Monday, 18 November 1985 Mr SPEAKER (Hon. Harry Jenkins) took the chair at 2 p.m., and read prayers. Mr SMITH —Has the Minister for Social Security or his Department initiated any study into the social impact of the Hawke Government's high interest rate policy, especially in relation to the much higher rents and consumer credit costs facing low and fixed income families? Can the Minister advise how many people have approached his Department seeking emergency aid as a direct consequence of the Hawke Government's high interest rate policies? Mr HOWE —If I might say so, the very low income families and the very poor have done very much better under this Government than they did under the previous Government. In terms of the overall thrust of this Government's policy, there has been no more important aspect of that policy than the approach of the Government to unemployment. In this year alone the Government will reduce expenditure in relation to the unemployment benefit by more than $200m. The previous Government's policies, which led to extraordinarily high levels of unemployment, produced a great deal of misery amongst thousands of Australian families. When one looks at the present Government's policies one sees that the Government certainly has helped the people in greatest need. It has certainly done a great deal to reduce the level of unemployment in this country, which was a scandal when we came into office. I know of no cases in which people have sought emergency relief as a result of housing payments. The people who are very poor are not fortunate enough to be in the situation of owning their own home. Mr LAMB —My question is directed to the Special Minister of State. What are the qualifications required under Commonwealth electoral law for candidates for election to the Federal Parliament? Has the Minister's attention been drawn to the announcement that the Victorian Branch of the Liberal Party is setting up a register of Party hopefuls as potential candidates to improve the quality of Liberal members of parliament, as that Party believes that in the past not always the best candidates have been preselected? Mr YOUNG —I know that, as a Victorian, the honourable member for Streeton has some interest in improving the quality of Liberal candidates. Under the Commonwealth Electoral Act, a candidate must be 18 years of age, must be an Australian citizen and must be an elector en- titled to vote or qualified to become an elector. Some grounds are given for people not being allowed to stand as candidates-people of unsound mind incapable of understanding the nature and significance of enrolment and voting, and, of course, if a person is an undischarged bankrupt or insolvent. But it is of interest to notice that one of the matters arising out of the Liberal Party conference at the weekend-I quote from Simon Clarke in today's Age-was this: The Victorian Liberal Party is setting up a register of potential candidates for state and federal seats to try to improve the quality of Liberal MPs It is noticeable that he did not say `Liberal MPs in Victoria'-just `Liberal MPs'. So I take it that what the Liberal Party in Victoria is telling the rest of Australia is that the Liberals must lift their game. Mr Goodluck —They cannot take one from Tasmania. Mr YOUNG —I do not think that the Victorian Liberal Party recognises Tasmania. Poor old Michael Hodgman is sitting up there alongside the honourable member now instead of being that outstanding front bencher that he used to be under the honourable member for Kooyong. But one wonders what could have provoked this outrageous outburst by the Victorian Liberal Party, to call for an improvement in the quality. I had a look through the Parliamentary Handbook to see the backgrounds of these people, because it is interesting to note that this is called the House of Representatives, and one would have thought that the parties would have been endeavouring to see that the major sections of the community were represented in the House of Representatives. That is what it is supposed to be all about. From this side of the House I think that one can see that every element of our society is represented by the Labor Government in this Parliament. I have not had time to talk to the Treasurer but it may be of interest to him, when the tax debate comes up later in the week, as to why the Liberal Party is interested in the long lunches. From looking at the Parliamentary Handbook, one finds that the Liberal Party representatives in this Parliament are dominated by 19 lawyers, six accountants-there would be some pretty shady ones amongst them-and 10 businessmen/management consultants. There are one or two other people, but they are absolutely dominated; 35 of them are lawyers, accountants or businessmen/management consultants. So, obviously, what the Liberal Party in Victoria is looking for and needs-if honourable members are talking to any of their mates-are a boilermaker, a fitter and a shearer. The Liberals need some people who are actually doing some work, people who use a bit of Solvol occasionally and who have really been involved in generating a bit of wealth in our community. It is most fortunate that this comes on top of the interview printed in the Melbourne Sun-News Pictorial last week in relation to the honourable member for Kooyong. The honourable member for Kooyong was asked: `How is the Leader of the Liberal Party going?' He said `He is doing his best'. Then the Melbourne Herald wrote an editorial on Friday which said that the honourable member for Kooyong should not have said that. I suppose that next time he is asked he will say: `No, he is not doing his best'. Honourable members interjecting- Mr SPEAKER —Order! The House will come to order. Mr Hawke —It is very difficult, Mr Speaker. Mr SPEAKER —It sounds as though this will be a difficult week or two for me. Mr YOUNG —I know what the honourable member for Kooyong is going through. I sympathise with him. We all have these sorts of years. Mr Cowan —I raise a point of order, Mr Speaker. We all like a bit of frivolity; but, in view of the unfortunate circumstances of the nation's economy at present, can the Government not do something constructive? Mr SPEAKER —Order! There is no point of order. Mr YOUNG —I do not know whether the National Party of Australia has moved a motion as the Liberal Party has but, from the look of that lot up there, it should. I reckon that there would be plenty of room, except for my old mate, the honourable member for Kennedy, who does not say too much. Honourable members interjecting- Mr SPEAKER —Order! I suggest that the House come to order, and the Minister can help me by concluding his answer. Mr YOUNG —Apart from stopping to breathe, I do not know what the honourable member for Kooyong can do that will be right between now and the next leadership battle because it seems to me that he is doomed in that everything he says will be wrong according to the newspapers. So he had better not say anything about candidates or who has been dropped from the shadow Ministry and who has been brought up because he is in an absolutely no-win situation at the moment. As to the present leader, if it is true that he is doing his best, those opposite are looking over here at the Government that will be here for a long time. Mr CARLTON —My question is to the Treasurer. I refer to the National Australia Bank's announcement that it would reduce its home loans by over 70 per cent to $250m and to the Treasurer's subsequent interview on the Australian Broadcasting Corporation AM program on Thursday 14 November when he said that the National Australia Bank `told the Treasury this week that their lending for this year would be $850m to $900m, not $250m'. In light of the comments of the Managing Director of the National Australia Bank on the Sunday program yesterday that the figures referred to by the Treasurer were in fact old figures provided in May-June this year, and that since then the market outlook has changed markedly, I ask the Treasurer: Does he stand by his statement on the AM program that the figures were provided only last week? Does he now acknowledge that the Hawke Government's high interest rate policies are causing funds for housing to dry up? Mr KEATING —I am not interested in having a banter with Mr Clark, but the figures were given to the Treasury last week, not in May. Indeed, the $70m a week figure, if annualised, runs to about $850m a year, which is somewhat down on the bank's $1,000m, and was given on the day Mr Clark first made his remarks. That said, I think one also has to recognise that the National Australia Bank's loans to customers have been growing very rapidly. In the spirit of competition which is now part and parcel of the banking system in the financial sector it is obvious that the Australian banks are getting market shares ahead of foreign bank competition. That is understandable. Of course, they have used the freedom which the Government has given them in terms of attracting deposits in this interregnum of a year or 18 months to lift their balance sheets enormously-I think the National Australia Bank by something like 30 per cent and the other banks by between 25 and 27 per cent. That has been reflected in their profitability. They have been taking deposits very ambitiously and lending very ambitiously-in this area of housing none more so perhaps than the National Australia Bank which would, therefore, perhaps be more sensitive than the other banks to changes in market conditions. That said, the important point is, I think, that there will be some slowing of housing lending over the next 12 months. One has to remember the record level of lending. It is not a matter of slowing from some modest figure; it is a matter of slowing from an extraordinarily high figure. The whole point of monetary policy is to slow activity across the economy, including in housing. Let me just compare the amount of money available for housing, that is, total housing finance in the bank and non-bank systems, between the two governments. The figure in 1979-80 was $7,018m; in 1980-81, $7,471m; in 1981-82, $6,506m; in 1982-83, $7,172m; in 1983-84, $10,369m; in 1984-85, $12,900m. Those funds are so close to being double the sorts of funds available for housing under the coalition Government as to show that obviously we are moving off a very high base and that there has been enormous and adequate provision for housing finance under this Government. This is reflected in commencements in these terms: During the period of office of the last Government, commencements crashed from 132,000 in 1981-82 to only 105,000 in 1982-83 and recovered to 130,040 in 1983-84 and 151,000 in 1984-85, and 140,000 are projected for 1985-86. In other words, there has been a very strong pick-up in the housing performance. Indeed, under the first home owners scheme there are 160,000 people who now have a roof over their heads, and who would not otherwise have had a roof over their heads, given the fact that what the previous Government was doing was subsidising old mortgages in the 1982-83 Budget. It had the old, cynical fistful of dollars policy out again and gave an interest rate subsidy to everybody regardless of income, means and need. We changed that. We introduced the first home owners scheme, as a result of which at the end of this year 160,000 people who otherwise would not have had a roof over their heads will now have one. I do not think one can draw anything from Mr Clark's remarks, except to say that the following day-on Thursday or Friday-Mr Clark said this about the Government: Their policy is absolutely correct for what is happening at this moment. . . . But we do have a little sign of overheating in the economy and the Government now is just reining that back slightly and trying to sustain a level but good rate of growth for the economy. Mr LANGMORE —I direct my question to the Prime Minister. What is the Government's response to the earthquake disaster in Colombia? Mr HAWKE —Like all Australians, including, I know, every member of this House, I was shocked by the disastrous consequences of the eruption of the Nevado del Ruiz volcano in Colombia on 13 November. As I think all honourable members will appreciate, the latest reports place the death toll at a very minimum of 20,000. I have sent a message of condolence to President Betancur and, on behalf of the Australian Government and, I believe, all the people of Australia, I have expressed our sorrow and our deepest sympathy to those who have been bereaved and are suffering. I wish-and again I know I am speaking on behalf of all members of the House-to commend the efforts of the Australian voluntary agencies which have launched a community appeal for assistance. Once again, Australians have demonstrated their humanity and their capacity to respond speedily and effectively to the plight of their fellow men and women overseas in times of disaster. I inform the House that in response to this appalling disaster the Government, for its part, has decided to contribute $2m towards emergency relief operations. Mr HOWARD —Mr Speaker, with your indulgence, could I say on behalf of the members of the Opposition that we associate ourselves completely with the Prime Minister's remarks and commend the Government on its very generous response to this great tragedy. Mr HICKS —I refer the Minister for Primary Industry to his statement in the House on 22 August when he said that `this Budget will bring interest rates down'. Will the Minister inform the House when this will occur? Mr KERIN —It is really interesting that these comments come from the Opposition, given its interest rate policies. It is trying to run one of the greatest frauds of all time. It wants total deregulation and it wants to put up interest rates, yet its members are wandering around trying to run this whole interest rate matter. As we know, the Leader of the Opposition, when Treasurer, achieved a great double-double digit inflation and double digit unemployment. It is absolutely amazing that the shonky people opposite should come in here and somehow say that they can run the economy better than we can. If we look at the figures for economic growth we can see what the Government has done in respect of the labour market and all the other matters. For the people opposite to concentrate on one economic factor is really the greatest bit of shonky economics and political nonsense that we have ever seen in this place. The announcement that I made after the Budget statement was put down related to the factors that were leading to higher and lower interest rates. Mr Howard —Both at the same time. Mr KERIN —Yes, at any time there are factors pushing up and pulling down interest rates, given that we now have a floating dollar and an unrestricted financial market. Of course, in that Budget statement the Government lowered the Budget deficit by a record amount. We lowered the public sector borrowing requirement. We have in place an accord which will bring down inflation. There was evidence at that time that overseas interest rates were also dropping. I believe that in the longer haul in the future, given the sensible, sane and excellent management of this economy, interest rates will drop. What I was pointing to on 22 August were the steps the Government had taken in that Budget that would push down interest rates. Dr THEOPHANOUS —My question is dir- ected to the Minister for Social Security. In view of the concern and misinformation which have arisen in the ethnic communities in relation to reciprocal social security agreements with other countries, can the Minister explain what decision the Government has reached in relation to such agreements and indicate whether ethnic communities will be consulted about future agreements affecting them? Mr HOWE —I thank the honourable member for his question. I know that he has been involving himself with and is concerned about the resolution of this issue. I will go back historically. The previous Government made a commitment to going ahead with further social security agreements, apart from the two we currently have with the United Kingdom and New Zealand, which both go back to the 1940s and early 1950s, on the basis of proportional portability. The present Government has made a decision that it also will seek to go ahead with further social security agreements with a number of the source countries for migration to Australia. The decision was based on the same principle of proportional portability. This Government's view is that it would be irresponsible to build a network of social security agreements on any basis other than proportional portability. One of the difficulties in this area is that it is one thing to talk about social security agreements; the other side of it is to change portability arrangements that have been in place in Australia for quite a significant period. The decision the Government has made essentially is to preserve current arrangements for 10 years until 1995 so that there will be no general change in relation to portability before 1995, with the exception of new residents who come to Australia after the date of announcement earlier this year who will be affected by the new basis of portability, which will be 25 years. So from 1995 people leaving Australia and going to agreement countries will be affected by a proportional arrangement which will mean that the responsibility Australia takes for the share of a pension paid with an agreement country will be based on a proportion of 25 years. People who have been in Australia for more than 25 years will be paid the full Australia pension, as they have been in the past on the basis of the 10-year rule. People who have been in Australia for less than that and wish to take a pension overseas will be paid on a proportional basis. The Government is anxious to enter into discussions with a number of countries. There have been detailed discussions with the Italian Government and we are very close to reaching final agreement. I expect that early next year we will make some change in relation to legislation affecting portability and that we will go on to sign an agreement with the Italian Government. I think that agreement will be very widely welcomed within the Italian community. We have been talking about a reciprocal social security agreement with Italy since 1951. It has taken a very long time to achieve. I know that Mr Corti, my counterpart in Italy, is delighted that the Government has made a decision, welcomes the decision we have made and is looking forward to the agreement being signed early next year. One of the virtues of the approach the Government has taken is that for the most part migrant people in Australia will not see a change in relation to portability arrangements for at least 10 years and possibly longer. That will make it possible for us to negotiate a series of agreements during a period in which no change is generally occurring to portability. I think that will help considerably because the issue of portability has been a very complicated one. It will mean that we will be able to discuss portability with a particular community in Australia at the same time as we are talking about an agreement. The effect of agreements will bring considerable benefits to people in Australia as well as overseas. People will have rights to top up pensions from overseas which, currently, they are not eligible to receive short of there being an agreement. People who have spent considerable periods in Australia but who do not currently qualify for a pension will also be able to receive an Australian pension overseas. Finally, Australia will have a better means of controlling income flows between countries in the sense that most of those flows will occur within the context of agreements at least after a period. I believe that will be in the interests of not only overseas governments but also the Australian Government. The honourable member for Calwell asked me about consultation. I have benefited a great deal from the very extensive consultations we have had over the winter recess. It is extremely important that, as we move towards agreement with countries, residents in Australia who are likely to be affected by any agreement have the fullest possible opportunity to understand what the Government is proposing and the implications it may have for them. Of course, it has never been a part of the Government's intention in any proposals that it has considered that the pensions paid in Australia would ever be adversely affected. That continues to be the situation. We have a prospect of people receiving supplements to their pensions in Australia and also better arrangements in terms of pensions paid overseas. Mr HOWARD —I refer the Prime Minister to his statement on 8 November. He said: By the end of this year the current account relationship to the GDP will be acceptable and will continue to improve. Does the Prime Minister still hold this view following the balance of payments results for October and also the continued doubts about the speed and size of adjustment following the devaluation, including from the Business Council of Australia? If he still holds the view expressed on 8 November, what does he regard as an acceptable current account figure as a percentage of gross domestic product? Mr Keating —Not the 6 per cent you gave us in 1982-83; that is for sure. Mr HAWKE —I am indebted to the Leader of the Opposition for his question. I remind him that the Government has always said, directly through the Treasurer and through me, that the effect of the depreciation on the current account would be lagged and that it would be spread over a considerable period. Mr Speaker, you will recall that the Budget Papers noted that the main effect in 1985-86 would be in the second half of the financial year-in other words in the first half of calendar year 1986-and that there would be further benefits in 1986, 1987 and beyond. Let me just pick up the point that was made by the Treasurer's interjection. The figure that we are talking about will certainly be significantly better than the 6-plus per cent that we inherited from the former Government which, in economic terms, was presided over by the Leader of the Opposition. We expect that in 1985-86 the figure will be of the order of 4.6 per cent and that it will move through the year so that by June 1986 it will be closer to 4 per cent. I am informed that the timetable is a little more drawn out than the past Australian experience, recognising some of the changes that have occurred in Australia's industrial structure. Again, picking up one of the points that the Treasurer made in the House last week, it is entirely inconceivable that a 20 per cent improvement in our competitiveness would not elicit a very strong response from domestic suppliers. The Government expects the benefits initially to reflect themselves in a greater share of the domestic market being obtained by domestic suppliers and thus a reduced share for importers and, in time, there will be gains in higher export sales. Our impression in this regard-applying what one would expect to occur as a result of past Australian experience as well as of theory-has been endorsed by a fair degree of anecdotal evidence given to us as recently as just a week or so ago at the meeting that I was able to have with the Business Council of Australia while the Treasurer was overseas. Members of the Council are telling us that they are already making greater sales in a number of areas as a direct result of the depreciation. Mr GEAR —Will the Minister for Sport, Recreation and Tourism inform the House what measures, if any, are being undertaken by this Government to capitalise on the enormous tourism potential of the America's Cup? Mr JOHN BROWN —I thank the honourable member for Canning for his question because it is in line with his well known and energetic pursuit of increased tourism to Western Australia. Mr Sinclair —Well, make a statement on it. Mr JOHN BROWN —Of course honourable members opposite do not want to hear this. It is good news. They do not want to hear any good news. Good news is just foreign to them; we know that. I am aware, as most others are, that the America's Cup will be a very significant event for Australia. In fact, it is estimated that it will inject something like $600m into the economy of Western Australia and will lead to 70,000 international visitors coming to Western Australia which of course will be of great benefit to that economy. I am pleased to point out that this Government has had the foresight, commitment and commercial sense to recognise the tourism potential to Western Australia, in fact to Australia generally, of the America's Cup. Because of that we have been able to do something about it. The so-called champions of the private sector-that is, this lot sitting opposite, with the possible exception of the honourable member for Fadden-were unable to realise during their entire term of office that we had a gold mine or a bucketful of dollars just waiting to be found. In fact, we had a diamond mine just waiting for someone to pick up the shovel and uncover the gems. Western Australia in particular is benefiting from the recent Paul Hogan campaign in the United States of America because this Government had the guts to bite the bullet and invest a fair amount of public money into using this well known comedian as the spearhead of an Australian campaign in the United States to let the rest of the world know what a favourable destination Australia was. There were plenty of cynics who said that it would not work, so let me give the honourable members a few figures that might indicate how successful the campaign has been. Last week I received the latest visa issuance figures from the United States, which make rather spectacular reading. In August, the figures were up 29 per cent on the previous August; in September they were up 65 per cent on the previous September; and in October they were up 49 per cent. Mr Howard —That's the weak dollar. Mr JOHN BROWN —The dollar has weakened against most other currencies. Why are people flocking to Australia instead of Europe? This year Australia will have an extra 100,000 visitors. Opposition members-Ha, ha! Mr JOHN BROWN —Honourable members opposite might laugh but the significant fact is that three years ago, when the geniuses opposite were in government and before Australia decided to do something about its tourism potential, 100 countries were advertising in the United States for travel to overseas destinations. Australia was forty-ninth in terms of preference. We are now first, which is a fairly significant improvement. Honourable members opposite laugh, as they might; the facts are there. In fact I think the figures I have given them are proof that our gamble has paid off, that something effective and useful can be done with taxpayers' funds-something the characters opposite never realised. In fact this Government has shown that it is able to work with the commercial sector, with industry and with the States to do something fairly effective. I will give the honourable member a figure that might indicate how useless the previous Government was. In 1982 contributions from industry to promotional campaigns for the Australian Tourist Commission were a lousy few hundred thousand dollars. This year they approached almost $10m, which is an indication of the industry's confidence in this Government's ability to do something. In fact last week industry recognised this by awarding the Hogan campaign the gold award for marketing excellence in Australia. I am sure every one of those great leaders of private enterprise whom the characters opposite are supposed to represent would like to have that award on their desk, but they did not get it; it came to a government organisation for the first time in history. I think that says something about the excellence of our industrial record. Mr Howard —It says something about Paul Hogan. Mr JOHN BROWN —It says something about Paul Hogan, exactly, and it says something about the fact that this Government had the wit and the intelligence to realise just what potential this thing had, and we did not do anything-- Mr Sinclair —Make a statement on it. Mr JOHN BROWN —The right honourable member does not like statements that indicate that 50,000 kids have got jobs. He loves to stand up there and given us gloom and doom and despair about the economy. The facts I have told the House prove that this Government can spend taxpayers' dollars in an effective industrious fashion, which is something the Opposition could never have done. I would love it to be able to give us one example of anything it did during its seven years in office that in any way achieved some sort of respect from the business sector; which is why, of course, it has fled the Opposition in droves. It would be remiss of me not to mention the fact that the Western Australian Tourist Commission and the Western Australian Government very strongly supported that campaign and, of course, the spin-off will be there for them. Mr N. A. BROWN —I ask the Minister for Employment and Industrial Relations: Does the Government still stand by its unqualified commitment to have 10,000 young people placed in traineeships by 30 June 1986? Mr WILLIS —The Government expects to achieve 10,000 traineeships in 1985-86. Mr LEE —Is the Special Minister of State aware that today's Sydney Morning Herald contains an extract from a book written by Mr Justice Athol Moffitt, a former Royal Commissioner and a former President of the New South Wales Court of Appeal? I ask the Minister whether Mr Justice Moffitt is correct to claim that the National Crime Authority can investigate only those organised crime activities which are referred to it by governments, and that: If the NCA itself wishes to investigate some activity, it must first seek and obtain Government approval. Is Mr Justice Moffitt correct to claim that the National Crime Authority represents a totally ineffective attack on organised crime? Mr YOUNG —I thank the honourable member for Dobell for his question. Obviously, like most members of the House, I have not had the opportunity of reading Justice Moffitt's book. Allow me to preface my answer by saying that I think many of us who have been associated with the area of interest for some years have acknowledged the work done not only by him but also by Stewart, Costigan, Williams and Woodward in the exposure they gave to organised crime in this country. I suspect we should also take into account that whilst this exposure may have gone on under previous governments, when the Hawke Labor Government was elected in 1983 that was almost the end of the exposures of organised crime, because the Costigan Royal Commission of Inquiry into the Activities of the Federated Ship Painters and Dockers Union was being wound up by the Fraser Government and it completed its task under this Government. We were then faced with putting into operation some sorts of mechanisms that would bring to an end what the Australian people had been given exposure to, this terrible list of organised crime and criminals throughout this country that went way beyond the comprehension of most average Australians. Let me say that Justice Moffitt's inference, in the excerpt from his book in today's newspaper which was referred to by the honourable member for Dobell in his question, in relation to NCA investigations is incorrect. Of course, the National Crime Authority can of its own volition investigate any activity it wishes. It can use its coercive powers only if it has a reference granted to it either by the Commonwealth, in its own right, or by the National Crime Authority Inter-Governmental Committee acting on a reference from the States. During the debate in 1984 on the National Crime Authority it was felt by the Opposition that the Commonwealth should act alone in these matters and should not perhaps be relying on the States because the States might move to try to frustrate some investigations the NCA wanted to carry out. Nine references have been granted to the National Crime Authority. There has been absolutely no frustration; every reference sought, either from the States or the Commonwealth, has been granted. The Inter-Governmental Committee at its first meeting decided, without any reference to legislation, that if any State or the Commonwealth refused to give it any reference which it sought that would immediately be made public so that everyone in the world would know that the Inter-Governmental Committee had acted in such a way. I say to honourable members opposite that the IGC has worked extremely well. I do not think any government in the future will act to disband the Inter-Governmental Committee because in this sort of activity it is enormously important to have the co-operation of all the States and all the law enforcement agencies. The National Crime Authority has been able to carry out its work because of the splendid co-operation between the various police forces-a co-operation which in the past in this country may not have been as effective as it is today. There is a contrast, conflict and contradiction existing in some people's minds between what should be exposed and what should not be exposed. There are those people-especially people in the media-who subscribe to the view that everything should be out in the open. There are others, such as those on the Council for Civil Liberties, who say nothing should be out in the open because there might be some impact on a person who may be completely innocent but who may be given publicity because his or her name may be involved in some activity or other. I do not know that that is an argument that can ever be settled in one parliament or in any given time. That is something which people will hold dearly to them. As honourable members know, this Government has decided that it is in the best interests of people to keep as much information as possible as confidential as possible within the activities of the National Crime Authority because of the civil liberties of people who may be involved. To that extent we were affected by a lot of publicity over previous years about people who, in the long run, were not even prosecuted let alone found guilty of any crimes which it might have been suggested in the Press they were guilty of. Of course, that is an argument that will continue to rage. That is something which governments of the day will have to deal with from time to time. In other areas we were left with a massive agenda of matters to deal with such as the interception of telephone calls. That is not something that came from the agenda of this Government; it had been on the agenda of the Fraser Government for three or four years. My predecessor, Kevin Newman, had raised the matter with the Australian Police Ministers' Council, I think, in 1980 or 1981. I do not think anything was done about it in those days by the Fraser Government. It did not appear to be as urgent then as it did when we came to government. However, that is a matter which is now being handled by the Prime Minister and the Attorney-General. An offer was made by the Commonwealth to the States at the National Drug Summit. All these sorts of questions take a lot of sorting out in terms of getting people to co-operate and of putting the legislation together and having it passed by both Houses. In terms of where we stand today in Australia compared to where we may have stood five years, 10 years or 15 years ago, it is not a partisan thing to suggest that perhaps we are doing better than the Fraser Government did. As I said, the Fraser Government gave exposure to what was going on in Australia. We were left with the enormous responsibility of trying to do something about it, as will future governments in Australia. To that extent I think we have a lot of runs on the board. Mr SINCLAIR —I ask the Minister for Aviation: In light of the demonstrable public satisfaction at the lower air fares offered and the provisions of paragraph 6 (1) (c) of the Schedule to the Airlines Agreement Act 1981, why has East-West Airlines Ltd been advised that it is no longer to operate the Perth-Yulara-Sydney and Sydney-Newcastle-Brisbane airline routes? Mr PETER MORRIS —The Leader of the National Party of Australia is well aware of the provisions of the Opposition's two-airline legislation. After all, the legislation which this Government is bound to uphold is the legislation which he played a principal part in framing. Under that legislation-- Mr Slipper —Why not change it? Mr PETER MORRIS —It cannot be changed because there is a five-year fixed term. The only way alterations can be made is for three years notice of termination to be given prior to the expiry of that five-year term. That notice of termination requires a decision of both Houses. Notice cannot be given before January 1987. The agreement is set in concrete in the terms that the previous Government, now the Opposition, wanted. As I started to say, under the provisions of the Opposition's two-airline legislation-- Opposition members interjecting- Mr PETER MORRIS —I would expect that each of those members of the Opposition who were members of the Cabinet responsible for the framing of this legislation behind secret doors- Mr Sinclair —That is why I am asking the question. Mr PETER MORRIS —The right honourable member should be patient and I will enlighten him about his legislation. After all, I did not frame it. It was his legislation and I would expect him to know what he put in it. Mr Sinclair —We did. Mr PETER MORRIS —Well, why is the right honourable member asking me? Obviously he does not know what is in it. Mr Howard —There is an exemption that you are not applying. Mr SPEAKER —Order! The Leader of the National Party has asked his question. Mr PETER MORRIS —I do not have the power of direction under paragraph 6 (1) (c) of the Schedule that the Leader of the Opposition is attempting to attribute to me. I do not have that power. Paragraph 6 (1) (c) relates to the Secretary's power. As I have said, the two-airline legislation is the previous Government's legislation, not ours. Surely the Opposition is not going to inflict upon me and upon this Government responsibility for its own shortcomings. In 1981 when I was in opposition and argued about this legislation, the previous Government argued that what was in the package was correct and appropriate to Australia's needs for at least eight years to come. So the Opposition should not visit upon this Government its problems, its oversights and its shortcomings. The situation in respect of paragraph 6 (1) (c) is that the Secretary is required to make a determination in respect of whether the provisions of the paragraph are being complied with. He has sought the information required from the organisation concerned. He made several requests and it has taken a considerable time. Ultimately, the information was received. It has been assessed by the Secretary and he has determined that the organisation, East-West Airlines, is not operating in accordance with paragraph 6 (1) (c). Mr Howard —Do you accept that? Mr PETER MORRIS —What the Opposition is asking me to do is to tell it whether its legislation is right or wrong. I have no intention of accepting responsibility for the Opposition's failures or for its legislation. This Government is bound to uphold that legislation. We will do it impartially and we will do it strictly-- Mr Sinclair —Yes, Minister. Mr PETER MORRIS —The right honourable member for New England was obviously saying `Yes Minister' at that time. The decision has been made by the Secretary to the Department- Mr Howard —The Jim Hacker of the Hawke Government. Mr PETER MORRIS —There are several Jim Hackers who are at last revealing their ignorance of the role they played in the legislation that they put to their Cabinet. Mr Tuckey —Do you approve? Mr PETER MORRIS —I have no responsibility for the previous Government's legislation or its shortcomings. We will uphold the legislation. As I have said, the Secretary and I have advised the airline of the provisions of paragraph 6 (1) (c) and said that, if the circumstances change and if the airline submits different information in respect of that paragraph, we will be prepared to look at it at that time. Mr DAWKINS(Fremantle-Minister for Trade) —Pursuant to sub-section 88 (4) of the Export Finance and Insurance Corporation Act 1974, I present the Export Finance and Insurance Corporation annual report for 1984-85. Mr KERIN(Werriwa-Minister for Primary Industry) —Pursuant to section 18 of the Honey Research Act 1980, I present the Honey Research Committee annual report for 1984-85. Mr KERIN(Werriwa-Minister for Primary Industry) —Pursuant to section 18 of the Dried Fruits Research Act 1971, I present the Dried Fruits Research Committee annual report for 1984-85. Mr KERIN(Werriwa-Minister for Primary Industry) —Pursuant to section 24 of the Cotton Research Act 1982, I present the Cotton Research Committee annual report for 1984-85. Mr BARRY JONES(Lalor-Minister for Science) —For the information of honourable members, I present the Marine Research Allocations Advisory Committee report on marine science and technologies grants and Queen's Fellowships for 1985. Mr SCHOLES(Corio-Minister for Territories) —For the information of honourable members I present the following annual reports for 1984-85: The Australian Capital Territory Building Standards Committee report, the Australian Capital Territory Administration of the Credit Ordinance report, the Australian Capital Territory Agents Board report and the Australian Capital Territory Building Review Committee report. Mr SCHOLES(Corio-Minister for Territories) —Pursuant to section 17 of the Consumer Affairs Ordinance 1973, I present the Australian Capital Territory Consumer Affairs Council and the Consumer Affairs Bureau annual report for 1984-85. Motion (by Mr Scholes)-by leave-agreed to: That this House, in accordance with the provisions of the Parliamentary Papers Act 1908, authorises the publication of the report of the Australian Capital Territory Consumer Affairs Council and the Australian Capital Territory Consumer Affairs Bureau, for year 1984-85. Mr COHEN(Robertson-Minister for Arts, Heritage and Environment) —Pursuant to sub-section 68 (4) of the Archives Act 1983, I present the Advisory Council on Australian Archives annual report for 1984-85. 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 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 on this planet Earth; (c) The large star depicting the advent of Federation in 1901. 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: Propose and pass a motion that `the existing Australian National Flag be changed only with the approval of the Nation as expressed in a Referendum'. And your petitioners as in duty bound will ever pray. by Mr Beale,Mr Ewen Cameron,Mr Hawker,Mr McArthur and Mr Shipton. To the Honourable the Speaker and Members of the House of Representatives in Parliament asembled: The Humble Petition of the undersigned Citizens of Australia respectfully showeth: 1. That the overwhelming majority of Australians are completely satisfied 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 Drummond. 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 satisfied 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 our 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 assembled. The Petition of the undersigned citizens of Australia respectfully showeth: That whereas the Commonwealth of Australia ratified the UN Convention on the Elimination of All Forms of Discrimination against Women in 1983, the Government of Victoria in passing the Planning (Brothels) Act 1984 is in breach of Article 6 of the Convention which says that `States Parties shall take all appropriate measures, including legislation, to suppress all forms of traffic in women and exploitation of prostitution of women'. That the Victorian Planning (Brothels) Act 1984 provides legal authority to brothel operators to traffic in and exploit the prostitution of women and to live off the earnings of prostitutes. That whereas the Federal Minister for Health has counselled citizens to shun promiscuity (The Australian 26.1.85) because of the serious and sometimes fatal health hazards, the operations of legalised brothels encourages promiscuity and the spread of diseases, including AIDS. Your petitioners therefore pray: That the Government of Australia having ratified the UN Convention on Women remain consistent in its obligations to uphold the Articles of the Convention and request the Victorian Government to immediately repeal the Planning (Brothels) Act 1984. And your petitioners, as in duty bound, will ever pray. by Mr Ewen Cameron,Mr Halverson,Mr McArthur and Mr Shipton. 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 and Mr Fife. 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 disatisfied with the pricing of petrol in this country; 2. That under a Labor 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 Hawker. To the Honourable the Speaker and the honourable 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. And your Petitioners as in duty bound will ever pray. by Mr Andrew and Mr Rocher. To the Honourable the Speaker and Members of the House of Representatives in Paraliament 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 Beale and Mr Ian Cameron. To the Honourable the Speaker and members of the House of Representatives assembled in Parliament. The petition of the undersigned respectfully showeth: Introduction of any additional capital gains taxes, wealth taxes or death duties is oppposed 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 and Mr Ewen 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 sayeth: That we the undersigned are totally opposed to any taxation change which involves a tax on Health Fund contributions, health charges or benefits; That we are already required to pay 1 per cent 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 Mr Dobie and Mr Ruddock. To the Houourable the 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 Preschools 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 Cadman. To the Honourable the Speaker and members of the House of Representatives in Parliament assembled: The petition of concerned people of Australia respectfully show their desire that Your Honourable House (the Government) act immediately to raise the Tertiary Education Assistance Allowance to the level of the Unemployment Benefit, And your petitioners as in duty bound will ever pray. by Mr Ewen Cameron. 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 certain citizens of Australia respectfully showeth that the current policies of the Community Arts Board of the Australia Council are disadvantaging regional residents (country and outer metropolitan) with regard to the provision of access to art forms, in particular to tours of professional performing 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 organizations to maintain access to performing and other arts activities in country and outer metropolitan areas. And your petitioners, as in duty bound, will ever pray. by Mr Lamb. 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 the Technical and Further Education Participation and Equity Program established as the centre-piece for national youth policy, addresses the educational, social and employment needs of twenty-two thousand unemployed Australian youth. The intended 50% funding cuts will directly affect at least ten thousand already disadvantaged young people, denying them access to further education and potential employment. Your petitioners therefore humbly pray: (1) That the decision to cut the Participation and Equity Programme funding be reversed. (2) That the Participation and Equity Programme be guaranteed funding for 1987, and beyond. And your petitioners, as in duty bound, will ever pray. by Mr Drummond. 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 the proposed Australian Bill of Rights Bill 1985 will endanger the Federal system in Australia, the State and Federal criminal justice systems, the State and Federal Police Force, the State and Federal education systems, the independence of the churches and religious associations, marriage and the family, children, the unborn, the handicapped, the aged and the infirm, employer and employee relationships and Australian society generally. Your petitioners therefore humbly pray: That your Honourable House defer debate on the Bill for twelve months and circulate the Bill for twelve months for the widest possible debate, scrutiny and discussion. 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 the Parliament assembled. The humble petition of certain citizens of Australia respectfully showeth: That pensions be adjusted fully to reflect the total increase in Consumer Price Index (CPI); and That the ceiling for pensioners incomes be increased to provide for an adequate `living standard', before any consideration is given to the introduction of reduced pensions and the fall of benefits. Your petitioners therefore humbly pray that action be taken by the Government to implement these proposals immediately, and not November 1986. And your petitioners, as in duty bound, will ever pray. by Mr Halverson. 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 iniquitous 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 the undersigned citizens of Australia respectfully shows- That the people of New Zealand and the New Zealand Government have given an example to the world in their efforts to achieve a nuclear free South Pacific, and such decision being endorsed by the people at a general election. Your petitioners therefore pray that the Australian Government support the principled stand taken by the New Zealand Government and urges it to condemn any efforts by the U.S. Government to impose economic or other sanctions on New Zealand in retaliation for their stand on nuclear vessels. We further urge the Australian Government to urgently implement its policy to promote the development of zones of peace and nuclear free zones in the Indian and Pacific Oceans. by Mr Kent. To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. The petition of the undersigned respectfully showeth: We are concerned that the closure of the Enterprise Migrant Hostel will be detrimental to the long-term settlement prospects of migrants in Victoria as well as detrimental to Ethnic Communities who have settled in the Springvale area. In addition, the long-term development of commerce and industry in the area will be adversely affected. We urge the Government to reverse this decision. And your petitioners, as in duty bound, will ever pray. by Mr Kent. To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. The petition of the undersigned respectfully showeth; that your petitioners submit that the government take urgent action in the matter of the complete restoration of the Highfield Estate in Stanley, Tasmania, and that all necessary funds be allocated forthwith. Your petitioners therefore humbly pray that these actions be taken in order to preserve for future generations of Australians, a major and nationally significant historic site. 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 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 Rocher. To the Right Honourable the Speaker and Members of the House of Representatives in the Parliament assembled. The humble petition of the undersigned electors of the Commonwealth of Australia respectfully showeth that: 1. We are completely satisfied with the design of the existing Australian national flag. 2. We are aware it properly reflects the immutable characteristics of Australia, namely: The Union Jack, itself the creation of 3 Christian crosses, represents the nation's historical origin, and the source of its language and law. The Southern Cross on an azure blue background signifying its place in space. The large star depicting the advent of Federation in 1901. 3. We know the flag has been a source of inspiration to generations of Australians in peace and war. 4. We 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. We are certain that any change to the flag will produce division in the Australian community. Your petitioners therefore pray that your Honourable House will: Propose and pass a motion that ``the existing Australian national flag remains sacrosanct from change''. And your petitioners, as in duty bound, will ever pray. by Mr Rocher. 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 we are greatly concerned with the extent to which serious crime, including murder, major drug financing and massive tax frauds have penetrated into the highest levels of Australian society as shown by the investigations of various Royal Commissioners and in particular by Mr Frank Costigan, Q.C. That we are concerned that the National Crime Authority has too many restrictions and possible lines of veto placed upon it for it to be an effective successor to the Costigan Enquiry and that this will allow major criminals to avoid prosecution. And your petitioners humbly pray that the Federal Government negotiate urgently with the Victorian Government on the reactivation of the Costigan Commission and to extend its term to at least the 31st March, 1985 and also to provide the Costigan Commission with whatever resources it may need to successfully conclude its investigations into organised crime in Australia. Further we believe the issue of organised crime in Australia is so important that the Parliament should not be dissolved until at least the interim Costigan Report has been received and fully debated in both Houses of the Parliament. 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. We the undersigned are deeply concerned that the decision to place an Army Artillery Base in the Orange/Bathurst/Mudgee area and the manoeuvres area in the Cobar region, would cause undue hardship to the families affected. Your petitioners humbly pray that the House of Representatives in Parliament assembled will call upon the Government to: 1. Abandon its decision to resume land in the Orange/Bathurst/Mudgee and Cobar areas for military purposes. 2. That no site is chosen which includes productive, agricultural and/or pastoral land. And your petitioners, as in duty bound, will ever pray. by Mr Sinclair. `For the People's Right to Peace' `For the Rights of Women and Children' `For National Independence, Disarmament and Peace' To the Honourable Speaker and Members of the House of Representatives in Parliament assembled, the humble petition of citizens of Australia respectfully show: 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 Tickner. 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 towards 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. Fully support the United Nations World Disarmament Campaign by allocating the equivalent of at least 10% of the defence budget 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; 6. Implement National Recycling Programs to reuse water and to compost all presently wasted sewage sludge and organic garbage into hygienic humus, a natural fertiliser, for use in rehabilitating 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 Tickner. 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 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 revitalising impoverished 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 Mrs Kelly. 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 Porter. Petitions received. Mr SPEAKER —I have received a letter from the honourable member for Tangney (Mr Shack) proposing that a definite matter of public importance be submitted to the House for discussion, namely: The failure of the Government's Priority One youth traineeship scheme. 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 SHACK(Tangney)(2.58) —The Prime Minister (Mr Hawke) launched the so-called Priority One: Young Australia youth traineeship scheme in a blaze of publicity on 18 August this year. We all watched a superbly produced nationally televised address, scripted by the Victorian Australian Labor Party's advertising agency, in which the Prime Minister announced a package of measures which he said would solve the problems facing young Australians. He said: The welfare and the encouragement of young Australians is my first priority as Prime Minister. This is a crass and cruel fiction which we intend to show in this matter of public importance debate. One could charitably argue that the Prime Minister's statement is true and that the Government is simply totally ineffectual in the implementation of its own policy, but the evidence is increasingly and overwhelmingly two-fold. All young people in Australia and all parents concerned about their children should know this and know it well. The Government's number one priority in this Priority One program is not the young people, not the unemployed, but its own electoral survival. Priority One is first and foremost a tool for bolstering the Government's own public image in the pursuit of that selfish goal. The centrepiece of Priority One is a system of traineeships that will offer young people a combination of training and employment at special trainee wages over a 12-month period. It is intended, if we listen to the Government's propaganda, that 75,000 traineeships will be created by 1988 in both private enterprise and the public sector with 10,000 places offered in 1986. Despite massive Government advertising to promote Priority One, concern and cynicism are growing over the lack of progress in implementing the traineeship program. It is becoming abundantly clear that the Prime Minister announced the package before the details had been worked out, before supportive funding arrangements had been thought through, and without sufficient consultation with business and unions. It is becoming abundantly clear that the traineeship program is in danger of collapsing because of trade union intransigence and outright opposition. It is becoming abundantly clear that the entire Priority One extravaganza was centrally linked to efforts to rebuild the Labor Party's image. It has involved the ALP's campaign strategists and its advertising agency, and it has become a classic cast study in party political appointments. The Government has not thought through the full details of the supportive policies needed to make the traineeship scheme effective. In a number of decisions the lack of co-ordinated planning is obvious. For example, the fringe benefits tax and the decision to end tax deductibility for entertainment expenses are forcing a contraction of employment in several industries which had been specially identified as being the appropriate industries for the traineeships. Officials from the restaurant, tourism and hospitality industry have warned the Government that the new taxes are costing jobs now and in the light of this it is unlikely that the industry will take on any young people under the traineeship program. Secondly, the training component in technical and further education colleges similarly is being neglected because the Government has actually cut TAFE funding by $12m, despite the fact that TAFE was supposed to provide the training component in a large part for the traineeship scheme. Thirdly, the Budget decision to increase the levels of youth unemployment benefit has made the dole more attractive than learning or education. Fourthly, frustration among young people will remain high for as long as the Government continues to underfund places in higher education and restrict universities' and colleges' powers to supplement government grants with private funds to expand educational opportunity. It must also be remembered that the Priority One traineeships are at best a compromise between the unavoidable necessity to free up youth wages and the Government's blinkered obsession with maintaining the ALP-Australian Council of Trade Unions accord. In accepting the concept of a trainee wage the Government has acknowledged the need, and yet it lacks the will, to introduce wage flexibility beyond the regulated confines of Priority One. As the Minister for Employment and Industrial Relations (Mr Willis) admitted recently: There's a case for a junior rate in all awards. But he went on to say that the Government is doing nothing at this stage. Priority One has also been plagued by union opposition which the Government has failed to resolve. The Federated Liquor and Allied Industries Employees Union of Australia has insisted that the trainees be paid the full junior wage for the full week, even though they may spend up to 20 hours a week in training institutions. The Shop, Distributive and Allied Employees Association has insisted that trainees be paid the existing junior wage and has demanded an assurance that the trainees will be employed full time when they complete the scheme. SDA Secretary, Jim Maher, said that the retail industry is already saturated with youth employees and described the scheme as `Cock-eyed . . . totally impractical, ill- conceived and nothing more than a bureaucratic bungle'. The Federal Secretary of the Australian Public Service Association, Paul Wright, said that the APSA `certainly has some worries about how it might work'. The Federal President of the Federated Clerks Union of Australia, John Maynes, said that employers and unions had not been consulted about the scheme. Honourable members opposite do not have to take my word for it. They should listen to John Maynes. He said: Employers and unions have not been consulted about the scheme and the whole proposal has been marked by gimmickry and bureaucratic bungling. John MacBean, Secretary of the New South Wales Labor Council, said he would insist that all trainees be paid the appropriate junior wage. The Australian Bank Employees Union is similarly demanding concessions from employers, including an agreement that trainees will be taken on only additional to the normal staff intake. Of course the attitudes of these individual unions and ACTU Executive members reflect the general antipathy of the professional union activists to the necessity to introduce more flexible youth wages in order permanently to reduce youth unemployment. As the Sydney Morning Herald said on 13 November: The supine reaction from the Government has been to weakly express the hope that a significant number of traineeships will still be offered, and to support compulsory unionism by expecting that preference for unionists will be continued under the scheme where that was already written into awards. Priority One has been designed and implemented as a principal part of the Australian Labor Party's electoral strategy. The ALP campaign advisers have been involved in and have benefited from the youth program since its initial planning stage. Just listen to this list. The ALP's research company, Australian Nationwide Opinion Polls Pty Ltd, was commissioned by the Government to conduct surveys and interviews in order to establish youth priorities, beliefs and concerns. In 1984 this cost the taxpayers $120,000. Yet the Government has steadfastly refused to accept the findings of this important study entitled `The new traditionalism'. The Government's advertising agency for the ALP in Victoria wrote the Prime Minister's August address to the nation and has been appointed to handle the $454,000 promotion for Priority One. Incidentally, this is the first time ever that Australian taxpayers have footed the bill for a Prime Ministerial address to the nation. As if that is not enough, on top of it all, the defeated Labor member of parliament Peter Steedman has been appointed consultant-the expert-to John Dawkins with responsibility to develop, among other things, Priority One promotional activities. The traineeship program, the centrepiece of the Priority One package, now looks certain not to be fulfilled and implemented by 1986. Concerns regarding the scheme are spreading across the community and these are seriously discrediting the Priority One program. The scheme is in danger of becoming just another Public Service make work scheme with the Federal Government planning to create 2,000 places in the Federal Public Service and up to 4,000 places in State and local government areas. Since August only two agreements have been reached. In Question Time today we heard the Minister for Employment and Industrial Relations say that he expects 10,000 places to be ready in 1986. I can tell the Minister that expectation is a long way short of achievement. Only two agreements have been reached-one with the Western Australian Government agreeing to take 500 trainees into the State Public Service, and one with Ansett, which has agreed to take 300 places. Not even the Federal Government has implemented the scheme in respect of its own Public Service and few business groups have expressed enthusiasm for the scheme or, indeed, the entire program. What about the architect of the traineeship proposal, Mr Peter Kirby, who chaired the inquiry into labour market programs? Mr Kirby was reported the other week as now being very pessimistic about the scheme working and he has criticised the Government for trying to do too much the wrong way around. Let me tell Mr Kirby and anybody who might like to listen: The Government was doing too much the wrong way round because its priority is not with unemployed young Australians but with its own public image and the expenditure of public moneys in pursuit of that image. Its priority is with its own electoral survival. If we read the newspapers we see that even on the Government's own benches there is strong concern that the scheme is turning into a patchwork and that the Government has launched the scheme before the issues have been thoroughly considered and resolved. As the Australian Financial Review commented when the scheme was launched: It was a deliberate attempt to divert attention from the hard economic decisions the Hawke Government must take . . . this Government will continue to try to ignore what every employer in the private sector knows only too well. Wage relativities between young and more mature persons do matter and no amount of increased training will eliminate that fact. We read in the Age of 12 November: The Government ought to consider relaunching its policy . . . It should also take up the offer of the Arbitration Commission and have youth (wage) rates examined . . . What Mr Hawke announced as a total approach to the problems faced by young Australians' has turned out to be less than total. There is valuable knowledge to be gleaned from the last decade of massive Commonwealth intervention in the labour market in the form of employment and training programs, but much of that valuable knowledge can be summed up as follows: Schemes and programs by themselves do not solve the underlying problems which are the root cause of youth unemployment. While labour market programs may help some young people, the cost of creating one program that would assist all unemployed youth is prohibitively high and therefore not on. That knowledge tells us that this indirect approach, sneaking around the back door of the problem, coming up with schemes and problems, is no substitute for facing up to the problems directly and taking steps to remove the barriers to full employment for young Australians. That barrier principally has been the disappearance of the relativity between youth wages and adult wages. The Government knows it. Why would we have labour market programs, the essential element of all of them being a wage subsidy component, if there was not a recognition that the level of youth wages had something to do with the problem? Madam DEPUTY SPEAKER(Mrs Child) —Order! The honourable member's time has expired. Mr WILLIS(Gellibrand-Minister for Employment and Industrial Relations)(3.13) —The Government welcomes this debate as an opportunity to clear up the misconceptions which abound about the present situation relating to traineeships. The speech of the honourable member for Tangney (Mr Shack) was a farrago of misconceptions and I hope to clear them up very much in the course of my contribution to this debate. Let me say at the outset that the Government has confidence that we will achieve the 10,000 traineeships that we have set ourselves as an objective in this financial year. That target is an ambitious one and one which will be reached only by a concentrated effort by government. It will demand a great effort from the Government and from the rest of the community. Before going into the details of what is required, let me say that it is rather ironic that we have had today a bit of a lecture from the honourable member for Tangney about youth unemployment when one considers what happened when honourable members opposite were in office and what has happened since this Government came to office. It is not as though since this Government came to office there has been a failure to deliver in terms of jobs for young people. Since this Government came to office, unlike what happened when the previous Government was in office, jobs have been created for young people, the number of young people in employment has increased and the number of unemployed young people has gone down. That is quite the reverse of the situation that applied under the previous Government. Briefly, since we have been in office employment of teenagers has increased by 54,600 over the two years to September 1985 and unemployment has gone down by 44,000. If we look at what happened during the period of the Fraser Government we see that the number of teenage jobs declined by 30,800 during that Government's 7 1/4 years in office and that the number of unemployed teenagers increased by 107,400 between February 1976 and February 1983. One can see a total reversal of the trends in relation to youth employment and unemployment operating under this Government compared with the trends that operated under the previous Government. That is the starting point. Things are now on the right track. The disastrous trend of the previous Government has been arrested and things are looking much better with regard to both employment and unemployment of teenagers. However, the Government is by no means prepared simply to let the matter rest by creating strong economic growth and strong employment growth and seeing young people benefit from that. We have been concerned to make special efforts to ensure that young people have a better chance of getting jobs than would other- wise be the case, and to that end we have had various reports submitted to us about the situation of youth unemployment. The principal such reports have been the report of the Kirby Committee of Inquiry into Labour Market Programs and the report of the Organisation for Economic Co-operation and Development on youth policy. Both of those reports said to us that the most fundamental thing we can do for the young people of this country is to create a system of training because, without training, our young people still do not face good prospects of getting employment, despite the continued strong economic growth; and, if they do get jobs, many of them will be in what is known as the secondary labour market-that is, low skill jobs providing little in the way of work satisfaction and no career prospects. The reports stated that if we want to have a better work force with better prospects, higher paid jobs and more opportunities to get jobs we need to invest much more heavily in training. As compared with other nations we were deficient in the training and education of our young people. We have responded to that recommendation with our Priority One package which has as its essence two key elements. The first element is an inducement to young people to stay at school longer. To that end we have increased educational allowances to encourage them to do so, brought about a rationalisation of youth income support arrangements and provided more money for education. On the other hand, we have acknowledged the fact that a large number of young people will still be leaving school before year 12 and not going on to other forms of training or education, and that those young people are in a sense at risk. The prospects are that many of them will finish up unemployed or in low paid jobs with no career future. To try to overcome that situation we have the second arm, a system of traineeships. In Australia at present we have a system of structured training for our young people in the form of apprenticeships; that is, training for trade jobs in the various trades that have been developed over the decades. Apprenticeship, of course, is a very long lasting training arrangement. But we have 100,000 young people leaving school before year 12 who do not go into apprenticeships, other education or any other form of training. Those are the young people for whom we are looking to provide traineeships. Traineeships are not some mickey mouse approach to the subject; they represent a fundamental and total reform of the transition process from school to work. It is not just a matter of trying to put some public relations camouflage over the youth unemployment problem; I deny that charge absolutely. There is nothing whatever to justify that kind of charge. Traineeships are an enormous operation, representing a fundamental change in one of the key aspects of life for young people-transition from school to work. It means that we are saying to young people: `We will give you a period of structured training, a combination of training on and off the job, in the year after you leave school so that you will go into the work force proper with some skills, some vocational abilities and something to offer employers that you do not have at present'. In the process of doing that we will upgrade the skills of the work force and create young people who are much more likely to be keen to go on to other forms of training, and so generally increase the level of skills of our work force substantially. In a world in which skills of the work force are being rapidly increased in all nations it is imperative that we as a nation invest much more in training, particularly the training of our young people. I think it is notable that the honourable member for Tangney, in the whole of his speech, made not one mention of training apart from the term `traineeships'. He did not talk about training in any way. Honourable members opposite show no understanding of the need for training and of the importance of developing a training system for our young people. They talk in simplistic terms, saying: `Everything would be all right if you cut youth wages'. We have been over that ground many times and I do not intend to go over it again today. Let me say that the course of their period in office shows that they know nothing about how to go about creating jobs for young people. As I have said, it is a massive task that we are undertaking in developing traineeships, and it cannot be expected that we shall get instant agreement by all of the players in the game to the arrangements which it is necessary to put in place. It is a tremendously complex and difficult task. It involves all of the national training network established under the National Training Council, which comes under my portfolio. It involves the whole of technical and further education, all employers in this country, the trade unions, the young people, the State governments and the State government industrial training arrangements and authorities. So we have a tremendous number of players in these traineeships. To expect that we can pull all that together in a month or two and say `Whacko, here are 10,000 traineeships' is absurd. It was never portrayed as capable of being done in that way. When the Prime Minister (Mr Hawke) made his announcement, he announced a scheme to which this Government was totally committed and to which it knew there was a commitment from the national employers and from the Australian Council of Trade Unions. So we were able to go into traineeships on the basis that we had agreement at that national level from the unions and the employers, and the in-principle agreement of State governments. All of those key players had given their in-principle agreement to the system of traineeships when the Prime Minister made his statement at the time of the Budget this year. So it was not a matter of misleading anyone. But we had to develop the detail, and that is what has been going on in the course of this year, both before and since the Prime Minister's announcement. We are reaching the point at which very shortly traineeships will be available on a substantial scale. It is not a matter of not having achieved any more than two agreements since August. That is the situation; only two traineeship schemes are actually in place. I mention in passing that in the home State of the honourable member for Tangney, 100 trainees are starting in the Western Australian Public Service this week. But those two are just the forerunners of many. In regard to the difficulties that have been met, there have been difficulties from State governments, because State governments have wanted the Commonwealth to pick up more of the tab. That is understandable with any financial arrangement which involves a State. There is inevitably some sort of wrangle with the State government about who will pay for what and whose responsibility it is to pick up what. That has been pretty well sorted out. We have formal agreements with the Western Australian Government and the Victorian Government at present, and the others will follow very shortly. I recently had a meeting of all State Ministers for Labour, and they again reiterated their agreement to traineeships, and it is simply a matter of thrashing out the detail to the last decimal point; but that is pretty well done. In regard to the trade union movement, there is concern, as has been expressed by some union officials, about some aspects of traineeships. That is inevitably part of the process of putting traineeships in place. Because union officials say that they want this or that, it does not mean that that is the end of traineeships. It is part of the process in which people state their initial position-often expressed, not just by trade unions but by various people involved, with some misconceptions about exactly what is meant by traineeships. Those misconceptions have been or are being cleared up, and there is increasing realisation of the relevance of traineeships and of the need and the willingness to be involved in them. Without going into the details, because sensitive discussions are going on which I do not want to do anything to upset by making any statements of detail now, in the near future there will be agreement in many areas which will enable us to have traineeships established both in various areas of private industry and in various areas of the public sector. I have confidence that we shall have 10,000 trainees in the course of this year. I have been heartened by the response of employers. The Confederation of Australian Industry indicated months and months ago, at the National Labour Consultative Council, that in principle it agreed to traineeships. It has not walked away from that position since. The Business Council of Australia has indicated to me directly that it is supportive of traineeships, and we expect that the companies of the Business Council will be heavily involved in the development of traineeships in the future. There are many aspects of this process which are being put in place. I should also mention that it is a training scheme, for which we must put together a substantial training arrangement. We are not talking about just setting up some simplistic training arrangement whereby we simply pick up what exists at present and say `We shall now call that training', and propose a training wage; we are talking about substantial structured training off the job and on the job, and that means that we have to have an agreed training package. We have to have the training authorities, the unions and the employers agreeing on the detail of the training that goes with those training packages. We have to have the tertiary and further education institutions and the industrial parties agreeing on the training that goes into the training off the job. All of the putting together of those training arrangements is a complex, time-consuming task; but it is all going along apace, and there is no reason to believe that it will not be in place in time for 10,000 traineeships to be in place in the course of 1985-86. We believe that traineeships will be a very strong feature of this economy in the next few years. The development of traineeships alone will mean that in the course of the next few years we shall halve the unemployment rate for 16- and 17-year-olds, and, of course, that is because many of the traineeships will involve additionality-more employment or more training than would otherwise have been the case. So in that respect it is important. But it is also important, I stress, that it is not just a question of more jobs and not just a question of less unemployment. It is also very much a question of much better employment because of young people being able to receive training and to go into better jobs than would have been the case otherwise. To conduct the debate on the basis of its just being a matter to reduce unemployment levels is a misconception of what this is about. It is a dual task: To reduce youth unemployment, certainly, and importantly; but also to make youth employment more interesting and more worthwhile, to develop better careers for young people, to provide a more skilled work force for this nation, and to provide, in the long term, an upgrading of our absolutely number one resource, in a country which has always regarded itself as resource rich: Our human resources. This Government intends to put all its efforts into improving our human resources and the capacity of our young people to produce and to contribute to this nation. We can do that through the system of traineeships which, along with the other aspects of Priority One: Young Australia, will make a massive contribution to the Welfare of the young people of Australia. Mr McGAURAN(Gippsland)(3.27) —There would be few, if any, members of this Parliament who would disagree that it is quite impossible to overstate the importance of finding solutions for youth unemployment, but no amount of glib assurances or marketed hype can disguise this Government's abject failure in tackling the problem. The Opposition would not have expected all the problems to have been solved, even though the Australian Labor Party has been in government for almost three years. But we would, as would all Australians, especially those young unemployed and their families, rightly have expected the task to have been started and well under way by now. Sadly, there is precious little to show for three years in office. The self-proclaimed standard-bearers for the disadvantaged and the unemployed have been revealed to be the preservers of privilege and elitism. In its sycophantic kowtowing to the Australian Council of Trade Unions, this Labor Government has institutionalised youth unemployment. In the process of institutionalising youth unemployment, it has sentenced a large part of the present young generation to a future without hope, without self-respect, without security, and without material well-being. Make no mistake: Every apologist for the labour system in this country is equally culpable with a sickeningly cynical ACTU. On a recent parliamentary visit overseas, I looked at youth unemployment in Europe and America. Whichever way one turns and however hard one tries to run away from it, one will always return to the centralised wage fixing system and rigid labour market as the root causes of youth unemployment. What is more, the Government and the ACTU know it. It is not enough that the protectors of privilege keep 6 1/2 per cent of adults out of work; they also must keep 21 per cent of the 15 to 19-year-old group on the dole queues. The ACTU is bigoted, selfish, self-serving and better suited to running a New York mafia operation than it is to representing the true interests of Australian workers. The Government is no less responsible for the state of youth unemployment in our country. It has deregulated the financial market and practically every primary industry, yet it callously abandons the young unemployed by refusing to budge at all on the need to deregulate the uncompetitive and uneconomic labour system. In this light Priority One is a gimmick. More than that, it is an expensive and cynical gimmick. The Government has promised that, by 30 June 1986, 10,000 school leavers aged between 16 and 17 will be offered traineeships. These traineeships are said to provide the young unemployed with work based experience and training as well as broad-based off the job training over at least 12 months. Furthermore, the trainees will receive a negotiated wage. Conceptually I agree with that approach which, firstly, combines work experience and off work training-no argument. Secondly, it creates jobs in the private sector rather than the public sector-no argument. But from there on in Priority One becomes a shambles. The union movement is deliberately sabotaging the program and is getting away with it through a combination of unpreparedness and vacillation on the part of the Government. One need look only at the comments of the Federal Secretary of the 160,000-strong Shop, Distributive and Allied Employees Association, Mr Jim Maher. He has described Priority One as `a cock-eyed scheme'. He goes further than that. He goes on to describe it as `totally impractical, ill-conceived and nothing more than a bureaucratic bungle'. The Minister for Employment and Industrial Relations (Mr Willis) sought to wave away this criticism by describing it as something akin to an ambit claim. I do not know whether that is a reflection of his naivete or a reflection of the cynicism of Mr Jim Maher that he would play politics in such a cynical fashion with the futures of the young unemployed. There are further senior members of trade unions upon which the success or otherwise of Priority One will depend who categorically reject Priority One. For instance, the Federal Secretary of the Australian Public Service Association, Mr Paul Wright, describes himself as having severe worries about how the scheme will work. Moreover, the Federal Secretary of the Australian Bank Employees Union, Mr Len Hingley, has said that there are fundamental issues of difference on just how Priority One will be, firstly, implemented and, secondly, administered. Sadly, one of the major architects of the Government's policies on youth unemployment has himself categorically rejected the direction in which Priority One is heading. That is Mr Peter Kirby whom the Minister, in his address to the Parliament, cited as one of the major authorities for introducing a program of traineeships. I hasten to add that we support the concept of traineeships centred around the private sector. Mr Peter Kirby has expressed profound pessimism about the chance of the program's success and has said: We've reached the point where divisions are so great, particularly among the unions, about it. Is it any wonder that, since the announcement of Priority One by the Prime Minister (Mr Hawke) on 18 August, there has really been only one agreement-that of Ansett Airlines of Australia which has allowed trainees to commence? The Minister has told the House that the agreement of the Confederation of Australian Industry, the Business Council of Australia and several other employer groups, together with qualified support from the State governments, has been obtained. Why is it that probably the most important component, that being the trade union movement, stands aside? The reason is, of course, that it seeks to protect the privileged position that it has found itself in under this Government. Firstly, it has a fear of lowering wages, rates and conditions of work. Secondly, it demands compulsory unionism from these trainees. The union bosses just have to face economic reality if this scheme or any other approach to solving youth unemployment is to succeed. One of the most glaring failures of Priority One, amongst many, is its inability to address any of the problems of the young unemployed in country areas. This is freely admitted by those administering Priority One, as the Minister will know. Priority One, if it does anything in the cities, will do nothing for those in the country. It does nothing to overcome the problems of distance, or the limited number of industries. Unless traineeships are directed at local government it is impossible to see how Priority One will help in any way the young unemployed in the country. Heaven knows, assistance is desperately needed following the Government's 56 per cent reduction in the participation and equity program, particularly at the technical and further education level. Where PEP was being administered by TAFE throughout country Australia the program was a substantial success. I cannot say nearly the same for PEP in secondary schools, but the Government should not have cut back on PEP in the TAFE component in the same way that it has for secondary schools. Priority One is too late in coming and tackles only one aspect of the problem. It is a complex problem, as the Minister and the honourable member for Tangney (Mr Shack) have outlined. Nobody doubts the complexity of the problem, but we do doubt this Government's resolve to tackle the problem. It does not, for instance, look at the educational aspect of traineeships properly-band-aid solutions are not nearly so important-nor is it any substitute for an integrated educational system. It does not look at the profitability of the private sector. It does not look at the closed shop labour market. It does not look at many of the attitudinal problems of both the young and the Australian community at large. The solutions will not be easily come by. Nobody doubts the enormity of the problem, but this Labor Government has not even commenced the task. Mr DAWKINS(Fremantle-Minister for Trade and Minister Assisting the Prime Minister for Youth Affairs)(3.37) —At the risk of fighting outside my league to some extent, I would like to contribute to this debate because I have never, in recent times at least, heard such a distortion of the truth and such a preparedness on the part of the Opposition to stare the facts in the face. Perhaps I should take the opportunity of welcoming back to the firing line Mr Shack since he got the sack. He has now decided to re-enter the fray. Having not been able to lay a glove on my colleague the Minister for Employment and Industrial Relations (Mr Willis) when he was shadowing him in that area, I doubt that he will have very much more success in his new capacity. I have followed his articles in the Australian, perhaps the most boring column in the Australian. Mr Halverson —You read them, though. Mr DAWKINS —I labour through them. What attracts my attention to Mr Shack's columns- Madam DEPUTY SPEAKER(Mrs Child) —Order! The Minister is getting a bit too informal. Mr DAWKINS —They are always illustrated by illustrations of the Prime Minister (Mr Hawke). He always tries to lighten his articles by sticking in a photo or a cartoon of the Prime Minister, presumably hoping that that in itself will attract the attention of the people to reading the drivel that he presents for us. In this debate we have had a most outrageous distortion of the truth. Some of those who were not around here prior to 1983 perhaps do not recall the way in which the employment market generally collapsed, particularly the employment market for those in the 15 to 19 year category. In the last year of the Fraser Government teenage unemployment rose by 49,000 or 30 per cent. In the last year of the Fraser Government 78,000 teenager jobs were lost. On the other hand, since we have been in government one in every three of the young people who were out of work now have a job, a most extraordinary turnaround in the circumstances of and the prospects for young people in Australia. Of course, that has occurred without the traineeship program which we are now intending to improve again and, beyond that, the circumstances for young people. I have listened to the honourable member for Tangney (Mr Shack) and I have read his articles. I have listened and read in vain for any suggestions as to what the Opposition-the Liberal and National parties-would do about improving the prospects for young people. The only thing we can find is that they have some attachment to the notion that if one slashes youth wages somehow, magically, jobs for young people will open up. Nobody suggests by how much one has to slash them. However, I notice that the Small Business Association suggests that youth wages should be slashed by 20 per cent. Nobody suggests by how much the employment market for young people would grow as a result of that highly discriminatory and inequitable program which would simply be an experiment with the circumstances and living standards of young people with absolutely no guarantee about the consequences. The participation rates rose when there was a compression of relativities between wages for men and wages for women. After the equal pay judgment was brought down and the disparity between the wages for men and women was reduced substantially we in fact found that more women were employed and more women, rather than fewer, entered the work force. There was no dramatic change in the relativities between junior rates and adult rates of pay when the labour market collapsed under the Fraser Government. Similarly, when there has been a dramatic turnaround in increased jobs for young people, again there has been no dramatic change in the relativities between junior and senior rates of pay. So where is this information? Where is the basis on which the Opposition can claim that young people will be sacrificed to the extent of a 20 per cent cut in their wages without the slightest suggestion that that would lead to an increase in job opportunities for them? This is simply a forlorn attachment with a piece of ideological nonsense for which there is absolutely no basis. On the other hand, the Government has decided to try to remove the barriers which prevent young people being so disadvantaged in the labour market. Some young people, of course, are confronting an unemployment rate two or three times higher than that of the rest of the community. Despite the fact that there has been a dramatic reduction in unemployment rates for young people, they still confront an unemployment rate which we recognise is in excess of that confronted by the rest of the population. The reasons for that, as presented by Kirby and as presented by the Organisation for Economic Co-operation and Development, are simply not related to some simplistic notion of how one thinks the labour market ought to work. Clearly, they are related to the disadvantage that young people confront in trying to compete for wages with those who have experience and those who have qualifications. Therefore, we have decided to adopt the recommendations of the OECD committee and increase the opportunities for people to remain at school and to go on to universities and colleges. We have done that in a couple of ways. We are increasing the amounts paid to students, whether they be in secondary schools or in tertiary education, so that there will be a linkage and an equality in the amount that people of any particular age receive in respect of education or unemployment. That is the most significant change in terms of improving the choices available to young people, particularly those people who come from poorer families. We make no apologies for that because over the years participation in education has been very much reserved for those people who come from more privileged backgrounds. If one looks at the composition of students in the senior levels of secondary schools, if one looks at the composition of those in universities and colleges, one finds overwhelmingly that they are disproportionately the sons and daughters of the wealthier families in the country. The students totally unrepresented are those whose parents are prevented as a result of financial incapacity to support their children at school, university or college. This major reform will make a substantial contribution to improving the opportunities for young people to remain at school and go on to tertiary education. We recognise, of course, that this program will place greater demands on places in education and on curriculum. We are encouraging both curriculum reform and the extension of opportunities in that area. We are also increasing the number of places available for young people in universities and colleges. We expect the States to do the same in secondary and technical and further education. It does not stop there. The Minister for Employment and Industrial Relations has eloquently spelt out the traineeship program which will be in place despite the attempts to sabotage it, particularly by the Opposition which, after seven years of barren contribution to this area, is now deciding to snipe and try to destroy this important initiative just a couple of months after its announcement. This will be the most substantial contribution that we have ever seen in this country to improving the chances of young people, 16 and 17 years of age, not only getting into the work force but also remaining there. The Opposition could at least join with the Government and encourage the success of this very important program. When one bears in mind that something like 40,000 apprenticeships are available each year, the fact that we are to move to an admittedly ambitious target of 70,000 traineeships a year recognises that a very substantial additional range of opportunities will be available to young people. Perhaps one of the most discreditable contributions that the honourable member for Tangney made today was to draw attention to the appointment of Mr Steedman as a consultant to me in this area. One perhaps has forgotten that the honourable member for Tangney, after losing his seat in 1983, joined the staff of the then Leader of the Opposition. Who did he think was paying for that? Certainly not himself and certainly not the then Leader of the Opposition. It was, in fact, the taxpayer. Madam DEPUTY SPEAKER(Mrs Child) —Order! The Minister's time has expired. The discussion has concluded. Consideration resumed from 10 October. Mr BARRY JONES(Lalor-Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(3.48) —I move: That the Bill be now read a second time. This Bill proposes new bounty assistance arrangements for the metal working machine tools industry in Australia for a period of six years from 1 July 1985. The new arrangements have been determined by the Government following consideration of the Industries Assistance Commission report on metal working machine tools and robots. The previous bounty scheme which expired on 30 June 1985 accorded assistance at a rate of 33 1/3 per cent of the Australian factory cost of power operated metal working machine tools if the tools had a minimum of 55 per cent local content. Assistance with design was also provided by way of an additional 25 per cent bounty on Australian design costs. The Government has accepted the IAC's major recommendations that bounty assistance for machine tools be continued and the basis on which the bounty is calculated be altered from Australian content to a value added principle. The proposed new arrangements do, however, incorporate a number of changes not recommended by the IAC. The major changes are: Different rates of bounty for producers of high and low technology machines; An extension of the bounty to exports of high technology machines; The value added calculation to be based on factory cost rather than selling price; An extension of the bounty to machines such as computer controlled flame and laser cutting machines, flexible manufacturing cells and systems and programmable control panels; and payment of bounty on machine modification and retrofitting activity. Under the scheme high technology machines, such as numeric controlled and computer numeric controlled metal working machine tools; robots; flame and laser cutting machines and their parts; flexible manufacturing cells and systems; and programmable control panels, will receive bounty at a rate of 40 per cent of value added as at 1 July 1985, phasing to 35 per cent after one year. Production of robots to 30 June 1985 has been assisted by duties ranging from free to 30 per cent, although in practice most imports have entered under by-law at 2 per cent because of limited Australian production activity. Low technology machines-that is, machine tools with standard controls-parts and accessories for use as original equipment in the production of all bountiable machine tools; and machine modification or retrofitting activities will become bountiable at 30 per cent of value added, reducing to 25 per cent after one year. Production of hand and foot operated machines has been, and will continue to be, assisted by a tariff of 25 per cent instead of being included in the bounty scheme. For bounty eligibility purposes, there will be a requirement for the value added by a manufacturer to be at least 20 per cent of total factory cost and, in the case of modifications and retrofitting, the bounty will not be payable where the cost per machine is less than $20,000. Provision of assistance by way of bounty rather than tariff is designed to ensure that the costs of completed machines to user industries will remain at world price levels. Preliminary results of a survey, undertaken by the Department and the Metal Trades Industry Association, on the age of machines in Australian industry, support the view that Australian users have old and aging machines. Maintenance of prices at world levels is therefore considered essential to the facilitation of modernisation in these industries. The Australian metal working machine tools industry currently consists largely of producers of low technology machines or machines with standard rather than computer controls. Of the 120 bounty recipients in 1983-84 only about 20 could be described as producing `advanced technology machines'. Sales by these companies, however, accounted for nearly half of total sales of all bounty recipients. Sales have suffered in the general downturn in the metal trades industry in recent years and from increasing import competition. The number of advanced technology machines produced in Australia is, however, growing. The differential rate of bounty for producers of high and low technology machines is aimed at encouraging Australian machine builders to move into the production of the higher technology machines, in line with world trends and the Government's overall objective of encouraging the modernisation of Australian manufacturing industry. The proposed level of bounty to be accorded production of lower technology machines represents an overall reduction of 25 per cent over 12 months of the level previously accorded and is approximately equivalent to the average level of manufacturing industry assistance. This reduction in assistance, coupled with the higher bounty rate for high technology machines, is expected to result in a move to the production of more competitive advanced technology machines. The Australian robot industry consists of a small number of manufacturers producing largely simple pick and place machines. This industry is continuing to expand with a growing trend toward production of more sophisticated machines and the proposed bounty will provide a valuable incentive to the industry's further development. The Australian Science and Technology Council-ASTEC-in its 1982 report on robots recommended bounty assistance as the most appropriate method of developing an Australian robot industry. As requested by the Government, the IAC took the Council's report into account during its inquiry. The Government's decision to accord assistance to robots at the same rate as that accorded the high technology machine tools is based on the close interrelationship of the two industries and their common market. When I say `common market', of course, I do not mean the European Economic Community. Different rates of assistance could lead to a distortion in the allocation of resources and an unbalanced development between the two sectors. Extension of the bounty to exports of high technology machines, including robots, will provide further encouragement to move into production of more sophisticated machines. Access to the world market is necessary if companies are to recover the high costs involved in investing in the design and development of high technology machines, and to remain competitive in the long term. The IAC recommended that bounty be paid on the difference between ex-factory selling price and the cost of bought in materials. Several problems were seen with this basis of calculation including manipulation of prices and trade-in values and determining the `true' selling price of machines produced for in-house use. If calculated on the basis of selling price, bounty would also be paid on the profit element. Should prices fall, this could lead to a reduction in assistance at the time when manufacturers most needed help. To avoid these difficulties it is proposed that in-house value added be based on total cost to make or factory cost, including attributable design, administrative and software costs. The extension of bounty assistance to computer controlled flame and laser cutting machines, flexible manufacturing cells and systems and programmable control panels, which were not covered by the IAC recommendations, is considered essential if rational development of the industry, in line with world trends, is to be encouraged. To exclude these machines from bounty assistance could lead to distortion in resource allocation within the industry and hamper future development. It is proposed that any existing import duties on these machines will be reduced to or be maintained at minimum rates, as with bountiable machine tools. Payment of bounty on machine modification and retrofitting activities will provide a valuable incentive to modernisation where modification to existing machines is a more viable option than investment in all new equipment. Development of a robot industry and a modern and viable metal working machine tools industry is vital for a healthy manufacturing sector. These industries are sources of new technology and processes for the wider manufacturing sector and represent training ground for and a reservior of vital engineering, metal working and software skills. To lose this capability would mean the loss of a vital ingredient in maintaining technologically advanced industries. The importance of new technology in the future of the metal trades industry was emphasised by ASTEC in its report released earlier this year on `Computer Related Technologies in the Metal Trades Industry'. In that report the Council stated, inter alia: New technologies have a major role to play in solving problems of the metal trades industry. They offer opportunities to moderate the effect of high labour materials and inventory costs, the problems arising from small and fragmented markets, inadequate quality assurance and the inability to respond to new challenges. The proposed new bounty arrangements scheme seeks to encourage the development of advanced, competitive metal working machine tools and robots industries and the modernisation of user manufacturing firms in related metal trades industries. The manufacturing processes of our major competitors incorporate a high degree of factory automation. If Australian industry is to remain competitive-or, indeed, become competitive-it must therefore adopt the latest appropriate technologies and integrate them into its production processes. Trends and developments in the production of robots and metal working machine tools domestically and world wide point to the growing importance of programmable computer controlled machine tools and computer integrated manufacturing systems in manufacturing industry. The adoption of technologies such as flexible manufacturing cells and systems which incorporate such machines into a reprogrammable manufacturing setup offers a real chance to overcome traditional problems of a small domestic market. The proposed new bounty also meets defence requirements for the best possible population of machine tools and the retention of design and development skills to enable the modification and adoption of machines for defence purposes at times of contingencies. Unlike the IAC recommendations, which provided no specific assistance or encouragement to the development of defence significant high technology machines, under the proposed scheme only activities of technology and defence significance will receive the higher rate of bounty. The pace of technological development in the field of industrial automation requires that the assistance arrangements be flexible enough to incorporate new machines and technologies as they arise during the life of the scheme. Inappropriate coverage or assistance would lead to unbalanced development of the industry and could perpetuate inefficient industry structures. The Bill, therefore, makes provision at clauses 6, 7, 8 and 9 for the Minister to vary the classes of equipment and other aspects of the bounty including the amount of bounty in light of industry developments and without further reference to the Industries Assistance Commission. Additionally clause 28 includes a provision for the introduction of registration criteria to be complied with by bounty recipients for the purposes of registration should this be deemed necessary. Ministerial declarations made for the purposes of clauses 6, 7 and 8 of the Bill are subject to the normal disallowance procedure. The Department of Industry, Technology and Commerce will monitor developments in the industry during the bounty period and a complete review of the scheme will be conducted by the IAC prior to the end of the six-year period. I mentioned earlier one aspect of the ASTEC report into computer related technologies in the metal trades industry. That report went on to say: The main task before Government is to ensure that the environment imposes a steady pressure for change to more competitive structures, while at the same time providing forms of support which enable potentially successful firms to adapt rather than fail. In framing this bounty scheme the Government has been conscious of the need to provide an environment conducive to change whilst at the same time providing a level of assistance which will cushion the effects of structural adjustment. The Government believes that the new bounty will encourage the development of a modern competitive metal working machine tools industry, facilitate development of an Australian robot industry and assist modernisation of user industries. The monitoring, review, and from time to time variation of the scheme, is directed at ensuring that the assistance remains up to date with technological and other developments. Finally, the Government is satisfied that the scheme proposed by this Bill will provide a policy environment which will encourage health and efficiency in a sector vital to Australia's manufacturing industry. Financial Impact Statement The Government proposes to limit expenditure under the bounty scheme to $16m in the first year of operation from 1 July 1985 to 30 June 1986 and $14m in each of years two and three. A proportion of the $16m allocation in year one will be expended to meet payments outstanding from the previous bounty scheme. I commend this Bill to the House. Debate (on motion by Mr Moore) adjourned. Consideration resumed from 10 October. Mr BARRY JONES(Lalor-Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(4.04) —I move: That the Bill be now read a second time. This Bill proposes to continue the bounty assistance for certain agricultural tractors and tractor cabs until 31 December 1992, and extend the bounty arrangements to original equipment parts and accessories for tractors. The proposed new assistance for the local tractor industry in this Bill replaces the temporary measures under the Bounty (Agricultural Tractors) Act 1966 and the Bounty (Tractor Cabs) Act 1983, which were in place from mid-1983 until 30 June 1985. That temporary assistance, which took the form of a doubling of the then existing rates of bounty for tractors and a temporary bounty on cabs fitted to imported tractors, was designed to enable the local producers of tractors and cabs to meet severe import competition until a report from the Industries Assistance Commission-IAC-could be made. The new bounty arrangements for the local tractor industry which are included in this single piece of legislation provide for a bounty on tractors having a nominal engine power of 15 kilowatts and above and on tractor cabs to be paid at the rate of 40 per cent of the value added by the manufacturers for the period from 1 July 1985 for one year, reducing to 35 per cent in the next year and to 25 per cent thereafter for the life of the new scheme. The rate of bounty on parts and accessories for tractors is to be paid at the rate of 25 per cent for the period of the scheme. For bounty eligibility purposes, a threshold will apply whereby bounty will be payable only if the value added equals at least 20 per cent of the factory cost of the manufacturer. The Australian tractor industry has experienced severe difficulties in recent years. Drought conditions reduced demand for tractors and, at the same time, local producers were faced with increased competition from imports as overseas manufacturers sought to maintain sales volume in a declining world market. Although the easing of the drought was followed by increased tractor sales, local producers continue to face difficult conditions due to oversupplied world markets, falling commodity prices and increased costs. In its report the IAC found that local tractor producers had lost market share, the market being substantially supplied by imports, and that employment in the industry had declined considerably, particularly following the closure in Australia of International Harvester Australia Limited's production facilities. The Commission also found that local manufacturers of cabs and parts had been affected adversely by a trend to import fully built-up tractors. The level of bounty applicable under the Bounty (Agricultural Tractors) Act 1966 varied with the power rating of the tractor and with local content. The IAC concluded that continuation of bounty assistance was justified but that a change was desirable because the previous arrangements had provided an unpredictable level of assistance due to vagaries in the scheme and they discriminated against the small producers of very large tractors as a result of the ceiling on bounty for tractors of 150kW and above. The import price index used to adjust periodically the rates of bounty for tractors was not, as far as the Commission could ascertain, accurately reflecting movements in the prices of imported tractors, resulting in an erosion of the effective rate of the basic bounty assistance-a situation which, it was anticipated, would deteriorate. The Commission favoured a new bounty scheme which would provide a relatively stable level of assistance over time and would be more uniform in its impact on different activities in the tractor industry. It also proposed an effective level of assistance of around 15 to 20 per cent in line with that accorded similar production activities. To achieve these objectives the IAC recommended a bounty based on the value added by producers, which offered a solution to the two main problems of the existing scheme-how to adjust payments to account for changes in tractor prices and how to vary payments according to the existing mix of tractor types and tractor prices. Such a bounty could also support directly, at known levels, the production of eligible components. The Commission recommended a bounty of 25 per cent of in-house value added, from the date of implementation until the end of 1990. It also recommended that an eligibility threshold for bounty purposes should be adopted, suggesting that it be set as a minimum value added of 20 per cent of factory cost. Before making a decision on the IAC's recommendations the Government had discussions with interested parties on the long term future of the industry. In the light of those discussions the Government decided that assistance for local production of tractors and cabs should be phased down over two years from the temporary assistance levels to a long term bounty rate of 25 per cent of value added. This will, in the Government's view, enable the local industry to complete its restructuring satisfactorily, to become more competitive, and to achieve and maintain an economically viable structure in the longer term. Additionally, and for the first time, it is proposed that direct bounty assistance will be paid to producers of parts and accessories for tractors at the rate of 25 per cent from 1 July 1985. To provide a stable assistance environment and give the local tractor industry the necessary degree of confidence to plan its future, the Government has also decided that the new assistance arrangements will remain in force until 31 December 1992. The arrangements will, however, be reviewed by the IAC before the end of this period. The Bill before the House includes provisions to promote the orderly development of the local tractor industry and to avoid fragmentation of production. The registration provisions require that any applicants for registration that were not in production of bountiable goods on 6 June 1985-the day the proposed new scheme was announced-will be able to obtain registration only if, in the opinion of the Minister for Industry, Technology and Commerce, such registration would permit the orderly development of the industry in Australia. A number of administrative provisions and definitions in the Bill have been modelled on similar provisions in recent bounty Acts. The Government expects the new assistance arrangements to result in major improvements in the competitiveness of the local tractor industry which should strengthen its position in the domestic market and enhance its opportunities for improving export performance. Financial Impact Statement It is estimated that the new arrangements will cost approximately $8m in 1985-86, reducing subsequently to an average of about $6m per annum when the phasing is completed. I commend the Bill to the House. Debate (on motion by Mr Moore) adjourned. Debate resumed from 18 September, on motion by Mr Barry Jones: That the Bill be now read a second time. Mr DEPUTY SPEAKER(Mr Millar) —I understand that it is the wish of the House to debate the Bounty (Commercial Motor Vehicles) Amendment Bill (No. 2) 1985 concurrently with the Bounty (Metal Working Machines and Robots) Bill 1985 and the Bounty (Agricultural Tractors and Equipment) Bill 1985. There being no objection, the Chair will allow that course to be followed. Mr MOORE(Ryan)(4.11) —The Bounty (Commercial Motor Vehicles) Amendment Bill (No. 2) 1985, the Bounty (Metal Working Machines and Robots) Bill 1985 and the Bounty (Agricultural Tractors and Equipment) Bill 1985 are being debated cognately. The first two Bills provide for the payment of bounties and the third Bill provides for the phased removal of bounties. The Bounty (Commerical Motor Vehicles) Amendment Bill (No. 2) provides for the phased withdrawal of the bounty over a three-year period commencing on 1 January 1986. This bounty is payable on a narrow range of components used in the assembly and manufacture of heavy commercial vehicles, that is, vehicles with a gross weight of 2.72 tonnes or greater. This Bill forms part of the Government's decision on the heavy commercial vehicle industry. The package of assistance measures, which is outlined in the second reading speech of the Minister for Science (Mr Barry Jones), provides for a reduction in the overall level of assistance granted to the industry. The Government's decision to remove the bounty on certain components and replace it with a tariff will greatly reduce the very disparate nature of assistance previously accorded the industry. The Industries Assistance Commission estimated effective assistance to range from negative percentages to 100 per cent. The phased imposition of a 25 per cent tariff, fully effective on 1 June 1989, on the currently bountiable components will raise prices of domestically produced or assembled vehicles but the reduction in tariffs on CBU vehicles will result in slightly cheaper imported vehicles. The industry in Australia principally imports CBU and CAB chassis and the vehicle body and trailer section of the industry then manufactures bodies depending on the requirements of the user. This industry is badly fragmented and is comprised primarily of assemblers of imported vehicles. The industry produces about 15,000 units per year by about 15 assemblers. There is one manufacturer who virtually custom builds each vehicle. The majority of assemblers are subsidiaries of overseas companies and assemble, in the broad, imported completely knocked down kits or CKDs. One interesting element of the Government's decision is the referral to the Automotive Industry Authority of what components, if any, would be competitive with imports at the general rate of duty. This part of the Government's package is somewhat confusing and I seek clarification from the Minister on precisely what the Authority will be doing. The bounty applicable to the agricultural equipment industry is an increase in assistance to that industry. The new bounty, to be paid at a rate of 40 per cent of value added for one year, 35 per cent for the following year and 25 per cent for the remaining years till the end of 1992, is effective from June 1985. This industry is now comprised of one volume producer, Chamberlain John Deere Pty Ltd, and a number of smaller manufacturers, some of whom produce very large tractors but principally Waltanna and Acremaster. Bounty has been payable to this industry since 1922. It was one of the first industries to be reviewed by the predecessor of the IAC, the Tariff Board. Since 1922 the principal recipients of this bounty have been Chamberlain John Deere and International Harvester Australia Ltd, which ceased manufacturing operations in 1982. Despite the dominance of these two companies, a number of new entrants have come into the industry in recent years. These new entrants have mainly been producers of very large tractors in small numbers. These producers of very large tractors have received little, if any, bounty assistance under the previous arrangements. Under the new arrangements all manufacturers of tractors of more than 15kw will be eligible for bounty provided they meet the necessary local content requirements. Producers of tractors of less than 15kw will continue to be assisted by a tariff of 25 per cent. For the past couple of years the agricultural tractor industry has been subject to temporary assistance over and above its long term assistance. This temporary assistance, together with the long term assistance, has resulted in high levels of effective assistance which is estimated by the IAC to be of the order of 48 per cent. The previous long term arrangements provided for assistance at a rate of 15 per cent. The proposal currently before the House is for substantially increased assistance to be provided in the first two years of the period covered by the legislation. Additionally, the bounty is to run for two years longer than that recommended by the IAC. The Opposition has real reservations about the additional two years and the greatly increased assistance for the first two years of the program. It appears that this two-year additional assistance is a continuation of the special temporary assistance received by the industry since June 1983. As a consequence, I will be moving amendments during the Committee stage to reduce the period of assistance to that recommended by the IAC and to reduce the rate of bounty to 25 per cent, also recommended by the IAC. The bounty rate of 25 per cent is an increase in assistance and will provide assistance generally of about 20 per cent in effective rate terms. This is a level similar to that accorded to manufacturing processes which are similar to tractor production. The main producer, in volume terms, in the local industry, Chamberlain John Deere, has had a number of years of loss-making on its tractor operations. This information is available from perusing the various IAC reports on the industry over the past eight years or so. In some years since the mid-1970s Chamberlain John Deere has made profits only as a result of the provision of bounties. The Opposition is concerned that, despite increased levels of assistance, the major volume producer may not have a viable tractor manufacturing operation at the end of this current program of assistance. The third Bill under consideration is the Bounty (Metal Working Machines and Robots) Bounty Bill. This piece of legislation proposes to pay bounty for a six-year period to producers of specified low and high technology equipment. The bounty will be payable to manufacturers of standard or low technology metal working machine tools at a rate of 30 per cent value added for one year and 25 per cent for the remaining five years. Bounty will be payable at a rate of 40 per cent value added for one year and 35 per cent for five years for the manufacture of high technology metal working machine tools. These tools include numerical controlled and computer numerical controlled machines, robots, flexible manufacturing cells and flexible manufacturing systems. This split bounty rate is a novel method of providing government assistance-one of three novel items in this Bill. The split rate bounty is designed to encourage the production of more advanced machine tools which improve quality, lower production costs and improve competitiveness. The IAC recommended different rates of bounty for metal working machine tools and robots, with robots accorded the lower rate. The Government has seen fit to alter this. Two other novel aspects of this legislation are worthy of note. The Minister has the power to vary the bounty rates and the product classifications without first receiving a report from the IAC. Section 23 (4) of the IAC Act requires that a reference be forwarded to the Commission and a report sent to government before duty or bounty rates are varied. The Government's desire to see Australian industry develop its technological base more thoroughly has resulted in the Minister wishing to be able to vary the bounty rates especially for high technology goods without the time consuming need to have an IAC inquiry. The Opposition has reservations about these novel approaches. We would not like to see them become a standard provision in these types of Bills. I am pleased to note that any variations are subject to parliamentary disallowance. I give notice to the Government that the Opposition will carefully scrutinise any such variations and would anticipate an adequate explanation for any changes the Government makes. This industry plays an important role in the defence capability of the nation. The submission of the Department of Defence to the IAC inquiry stated in brief that it was imperative for the future capability of the Defence Force that at least a nucleus of a metal working machine tools industry be maintained. In supporting this Bill the Opposition has paid particular attention to the views of the Defence Department. Australian industry already accounts for about 70 per cent of the repair and maintenance requirements of the Defence Force but only about 30 per cent of the capital equipment needs. The Cooksey report commissioned by the Minister into various aspects of the defence industry will be of special interest when it is released in the next few months. Before concluding it is important to note that the Opposition does believe Australian industry can be competitive, that it can be more outward looking and export oriented, and that it can develop new processes and new products. These beliefs will be achieved provided the competitive environment within which industry operates is not overly burdened by regulation, government taxes and charges, and the abuse of monopoly power by certain groups in the economy. The Bills before the House do not in any way seek to alleviate the fundamental burdens imposed on industry. The Government has been singularly successful at imposing more and more burdens on industry. I refer, firstly, to the prices and incomes accord mark II and its associated costs via partial discounting and productivity claims; secondly, the Government sanctioned inflexibility of the labour market which condones substantially increased on-costs; thirdly, the new tax package with its increased company tax, capital gains tax and fringe benefits tax-all of which are an unwarranted attack on Australian industry; and fourthly, the increase in government charges on a series of services, including electricity and shipping costs. Despite the Goverment's abject failure to grasp any of these nettles, there are a number of firms and companies which are successful and which are exporting products overseas. One small manufacturer of very large tractors has grown without bounty assistance and is actively seeking overseas markets with enthusiasm. This company has displayed the change in attitude that will be required across a broad spectrum of industry if Australia is to climb out of the balance of payments disaster it is currently experiencing. The Opposition will support these Bills but the Government must make a concerted move to remove the many barriers that are hindering industry's drive to become more competitive. Mr CHYNOWETH(Dunkley)(4.24) —In rising to speak in this debate on the Bounty (Commercial Motor Vehicles) Amendment Bill (No. 2) and cognate Bills, I shall direct my remarks to the Bounty (Metal Working Machines and Robots) Bill. As a turner and fitter and a member of the Australian Robot Association Inc., these Bills are of particular interest to me. I have been a turner and fitter all my working life, except for a few periods when I changed occupation. I have also been a member of the Australian Robot Association since its inception some years ago. About two weeks ago I spoke to Sir Laurence Hartnett. I am sure many members of this place are aware that he was one of the founders of Australian industry. I discussed with him briefly his book, Big Wheels and Little Wheels, which is about one man's struggle to get Australia's secondary industry moving about 40 years ago. One section of this book mentioned the war effort and the importance of machine tools and how he had tried to make certain that Australia had its own industry. As a turner and fitter, I can only reiterate that Australia must have a machine tool industry; one that is modern, one that has innovative ideas and puts them into practical application and one that can compete on the world market. Our society as we know it today would not have eventuated but for the advent of machines capable of manufacturing items of precision and in large quantities. Up to the present time, these machines have been operated by highly skilled craftsmen who, I must say, have been underrated by our society. I was exceptionally pleased today to hear the Special Minister of State (Mr Young) say that more practical people are required to be elected to this place. One of the first things I noticed when I came here was that the place was dominated by lawyers. We all know what lawyers are trained to do. Mr Barry Jones —And accountants. Mr CHYNOWETH —And accountants, yes. Some of them are trained to do the same thing as lawyers. Mr Downer —What are you trained to do? You are certainly not trained to talk sense. Mr CHYNOWETH —I may not be able to talk as well as the honourable member but at least what I say is practical and it does make sense when read. There is hardly a section of modern society that is not dependent on the skills of turners and fitters. Any manufactured article that can be named would have had a skilled craftsman involved in its manufacture. I believe this group of people deserves more recognition and that it should have its own professional body within its union to make certain that it gains the respect to which I feel it is entitled. Without good machine tools a good craftsman cannot produce a good article under any circumstances. Australia must design and manufacture better machine tools and tools of a greater variety. We must make certain that we are not dependent on overseas companies for these vital items. As is very well known in time of conflict the first item a country stops exporting is machine tools. We can have a viable industry here and I believe this bounty will assist those companies that are prepared to invest in our future. I would like to speak about the social implications of a machine which will undoubtedly have the greatest impact so far on living standards and society. I cannot stress enough that the robot revolution, which is just beginning, will alter the whole country's economy, its thinking towards work and its expectation as to the creation of wealth. The robot should, if established on a correct base and plan, do a great deal for society. But if it is allowed to become part of our society without proper planning it may create chaos. It will have the effect of making wealthy organisations extremely wealthy and the rest of us very poor. These machines will be able soon to work for 10c an hour. They will receive no wages, no sick pay, no insurance cover, no holiday pay, no time off, no lunch breaks and no tea breaks and, above all, they will pay no taxes. Why do I emphasise the taxes aspect? I do so because our society, as it exists today, relies on taxation to support our infrastructure. If there are not enough people working and paying taxes our whole society as we enjoy it in Australia today will collapse. Where will the money come from if our work force is replaced by robots or, as I have referred to them in the past, silicon slaves? The tax base already is diminishing. There are more and more calls on government for money. People are paying enough tax. Robots will take over many thousands of jobs very soon. Already I have suggested in a previous speech that a technology tax or a techtax should be applied to robots and the money obtained directed towards retraining those people displaced. However, another potential solution is found in a book by Mr James Albus, in which he states: One possible solution to the problem of wealth distribution in a robot economy might be to make it easy for individuals to become robot owners. If, for example, workers in industries where robots were being introduced were to be given the opportunity to purchase the robots that were to displace them and to lease those robots to their former employers, then instead of becoming unemployed, the displaced workers would become independent owner-entrepreneurs. That should appeal greatly to the Liberal Party. Mr Albus continues: Appealing as this possibility is, it suffers from the problem that it would be practical in only a few instances. It might possibly work in farm applications and perhaps to some extent in construction work. However, the structure of the working relationships in factories and offices makes it unlikely that it would work there. Such an arrangement would require an unprecedented degree of cooperation, vision, and mutual good faith between unions and management, as well as between workers and capital financing institutions. Another possibility, more amenable to manufacturing industries, would be to introduce a massive program of Employee Stock Ownership Plans . . . This would allow most of the presently employed industrial and business labor force to benefit from the robot revolution . . . Another possible solution would be to finance the development and construction of robot factories out of public money . . . and pay dividends on the profits from those investments to everyone on an equal per-capita basis. . . . . The equal distribution of wealth earned by robot labor might even lead eventually to the repeal of the graduated income tax. If robots were to provide for the basic needs of everyone, there would be no further moral justification for taxing the rich to subsidize the poor. There would be no need to penalize success and put great riches beyond the reach of all but the very few. The payment of equal dividends to all would make it possible for society, in good conscience, to reward excellence and encourage ambition. Mr Albus, in his book, then proceeds to set out a way of establishing a national fund so that all moneys raised could be distributed equally. Robot technology has the ability to eliminate poverty. The cure to poverty is simple-it is wealth. Robots have the capacity to create wealth which could be virtually unlimited. Robots will work for the cost of their purchase plus their upkeep. Each industrial robot is capable of producing approximately $30,000 a year for its owner. People owning one or two robots and receiving an income alongside that which was earned by their own labour would undoubtedly solve the economic and social pressure within our communities. People would be able to pursue whatever careers and aims they had and by doing so would enjoy a satisfying and fulfilling life. Robots will have enormous impact on our society and much more research must be done immediately with a view to their imminent and widespread introduction. I urge the Government to give these silicone slaves the attention they deserve. Mr DOWNER(Mayo)(4.34) —Although the Bounty (Commercial Motor Vehicles) Amendment Bill (No. 2) and cognate Bills before the House today are of a relatively minor nature, they reflect in a lot of ways the very great importance of industry policy to this country. From that point of view I think the Bills should be taken very seriously. In the brief time allocated to me in the debate I would like to speak on just two of the Bills: The Bounty (Metal Working Machines and Robots) Bill and the Bounty (Agricultural Tractors and Equipment) Bill. Both these Bills have one very major advantage; that is, that they are Bills which provide for a bounty rather than a tariff. In that respect they contrast with the other Bill before the House, the Bounty (Commercial Motor Vehicles) Amendment Bill (No. 2). I am, as are other members, particularly those on this side of the House, a great supporter of industry assistance through the use of the bounty, should assistance be deemed necessary at all, rather than through the method of the tariff. In particular I believe bounties minimise the cost to consumers and to the users of the imported or assisted goods. Of course, that is to the long term benefit of the competitiveness of Australian industry. Also, it minimises the burden on consumers themselves. When we talk about industrial policy we are not talking about supporting big business or vested interest groups; we are talking about providing the best deal for ordinary people who, in economic terms, are manifested in the form of consumers. Also, I support the principle of bounties over tariffs because it is a visible means of support rather than a virtually invisible means of support, as is the tariff. At least by way of visible support in the form of an allocation in the Budget we are able to see the true nature of wealth redistribution involved in this form of assistance rather than its being hidden behind the cloak of the tariff. In that respect the two Bills I address today are very positive. That is certainly not the case, as other members will pick up later-in particular the honourable member for Parkes (Mr Cobb) and the honourable member for Forde (Dr Watson)-with the Bounty (Commercial Motor Vehicles) Amendment Bill (No. 2), which is somewhat negative. As far as the Bounty (Metal Working Machines and Robots) Bill is concerned, there are a number of reasons why some degree of bounty is justified. First of all, the Industries Assistance Commission pointed out-as has been pointed out by others-that there is a defence need for some sort of Australian domestic metal-working machine industry. I am prepared to accept-I suppose more or less on face value-the arguments of the Department of Defence for Australia having at least a nucleus of such an industry. It is argued that without this bounty the industry would close down altogether. I think that that is a contention which could be debated, but for the sake of this piece of legislation and this debate I will leave it that the defence justification is perhaps a reasonable one. As far as this Bill is concerned, I also welcome the change in the bounty calculation from one based on a system of Australian content to one calculated on a value added basis. I think that is a much more sensible way of evaluating what the level of bounty should be. I point out also that this is consistent with the recommendations of the Industries Assistance Commission. Also in regard to this Bill, I welcome the extension of the bounty to exports. Of course, this was a measure taken by the Government in relation to the shipbuilding industry as well. If we are going to provide a bounty I think that bounty should be consistent right through the industry rather than being somewhat erratically applied just to domestic production. There is one other aspect of this Bill which I welcome: On low technology machinery, the bounty is reduced from 30 per cent to 25 per cent over a period of one year. In my book, any reduction in a bounty is a step in the right direction, just as any increase-which is the purpose of other pieces of legislation-is a step in precisely the wrong direction. There is one aspect of this Bill, however, which gives me some concern. That relates to the fact that the Government has opted for what one could describe as a differential bounty. In other words, the Government has provided a higher bounty for the higher end of the technology range-a bounty of 40 per cent reducing to 35 per cent over a period of a year, compared to a bounty of 30 per cent reducing to 25 per cent for the low technology end of the market. I think that the Government's decision to do this raises very basic questions about Australia's industrial policy. It raises questions about whether a government should be encouraging certain industries which it believes to have high growth prospects or whether, on the other hand, a government should adopt a neutral approach to any form of industry assistance so that the market-place itself determines whether a product is appropriate for that market place or whether the product is, in fact, unnecessary. In other words, in terms of the allocation of economic resources in the community, under that latter system it is the consumer who decides whether a particular product should be produced and sold; it is not the Government which makes that decision. What a government has to do in evaluating these sorts of questions is to weigh up the positive effects on a particular industry against the costs imposed on other industries, on consumers and on taxpayers of introducing some sort of differential bounty or assistance. I suppose it is fair to say to the Government that this is a fairly difficult judgment to make. But I would go further than that and say that from the point of view of Ministers and public servants it was a decision which was practically impossible to make. We have to ask ourselves: Does the Minister really know what are the long term prospects for a particular industry or a particular segment of an industry, or does he have no idea? It assumes that the Minister, or one could say his Department, has a very fine and detailed knowledge of future events for those particular industries. I do not believe that that is an assumption that one can reasonably make. I am not arguing that the private sector would have that fine and detailed knowledge of future events but I contend that, where people are putting forward their own money in making decisions about investment, they would do so at least with greater certainty than would, perhaps, a government when that government is, in effect, making a decision with other people's money. This policy of picking winners, which is a part of this legislation, has in the past frequently led to disappointments; yet, on the other hand, a large number of industries have been enormously successful without being given significant support by governments. The television industry was initially not supported by governments and yet the whole of television technology was developed without industry assistance policies to support it. The automobile, which of course receives widespread assistance throughout the Western world nowadays, was originally developed without the intervention or assistance of goverments. There are areas where industries have been enormously successful without industry assistance, without, if one likes, the government picking them as winners. Instead, the market-place, the ordinary consumers, have picked them as winners because they have appreciated the products that the industries have been trying to sell. As far as government support is concerned, it is hard to think of industries which have turned out to be enormously successful and which, after a period, have been able to survive without any sort of government assistance. Indeed, the reverse is very frequently the case. It is often the case that government assistance is continued in order for an industry to survive and the government becomes a captive partner in the operation of that industry. A government is unlikely to withdraw from that industry because of political pressures or because jobs may be involved. The jobs and the industry may be in a marginal electorate and for that political reason the government is not prepared to withdraw from the industry. The result is that it is not the government, the politicians or the public servants who administer the policy who are the losers; the consumers and the community as a whole are the losers. It is interesting to note in this context the judgment and the opinions of the Organisation for Economic Co-operation and Development which so often has pointed out the very great benefits of having a market oriented economy. It is certainly an organisation which has very seldom, if ever, supported the principle of governments picking winners. But I will quote from what it said in 1983 in one of its reports. It stated: In the final analysis attention should be drawn to one of the greatest comparative advantages of private initiative in the market place, namely that it has an established mechanism-loss-making-to identify and terminate failures, whereas incipient public sector failures frequently lead to an ever increasing extension of subsidies. That is what worries me about this Bill. The Government has decided to pick what it believes to be high growth and promising industries of the future without really knowing whether those industries are entirely relevant to the Australian economy or whether there will ever be strong consumer demand for their products-yet the taxpayers, rather than individual investors, are being asked to put money forward. Neither I nor the Opposition is alone in holding those views. It is interesting to see what the Prime Minister (Mr Hawke) said on 26 September 1983, which was after his succession to the position of Prime Minister. When addressing a computer conference, he said: . . . it is self-defeating if the Government is being asked to commit itself to the maintenance or the commercial utilisation of certain `key technologies'. It is neither in the community's nor the industry's interest to move down a track which locks the Government into continuing rounds of assistance aimed at ensuring the continued utilisation of technologies in circumstances where adjustment to changing technologies should be encouraged. What the Prime Minister said there seems to me to be in contrast to what his Government is proposing in this legislation. The Prime Minister was not supporting a policy of picking winners but the Minister for Science (Mr Barry Jones) has introduced a Bill which does precisely that. My final point on this Bill is that the best technology is not necessarily the newest technology. One can think of many examples where that is the case. By way of example one could ask the question whether the process of artificial insemination is best carried on-the Industries Assistance Commission points this out in its report-through a high technology method or whether from the ordinary farmer's point of view it is best carried out in what one would describe as the traditional way. Ordinary farmers with a small degree of capital available to them would clearly opt for the traditional method, rather than go for the high technology end of the market because they would have to put forward far too much capital to justify the return that they would be likely to get from high technology. That applies right across the industry spectrum. I used that example perhaps to be slightly frivolous but one could take a number of much more serious examples. For example, should we opt for solar or ethanol energy or should we continue with oil and coal? It is my view that a large amount of capital would be needed to opt for the new technology energy industries with very little return-this should be fairly obvious to members of this House-whereas if we continue with the older technologies, at least for the time being, we will get a much better economic return. For those reasons, I have very serious reservations about the differential bounty which exists in this legislation. Although I go along with the position of the Opposition in supporting the legislation, I do so with that reservation. I point out that it is a reservation shared also by the IAC which in its report did not support the provision of a differential bounty. The second Bill I want to address in the few minutes remaining is the Bounty (Agricultural Tractors and Equipment) Bill. This provides for a bounty of 45 per cent in the first year, 35 per cent in the second year and 25 per cent thereafter until 1992. The Industries Assistance Commission recommended a bounty of just 25 per cent, which I believe is perfectly adequate. For that reason I support the amendment put forward by the Opposition. I also support the Opposition's amendment that the bounty should continue only until 1990 and not until 1992. That also is consistent with the recommendations of the IAC. But we have also to ask ourselves whether this 25 per cent bounty, should the Government support our very sensible amendments, is in itself too much. I certainly believe it is a very generous bounty, particularly bearing in mind that the agricultural tractor industry has received a bounty since 1922 when, presumably, it was introduced as short term assistance in order to get the industry going. It is remarkable that that bounty is still being asked for by some people and still being introduced and supported by the Government all those years later in 1985. It just shows that once an industry is given some assistance it is just about impossible to take that assistance away-certainly it has been for this Government. Let us have a look at how effective this bounty has been. A few years ago two major companies benefited from the bounty. They were International Harvester Australia Ltd and Chamberlain John Deere Pty Ltd. I know that all members of the House will know of the sad demise of International Harvester in Australia. The bounty did not do very much to keep it in business. I suppose that we have to look at Chamberlain John Deere to see what the bounty is doing for that company. As far as I can establish-and I stand to be corrected-Chamberlain John Deere has not made a profit since 1973-74, the Australian operation being supported by its overseas operations. It has only 10 per cent of a particular segment of the market, and I point out that very recently-in the last two or three months-that company retrenched 100 of its then 600 employees. So it is not a company with a very great record; in other words it is not a company, without wishing to be too savage on it, which is producing a product that Australian farmers are crying out for because of the competitive price at which it is being sold and the high quality of that product. That product is basically being rejected by the market, yet the company is being propped up by the poor and long-suffering taxpayer. We have to ask ourselves in providing this bounty whether Chamberlain John Deere will ever succeed as an operation in Australia, indeed in Western Australia. Let me just say that that company, when asked to give a commitment that it would continue in Western Australia, did not respond to that request. One other aspect of the Bounty (Agricultural Tractors and Equipment) Bill worth raising is the fact that it provides a new bounty to small tractor manufacturers who in the past have not received the bounty. It is worth pointing out that many of those manufacturers are efficient manufacturers, producing goods that the market wants, that the farmer wants, and I think we have to ask ourselves why the Government is providing public funds to support companies which are already operating on a profitable basis. That seems to me to be a fairly extraordinary way of operating an industry policy when it can be argued that there are a whole lot of areas where government support is more needed even if they are not in manufacturing industry. In conclusion I think that the two Bills I have addressed are a little incoherent, and although some aspects of them are quite good and move in the right direction, I support the Bills with some reservation. Of course I very enthusiastically support the Opposition's foreshadowed amendments. One really has to ask whether these sorts of individual measures are addressing the very basic problems facing Australian manufacturing industry or are in fact evading those basic problems and sending good public money after bad. I fear that the real solution for manufacturing industry which is not succeeding lies much more in getting the macroeconomic policies right than in looking at ways of throwing more public money at supporting an industry which is suffering basically because the macroeconomic policies are basically wrong. After all, the Government cannot really argue with the contention that the highest real interest rates for 50 years are creating very great hardship for manufacturing industry, particularly in my State of South Australia, which will soon be casting judgment on the high interest rate policies of the Hawke and Bannon governments. One cannot really argue with the contention that full wage indexation and the inflexibility of the labour market are imposing costs on industry which are making it uncompetitive. One cannot really argue with the contention that Australia, having one of the highest rates of inflation in the OECD, is becoming increasingly uncompetitive with our major trading partners and that it is why our dollar is being marked down day in and day out. The people sitting on the other side of the House are pushing up interest rates to pay for their failure. Mr DEPUTY SPEAKER(Mr Millar) — Order! The honourable member's time has expired. Dr THEOPHANOUS(Calwell)(4.55) —I say to the honourable member for Mayo (Mr Downer) that it is about time that he grew up and started living in the real world instead of in his fantasies. I say to anyone from South Australia who just heard the speech of the honourable member for Mayo that if his policies and the policies of the honourable member for Ryan (Mr Moore) were pursued there would not be a single manufacturing industry left in South Australia. That would be the consequence of the absurdities we have heard today. We have today a statement from the Opposition saying that it would reduce protection for these major industries. Let us be blunt about it. That is what it is saying. It wants to reduce protection on these major industries at this particular time. Mind you, it has no strategy whatsoever for encouraging alternative investment. All it is saying is that it would simply throw out the moderate and sensible measures found in these bounty Bills. Is this the same Opposition which day after day raves about the current account deficit? It talks about the trade deficit. Are honourable members opposite not the people who are complaining that the difference between imports and exports is increasing? They are the same people. Now they are coming in here and saying: `Look, why should we have such a bounty on agricultural products? We should reduce that bounty; it is too much'. That is what the honourable member for Ryan says. The manufacturers of agricultural products would go to the wall. This is their idea of how to reduce imports and increase exports. It is absolute rubbish; it is nonsense. If any members of the National Party of Australia agree with this rubbish, they certainly have lost some of the traditions of the old Jack McEwen days, the great days when the Country Party knew something about what was important in terms of Australian manufacturing. Of course we have a problem in the current account and the trade deficit and therefore-- Mr Downer —The biggest problem in history. Dr THEOPHANOUS —The honourable member for Mayo would not have a clue how to solve this problem so he should just be quiet and listen to some sensible ideas. We have this problem and therefore we ought to be thinking about what we can do to replace this country's imports. The fact of the matter is that we now have the preconditions for import replacement by way of a speeding up of domestic production through the devaluation of the dollar. Mr Hawker —What about your wages policy? Dr THEOPHANOUS —The honourable member should keep quiet and listen for a moment; he might learn something about economics. All the economics he knows has been learned from one particular school which has been totally rejected overseas as not applying in any way. The only country that is pursuing his school of economics is Great Britain, and it has completely and utterly destroyed its economy. I now turn to the real issue. Because of the substantial growth achieved in the Australian economy we are sucking in imports because of increased consumer demand. That is the issue, and it has not been addressed last week or this week by the Opposition. Members of the Opposition pretend to talk about economic matters but they do not address the real issue. The real issue is that imports are being sucked in notwithstanding the devaluation. That is what we ought to be addressing. Imagine what would happen if in these circumstances we reduced protection and did not have bounties on goods competing against imports? Would the current account deficit not get worse; would the gap between imports and exports not get wider; and would the pressure on the dollar not increase? Of course they would. So the honourable member for Mayo and the honourable member for Ryan should be back to their drawing boards and think again before they put forward these nonsense proposals. I put it to them that if we were to pursue the approach they are talking about we would be in a much more serious position. If we adopted the Opposition's polices we would have much more pressure on interest rates because another of its absurd policies is to get rid of the ceiling on housing loan interest rates. That is another matter. I turn to the proposals being put forward in this bounty legislation and explain why they are sensible proposals which need to be adopted if we are to get restructuring going in this country. Mr Downer —We are not voting against them. Dr THEOPHANOUS —The honourable member's whole speech was opposed to them, but he is not voting against them. He is not voting against them because he would not be able to carry half his Party to vote against them; that is the problem. It is another example of the greatly divided Liberal and National parties. I was amazed to hear the comments of the honourable member for Mayo on the Bounty (Metal Working Machines and Robots) Bill. He asked: `How can a government pick winners? How can a government intervene by encouraging production of machine tools?'. Surely machine tools are fundamental in getting a manufacturing base going. But he was suggesting that one should not encourage such production because if production of machine tools is encouraged rather than anything else, one is picking winners, and one should not do so. The honourable member was speaking as if the production process is airy-fairy and does not involve machine tools. If manufacturing industry is to be got right the fundamental point is to ensure that capital goods, machine tools, robots and other modern technological tools are produced in Australia so that they are readily avialable here to keep industry going. It is the key to the rapid development of a large range of manufacturing industries. It is rubbish to suggest that because the Government is providing a bounty to support such industries there is something wrong and we are simply trying to pick winners rather that for the market to pick winners. Of course, we support this legislation because it is absolutely essential. If the Liberals, in government, had adopted a strategy of trying to encourage and support the machine tool industry, the position would have been different. But in the last two years of the Fraser Government the machine tool industry was virtually wiped out in this country-that is how bad it was. Now, the provisions in this legislation will support that industry. Those provisions are very important and I totally support them. Furthermore, if these provisions do not turn out to be substantial enough in expanding industries in this area, together with the effect of devaluation, we will look at the matter again and we might even bring in further proposals. We want to see manufacturing extended in this area. What about the other proposals affecting the agricultural industry? Australia is the biggest per capita user of tractors and agricultural equipment in the world. If one has such a massive base of demand, how is it that the production of tractors and equipment is virtually non-existent and as an industry has almost been wiped out? That is the legacy of the previous Government. We in Australia have both the expertise and the market to develop an agricultural equipment industry which not only could produce for our domestic needs but could export to the world. A country such as ours, which has so much research invested in agriculture, should have invested in agricultural equipment and production. We have forgone that important opportunity. These proposals introduced by the Government are intended to redress that position. With these proposals we hope to encourage new investment in agricultural equipment such as tractors, and we must develop this effort in the future. It may yet not be too late to develop in the future the production and assembly, perhaps on licence, of agricultural equipment so that we can export these items from Australia as well as use such equipment within our own regions. That should have been a legacy from the previous Government, but it did not happen. The present Government is now trying to redress that situation. I say to the Government that if these bounty proposals are insufficient, we should look at the matter again. Let us also see whether through the Australian Industry Development Corporation and through joint venture projects we can encourage investment in agricultural equipment, because it has a future. It is an area that should be stimulated by the Government. Unfortunately, because of the pressure of business facing the House, members on the Government benches are restricted in their comments. I conclude by saying that we totally reject the Opposition's approach on this legislation. The Opposition's voice is incoherent when on the one hand it complains about the balance of trade, the balance of payments and the level of imports, and on the other hand seeks to make suggestions that would not allow us to substitute import replacement industries and export oriented industries, which is the whole intention of these Bills. I commend the Bills to the House and I believe that we should do more in this area rather than less. Mr COBB(Parkes)(5.06) —I want to make some comments on all three of these bounty Bills-the Bounty (Metal Working Machines and Robots) Bill, the Bounty (Agricultural Tractors and Equipment) Bill and the Bounty (Commercial Motor Vehicles) Amendment Bill (No. 2)-on which, for some reason that escapes me, the coalition has largely decided to support the Government, the amendments notwithstanding. I believe that the level of protection being offered these industries, and in some case the form in which it is being offered, is detrimental to the Australian economy. The Bounty (Commercial Motor Vehicles) Amendment Bill is a package of revised assistance arrangements for that industry. At present the assistance given to Australian manufacturers of certain components used in the assembly of general purpose heavy commercial vehicles is a mix of both bounty and tariffs. The purpose of this Bill is to tidy this up and give only one form of assistance, namely tariffs. Bounty assistance was introduced in 1978 and was due to end of 30 June 1985. However, it has been extended to December this year. Now it is proposed that this bounty on locally produced components will gradually be phased out over three years to be replaced by a tariff on imported components, which will be eventually phased in to completely replace the bounty. Overall, the level of assistance will generally be maintained at a similar or equivalent level to what it is now. That may sound logical to some but to me it is bad for two main reasons: First, it continues the protection which originally had been due to end on 30 June this year. We in this House should be talking about lowering protection, not maintaining and prolonging it. The devaluation of 25 to 40 per cent which has taken place this year according to what currency one is looking at, provides an ideal time, if not a unique time, for this country to lower this protection. If we lowered protection where tariffs exist, protected imports would become cheaper and as a result we would have lower inflation in this country, which would help the economy all round. Also, the devaluation, which makes imports more expensive, would at the same time more than cancel out the short term effects to the component industry of the tarrif cut. Secondly, I oppose this legislation because it converts all bounties to tariffs. I believe that we should be operating the other way around and converting the tariff component to bounties. If we switch all bounties to tariffs, a number of undesirable effects will follow: Vehicles will become dearer and this will make it hard for importers in this country to survive. If the vehicles become dearer it will make it more difficult for users of such vehicles, including people in primary industry, the mining industry, the transport industry, not to mention general consumers. Further, country people will be disadvantaged compared with city people because of the nature of country industries where they tend to use these vehicles more in activities such as freight cartage. There would also be a tendency to lower quality as imports now become dearer; we would be more dependent on the local product. The cost of protection will be shifted from all Australians, as the honourable member for Mayo (Mr Downer) earlier said, to the users of these industries. I believe this is grossly unfair, particularly as the users would be the ones most against protection of these vehicles. If the Government wants to protect this industry we should all pay equally, not just an arbitrarily chosen group in the community. I believe that the overall effect of this will be negative instead of beneficial. We will have higher inflation, higher costs, fewer vehicles sold, a lower standard of living and fewer jobs. There will be fewer jobs because a trucker who buys a truck for $100,000 when the protection level is running at 100 per cent could have bought that truck for $50,000 and saved $50,000; he would have had that money left over to spend elsewhere in the community in more efficient areas. There are many other side effects. For example, overseas countries will have fewer of our dollars because we will buy less from them and, therefore, they will end up buying less from us. In other words, trade overall will suffer. A bounty is a far better way to protect industry if one wants to protect industry. Because it is more visible and must come from Budget moneys it will be subject to regular review. It is obvious that the original high protection that has been given this industry has failed miserably. I seek leave to incorporate in Hansard a table on the registration of vehicles. I have shown it to the Minister and I believe it is suitable for incorporation. Leave granted. The table read as follows- REGISTRATION (does not include unregistered vehicles in primary industry and defence) OF VEHICLES OVER 2.72 TONNES 1978 1979 1980 1981 1982 1983 Locally Assembled... 24,254 22,358 21,445 21,904 17,223 15,038 Imported... 20,247 18,634 20,137 29,436 30,722 32,426 TOTAL... 44,507 40,992 41,582 51,340 47,945 47,464 Mr COBB —I thank the House. The table clearly shows that the number of locally assembled vehicles in this country fell by 9,000-from 24,000 to 15,000-between 1978 and 1983. At the same time, the number of imported vehicles to this country rose from 20,000-odd to 32,000. In other words, imports have risen 60 per cent and locally assembled vehicles have fallen almost 40 per cent, despite the levels of protection. Likewise, we have seen employment in the assembly industry fall from 5,400 to 2,100. A total of 3,000 jobs have been lost. Overall, assemblers have been operating at a loss in this country and some have been unprofitable since 1978. The effective rate of assistance in this area is approaching 100 per cent. That is four times the average of assistance to the manufacturing industry and it is 12 times the average of assistance to the agricultural industry in this country which is really struggling these days. We do not want to be handing out more protection to the industry about which we are talking today. In simple language, this means that the transport operators and the bus drivers of this country have to pay twice the amount they should when they purchase a truck or a bus. Think what this does to business initiative, not to mention transport costs, bus fares, interest rates and a whole range of other economic factors. Mr Hunt —And our competitiveness. Mr COBB —That is right. All this occurs for the sake of propping up a few thousand jobs. The livelihoods of hundreds of thousands of people are put at risk because of this policy. Where is the compassion for these people? The madness of the high protectionists on both sides of the House who continue to vote for this policy never ceases to amaze me. Such a high level of assistance-it is approaching 100 per cent-provides an incentive for resources which might otherwise have been placed in more efficient industries to remain in vehicle assembly or component production; that is, we are only propping up the inefficient at the expense of the efficient, and at the end of the day Australia is the poorer for it. The same story of falling employment has been mirrored in the components manufacturing industry, as it has in the assembly industry. Again, the protection granted has failed to prop up this industry. It saddens me to think that in this place today we intend to vote to continue this inefficiency. In fact, we intend to vote to continue the protection in an even more inefficient form than existed before; namely, tariffs instead of bounties. This policy of protection for the industry has failed in the past. It is continuing to fail and undoubtedly it will fail in the future. The tragedy is that so many people will have to suffer from it all. I might stress that it is not just the downstream individuals-the users and their clients who suffer-it is also the people in the components and the assembly industries who suffer. Because these industries have been highly protected they become inefficient and, as a result, the world passes them by. Eventually, all this comparative inefficiency catches up with industry and the imports come in anyhow. This has certainly been the case in Australia in recent years and the trend is accelerating. I feel sorry for those who have jobs in these industries because they must have a somewhat uncertain future. I would have thought that a continuation of our present protection policies was almost the kiss of death. I now speak to the Bounty (Agricultural Tractors and Equipment) Bill. This Bill, to use the terminology of the Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce (Mr Barry Jones), in his second reading speech, seeks to extend the temporary-I stress the word `temporary'-bounty assistance on agricultural tractors, which existed from mid-1983 to mid-1985, with continuing assistance until the end of 1991. The temporary assistance, I might add, is twice the level of assistance that existed before and which goes back until 1922. Here we have the same old protection saga that has been retold in Australia hundreds of times before-assistance which eventually becomes temporary assistance at a higher level then has to be continued for several years into the future. As I have said, we have had the present bounty since 1922. I sometimes wonder why we protect the tractor manufacturing business in Australia at all. Australian farmers buy, in total, only a few thousand tractors in a year. These tractors are divided up into many different brands and each brand is further divided into a whole range of sizes and types. Obviously, it is next to impossible to get a big enough production run to achieve any sort of economy of scale necessary to get unit production costs down to competitive levels. Under these conditions, I guess our tractor manufacturers, or what is left of them, are to be marvelled at for hanging in there as well as they do. However, it is fanciful under the rigid wage fixing system with which we are burdened in Australia to think that a tractor manufacturing industry could ever exist here without some sort of permanent protection. Past governments are to be congratulated that at least the protection given to this industry is in the form of a bounty instead of a tariff. It is ironic to contemplate that if the tractor industry ever did become successful here, and we did assemble thousands of tractors, the Government would then find the cost of the bounty quite onerous and would no doubt be looking to switch the form of protection to that of a tariff. In many ways, the fact that we protect our tractor industry by way of bounty instead of tariff shows that the protection policy is a failure. Nevertheless, I believe the present Government deserves credit for intending to scale down the existing bounty level of 40 per cent to 25 per cent by 1987. This level will then continue through until 1992. That will give us 70 years of continuous tractor bounty protection in Australia. However, I do note the intention to extend the bounty to parts and accessories at a level, I believe, of 25 per cent. Whatever the merits of this move, it seems that we are about to start up yet another protected industry in Australia that somehow we managed to exist without previously. Sales of new tractors have been extremely sluggish in Australia in recent years. Drought, falling prices for farm goods sold and now devastatingly high interest rates from the present Government's policies have seen to that. On top of this, tractor prices are on the way up, because the devaluation effect of the collapsing dollar is making overseas imports more expensive. Farmers are being caught both ways. There is now the extra fear that capital gains tax will further penalise farmers who buy their tractors on lease. I give the example of a farmer who leases a tractor for, say, $100,000 over a period of four years because he cannot pay cash for it immediately. He then buys out the lease at the end of the four years for $20,000. Ten years later he may decide to trade it in. I guess that at that stage a new tractor would cost say $220,000. So if he gets a trade-in of $120,000 for the tractor it will mean that he has made, under the present legislation, a capital gain of $100,000. Goodness knows how he is expected to continue on under those sorts of rules. What I am leading up to is that if the Government's aim is to boost tractor sales, not to mention the economy, and help manufacturing employment in Australia then the best approach is not through high protection policies, which only aggravate the problem, but by sound economic management which leads to lower interest rates and the rejection of any proposed capital gains tax. Lastly, I want to speak to the Bounty (Metal Working Machines and Robots) Bill. The Bill intends to extend protection for the metal working machine tools industry in Australia from now until 1991. The Bill proposes different rates between high and low technology industries. High technology machines will attract a bounty at the rate of 40 per cent, easing to 35 per cent after one year. Low technology machines will attract bounty at a lower rate of 30 per cent which will reduce to 25 per cent after one year. Here we have another familiar situation where the Government is trying to pick winners instead of treating all metal working machines equally. This approach has been tried before and failed and it will almost certainly fail again. Just because an industry is new, or a high technology one, is no reason to give it higher protection. If anything, if it is to have a sound future, it should receive lower protection. To start an industry on high levels of protection only guarantees that inefficiencies will be built into it from the start. By doing that, the long term future of such an industry is therefore made all the more doubtful. The history of industry protection in Australia is that the higher the protection, the more inefficient the industry. It seems that because we are again ignoring the salient lesson of history we will be comdemned to repeat it. New technology industry is fast becoming another expression for the old infant industry in the Australian protection debate. Let us not vote here today to create yet another highly protected industry which is destined to decline in sales and jobs as the years roll by and as overseas countries, exposed to real world competition, outstrip us yet again. Before we vote to implement this legislation today, I urge the Government to look again at these Bills and to think again. Mr O'KEEFE(Burke)(5.21) —What a delight it was to sit here and listen to the latest extravagances of economic policy as espoused by the honourable member for Mayo (Mr Downer) and the honourable member for Parkes (Mr Cobb). I have not heard so much drivel for ages. Their new policy would fix up all our foreign exchange difficulties with fewer jobs in Australia and more imports. What sort of nonsense is that? Yet honourable members stand here and espouse it. What they are doing is in fact advocating the interests of a particular sectional group-these are very much short term interests, not long term ones-and revealing once again to me that they are totally out of touch with the group that they purport to represent. I will return to that and address it in more detail in a little while. This debate is really about the heart of the future of engineering and manufacturing in Australia. While the Bounty (Commercial Motor Vehicles) Amendment Bill and the cognate Bills deal with specific assistance measures for particular industries and components, they are part of a broader strategy which has been adopted by the Government. I make the point that decisions such as continuing the bounty assistance for certain tractors and tractor cabs and extending bounty arrangements to original equipment parts are an example of this. Why is there the need to do this? The Australian tractor industry has experienced severe difficulties in recent years. Drought conditions reduced demand for tractors and, at the same time, local producers were faced with increased competition from imports as overseas manufacturers fought to maintain sales volume in a declining world market. Although the easing of the drought, which followed the election of the Hawke Government, improved tractor sales, local producers did not benefit. This is a point that the honourable member for Parkes has failed to touch on. Let me reiterate: A very significant increase occurred in the demand for tractors with the easing of the drought, but this was not a demand for local products. Why? Because Australian farmers-the Australian rural sector-were buying imported products. That is a point I wish to return to later. Another aspect of the Bills is the proposal to provide new bounty assistance arrangements for metal working machine tools in Australia. These arrangements have been determined by the Government following the recommendations from the Industrial Assistance Commission, particularly as these referred to working machine tools and robots. The approach being taken is that because our major competitors are incorporating a high degree of automation, it is necessary for us to adopt the latest appropriate technologies and integrate them into our own production processes. It is not a process of giving up on Australian industry, as seems to be being advocated by the honourable member for Parkes; it is a process of helping Australian industry to adapt to the latest technologies and integrate them. I would hope that for many years the honourable member for Parkes will have quoted back to him his statement-and I took it down verbatim, almost as well as the Hansard reporter-that this was `all for the sake of propping up a few thousand jobs'. What an absolutely disgraceful statement for anybody to make in this House. `All for the sake of propping up a few thousand jobs'. The honourable member's Government failed to do anything about jobs; his Government put Australians on the dole queue. I hope the honourable member lives to regret that statement for the rest of his time in this House. `All for the sake of propping up a few thousand jobs'. This Government cares about a few thousand jobs. The honourable member is out of touch and he should stay out of touch. I return to the point that I was making. In the motor vehicle industry, for instance, we are putting into place a package of revised assistance arrangements for the commercial motor vehicle industry. The Government has accepted the finding of the IAC that the level of assistance accorded to vehicle assembly was too high and that it has resulted in unacceptable levels of fragmentation in the industry. We have examples here of three separate sectors of Australian industry being addressed-tractors and harvesters, metal working machines and tools and the motor vehicle industry. This is part of a general strategy. The main task before this Government is to ensure that the environment imposes a steady pressure for change to more competitive structures, while at the same time providing support which enables potentially successful firms to adapt rather than fail. That is the difference. We want to see these industries adapt, survive and succeed; not fail. I make a further point about this matter. In the tractor industry, about which there has been some discussion, the new arrangements are designed to result in major improvements in the competitiveness of the local industry, and these should strengthen its position in the domestic market and enhance its opportunities for improving its export performance. I turn to the metal industry and the latest technology machines and robots. In these Bills the Government is providing for different rates of bounty for producers of high and low technology machines. We are encouraging the development of high technology machines in Australia. That is based on a belief that assistance to robots and high technology machines at this rate is in their common interest and will lead to benefits and to new technologies playing a major role in solving the problems of the metal trades industry. We wish to offer opportunities to moderate the effect of high labour material and inventory costs, the problems arising from small and fragmented markets, the inadequate quality assurance and the inability to respond to new challenges which face the industry. I ask the question: How did our Australian industries get into this state? Those who talk about protection and tariff barriers, having had 25 years to do something about it and having built the structure that these inefficient industries have developed behind, now stand up in here and tell this Government to pull it all down. Has anyone ever heard anything like it? Pull it all down! One does not just pull it all down; one uses what this Government is using-a sticks and carrots approach. One says to industry: `Get your act into gear, but we will give you time to do it and we will assist you during the time that it takes to do it'. That is the way to approach this matter, not the way which has been espoused by the honourable member for Mayo and the honourable member for Parkes this afternoon. I refer to the change in government purchasing practices as these relate to the defence industry in particular. This Government has taken a decision that we will no longer buy our defence equipment off the shelf overseas from whoever happens to take us to the best paid lunch. Instead, we will use these purchasing opportunities to develop Australian industry. What is happening with our submarines, with the construction of the FA18 fighters in Australia and with the new trainer project that will be awarded to the Royal Australian Air Force are all examples of a constructive approach. It is not all that hard to work out, but it is one which takes some determination on the part of government to implement. If some honourable members opposite were to join me in a visit to the Government Aircraft Factories they would see the difference that has taken place-the new technology there, the new understanding, the new training and the new pride in Australia workmanship in industries that the Opposition wrote off as little as 2 1/2 years ago. We are not going to give up on Australian industry; honourable members opposite are the ones who are giving up. I also suggest that those opposite take a visit to the Ford plant in Broadmeadows, which is in my electorate, where, again, new technologies including robots and a new car assembly structure, designed specifically by Australian designers for Australian circumstances, is in operation. It is worth looking at to regain a bit of confidence in what our people can do when given a chance by government. From some of the comments that have been made by honourable members on the other side of the House, there are a lot of lessons to be learned on what they thought were relatively innocuous Bills. Honourable members opposite do not understand that these Bills fit in as part of an overall strategy which is being applied by the Government. I return to the question of the rural sector and agricultural equipment. Those who represent the rural sector have been calling very boisterously lately for a cutback in protection for Australian manufacturing industry. That is what the contributions from the other side of the House are all about. As I mentioned before, such an approach is totally short term and totally out of touch. It fails to understand that those few thousand jobs that we were talking about put money in the pockets of consumers who buy Australian agricultural products in the supermarkets. It is no accident that while we had record unemployment in Australia we also had declining revenues and returns to the Australian agricultural industry; no accident at all. Honourable members opposite ought to try to think things through a bit. Where does their policy take us? Where does the rural sector lie? How can they expect people to take them seriously if they are saying on the one hand, `Give us protection for Australia's rural sector' and, on the other hand, `Do not support anyone else in the economy'? Where do honourable members opposite think their policies lie? The rural sector does not have that approach. Opposition members are so out of touch it is unbelievable. Those in the farm sector to whom I relate are aware that they are part of a macroeconomic structure, that it all has to piece together and that this Government at least understands where it is all going. I did not intend to be as drawn as I have been in this debate. I thought discussion of these Bills would be relatively quiet, that they were relatively uncontested, as represented by the fact that the Opposition supports them. But all of a sudden honourable members opposite have flushed out the fact that they do not understand the strategy and that they have had pressure put on them by their close colleagues who have specific interests to follow. That is not what this Government is about, what our legislative program is about or what our industry support scheme is about. I very proudly commend these Bills to the House. Mr TUCKEY(O'Connor)(5.34) —We are debating cognately three separate bounty Bills, one dealing with commercial motor vehicles, another with the metal industry and the third with agricultural tractors. It so happens that the Bill dealing with agricultural tractors has a quite significant effect in my electorate. I might be able to say something about this matter to which the honourable member for Burke (Mr O'Keefe), who speaks on behalf of people with whom he obviously has no close connection, might like to listen. In this area, in which people are to be registered in future, there are four manufacturers of very large tractors, two of which operate from the town of Merredin in my electorate. They are the Acre Master Company and Farmers Tractors Australia Pty Ltd, which produces the Phoenix tractor. The other two are Waltanna Tractors, which operates in Hamilton in Victoria, and the Baldwin company, which produces tractors at Castle Hill in New South Wales. These people do not produce large quantities of tractors. In fact, the two that I represent produce by far the largest quantity-probably 100 tractors a year between them, compared to the 20-odd that the other two manufacturers manufacture. Honourable members might say that that is not many tractors, but we are talking about tractors all of which probably exceed 200 horse-power. Both Phoenix and Acre Master produce tractors with as much as 450 horsepower. They are very large machines valued at hundreds of thousands of dollars. They are in competition with the Steiger company for one, and the Versatile company for another. When we check the total international manufacturing of the last two companies, which are American companies exporting to Australia, we find that their manufacturing is only in the thousands. Economies of scale are not very notable at this end of the industry. I think all of them use things such as engines, gear boxes and transmissions from other manufacturers. They are part manufacturers, part assemblers. I am pleased to see the introduction of this assistance after a tremendous battle in this place ever since I came here, when all that the people had asked me to achieve was the removal of the 2 per cent revenue duty from their imported components. We had the most remarkable situation in which one could bring in a fully built up Steiger tractor and pay absolutely no duty at all, not even the 2 per cent, whereas local manufacturers had to pay 2 per cent on their engines, gear boxes and the other things they imported. All they wanted in order to compete with these imports was to have that 2 per cent taken off. Now we are to give them 40 per cent protection, or a bounty, in the first year on their local components. That is taking a sledge hammer to crack a nut. They did not need that much help, as they told me directly. The other big manufacturer in the smaller field of tractors is Chamberlain John Deere Pty Ltd., as it is now known, the other Western Australian manufacturer which, in my view, irrespective of the level of the duty provided, will probably have great difficulty in surviving. It is producing at the bottom end of the market. The only tractors it manufactures in Australia, although it markets a huge range, are the smaller tractors for which there is huge international competition. It will struggle. But I still welcome the fact that this will be a bounty and not a duty. A duty adds to the price to the farmer. We find that, unfortunately, in the Bill relating to commercial motor vehicles. I think it will be the farmers who suffer from that. Nevertheless, some assistance will be given to some manufacturers over a period. For those making the very large tractors economy of scale is something that is not needed. It is interesting to note that some of these people already had inquiries from overseas. They can compete on international markets. We have to be terribly careful that in granting this level of assistance we do not build in something that is not necessary. These people are operating in very simple facilities and doing the job very well. We do not want to turn them into what some other sections of industry have become. It is interesting that all the major international innovation in farm machinery has originated in Australia, and we have lost it all. It might be of some interest to those on the other side, when they tell us how these protective measures will assist, to remember that the first plank of arbitration or centralised wage fixing was the Harvester decision. At that stage we dominated the world in harvester innovation and manufacture. We suddenly decided that those who were making harvesters had to be further protected, and overnight all that innovation went overseas. Today it could be said that we do not manufacture any harvesters at all. We do; we manufacture some, but it is really not a problem. We have set out to help the tractor manufacturing industry as it exists in Australia. Recently, after going for the revenue option and putting some additional tariffs on harvesters, the Government reversed that decision in a rather unsatisfactory way. My question is: Is it all too late? These people can manufacture tractors and attract the bounty, but they have to find customers. What have honourable members opposite done to customers? What are they doing to them this week? They have imposed their notorious tax package, including a capital gains tax. We have just had that matter-- Government members-Ha, ha! Mr TUCKEY —Honourable members opposite are laughing. The fact is that orders for large plant are being cancelled at the moment because anybody who now buys a tractor will be affected by this. Someone scoffed about leasing a tractor, but practically all large agricultural plant is leased, as that is the only means of financing it. The reality of that means of financing is that, no matter who makes a trade-in on a leased piece of equipment, the residual value will be the base value. That will be 30 per cent or 40 per cent of the original purchase price. The reality of today is that for a piece of well-maintained, good quality plant owned for, say, four or five years, the trade-in value will be 80 per cent to 100 per cent of original purchase price. Farmers are just waking up to the fact that they will have to pay capital gains tax on that differential. If it is $40,000, for instance-and that is quite a typical figure-they will be taken straight into the 60c in the dollar bracket on that amount of money alone. So what are they saying? They are saying: `All right; I'll go and buy some spare parts and keep the old machine. I can't afford that'. Truck drivers are worse off, because they will be trapped by this thing and discover it later. Government members interjecting- Mr TUCKEY —Yes, honourable members can tell them to pay tax. I shall tell the House what will happen to manufacturing industry. As people discover this, they will decide not to buy, and the manufacturers of spare parts-on which the Government is also granting bounty under the Bills-may be the winners. But honourable members can take it from me that there will be a major problem. That is not all. What about the quarantining of farm losses? The very people who have money to invest in farming are being told that they cannot benefit from the depreciation on a brand new piece of machinery because it must be left on the farm; it cannot be transferred back to their cash-producing industry. So will they buy a new tractor under these new, beautiful bounty conditions? No; because they have lost the advantage which they sought. That is the price that the Government will pay for the sort of things it will do. What about the interest rates? If someone is prepared to handle all those tax problems, that is all right. Such people are confronted with an interest rate of 25 per cent. Twenty-one per cent is the norm. Treasury bills went to 19.5 per cent the other day. There were headlines in the Press saying that treasury bills had hunted bank bills off the blooming floor. One could not sell a bank bill even if one had a bank bill. That was the situation. So where will these tractors be sold with the bounty? All the customers have had to leave because they cannot afford to buy them. They cannot afford it because they have no tax breaks. They cannot afford the interest. That is the situation that the Government has created. It is time that it stopped and thought about it. Government members interjecting- Mr TUCKEY —So that honourable members can cool down for a minute, let me take them back to their Bill. There is a registration provision in clause 23, and honourable members ought to stop and think about it. It is a good news, bad news situation. The registration provision implies that there will be no new manufacturers. I think it was the honourable member for Calwell (Dr Theophanous) who said a minute ago that this was a great opportunity to expand business. But there will be new manufacturers only if the Minister says so, because they will be registered now. One advantage of that in this instance was that there was a distinct possibility that the bounty would have been paid on imported tractors, because at 20 per cent value added, that is probably the mark up; and then other goods are added. I am happy with that. However, the Government has carefully avoided that by saying, `You will get the bounty only if you are registered'. I think the Minister at the table, the Minister for Social Security (Mr Howe), would concur that the Government will not register people who put the finishing touches on large imported tractors. So, presumably, that is good. But it is not so long ago that on the Bounty (Ships) Act the Government did the same thing. A Mr Millman, a manufacturer in my electorate, had just completed a brand new building before that legislation was introduced. For 35 years he had been in the business of making smaller ships, and the new building was to enable him to start making ships of a bountiable size. The Government will not give him a licence. The man has every reason to have a licence. He has employed trade unionists; he is a great manufacturer; and he has done everything right. But the Government has locked him out. He has been refused a licence. I have raised the matter in this place before. That decision is a little silly because we need some new people in the industry. We need them in the country. Mr Millman operates in Geraldton. He is a very good operator. The Government must think twice about what it has done with clause 23. It is an excellent clause to give the Minister some discretion and to see that our bounty goes to genuine local manufacturers. I am terribly disappointed in the form of the Minister for Industry, Technology and Commerce (Senator Button) on the Bounty (Ships) Act. He has cost 23 people their jobs in Geraldton, and he has removed a competitor from the market. Mr Howe —And saved them in other States, though. Mr TUCKEY —That is fine. If the Government is prepared to keep people on the east coast in jobs at the cost of those on the west coast, I shall get Mr Burke to explain that during the next State election campaign. We shall be going after the Labor member, Jeff Carr, in Geraldton, hammer and tongs on what this Government has done to him and his constituency. I shall give the Minister's explanation to the people of Geraldton-that Jeff Carr prefers jobs to be maintained on the east coast. I am sure he will be grateful for that. We must touch on the other aspect of the meaning of this Bill and the words of people here. It is said that this legislation will solve our trade deficits-and they are disastrous. Government members know all about them: $1.1 billion a couple of months back, $1.6 billion last month, and we are running at average rates of $10 billion and $11 billion plus, which is a disaster. The Government thinks that the manufacturing sector, with this sort of assistance, will help. The Government could be right-except for one thing: It is not out talking to the manufacturers. As shadow Minister responsible for small business, I am doing that, and I will state what they are telling me. I shall be transferring information to government members with which they might save themselves. There will be no J curve effect because manufacturing industry will not rise to the bait. That is because the Australian Council of Trade Unions will not let it do that. It will not go in and spend its good money at the risk of anything up to 25 per cent in interest rates. The interest rate market is now so volatile because this Government has borrowed $20 billion. That is one reason. People have also learnt that importing is a lot less trouble. Dr Theophanous —This is not relevant to the Bills. Mr TUCKEY —This is very important. I am stating why manufacturers will not respond to the Government's bounty initiatives. They will not get into this business where the unions are running them ragged and they have to suffer feather-bedding, superannuation claims, vandalism and interest rate uncertainty. They will not make those decisions. Let me give a good example. Leighton Contractors Pty Ltd, as exporters, has recently won a contract for the Hong Kong light rail system. That is wonderful. That is not import substitution. That is an actual export. What will be the principal component of that export contract? It will be the trams. Quite clearly, the rails must be laid over there. Who will make the trams? Australia still has good technology in manufacturing trams. Government members interjecting- Mr TUCKEY —Wait a minute. The Comeng company has the ability. It is refusing at this stage to sign a contract to build the trams. Why? The day the word got out, its unions were round and put it under the hammer, and Comeng said: `Damn it. We shall not go into a deal unless these unions guarantee it'. Government members interjecting- Mr TUCKEY —I am sorry; I am just stating the facts. This is where the Government's problem lies. Honourable members laugh. It was all reported in the Press. Dr Theophanous —Have a look at the accord. Mr TUCKEY —The accord has not satisfied Comeng. It will not commit itself to an export order that is very valuable to Australia because it cannot reach agreement with its union representatives that the trams can be manufactured at a price to which it can commit itself. Government members interjecting- Mr O'Keefe —I raise a point of order, Mr Deputy Speaker. The honourable member for O'Connor should restrict himself to telling the truth. Mr DEPUTY SPEAKER(Mr Ruddock) —Order! There is no point of order. Mr TUCKEY —The honourable member can withdraw that, because it means that I am a liar. Mr Deputy Speaker, I ask that it be withdrawn. Mr DEPUTY SPEAKER —The honourable member takes offence at the remark. Is the honourable member for Burke prepared to withdraw it? Mr O'Keefe —I am certainly prepared to rephrase that, Mr Deputy Speaker. Mr DEPUTY SPEAKER —I do not think that is appropriate. Is the honourable member prepared to withdraw the remark? Mr O'Keefe —Perhaps, Mr Deputy Speaker, you could explain to me-- Mr DEPUTY SPEAKER —The honourable member for O'Connor has taken offence at the remarks offered and I have asked the honourable member whether he will withdraw them. Mr O'Keefe —In that case, Mr Deputy Speaker, I withdraw. I do not wish to cause offence. Mr TUCKEY —I am conscious that other members want to participate in this debate, and I think that my remarks are well worth considering. It is a fact that there are other problems- Dr Theophanous —You haven't got a clue. Mr TUCKEY —Oh, no; I have not got a clue. I am just telling Government members how this will work. The big problem is that their side of politics does not have a clue. They have led Australia into this situation. They have pumped $20 billion into the economy and it has all been spent on overseas goods. The manufacturing sector, the only one-the primary sector and mining cannot do it for them-the very sector that they want, does not trust them or their ACTU. It will not help them out with their J curve. Government members have given that sector the perfect reason to go on importing. They jack up people's wages by indexation. They will always be able to meet the price of overseas goods-until Australia goes broke. That is the problem that they have. Those are the realities of Australia's economy today. However, I shall say no more, because I want to retire from this debate to leave it to others. Mr HOWE(Batman-Minister for Social Security) —I claim to have been misrepresented by the honourable member for O'Connor (Mr Tuckey) and I wish to make a personal explanation. Mr DEPUTY SPEAKER(Mr Ruddock) —The Minister may proceed. Mr HOWE —I interjected during the remarks of the honourable member concerning the impact on other manufacturers. It was not correct that I was implying that I was not concerned about shipbuilders in Western Australia, but the net effect of the registration system is in fact to protect jobs in the industry, including jobs in Western Australia. Dr WATSON(Forde)(5.50) —I rise to speak in this cognate debate on the Bounty (Commercial Motor Vehicles) Amendment Bill (No. 2) 1985, the Bounty (Metal Working Machines and Robots) Bill 1985 and the Bounty (Agricultural Tractors and Equipment) Bill 1985. I intend to speak to the first two Bills in detail and in particular I wish to elaborate on some of the points made by my colleagues the honourable member for Parkes (Mr Cobb) and the honourable member for Mayo (Mr Downer). I intend to do this by discussing, first of all, the impact of the Bounty (Commercial Motor Vehicles) Amendment Bill, particularly the impact of the change from a bounty to a tariff. Secondly, I would like to discuss the inconsistency between the Government's proposals-the inconsistency between the Bounty (Commercial Motor Vehicles) Amendment Bill and the other two Bills. Thirdly, I would like to discuss some of the problems with the Bounty (Metal Working Machines and Robots) Bill. Finally, I would like to discuss some of the inconsistencies in the representations on these Bills by the Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce (Mr Barry Jones) and the Government. The rationale for these Bills is really contained in two documents-partly the Industries Assistance Commission report on heavy commercial motor vehicles, parts and accessories of February 1984 and partly the Minister's second reading speech. At page 11 of its report the IAC makes some observations about the characteristics of the current package. Basically, these are that the current package affords some segments of the heavy commercial vehicle industry, particularly vehicle assembly, effective assistance well in excess of that afforded most other activities in the economy; secondly, that it affords disparate assistance to the various segments of the heavy commercial vehicle industry; and thirdly, that it contributes to the significant disparities in assistance which characterise automotive production as a whole. Basically the IAC suggests that there is an attempt in the first Bill to rationalise the industry. This is also the argument put forward by the Minister when he stated in his second reading speech: As a consequence of criticism of the existing arrangements, the Government is concerned to simplify the current assistance . . . In other words, there is an attempt to simplify the process. But in doing so the Government has adopted a method which, while it may simplify the process, in fact goes in exactly the opposite way. The Government is going to remove bounties and replace them with tariffs. The honourable member for Burke (Mr O'Keefe) criticised honourable members on this side of the House and suggested that we were being a little inconsistent with statements made by previous coalition governments and previous Labor governments, but one has to realise that there is no virtue in being consistently wrong. The effects of replacing a bounty with a tariff are sixfold. I would like to address these very briefly. Firstly, removing a bounty and replacing it with a tariff increases the costs of production. Tariffs result in higher costs being passed on to users and consumers in our society. Secondly, higher costs of production result in export competition becoming more intense for certain industries within our society-for example, farmers and small manufacturers-who are competing on the export market. The fact that they have to absorb higher production costs means that they will be less competitive in the export market. For a country which is facing a $500m fall in exports and a $1.6 billion deficit, as is recognised in the latest figures, these kinds of considerations ought to be of concern to the Government. Mr Cobb —It cannot neglect the exporters. Dr WATSON —It certainly cannot neglect the exporters. The third effect is that higher costs will eventually lead to higher inflation. As other members have noted, we have an inflation rate which is already two or three times those of our major competitors. Even though this is a small change, there is no doubt that these small changes accumulate over time and feed into our cost structure and, therefore, into our price structure and our inflation rate. Eventually, because we have a consumer price index related wage indexation system, that cost eventually feeds into wages right across the economy. Fourthly, higher costs must imply reduced production and, in the long run, lower employment. There is simply no escaping the fact that one reaction to higher costs of production in any business is to reduce the amount of goods and services produced. When that is done in the longer run employment growth must fall or unemployment must rise. Fifthly, as also suggested by the honourable members for Mayo and Parkes, one advantage of bounties over tariffs is the fact that bounties are visible whereas tariffs are invisible. It has already been suggested that, in a budgetary context when deciding how our resources should best be spent and how government expenditure should be best undertaken, there are some significant advantages in having items such as bounties visible in the Budget rather than invisible as taxation in the form of tariffs. That leads me to the final effect. Bounties represent government expenditure whereas tariffs represent government revenue, and the change from expenditure to revenue may have some interesting effects for the Government in the sense that it might help reduce its rather large deficits, but in fact this is to the detriment of the rest of the community. The Government has argued, and the Minister argued in his second reading speech, that it found difficulty in seeing benefit in the IAC recommendations. I must admit, having reviewed the Government's proposals and the Bills, that I equally found difficulty in seeing benefits flowing from the Government's proposals. The second Bill I want to discuss in detail is the Bounty (Metal Working Machines and Robots) Bill 1985. We have already seen that when the Government has only two choices, when it can go either one way or the other, it picks the wrong way. It is going from bounties to tariffs when, if anything, it should be going from tariffs to bounties. So the Government is not very good when it is given only two choices of picking a winner. It picks a loser every time. The honourable member for Mayo has already pointed out that there is no empirical record to suggest that it is any good at picking winners at any stage. Of course, this is exactly the problem with the Bounty (Metal Working Machines and Robots) Bill. This Bill in effect suggests that the Government will pick a winner in high technology but is not going to back, if you like, a relative loser in the low technology area. What I want to do is actually go through the second reading speech of the Minister and point out some of the inconsistencies in it. Mr McGauran —There are plenty of them. Dr WATSON —There are a heck of a lot. The first point of probable note is a point which was referred to earlier by the honourable member for Mayo. Let me quote the Minister's statement: The differential rate of bounty for producers of high and low technology machines is aimed at encouraging Australian machine builders to move into the production of the higher technology machines, in line with world trends and the Government's overall objective of encouraging the modernisation of Australian manufacturing industry. First of all, as I said previously, the Government has not demonstrated that it can actually pick any winners. It does not present any evidence to suggest it is any good at it. In fact, I suggest that the evidence is that governments and bureaucrats are very unlikely to be able to pick winners. If, as the Minister argues, this is in line with world trends, why is the assistance necessary at all? If this is a world trend, why does Australia not move along with the world? Either we are going to move along with the world without assistance or we need the assistance for other reasons. I think the honourable member for Mayo, the honourable member for Parkes and the honourable member for O'Connor (Mr Tuckey) have pointed out some of the reasons. The fact is that there is something fundamentally wrong with Australia which relates back to our wage structure, incentives for investment and the reward for entrepreneurial risk. That is the problem that is fundamental in Australia. If one does not address those issues one has absolutely no hope in the longer run of addressing the real issues that face Australia. Not only that, but also the legislation ignores some other real fundamentals. First of all, the Minister's second reading speech makes no mention of the skills that are required to take advantage of high technology. There is no mention in the speech of whether we have the right education policy. In fact, one could argue that the restrictions placed by the Tertiary Education Commission on the expansion of universities and colleges and other areas in Australia are leading to exactly the opposite effect. So there is no addressing the question of whether we have the required skills. The second reading speech does not address the question of whether an artificially high demand will create artificially high wages and costs and, therefore, prices because that is what a bounty in one area versus the other area does-it creates an artificially high demand in that area. Thirdly, the second reading speech makes no reference to what our immigration policy is in this area. Like the honourable member for O'Connor, I have organisations and firms in my electorate involved in high technology which have extreme difficulty even recruiting individuals with the appropriate skills and, when they can get them, they have extreme difficulty in convincing the Department of Immigration and Ethnic Affairs to allow them to enter and remain in Australia and become permanent residents. So we are not told whether we have consistent education and immigration policies that go along with picking the winner. Even if the Government is right in picking the winner, it also has to get its other policies straight. The Minister, in his second reading speech, said: The Government's decision to accord assistance to robots at the same rate as that accorded the high technology machine tools is based on the close interrelationship of the two industries and their common market. Different rates of assistance could lead to a distortion in the allocation of resources and an unbalanced development between the two sectors. Mr Cobb —Good heavens! Dr WATSON —Good heavens, all right, as the honourable member for Parkes said. Why did not the Government use exactly the same analogy when it was talking about choosing between high and low technology areas? If different rates of assistance can lead to an imbalance within the one sector, certainly favourable treatment can lead to imbalance in two sectors. So the Government is not even consistent in its own logical progression. Another illustration of exactly the same thing is given a little later in the Minister's speech. The Minister stated: The extension of bounty assistance to computer-controlled flame and laser cutting machines . . . in line with world trends . . . To exclude these machines from bounty assistance could lead to distortion in resource allocation within the industry and hamper future development. So on the one hand the Minister is arguing, within the same speech, that distortions will occur if we favour one but not the other and on the other hand he tries to argue in favour of high technology over low technology. Exactly the same arguments can be applied to that distinction as he applied to his other distinctions. Mr Downer —It is hypocrisy. Dr WATSON —Of course it is hypocrisy. The Minister, in his second reading speech, suggested that the IAC recommended that bounty be paid on the difference between ex-factory selling price and the cost of bought-in materials. He went on to say that there are some problems with this approach. He said: To avoid these difficulties it is proposed that in house value added be based on total cost to make or factory costs, including attributable design, administrative and software costs. That seems to be fairly good. But what is the effect of that kind of decision? The Government's approach implies that it will apply the greatest reward to the least efficient producer. In other words, the least efficient manufacturer will be paid the greatest bounty. Again, this is exactly the opposite to the kind of encouragement that we hope will be achieved in this country. We would hope that people who are efficient and people who take risks and produce wealth will be encouraged and that inefficiency will be discouraged. The Government's proposal will do exactly the opposite. I repeat that the Minister cannot pick winners and losers even in his own speech. If he cannot do that, how in the heck can he expect the Government to pick winners and losers in the broader framework? Mr Slipper —He is good at Pick-a-Box. Dr WATSON —He is good at Pick-a-Box. The honourable member's interjection brings me to my final comment. I have actually been an admirer of the Minister for Science (Mr Barry Jones) for quite a long time. Of course, although the Minister has not trained in economics at least I thought he had some training in logic. Mr Slipper —He means well. Dr WATSON —He may mean well. I am actually surprised that he has lent his name to legislation which is put forward by the Minister for Industry, Technology and Commerce (Senator Button) and that he has supported in this House a package which is inconsistent, illogical and ill-conceived. I thank the House. Madam DEPUTY SPEAKER(Mrs Child) —I call the honourable member for Fisher. Mr Cobb —Hear, hear! Mr McGauran —He is a good man. Mr SLIPPER(Fisher)(6.07) —I thank my colleagues for their very kind comments. I was impressed by the contributions of the honourable member for Parkes (Mr Cobb) and the honourable member for Forde (Dr Watson), both of whom are very erudite gentlemen. The honourable member for Parkes has conducted a detailed study over many years of matters which are the subject of these Bills while the honourable member for Forde has had a distinguished academic career in the field of commerce and economics. I also compliment my colleague, the honourable member for Mayo (Mr Downer), who has produced, as usual, a sterling speech for our benefit. I am sorry that the Government is pursuing the legislation now before the House and, instead of grasping the nettle and accepting the challenge to rationalise this nation's approach to subsidies, tariffs and bounties, we are being treated to more of the same old recipe for disaster. The individual pieces of legislation which are before the House have certain things in common. They have a lack of vision and they have a lack of appreciation of what this country needs. They simply fail really to consider the fundamental issues in this area confronting Australia. The approach of rational economics appears to be thrown out the window. The Government completely fails to look at what it should. Its approach-and the decision it makes when considering these questions-simply seems to be to prop up at all costs. In fact, one company which is to be the beneficiary of one of the pieces of legislation before us has had assistance since 1922. It would appear that any profit that the company has made over the last 10 years has come from bounty support. As far as I am concerned, that situation is unacceptable and ought not to continue. I had prepared a 20-minute speech but, because of time constraints and the threat that the Government would use the guillotine if I delivered a speech of that length, I have to accept that unfortunately I am to be muzzled. Until the next election the Government temporarily has the numbers to stop honourable members on this side of the House talking about matters of great national interest. Mr McGauran —We wouldn't do the same. Mr SLIPPER —We would not do the same, as my colleague the honourable member for Gippsland said. The Minister for Science (Mr Barry Jones) had a golden opportunity to take a bold new step in the direction of a more competitive Australia, but what have we seen-rhetoric and more of the same piecemeal and inadequate approach which Australians have come to expect from Federal governments. I am not one of those people who say that everything that the coalition did was right. Everything was patently not right because if it had been right the Opposition would still be the government of this country. But over the last 32 months-those disastrous 32 months that this country has languished under socialist control-we have been through a political purgatory. We are now cleansed and fit to take our place once again on the treasury bench. Instead of more protection or, should I say, rearranged protection or, if one were to be completely unkind, I should say juggled protection, opportunity should be given to industries in this country to stand on their own two feet. The mishmash of Bills we are debating completely lacks an organised and systematic approach. It is a sad and sorry day when the Minister of Pick-a-Box fame-- Madam DEPUTY SPEAKER —The honourable member for Fisher will address the Minister by his correct title. Mr SLIPPER —I am certain that the Minister is very proud of his Pick-a-Box achievements. He is the Minister for Science and he is the man who brought the Government's legislation into this place. As my colleague the honourable member for Forde agreed, the Minister means well. He is a Minister who seems to have some respect but, unfortunately, he is completely out of his depth in this area. Does the Government not realise that protection raises inflation, with adverse consequences for our international competitiveness? Does the Government completely fail to appreciate the way in which protection results in what economists call a protection loss? Also, of course, protection raises costs to consumers. In the case of the export sector, exports are effectively taxed because this sector is unable to pass on the higher cost resulting from protection in the form of higher prices. Studies suggest that at least 70 per cent of protection passes through to tax the export sector. Is the Government not cognisant of the fact that bounties are better than tariffs? We find in one of these Bills that the Government is reducing the bounty and moving in the direction of tariffs. If the Government, in its wisdom or lack of wisdom, decides that there should be support or protection for an Australian industry, it is infinitely better that the Australian taxpayer, the Australian community as a whole, should bear the cost of that support rather than having a tariff where the end user, the consumer, has to wear the full brunt of the Govenment's decision. Another factor about protection that concerns me greatly is that it encourages industries to become dependent on government help. Rather than trying to improve their efficiency, ever higher protection is sought, with the demand that we, the ordinary people in Australia, the ordinary taxpayers of Australia, bear the cost. Sadly, this Government once again has completely failed to take a reasonable and rational approach to these issues. We are sick and tired and, indeed, the people of Australia are undoubtedly sick and tired of the way that a vast amount of inferior legislation gets trundled into this place. In many cases it is ill-considered, poorly drafted and simply not well thought out. We must encourage competitiveness in Australia. We must encourage industries to stand on their own two feet. We must point out that the Government's wages policy is a complete disaster. The way in which the Government has been approaching this matter has earned the condemnation of all Australians. The Government has missed another opportunity to take us in the direction of competitiveness and a reasonable approach. We need less protection, fewer tariffs and fewer bounties. We need a situation where industries are able to operate in an ordinary free market with a rational approach. It is a sad day that the Government has taken the course of action which is being inflicted on this Parliament and this nation with these Bills. I am sorry that the Opposition is not opposing these Bills to the extent I would like to see. I certainly hope that the Opposition, when returned to government at the next election, will take the sort of approach to these matters which has been very well outlined by my colleagues the honourable member for Forde and the honourable member for Parkes. Mr HAWKER(Wannon)(6.14) —I believe that my colleagues have already canvassed very widely most of the issues that relate to these Bills. I do not think much of it needs repeating. However, I would like to confine my remarks to the bounty on agricultural tractors and equipment. The fortunes of the Australian tractor industry are very much related to the fortunes of Australian agriculture. As honourable members well know, Australian farmers are facing a rural crisis. In fact, if one thinks about it, 100,000 farmers would not have been marching around Australia in the last few months trying to get the messages across if there was not something very seriously wrong. I think the situation can be well explained if one looks at the latest `Quarterly Review of the Rural Economy' which has been put out by the Bureau of Agricultural Economics. Under the heading `Overview' the BAE states: In the past three months, the outlook for prices for several rural commodities has deteriorated . . . The real net value of rural production, which is a key indicator of the economic performance of the rural sector, is now forecast to fall by 26 per cent from 1984-85 to 1985-86, following a decline of 19 per cent from 1983-84 to 1984-85. By any measure, these are extremely serious figures. They show an alarming picture. All farmers are already well aware of this but I hope honourable members opposite will start to take a bit more notice because the matter is extremely serious. I do not think we have seen too much of the real troubles that are about to come. In fact, the `Overview' goes on to talk in particular about the crops sector which I would like to mention because most big tractors are used in cropping. It states: . . . the downward pressure on world wheat prices appears likely to continue. The price of Australian wheat is now forecast at $176/t for 1985-86, down by 3 per cent from the price of . . . 1984-85. I bring up this matter in this context because obviously tractors are very important in the wheat industry in particular and also in other areas of agriculture. I think the decline of wheat prices could be a major factor in the demand for tractors and tractor sales. Already the tractor industry has been facing trouble. As the Minister for Science (Mr Barry Jones) said in his second reading speech: The Australian tractor industry has experienced severe difficulties in recent years. Drought conditions reduced demand for tractors and, at the same time, local producers were faced with increased competition from imports as overseas manufacturers sought to maintain sales volume in a declining world market. Although the easing of the drought was followed by increasing tractor sales, local producers continued to face difficult conditions due to oversupplied world markets, falling commodity prices and increased costs. If that is not bad enough, if some of the forecasts, which are over and above what the BAE has already been prepared to state, about the future of wheat prices are correct tractor manufacturers could in fact be facing a disaster in the not too distant future. Also the honourable member for O'Connor (Mr Tuckey) highlighted in some detail the effect that the proposed tax package, which the Government is in the process of introducing, will have on these tractor sales. Again, that could add to the problems. Before getting to a specific tractor matter, I would like also to say a few works about bounties and tariffs and in particular, about the bounty as it is affected in these Bills. I believe that bounties are a far better way of supporting an industry when it can be demonstrated that it needs support. Wherever possible bounties should be extended to support industries that are now receiving tariffs. That does not mean to say that the level of protection should not be reduced at the same time. But on the matter of tariffs it has already been made patently clear to anyone who has been prepared to listen, as the National Farmers Federation has gone to some considerable lengths to point out, that tariff protection to secondary industry is already a hidden tax on farming adding up to something like $9,000 for every farmer in Australia. As the honourable member for Mayo (Mr Downer) has already said, the bounty is an extremely visible form of protection. For that reason it is a far better way of protecting an industry that needs it because it means that that industry comes under public scrutiny and that every year the bounty is reviewed in a Budget and it is there for everyone to see. The bounty also means that we avoid the situation with tariffs where there is a hidden cost that is in fact borne by exporters in the main. By shifting from a tariff to a bounty we would have the advantage that if protection were needed it would be levied on all taxpayers rather than the bulk of it just going on to the export industry. I believe that the Government should extend its policy to include bounties, wherever possible, taking over from tariffs. I also raise a matter which one of my colleagues has already touched on. I wonder whether this tractor bounty is the Government's idea of some small compensation for the problems facing the rural industry. I suggest to the Government that the problems facing the rural industry are far more fundamental. By and large, they can probably be sheeted home to the lack of competitiveness of our export industries on the world markets. This lack of competitiveness has been exacerbated in several ways. I have already touched on the problems of tariff protection to secondary industry. The other ones have already been mentioned by my colleagues, including the very high interest rates-the highest real level of interest rates in 50 years. Mr Slipper —Shameful. Mr HAWKER —Yes, it is shameful, and it is something about which the Government seems to be loth to do anything. Mr Downer —And particularly hard on South Australia. Mr HAWKER —It will worry South Australia in particular and it will worry Mr Bannon too. The other fundamental problem facing agriculture is the rigid wage fixing system, which does not take into account the capacity of an individual industry to pay. This is something which is unnecessarily burdening primary industry at a time when it is in no fit state to continue paying increased costs for wages. Like the honourable member for O'Connor, I have a tractor manufacturer in my electorate, namely, Waltanna Tractors, which is operated by James Nagorcka near Hamilton. It is a very efficient little operation. It began to operate and is still operating without any protection. It has been paying an import duty on some of the components that have been going into the tractors. The reason it has not been getting any protection is that it is making large tractors-greater than 150 kilowatts-and this meant that it did not qualify for the protection that was being given to the other tractor manufacturers in this country. Currently Waltanna is manufacturing about 15 to 20 tractors a year. To put this in context, that is 15 to 20 out of a constant market share of something like 1,000 per year for the whole of Australia. The Government has very generously offered this manufacturer and the other manufacturers of large tractors some additional assistance. This manufacturer at least will make a very positive response to that offer of additional assistance. Because of this assistance, it already has plans to increase production by another 30 units per year. The increase is more than double the present output. Also, another tractor model is being plannned. To put it in context, this assistance will be worth something like $8,000 per tractor for Waltanna. Obviously, this manufacturer is taking advantage of the bounty and he has further plans to increase production to something like 50 tractors a year. One of the things the Government would like to hear most is that Waltanna is very keen to try to open up an export market. Something which the Minister for Science would, I am sure, be pleased to hear is that at present this manufacturer is spending something like 20 per cent of his turnover on research and development. That is an astounding figure. I am sure everyone would like to see more manufacturers spend money on research and development because Australia has a very bad record in this area. As well as providing direct employment, it provides employment to local industries which are taking on sub-contracts. This is a fine example of a small, healthy, decentralised industry. It is one that is prepared to take up a challenge that this Government has offered. I accept the points that have been made by my colleagues about support. As I have already stated, this manufacturer has grown and survived without support. The Government has been very generous in offering additional support. The manufacturer will take up the challenge and he is to be congratulated on doing that. While this opportunity is being given, it should be emphasised that the assistance given by way of the bounty will be phased down. The challenge that this manufacturer and others which will take advantage of this assistance must accept is that the assistance will be phased out by 1992 or, if the amendment of the honourable member for Ryan (Mr Moore) is carried, maybe a year earlier. The challenge is there. It should be quite clear to all manufacturers that there should be no misunderstanding whatsoever that the assistance will be continued beyond that. Assistance will give this manufacturer the opportunity to expand, to develop an export market and to increase employment with the proviso that, having taken up that challenge and been given that opportunity, it will have to be an industry that can stand on its own two feet. Mr BARRY JONES(Lalor-Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(6.26) —in reply-I thank the honourable members who have contributed to the debate. Let me take up some of their points in turn. The honourable member for Ryan (Mr Moore) asked a question about what he described as the Automotive Industry Authority. I apologise that the second reading speech used the word `Authority'; it should have been `Council'. The relevant body will be the Automotive Industry Council. What will the Council do in relation to the commercial motor vehicle bounty? It will report to the Government on what components will be competitive with imports at the 25 per cent general rate. This is something on which the Government needs industry advice. The complex sourcing arrangements overseas make this imperative. At the moment the bulk of the components enter duty free for home consumption. The 25 per cent duty rate is being phased in on about 10 per cent of these components. When the Government is advised that additional components are being produced locally and can compete at the 25 per cent duty rate, the overseas components will then be denied duty free entry. The honourable member for Mayo (Mr Downer) provided some well worn rhetoric about picking winners, but I think he missed the point. The legislation is directed at encouraging an already established Australian industry which is producing metal working machine tools to modernise its operations in Australia. This industry will not be able to compete with imports if it does not update. The clear direction of manufacturing industries throughout the world is towards numerical and computer controlled machines, and we must move in the same direction. This is something I have been talking about in the House ever since I became a member. Mr Peacock —You wrote a book. Mr BARRY JONES —Exactly. The honour- able member for Mayo questioned the payment of assistance to some companies that are making a profit. The small producers to whom he referred were disadvantaged by the previous arrangments. The honourable member will acknowledge that no industry will continue unless it sees a prospect of a return on its investment. The great difficulty is that there will simply be a withdrawal of capital from an area seen to be in difficulty and it will be transfered somewhere else. We would then be faced with the situation of deciding whether we want that industry to collapse domestically or whether we assist it in some transitionary process. I certainly agree with even some of the far Right rhetoricians opposite that one would not want to see a temporary arrangement going on forever. Mr Downer —Since 1922. Mr BARRY JONES —Exactly. Some companies do make a profit. However, the overall assistance arrangements for this industry do not provide any grounds to discriminate against companies which are lucky or fortunate enough to make a profit. Chamberlain John Deere Pty Ltd was recently forced to retrench some of its employees because of poor market conditions. The company continues to be a major employer in Western Australia. It has recently undertaken a major modernisation program and, with the assistance forthcoming, it is expected to maintain a more competitive and more viable operation. I have always taken the view that the statement about not being able to pick winners is more of a quasi-theological statement, essentially an article of faith. Sometimes one can pick a winner and sometimes one cannot. It is true that both government and the private sector have a very spotty record in picking winners but there are some areas in which governments have been notably successful. The Australian film industry stands out like granny's tooth. Sitting suspended from 6.30 to 8 p.m. Mr BARRY JONES —As I was about to say before the suspension of the sitting for dinner, a particularly interesting point which came up at the International Meeting of Science and Technology Ministers in Ottawa last month was that the United States delegate, Dr Jaye Keyworth, remarked that in science and technology the United States was `no longer laissez-faire' and intended to move away from a free market approach, recognising the need to `target' particular technologies. As he said, relying on `the natural course of events' just does not happen fast enough. This, of course, will be anathema to many of the drier members of the Opposition to whom it is an article of faith that government cannot pick winners. But, as Dr Keyworth, the President's science adviser, said, governments are often in an excellent position to judge general trends because of their access to a wide diversity of data, while businesses are inevitably quite limited. I might just interpolate as well that, when the Organisation for Economic Co- operation and Development examiners were carrying out their review of national science policies at the end of last year, they remarked that they heard economic arguments in Australia that were fashionable in North America 10 or 15 years ago but not heard since. Before I comment on what the honourable member for O'Connor (Mr Tuckey) had to say, I want to withdraw a word that I used before the suspension of the sitting. It had been pointed out by the honourable member for Kooyong (Mr Peacock) that I said that it was hoped to maintain a more competitive viable operation. As I have no ambition to be a finalist in Alex Buzo's tautology award, I withdraw the word `viable'. Mr Peacock —Thank you. Mr BARRY JONES —I acknowledge the rebuke of the honourable member for Kooyong. The honourable member for O'Connor simply made a speech about the tax package, which he condemned with customary vigour, but as it had nothing to do with the Bill I will pass it over. The honourable member for Forde (Dr Watson) criticised the same rate of bounty being applied to high technology metal working machines, robots and other types of advanced machines but did not, I think, grasp the intent of the legislation which is aimed at encouraging the introduction of high technology into Australian manufacturing industry-an area where the technological base is really old. As I have said on many occasions in this place, Australia is, in a way, a technological museum. It is extraordinary to reflect that, as a recent survey of the Institution of Engineers pointed out, capital equipment, by and large, is older in Australia than it is in Britain and very much older than in Japan or West Germany. Dr Watson —My point was that there is something fundamentally wrong with the Australian economy. I do not disagree with your premise; I disagree with your conclusion. Madam DEPUTY SPEAKER(Mrs Child) —The Minister would do better not to invite interjections. Mr BARRY JONES —I acknowledge the point that has been made. There is an attempt to change direction quite dramatically. Mrs Thatcher remarked at one stage that what industry needs is the bracing effects of an ice cold shower but, as British industry showed, that can also be a way of getting pneumonia. Some industries are almost terminal cases which can have their supply cut off if we are too dramatic in changing existing schemes. But without these transitionary changes we will not be able to secure or expand our competitiveness vis-a-vis overseas manufacturers. We need to recognise the impact of these sophisticated technologies and to encourage firms to adopt them. There has been a very distinct cultural, intellectual resistance to recognising the need for change. The honourable member for Forde was also perplexed as to why the commercial motor vehicle bounty is being replaced with a tariff. This has been designed to encourage vehicle assemblers to buy the competitive local components. If they want to buy imports they will have to pay 25 per cent more. Under the bounty the assemblers have the choice of local components or imports, which were around the same price because the bounty provided the equalising factor. It seems to be compulsory for the honourable member for Fisher (Mr Slipper) to speak on every economic debate, although he appears to be in a minority of one through the extremity of his views. He kept telling us that industry must stand on its own two feet, that it is not used to doing this and that we need to move in the direction of competitiveness. This is precisely what this legislation is all about. We are trying to bring about change without collapse. Australian manufacturing is in a very fragile situation and in recent years industry generally has had a poor record in innovation and research and development. These Bills and a number of associated measures, of which the 150 per cent tax deductibility for research and development will be the most important, are designed to effect that change. I thank honourable members for their contributions. I hope that we can secure a speedy passage for the Bill. Question resolved in the affirmative. Bill read a second time. Message from the Governor-General recommending appropriation announced. Bill reported from Committee without amendment or debate; report adopted. Bill (on motion by Mr Barry Jones) read a third time. Consideration resumed. Question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Barry Jones) read a third time. Consideration resumed. Question resolved in the affirmative. Bill read a second time. The Bill. Mr MOORE(Ryan)(8.10) —I move the following amendment: (1) Clause 4, page 4, lines 10-12, omit the definition of ``terminating day'', substitute the following definition: `` `terminating day' means 31 December 1990 or such later day, not being a day later than 30 June 1991, as is fixed by the Minister by a notice published in the Gazette before 31 December 1990; ''. I move the amendment mindful of the re- commendations of the Industries Assistance Commission in its report. The amendment is moved with the intent of bringing the Bill into line with the recommendations of the IAC report. Mr BARRY JONES(Lalor-Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(8.11) —The Government cannot accept the amendment to the Bounty (Agricultural Tractors and Equipment) Bill 1985 moved by the Opposition. It is essential that this industry be given assistance beyond 1990 so that it can plan its future with a necessary degree of confidence. Mr Peacock —I've heard that before. Mr BARRY JONES —The honourable member has said it a few times. To do that the industry needs the longer proposed period of defined assistance. We all know the difficulties that the tractor industry in Australia has been experiencing because of droughts and severe import competition. Given the nature of this industry characterised by both cyclical and seasonal fluctuations, there is need for a period of reasonable stability in which the industry can continue to modernise to enable it to compete in the longer term. As has been said so often, we want manufacturing industry to be more outward and forward looking, and if we are to achieve this we must provide the proper environment over a reasonable period. The Opposition suggests that we reduce not only the period of assistance proposed by this Bill but also the level of assistance in the first two years to the level recommended by the Industries Assistance Commission. The Government believes that there should be a phase-in period of assistance so that this industry can adjust over the next two years from the former relatively high levels of temporary assistance to the long term rate of 25 per cent of value added. This should enable the industry to complete the restructuring it put in train during the period of temporary assistance. The long term rate of bounty, as proposed in the Bill, is in accordance with the IAC's view that assistance for the tractor industry should be in line with that accorded similar production processes. There will be considerable disruption within the industry followed by job losses if the assistance the Government is now proposing for this industry is not implemented. What we are really considering is whether Australia should maintain a tractor manufacturing industry. The view of the Government is that we should. Amendment negatived. Mr MOORE(Ryan)(8.13) —by leave-I move: (2) Clause 12, page 13, lines 5-14, omit paragraphs (1) (a), (1) (b) and (1) (c), substitute `an amount equal to 25% of the value added to the tractor by the manufacturer.'. (3) Clause 12, page 13, lines 17-25, omit paragraphs (2) (a), (2) (b) and (2) (c), substitute `an amount equal to 25% of the value added to the cab by the manufacturer.'. In moving these amendments I must say that I am pleased that the Minister for Science (Mr Barry Jones) responded in the way he did, saying that the industry needs a degree of confidence. He said that job losses would be minimised, or that jobs even would be restored, by the actions of the Government. I ought to add a bit to the prologue of the Minister by quoting from IAC reports over the years. The IAC report of 1976, commenting on the Chamberlain John Deere Pty Ltd tractor operation, stated: When bounty is excluded, Chamberlain made losses on the production of tractors in each of the four years up to and including 1975. With bounty payments taken into account, the company made a moderate return on its funds employed in the first three years but suffered a small loss in 1975. In other words, that company showed a profit only because of the bounty. In 1983 the Temporary Assistance Authority stated: . . . with the company-- that is Chamberlain-John Deere-- making substantial losses on its tractor operations after payment of the bounty for 1978-79, 1979-80, 1980-81. Operating losses increased considerably after 1979-80 and projections for 1982-83 show a further decline in the financial postion of the company's tractor operations. The 1984 IAC report stated: Chamberlain John Deere has incurred increasing losses to its local tractor operations since 1979-80. The company estimates that its loss situation will continue at least until 1984-85 but should then be reversed if the tractor market fully recovers-- we all know what the projections are for the rural sector- the new product is accepted by the farmers-- that is, if they can pay for it with the way interest rates are these days-- and the company receives the level of assistance requested. In general, Chamberlain John Deere's total operations have been more profitable than its tractor production activities, although the company incurred a loss in 1982-83. The Minister went to some pains to talk about job losses and the importance of retaining jobs in the tractor industry. I know that he is a great believer in innovation and in investment by industry and such things. But the 1976 report showed that Chamberlain John Deere employed 1,000 people. The 1983 Temporary Assistance Authority report showed employment at June 1980 at 895 but having declined to 555 in December 1982. The 1984 IAC report showed that employment fell further to 547 in June 1983. Mr Peacock —Are you telling us that with protection there were job losses? Mr MOORE —With protection the company is still doing badly. The West Australian of 16 September 1985 reported that Chamberlain John Deere had laid off a further 101 persons, leaving the total employed at 446. That is hardly a good record for propping up. Chamberlain John Deere's operations on tractors have also continued to decline as a percentage of its total operation. The 1976 IAC report showed that tractor production represented about 50 per cent of its manufacturing activities and about 30 per cent of its total operations, including merchandising activity. The Chamberlain John Deere submission to the IAC showed that those employed on the manufacture of tractors represented about 48 per cent of total employment in June 1983. I turn to bounty payments, which is what this legislation is all about. In 1979-80 bounty payments totalled $5.4m, the number of employed was 895 and that represented a bounty per person of $6,129. The amount of bounty per person then decreased from $4,700 in 1981 to $5,056 in 1982, $5,380 in 1983 and $4,900 in 1984, by which stage employment in the industry had dropped from 895 to 547. One could say that a good demolition job had been done. I conclude by saying that the current proposed legislation anticipates a bounty at the level of $8m in 1985-86 with an average of $6m after 1987-88. Using that lower figure, assuming that Chamberlain John Deere retains its average of about 70 per cent of bounty payment and using a current known level of employment of 450, bounty per person will be approximately $9,600 this year and will rise to $12,800 in 1985-86. I believe we have a reasonable case. Mr Peacock —What do you say? Mr BARRY JONES(Lalor-Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(8.19) —As nobody knows better than honourable members opposite who are hanging on my every word, we have inherited a particular kind of industrial structure for which there has been bipartisan support since the end of World War II. It is an inherited situation and one which has put our manufacturing industries in a state of pitiful weakness. We have to recognise that and the need to change in a different direction. We cannot just depend on import substitution. We have to be moving out into world market. We have to recognise that protection is not a universal panacea. In fact, the case that the honourable member for Ryan (Mr Moore) put is unquestionable-despite high levels of protection the number of people employed in Chamberlain John Deere Pty Ltd has fallen from 1,000 in 1976 to 446 in 1985. Nobody is arguing about that. Honourable members may have noticed that the Australian Labor Party-although its traditional position has been strongly protectionist-is moving in a different direction. There are two separate issues. I want to pay tribute to the courage shown by the Minister for Industry, Technology and Commerce, Senator Button, for changing the nature of the tariff debate. It has been difficult, but I think there is a recognition that changes simply have to happen. Problems arise where companies are still dependent on significant levels of protection and are going through the whole process of restructuring. Determining whether they want to get out of the industry altogether and put their capital somewhere else or wish to continue to manufacture tractors is a decision that they have to work out partly for themselves. But they are entitled to ask the Government whether government offers some prospect of security over a reasonable time in the future. Chamberlain John Deere Pty Ltd has been restructuring. It is now in a better financial position than it was earlier. It has had difficulties. Mr Moore —For fifteen years. Mr BARRY JONES —Absolutely. We recognise that. There has been an extraordinary slowness and reluctance-and it has afflicted people on both sides of the political spectrum-to recognise how far and how fast the technological revolution has changed the nature of secondary industry. Mr Peacock —That is because you and I are the only ones in here who have read your book. Mr BARRY JONES —I would like to think that there are a few more than that. I would like to think that the honourable member for Ryan has read it as well. Despite some of the comments from honourable members opposite I think that there is recognition that we are going in the right direction. The tragedy is that this process was not started 10 or 15 years earlier. All industries are suffering from a long heritage of tragic mistakes, of tragic shortsightedness. So I persist with our rejection of the amendments. Mr Peacock —So powerful is the argument, we won't divide. Mr BARRY JONES —Terrific. Amendments negatived. Bill agreed to. Bill reported without amendment; report adopted. Bill (on motion by Mr Barry Jones)-by leave-read a third time. Consideration resumed from 10 October. Mr BARRY JONES(Lalor-Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(8.25) —I move: That the Bill be now read a second time. This Bill proposes to amend the Liquefied Petroleum Gas (Grants) Act 1980 to terminate the operation of the subsidy scheme under that Act on and from 1 October 1985. The Government's decision to terminate the LPG subsidy was announced by the Treasurer (Mr Keating) in his statement on 14 May this year outlining Government expenditure savings. This subsidy was originally introduced for a three-year period from 1980 and later extended in a modified form to alleviate the impact of the sharp increases in the price of LPG at that time and to allow consumers time to adjust to changing price trends for LPG. In the longer term consumers would have the opportunity to convert to more readily available alternative fuels such as natural gas and electricity. The decision to abolish the subsidy is therefore consistent with the original intention of the subsidy, which was to provide temporary assistance to consumers facing rising prices for LPG. Since its review of pricing and subsidy arrangements in 1984 the Government has been concerned at the high cost of this subsidy and the continuing situation whereby subsidised consumers of LPG are being more favourably treated than consumers of other competing fuels. Abolition of the subsidy will remove a distortion of the demand for energy that has been created by the encouragement of LPG use in areas where alternative energy forms of lower real cost might have otherwise been used. The average household user of subsidised LPG is expected to face a once only price increase of around 3 per cent but all LPG consumers will continue to benefit from the price stabilisation measures introduced last year. These measures, which provide for the Minister for Resources and Energy to determine the wholesale price for LPG, where introduced to eliminate the frequent price fluctuations facing consumers as a result of movements in exchange rates and world prices. The effect of this policy is that LPG consumers are currently enjoying substantially lower prices than would otherwise be the case. To minimise the impact on consumers, the subsidy has been allowed to continue through the winter months, the period of peak demand, until 1 October 1985. Its termination at that time will also reduce the impact upon consumers who may have made investment decisions based on the current arrangements. The abolition of the subsidy on and from 1 October 1985 is expected to save the Government about $3.5m during the remainder of the 1985-86 financial year. This saving would have amounted to an approximate $6.8m in the full 1985-86 financial year. I commend the Bill to the House. Madam DEPUTY SPEAKER(Mrs Child) —Order! I understand that it is the wish of the House to debate this Bill concurrently with the Petroleum (Submerged Lands) (Cash Bidding) Amendment Bill. There being no objection, the Chair will allow that course to be followed. Mr BRAITHWAITE(Dawson)(8.28) —The Opposition will be allowing the Liquefied Petroleum Gas (Grants) Amendment Bill to pass without objection because the Opposition sees it as the Government's response to the expenditure cutting process of last May. While the Opposition doubts the wisdom of some of the priorities that the Government has set in these expenditure cuts, it indicated very early in the piece that it would allow such Bills through without opposing them. But, in doing so, there are some matters to which we should refer. The Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce (Mr Barry Jones) indicated in his speech that the subsidy would be closed down on and from 1 October 1985, in spite of the fact that an extension had been given to the subsidy up to March 1987. The subsidy is now to be phased out two years earlier. It is very difficult for a person using LPG to try with any certainty to plan the process of conversion from one form of power to another. It has also been indicated that the time is deemed ripe for the transfer because consumers should have been able to make arrangements for the alternatives of electricity or natural gas. This is probably true in most parts of Australia, but there are some cities, areas and regions that do not have access to that cheaper power, particularly natural gas, and with electricity at its present price one wonders whether that transition can effectively take place right across Australia. So whilst we do not disregard the Bill's implications, all that we say is that we shall not oppose it for those reasons. In his second reading speech, the Minister said that a substantial cost was associated with this subsidy. I refer him to the figures that I have taken out since 1981-82, when the subsidy, probably at its highest, was $30.8m. In 1982-83 it was $27.8m. In 1983-84 it was $25.1m. There was then a substantial drop in 1984-85, to $7.1m, because of the different structure on the transfer to the cotermination date of March 1987. It was substantially reduced in 1985-86 to $3.5m. The Minister talks in terms of its being a substantial amount. I refer him, as I referred the House last week, to the amount of revenue that the Government collect in any one year from oil-related taxes and levies. In 1982-83, as against a $27.8m subsidy, $4,847m was collected. In the next year, $5,709m was collected; in 1984-85 $6,506m was collected; and in the current year, $6,898m will have been collected. So there is a substantial amount there that the Government collects from taxes on the oil, and not to try to direct greater development and research but mainly as a revenue item. So we shall support that Bill; we just wanted to make those qualifications about it, because no certainty has been given to the people in being able to follow legislation to a natural conclusion and to find out that they must transfer their equipment to another source of power at present. The Petroleum (Submerged Lands) (Cash Bidding) Amendment Bill was introduced into this House last Friday, although it had had two introductions into the Senate. The first one there was during the autumn sittings, on 28 March 1985, when it was rejected, rather resoundingly, with the full support of the Australian Democrats and the Opposition, and Senator Harradine. It is interesting that it has now been brought back-not because it has any particular virtue, as far as the Opposition can see, and not because there have been any major changes in its thrust; it is because the Senate has changed the nature of its complexion-as far as the Democrats are concerned, who now sit on that side. Whilst we had a good debate from Senator Jack Evans, who was then leading for the Democrats in that debate, and who really supported the Opposition in tossing out this legislation on the basis of philosophy, we now find that with the change of that complexion, matters in connection with energy resources have now been taken over for the Democrats by Senator Sanders. We are rather cynical in our observation of this move. If legislation has to be brought into this House by such devious means as that, one must consider the worth of the legislation itself. One might say that it is a very back-door entry. Perhaps instead of Judas and his 30 pieces of silver, we can now start talking about Judas and his 30 pieces of woodchip. I think that that is appropriate, because in one of today's newspapers there is an article by Peter Hatcher, of Canberra, which indicates that the industry was far from pleased with the manner in which Senator Sanders applied himself to the Bill. The article indicates that, incredibly, Senators Sanders's approach starts from a proposition that he wants to stop all oil drilling. His joining issue with this cash bonus bidding proposition may indicate that this is his way to have further development and promotion of oil drilling in Australia stopped. So we are rather cynical of the approach that has been adopted. There has been an abuse of the vote by the Democrats in that the four who crossed the floor abrogated their duty to the whole electorate of Australia, particularly when selling off a very important item like oil development against something else in Tasmania. Speaking of the other Senator Evans, it is not the only time he has sold out Tasmania in this regard. Once it was the Franklin Dam; now it looks as if the woodchip industry will follow. Mr Goodluck —You mean a quid pro quo? Mr BRAITHWAITE —I did say that it was Judas and his 30 pieces of woodchip. The Bill demonstrates the Minister's lack of commercial experience and understanding of the total oil development situation in Australia. In fact the total oil industry is in a parlous position with regard to exploration and development. Exploration and development are badly required at this time. Only last week there was in this House a Bill, the Customs Tariff (Stand-by Duty) Bill, which indicated that the Government's whole attitude towards the oil industry, its development and refining, is that it is a great avenue by which to get more money. We cannot go past that fact. At a time when oil exploration in Australia is suffering large costs and lower returns, this will just be an additional cost. As I understand it, that additional cost will be up front. It will be $50m in the first year, as required, which overlooks the real problem facing Australia at the moment. If we go back 11 years we will remember that in 1974-75 Australia exported oil rigs at a time when the then Labor Government was trying to buy back the farm. It is doing precisely the same now. It is trying to export those same oil rigs on the basis of adding costs to the more lucrative processes of developing oil wells in Australia. A wider implication of cash bidding is its very negative effect on future exploration and development. Again, the Minister has indicated a certain lack of appreciation of what the oil industry is all about by bringing this Bill in for a second time in such a devious way. At the moment oil exploration in Australia is a high risk investment. It is now being undertaken probably in areas which are not as attractive as they would have been 10 years ago, because it is only natural that Australia, through its surveys, should have taken up and already developed the more profitable areas. So at a time of high risk and low prospectivity this is another nail in the coffin of the industry's development. We should be encouraging developers to explore areas of high risk, areas where technical knowledge is limited. It is not as though we are a major oil producing country. We have limited resources, technical knowledge is limited and the costs are massive at a time when world oil production is reducing, oil being a finite product. As I mentioned before, this aspect of cash bidding is just another cost on top of what is already there. For instance, the Jabiru experience in the Northern Territory highlights the uncertainty, the risk, the cost and the difficulties of off-shore exploration. Yet we are about to add another cost. In Australian exploration at the moment a number of dry wells are struck before striking a productive well. On top of that, the chances of a production well being a profitable is probably about one in 70 or one in 80. So it is very clear to any developer that the risks he has to take are lengthening and his profits are shortening because of the direction this Government is taking through this Bill. I would like to put before the House Australia's production record over the last 15 years. It has been indicated that in the last 15 years Australia has consumed more oil than it has found. Except in Queensland, there have been no discoveries since Jabiru. The present 75 per cent to 80 per cent self-sufficiency in oil in the domestic refining area is expected to reduce to 42 per cent in 1993-94. Australian has a 94 per cent self-sufficiency in crude oil and this is expected to drop to 42 per cent by 1993-94. The major Gippsland fields as well as the other wells throughout Australia are facing significant declines. The prospect of finding further oil in Australia is rated very low compared with other nations. The legislation we are considering has been brought before the Parliament at a time when we have a major balance of payments problem. I think the current account deficit for October was $1.64 billion. So, there are major problems now and there will be in the future. Australia can redress some of that trade deficit by being self-sufficient in oil production. However, the measures before us discourage futher investment. The mining of uranium is another very good example of a high risk area which is being discouraged by sanctions that are being applied at the moment by the Australian Labor Party. While the Opposition approves of the Liquefied Petroleum Gas (Grants) Amendment Bill, it will certainly oppose the second reading of the Petroleum (Submerged Lands) (Cash Bidding) Amendment Bill. Mr CUNNINGHAM(McMillan)(8.43) —I rise to speak to the Petroleum (Submerged Lands) (Cash Bidding) Amendment Bill 1985, which seeks to amend the Petroleum (Submerged Lands) Act 1967. The amendment proposes the provision of a cash bidding system for the award of petroleum exploration permits in highly prospective off-shore areas. The Bill also seeks to amend the Petroleum (Submerged Lands) (Exploration Permit Fees) Act 1967. The reintroduction of this Bill follows extensive examination of alternatives to cash bidding. The previous speaker, the honourable member for Dawson (Mr Braithwaite), mentioned that the first Bill was rejected in the Senate in March 1985. However, the Government's evaluation has confirmed the view that cash bidding is the most efficient and equitable means of awarding petroleum exploration and exploitation rights. The cash bidding system allows an explorer to determine and carry out an exploration strategy in the light of the commercial realities of the day. It seems strange that so much of the deregulation approach that this Government has initiated seems to be always opposed by those opposite, who seek to portray themselves as free enterprise operators. We are seeking to modify our regulatory system which, when implemented, will enable companies to operate strictly on the basis of commercial judgments. On a number of occasions this year the Government has argued the rationale for cash bidding and the Opposition has never seriously challenged that rationale. There was nothing put forward in tonight's debate by the honourable member for Dawson to argue that case at all. The Opposition is opposing for the sake of opposing. The significant shortcoming in the work program bidding system which we have has been the catalyst for the introduction of these measures in areas where there is high competition for exploration permits. The Minister for Science (Mr Barry Jones) in his second reading speech outlined four areas where the work program system has some deficiencies. Firstly, the work program system encourages companies to propose exploration programs that may later prove to be uneconomic. Secondly, it forces the Government, where a program becomes uneconomic, either to agree to exemptions or, alternatively, to require the company under the threat of permit cancellation to undertake uneconomic exploration. Thirdly, it requires the subjective selection of the winning bid and, fourthly, it is costly and complex to administer. To be blunt, even with the best of intentions, the inherent weaknesses of the work program bidding system when used in highly competitive situations cannot be satisfactorily overcome. I expected the honourable member for Dawson to put forward in the speech on behalf of the Opposition some arguments to show us where and why the Opposition needs to oppose this sort of legislation. Let me detail a little about cash bidding as proposed in the legislation. The legislation provides for a Joint Authority consisting of the Commonwealth Minister and the relevant State or Northern Territory Minister who will make the decisions on which areas are to be released under the cash bidding system. Cash bidding permits may be awarded for one six-year term. However, it is envisaged that the permits will be small, perhaps no more than 30 graticular blocks. This will enhance the chances of a number of different companies or consortiums acquiring good acreage. This will also facilitate a more concentrated approach in each permit. Restricted tenure will discourage companies from acquiring the permits for purely speculative purposes. There will be no incentive in the system for companies to do so. Restricted tenure will increase the opportunities for initially unsuccessful bidders to acquire the acreage when it is re-released. However, adequate provisions will allow permittees to retain tenure over discoveries after the permit has expired. The permittees will not be required to undertake a specific work program. This will give them the flexibility to undertake the most commercially viable exploration program taking account of changing economic conditions. In other words, we are attempting to put companies or consortiums into a situation where economic conditions will be the crtiteria upon which they will make their decisions and not so much government regulation. It is strange that this type of approach has been rejected previously by the Opposition. It has now been reintroduced, but we believe it will go through this time. I will say a few words about the Joint Authority. The Authority will be able to reject bids that are inadequate because of lack of competition or collusive bidding and where the bidder does not meet the financial or technical criteria or any other conditions made known prior to the bidding round. It should be noted that these powers are no different from those available to the Joint Authority when considering applications under the present work program system. The Joint Authority's powers are necessary to ensure fair competition and that the permits are awarded to competent explorers. The highest bidder may reject an offer of award of a permit. This will ensure that a bidder offered a number of permits will not be overextended financially by having to accept all the offers. This will also enable a bidder to withdraw if financial or business circumstances change after the bid has been lodged. The work program bidding system also includes this provision. Cash bids, however, will not be deductible from resource rent tax or company tax. Allowing deductibility would have encouraged higher bids which may have reduced the competition. An additional effect of allowing deductibility from company tax would be to disadvantage those companies that are not currently paying company tax. I address my remarks to this piece of legislation as the Liquefied Petroleum Gas (Grants) Amendment Bill, with which we are dealing in a cognate debate tonight, will be covered by other speakers on this side. In the time I have available I stress to the Parliament and to those listening the importance that off-shore drilling has to the supply of fuel in this country. Just off the coast in my electorate of McMillan, which is in the Gippsland area, are the Bass Strait wells. Over many years the work program system in that area has not worked as effectively as it could. Over many years we have seen the need for a change to the system whereby less regulation and more business enterprise could have been applied to that area. This legislation which has now been reintroduced will enable consortiums and companies throughut Australia to tender and to bid for exploration permits in some highly prospective off-shore areas such as the Bass Strait fields which play such an important role in our economy. It should not be forgotten that that part of the world provides an enormous amount of our fuel and is of enormous vitality to our economy. Any measures which we can introduce and which will provide better competition in those areas and better development of our petroleum exploration areas, can be only for the good of the economy and the good of the country. The honourable member for Dawson in outlining his opposition to the legislation was critical of the Senate and the fact that Senator Sanders, an Australian Democrat, has changed the position. According to the honourable member for Dawson, Senator Sanders, for cynical purposes, is taking a different approach from that taken by former Senator Jack Evans who was in charge of the legislation for the Democrats when it was earlier rejected in the Senate. I believe that at this stage the Bill will and should pass the Parliament. I firmly believe that if we are to look at exploration strategy in the light of commercial realities this sort of legislation must be passed. Companies and the consortiums involved will see the opportunities that are available in this legislation to free up the market. This Labor Government has not been afraid to allow economics to work rationally and this legislation is a very positive measure in that direction. I strongly support the Bills. Mr GOODLUCK(Franklin)(8.57) —I will speak very briefly on the Liquefied Petroleum Gas (Grants) Amendment Bill which terminates the operation of the subsidy under the principal Act on and from 1 October 1985. The Liquefied Petroleum Gas industry is always very perplexing to me especially when I find that LPG in Tasmania is twice as dear as it is in Victoria. The honourable member for Hume (Mr Fife) is in the House tonight. He was a very good Minister and had an understanding of the problems of the petroleum industry and, in particular, of LPG. It was proposed that the price of LPG would be only half the price of super petrol and as far as possible the prices would run parallel. However, I am afraid that that has got completely out of kilter. A lot of people converted to LPG because they thought that it would be cheaper and that if they converted to LPG for domestic use they would benefit. Consequently, they converted. The reason the Government at the time adopted import parity pricing was that it wanted to look for alternatives. The Liquefied Petroleum Gas (Grants) Amendment Bill and the Petroleum (Submerged Lands) (Cash Bidding) Amendment Bill do not run parallel with each other. On the one hand the subsidy will be taken off LPG and on the other hand we are talking about exploration. I appeal to the Minister for Science (Mr Barry Jones), who is at the table, to take heed of some of the things that I and others have said in the past. In South Korea most of the motor vehicles are run economically and efficiently on LPG and do not pollute the air, which is very precious to the South Koreans. In Japan most of the taxis are run on LPG. But we have this ridiculous belief in Australia that motor vehicles cannot be run on LPG, that they will have trouble in the long term with valves and goodness knows what. We witnessed the introduction of an LPG driven vehicle by Datsun. It was then taken off the market. This was probably done because of poor marketing and poor merchandising. That company did not introduce a dual system; it introduced only a system where the vehicle was powered by LPG. The Minister will recall that I have said before that there are alternatives in regard to differentials, upholstery, gear-boxes, colours of motor cars and goodness knows what but there is never any real alternative to petrol. Petrol driven vehicles will run economically and efficiently on LPG. We have witnessed some of the Government cars using it. The cynics keep saying that LPG is no good and that things occur when it is used. They do not occur in South Korea or Japan, where these vehicles are run economically and efficiently and do all the other things that I have mentioned. We need to make certain in Australia that, on the one hand, we have the storage capacity to cope with the demand for LPG. We need to encourage its use and we need to have a marketing system whereby people will get accustomed to the fact that it is efficient and is good for the motor vehicle and for the economy of Australia. I should vote against this legislation tonight but I think that would be an absolutely futile exercise. Let us face it, we are exporting to Japan at a cheap price. I do not know what the price is now but it is being exported at a very cheap price. People in Japan are cooking with LPG and they are laughing all the way to the bank over it. But in Australia we are putting another penalty on our consumers, the rural consumers whom we hear so much about and other people, such as the restaurateurs who find it necessary to use LPG as a means of cooking and those in the outback who use it as a means of lighting and running their motor vehicles. I say to the Minister that we need to do a bit more research into LPG. We should not disregard it completely but try to understand it and make certain that it will benefit Australians in the long term. The reason we went to import parity pricing-the specific reason that was paramount-was that we wanted Australia to be self-sufficient. We did not want to depend on the Arabs and other parts of the world for our sufficiency. Therefore, we encouraged people to go to LPG. We put up the price of petrol hoping that, because of that price increase, people would go to LPG. Unfortunately, things got out of kilter. The poor old consumers in Tasmania are paying twice as much for LPG as people are paying in Melbourne and taxi owners are paying twice as much and it has a flow-on effect in the economy. There is something wrong with the pricing, there is something wrong with the distribution and there is something wrong in Australia with the storage and use of LPG. The Government needs to do something about it. I support this Bill only because the Minister and members of the Opposition have said that it is of paramount importance for me to do so. The former Minister who is sitting in the back of the chamber would understand only too well what I am talking about. Mr Tim Fischer —The honourable member for Hume. Mr GOODLUCK —I am sorry, the honour- able member for Hume (Mr Fife). I have a poor memory for names and faces but the former Minister has a nice face and nice name. Let me get back to the Liquefied Petroleum Gas (Grants) Amendment Bill. I was absolutely astounded by an article that the honourable member for Dawson (Mr Braithwaite)-a very good shadow Minister-pointed out to me. The article is headed: `How Evans and Sanders got up oil lobby's nose'. I might not have a liking for oil companies but in no way would I determine that they should be allowed to do certain things if certain things are done in return. The woodchip industry, which, incidentally, is only part of industry in Tasmania, is being used by the conservationists as a lever-- Mr Simmons —What about the Bill? Mr GOODLUCK —I will get back to the Bill, so the honourable member does not need to take a point of order. This matter is dashed important. The conservationists are using the oil industry as a lever to stop the forest-based industries in Tasmania which employ nearly 3,000 Tasmanians and which are very important to the economy. Let me read from this article-- Mr Simmons —Do they use LPG? Mr GOODLUCK —Of course some of the smaller timber firms in Tasmania use LPG. Most probably it is used right throughout Australia. It is necessary for me to quote the following article from the Sydney Morning Herald of Monday, 18 November 1985, entitled `How Evans and Sanders got up oil lobby's nose': The name Norm Sanders didn't mean much to the oil lobby. `We didn't really know anything about Norm except that he rode a motor bike,' said the assistant director of the Australian Petroleum Exploration Association . . . It was a costly gap in the oil industry's knowledge of Federal politics. Senator Norm Sanders not only controlled the future of a controversial piece of oil legislation, he happened to have a pathological loathing of oil companies. Equipped with a PhD in geophysics, he spent six years working to halt offshore oil drilling in California after the 1949 Santa Barbara oil spill. He told the lobbyists from APEA that they and everyone associated with oil companies were corrupt. `They had never spoken to any politician who was so openly anti-oil', Senator Sanders writes. But then the incredible starts. The article stated: Their meeting-arranged for 8 a.m. in Canberra, to put the Sydney-based lobbyists to maximum inconvenience-was described by Mr Morahan as `incredible-he starts from the proposition that he wants to stop all oil drilling'. We went to import parity pricing. All the people of Tasmania are paying a high price for petrol so that Australia can become self-sufficient. We want the oil industry people to find more wells. We want more Australian petroleum. We want those wells to come up with new oil and we need to support them. Here we have a man who wants to stop all this for his own selfish, rotten reasons, using the woodchips issue as a lever to do so. We want to stop the legislation. The oil industry itself does not want this legislation because it cannot afford the associated costs. We all understand that costs have risen so we need oil exploration. We need new oil in this country to be self-sufficient. Here we have a fellow who has just come into the Senate, representing my State of Tasmania, saying that he hates oil companies, never caring about the motorists and the problems of Tasmanian motorists, never talking about the price of petrol in Tasmania. He does not want any new oil found in Australia. He wants to stop the woodchip industry in Tasmania and he is using this legislation as a lever. I think that is rotten, stinking politics. I am sure the people of Tasmania who have listened to me tonight will begin to understand some of these selfish, rotten little interest groups who are starting to decay Australia and all that we stand for. Therefore I support the shadow Minister at the table in opposing this Bill. I want cheaper petrol for Tasmanian and mainland Australian motorists. I want more oil to be discovered in Australia. I want the oil industry people to be able to find those wells and I want the price of petrol brought down so that we do not have to depend on import parity pricing or the devaluation of the dollar which is one of the significant reasons why the price of petrol in this country has risen so greatly. Mr SIMMONS(Calare)(9.04) —If people had suggested to me some 12 or 18 months ago that I would be taking part in a debate that would have the effect of removing the liquefied petroleum gas subsidy I would have looked at them rather incredulously, because my interest in the whole question of the liquefied petroleum gas subsidy goes back a number of years. Prior to my entering the Federal Parliament I spent five years as a member of the Bathurst City Council and during that time I had the opportunity also to serve as a member of the New Souths Wales local government gas advisory council. I served as Deputy Chairman of that body for two years. During that time, particularly in the period from about 1980 through to about 1982, there had been a rather steep escalation in the price of liquefied petroleum gas. Indeed, the former Government, recognising the difficulties that this would cause to local government, introduced the liquefied petroleum gas subsidy, which at that stage was $80 per tonne. The reason it did that was that the local government gas lobby was a very effective lobby. In the 1960s a suggestion was made that liquefied petroleum gas was almost like sawdust to the petroleum industry. It was regarded as an additional fuel which was not really of great use in the industry. Therefore, local government gas utilities were encouraged to convert from their coal bases to liquefied petroleum gas. When liquefied petroleum gas was processed to produce a gas which could be utilised by a town gas reticulation system two major production plants were used. Firstly, the reforming plant used LPG as a feedstock which was processed in association with steam. The second plant mixed LPG with air in controlled proportions to produce what is known as tempered LPG. The development of oil refining in Australia led to a very substantial local supply source of LPG. As a result a large distribution network both in bulk and bottled gas began throughout Australia in 1958. A whole series of rather rapid escalations in prices followed the oil crisis shock in the 1970s. This caused a tremendous impact in gas distribution. It was particularly significant in a State such as New South Wales where some 19 local government municipal bodies had gas undertakings. Therefore, we saw enormous price hikes at that period. In order to alleviate some of the political problems at that stage the Fraser Government introduced the liquefied petroleum gas subsidy of $80 a tonne. On 31 March 1984, in the course of the second reading debate on the Excise Tariff Amendment Bill, I made a number of comments similar to what I am making tonight about the impact of liquefied petroleum gas prices on the local government gas industry. For the first time in about three or four years local government bodies in New South Wales had a predictable situation. The difficulty for local government in running a gas utility is that there needs to be predictability of price and local government had been faced with rapid escalations in prices over a period of four or five years. For the first time, a little over 18 months ago, as a result of the changes made by the then Minister for Resources and Energy, Senator Walsh, there was a degree of predictability. The new system meant that price movements were related to the consumer price index. As a result, the wholesale price of LPG fell from $80 a tonne to $20.31 a tonne from the period March to October 1984. From October 1984 to April 1985 the price fell to about $19.97. It rose very slightly by about $2 a tonne from April 1985 but for the first time in about five years there was a degree of predictability in prices. For many years local government had been concerned at the huge impost on municipal ratepayers forced to use LPG, bearing in mind my earlier comments that particularly in the late 1950s and early 1960s local governments had been encouraged to convert their coal powered plants to LPG. As I said, LPG was considered to be the sawdust of the petroleum industry. In some senses it is very significant that tonight we are debating a Bill to take away the LPG subsidy completely. In contrast to what we saw some four or five years ago when there was a great hue and cry throughout the rural areas of Australia because of the rapid escalation in prices there has been little resistance to this measure, announced by the Treasurer (Mr Keating) in the May economic statement this year. The reason there has been very little resistance to this measure is that, so far as local government gas undertakings are concerned, there is this predictability and there is no longer a rapid escalation in prices. In the second reading speech to the Senate on 22 August 1985 the Minister for Community Services (Senator Grimes) made these comments, which in many ways perhaps sum up the situation with this Bill: This subsidy was originally introduced for a three year period from 1980 and later extended in a modified form to alleviate the impact of the sharp increases in the price of LPG at that time and to allow consumers time to adjust to changing price trends for LPG. In the longer term consumers would have the opportunity to convert to more readily available alternative fuels such as natural gas and electricity. The decision to abolish the subsidy is therefore consistent with the original intention of the subsidy which was to provide temporary relief to consumers facing rising prices for LPG. Tonight I wish to mention my electorate. In his second reading speech the Minister mentioned that alternative fuels could be available to certain areas of Australia. In the early 1970s a pipeline was being planned from the Cooper Basin in South Australia to Sydney. At that stage it was suggested that that pipeline would be linked to the important central western cities of Bathurst, Orange and Lithgow, which are three very important cities within my electorate. Because of environmental difficulties associated with the pipeline through that part of the State, but more importantly through the Blue Mountains National Park, it was decided that that pipeline would be deviated southwards through Young. Since then the councils of Bathurst, Orange and Lithgow have been pressing the Federal Government-initially the Fraser Government and subsequently the Hawke Government-to rectify that situation. I felt, as did the councils, that there was a moral obligation on the Federal Government and the Australian Gas Light Co. to supply natural gas to those three cities. I am pleased to say that recently, on 5 September 1985, in a joint announcement the Federal Minister for Resources and Energy, Senator Gareth Evans, in conjunction with the New South Wales Premier, Mr Neville Wran, announced that those three cities would receive natural gas in about 18 months time. That will give an enormous boost to those three cities. It is a bit like a chicken and egg situation. Without natural gas it is very difficult to attract industry; industry is not really interested in an area unless it has a guarantee that natural gas is on the way. I particularly want to congratulate the Hawke Government on its decision to supply natural gas to those three cities. The decision to terminate the liquefied petroleum gas subsidy will have an impact upon my electorate. As I said at the outset, the LPG subsidy of $80 a tonne was introduced at a time when prices were rising sharply and people throughout Australia, particularly rural Australia, were grossly disadvantaged because councils and others who supplied LPG at that time were encouraged to move over to that type of fuel. I am pleased that there is now a degree of stability in LPG prices. This is most important in my area because within the next 18 months the councils of Bathurst, Orange and Lithgow will not have the problems associated with LPG over the last five years. They will have the greatest premium fuel available in Australia at present, a fuel of which there is tremendous abundance-that is, natural gas-which will mean a tremendous boost to the whole industrial base of the central west of New South Wales. So I am particularly pleased to see that there is, as I have indicated, a degree of stability that has had an effect on the rest of provincial Australia. Naturally, I would like to see whole areas of Australia eligible for natural gas, but areas need a certain population and an industrial base for natural gas to be provided at a reasonable economic rent. I suppose all of us are parochial at times when speaking in this Parliament. People have justifiable concerns about the pricing of fuels, but on behalf of my particular region I take this opportunity of congratulating the Government. No doubt I will have an opportunity when the Pipeline Authority Amendment Bill is introduced to make further comments about natural gas in my area. This legislation is an important step because it introduces for the very first time a degree of stability in the pricing of a premium fuel. We will no longer see liquefied petroleum gas users being forced to put up with savage price increases of up to 40 and 50 per cent in one hit. I congratulate the Government for bringing about this change. I believe that the Government seeking at this stage to remove the subsidy is an important step because in many cases the raison d'etre for the subsidy has been eliminated. Mr BRUMBY(Bendigo)(9.18) —In the brief time available I would like to say a few words in support of the Petroleum (Submerged Lands) (Cash Bidding) Amendment Bill and the Liquefied Petroleum Gas (Grants) Amendment Bill. These two Bills have been dealt with very well and very competently by my colleague the honourable member for Calare (Mr Simmons). The Petroleum (Submerged Lands) (Cash Bidding) Amendment Bill amends the Petroleum (Submerged Lands) Act and provides for the awarding of highly prospective off-shore petroleum exporation permits on the basis of cash bids. Under the cash bidding system of this legislation permits will be awarded to companies or to consortia offering the highest bid provided that certain conditions are met by the bidder. The Joint Authority-which is, as the explanatory memorandum explains, the Commonwealth Minister and the relevant State or Northern Territory Minister acting together-will have the power to reject bids if they are considered inadequate on account of insufficient competition or if there is evidence of collusive bidding, if the bidder does not have the technical or financial resources to carry out effectively the operations off-shore, or indeed if any of the conditions made known prior to the bidding round have not been met. Unlike the existing off-shore permit arrangements, only limited renewal options will be available for permits awarded under the cash bidding system. The Opposition, of course, has announced it is opposing this legislation. The amendments contained in the Bill will promote the more efficient allocation of the more prospective off-shore exploration areas and will also improve the efficiency with which these permits are administered. The level of revenue that might be raised by the awarding of permits under this system is difficult to estimate-it probably cannot be estimated at this stage-as obviously it will depend on the number of areas released during each financial year and the industry's appraisal of and response to the acreage released. The Government has sought to introduce the cash bidding system for a number of reasons. The primary one, of course, is that there have been significant shortcomings of the work program bidding system, particularly where there is high competition for exploration permits. In a number of senses the work program system has been ineffective or unsuccessful, firstly because it encourages companies to propose substantial exploration programs that may later prove to be uneconomic. That might be either because of changes in economic conditions or circumstances or simply because of a downgrading in the prospectivity following the initial exploration that led to that occurring. There is a second reason, and that is that the current work program system forces the Government, where a work program becomes economic, to agree to exemptions from parts of the program, which undermines the credibility of the system and is inequitable to unsuccessful bidders. There is a third reason why we wish to see the existing program replaced by a cash bidding system, and that is that the existing program requires a subjective selection of the winning bid where competition is high, as no amount of technical advice can differentiate readily between work programs of a similar character and size, nor can that advice predict whether the work program will actually be completed by the applicant. The fourth reason, and one of the most important ones, is that the work bidding system is costly and complex to administer, as work programs must be verified throughout the life of the permit in order to maintain the credibility of the system. It is for those four reasons that the Government has introduced these amendments to introduce cash bidding. In contrast to the four reasons I have just mentioned, cash bidding will give explorers the opportunity to adopt the optimum and the most economically efficient exploration philosophy based on the progressive acquisition of information about the permit areas. Commercial judgments can then be made about the appropriate level of exploration at any given time without the sometimes heavy, sometimes excessive and perhaps unnecessary, element or hand of government regulation intruding. I support that Bill. The other Bill before the House is the Liquefied Petroleum Gas (Grants) Amendment Bill, which is of particular interest to me and, of course, to many of my constituents. It is estimated that there are some 5,700 consumers of LPG within the Federal electorate of Bendigo, an electorate which ranges westward from the provincial city of Bendigo taking in Maryborough, Stawell and Halls Gap and northward to Donald and Charlton. I am particularly interested in the aspect of LPG pricing policies and natural gas distribution policies as they affect the area of Stawell in my electorate. I think it is worthy of note that under the existing policy, which we inherited from the previous government, there were serious problems with LPG pricing in Australia. As my colleague the honourable member for Calare remarked, the previous Government's policy, which it introduced in 1980 to provide a subsidy, effectively, of $80 per tonne, did provide some relief from excessively high and wildly fluctuating LPG prices, but did not really solve the problem that the overall context of its policy created for users. Tying the price of LPG effectively to export parity prices still meant enormous fluctuations in the cost and price of LPG for consumers throughout Australia. It is worth repeating, if my memory serves me correctly, that we saw an increase in the price of LPG of 200 per cent in 1979-80. Even after the introduction of the previous Government's policy in 1980 involving the $80 per tonne subsidy, we still saw, for instance, between 1982 and 1983, the price of LPG to consumers rise by almost 50 per cent-I think 43 per cent was the exact figure. Whilst a subsidy was there it did not really provide relief for consumers, particularly in country areas, from those fluctuations which occurred because of international price changes; nor did it provide an adequate buffer against the continuing escalation of those prices because of parity pricing. In March 1984 this Government introduced a new set of pricing and subsidy arrangements which were to operate until the end of March 1987. At that time we set the basic wholesale price of LPG at the average export parity price for Bass Strait propane and, under the agreement and policy announced then, adjustments were to be made on 1 October and 1 April each year. Perhaps the most significant part of the policy that we announced at that stage was that future increases in the price of LPG were to be limited to the increase that occurred in the fuel and light component of the consumer price index for the latest six month period prior to the adjustment date. The effect of the policy which we announced then and which is still operable is that by tying the degree of fluctuation or the degree to which, for instance, LPG prices might suddenly escalate because of either the weakness of the Australian dollar or fluctuations in parity prices overseas, export prices, to the fuel and light component of the consumer price index we have engendered an enormous degree of price stability in the price which Australian consumers must pay for LPG. This Bill concerns the termination of the subsidy which we announced on 14 May 1985. That subsidy was terminated from 1 October 1985. It is not a significant subsidy in terms of dollars; it amounts to a few million dollars per annum. The effect of the abolition of that subsidy is only once-off and only small on the prices which consumers might pay. The abolition from 1 October resulted in a one-off increase in wholesale prices of about $20 per tonne, which is about 8 per cent, and that translates into an increase of about 3 per cent or 4 per cent in retail prices. On this Bill I emphasise that the crucial part of the Government's policy in respect of the pricing of LPG is to maintain price stability. We have done that through the agreement and the new arrangements which we introduced in March 1984 by providing that there cannot be increases in the future above or beyond the increases which occur in the fuel and light component of the CPI. That is a crucial thing for consumers, because, as I say, it provides stability. It provides stability for industry as well. Industry's main concern over the last five to six years has been to obtain a degree of price stability so that it can plan ahead and look at what the cost of its imports might be. I mentioned the 5,700 users of LPG in my electorate. From my communication with them, particularly after we announced the changed arrangements in 1984, I found that they were very pleased about the new stability that we had introduced into the system. The users of LPG in the areas of Stawell and Ararat, just outside my electorate, do not have access to natural gas, and they would, of course, like to see efforts made by government to extend natural gas pipelines and grids through to their areas, so that in future they would have access to it. For those areas, I can only say that there is a substantial amount of industry in Stawell which is dependent on high energy input. I can think, for a start, of Motorway Tyre Retreaders in Stawell, which is concerned about the price of its input and would be delighted if it were possible, through Commonwealth and State programs, to see natural gas provided to Stawell. It would provide an enormous fillip to industry in that area. I conclude by endorsing the two Bills before the House, particularly the LPG Bill, which, as I have said, has engendered an increasing amount of price stability for both industrial and commercial users of LPG. Mr PETER FISHER(Mallee)(9.28) —I had not intended to speak on the Liquified Petroleum Gas (Grants) Amendment Bill, and I shall not delay the House for much longer, but I really cannot allow the Bill to go through the House without signifying my opposition to it. I remember very clearly when the subsidy concerned was introduced at $80 a tonne. It was introduced for two specific reasons. The first reason was to give an incentive to people to use liquefied petroleum gas in place of other fuels, simply because we had an excess of LPG in the country and because we wanted to ensure that the most efficient use was made or our finite fuel resources. As a result of that decision, many people throughout our community converted to the use of LPG, both in the transport industry and, of course, for domestic use. It was also introduced, of course, to ensure that parity pricing, which was introduced at that time to encourage exploration, would move ahead without any major disadvantage to a specific group of people, mainly country people who did not have access to natural gas usage. Now, of course, it has been totally taken away. While the honourable member for Bendigo (Mr Brumby) says that it is not a significant amount, I remind him that it is a significant amount to those people who receive the benefit. It was a concession provided by the Commonwealth Government, when it was introduced, of some $35m a year, which is a very significant amount when applied to the very small number of people across Australia who use LPG. I also have some 6,000 people in my electorate who use LPG daily and the removal of this subsidy progressively over the last two or three years is providing an additional burden for them. I simply signify my objection to the way this measure has been handled. We are today exporting LPG to Japan very cheaply but we are imposing a penalty on those people in this country who use it. While this has produced some stability and removed some of the fluctuations from the pricing policies, it has at the same time imposed a quite significant cost on those people throughout my electorate and throughout many other areas of rural Australia where no other alternatives are available. I object very much to this proposal and I oppose the Bill. Mr BARRY JONES(Lalor-Minister for Science)(9.32) —in reply-Reeling from the savage blows of this remorseless Opposition, I nevertheless thank all honourable members who have contributed-the honourable member for Dawson (Mr Braithwaite), the honourable member for Franklin (Mr Goodluck), the honourable member for McMillan (Mr Cunningham), the honourable member for Calare (Mr Simmons), the honourable member for Bendigo (Mr Brumby) and the honourable member for Mallee (Mr Peter Fisher). Let me turn to the points raised about the two Bills. First of all, the honourable member for Dawson said that the liquefied petroleum gas subsidy was being phased out two years early. Strictly it is 18 months early. The due date was March 1987. Under the policy introduced by Senator Walsh when he was the responsible Minister in 1984 the subsidy was expected to phase out by mid-1985 or early 1986. However, the devaluation of the Australian dollar has meant that this will not now happen. Consumers of LPG are getting considerable benefit from the current policy. The current price is $40 or so below the export parity price and there is no justification for continuing the additional distortion created by the subsidy. For the benefit of the now absent honourable member for Franklin I point out that the LPG subsidy has no impact on the price of automotive LPG. The subsidy was payable only to traditional users, not to automotive or petrochemical users. Automotive users gain advantage of the price stabilising policies introduced in March 1984. The price of LPG in Tasmania is about twice that in Melbourne for two reasons, both of them of course to do with geographical isolation-the high cost of transport and storage to and in Tasmania. Of course, owing to a rush of free marketeering to the head there have also been outbreaks of price discounting in Melbourne which has made the price perhaps artificially low. Mr Goodluck —I do not believe all that, but it is good. Go on! Mr BARRY JONES —No, I have no more to say on that. On the Petroleum (Submerged Lands) (Cash Bidding) Amendment Bill, let me make this absolutely clear. I was fascinated with the article in the Sydney Morning Herald about Senator Norm Sanders. It sounds like what the New Yorker calls vivid writing. I must find out about the champagne party in Senator Evans's office. I do not know whether it happened. I certainly was not invited as Minister Assisting; let me assure honourable members of that. Mr Goodluck —Even though we smile, it is very serious. Mr BARRY JONES —The fact is that the story sounds extremely implausible. Let me make it clear that the Bill has in no way been rushed through. There has been extensive debate on the provisions throughout the year. Since its introduction, this Bill has been on the table for two weeks. The Opposition has brought forward no further argument to justify its opposition to the provisions. The Government has rejected very strongly any suggestion of a deal with the Australian Democrats on this legislation. The Democrats have reviewed the legislation very closely since March 1985. Senator Sanders, when speaking in the Senate on this legislation, said: What about the argument that the Australian Democrats' support for cash bidding at this time is some sort of repudiation of our former position? I suppose it could be seen as such. However, we have seen new data. We have decided that we can change our minds. Honourable senators will have to admit that the sign of an intelligent approach to a problem is that when one is confronted with new data one can change one's mind; one is not locked into a doctrinaire position . . . At the time the cash bidding Bill was put to the vote, the Democrats were still looking at alternative ways of deciding who should get oil leases in highly prospective areas. We had not reached a consensus on the best possible way of doing it . . . The vote against the Bill, therefore, was taken in the context of a further investigation of all the options. The suggestion that cash bidding will somehow lead to a reduction in oil self-sufficiency is based on the misconception that cash bidding will reduce funds available for exploration and therefore exploration activity. It is argued that it will cost more to get into it. It is true that before one can get into the bidding there is an entry ticket to be purchased and that costs $3,000. But the point has to be made that, if the prospective bidders are not able to afford to compete, the reality is that they have no prospect whatever of succeeding. In the immortal words of Joan Crawford in the old film: `Whom is fooling whom?'. If companies are to be excluded from the game by a $3,000 admission fee, it is ridiculous and fatuous to think that they could be possible competitors. Contrary to the assumption upon which this criticism is based, companies do not neglect promising exploration prospects after having acquired them. Having acquired an exploration permit, companies will undertake the most commercially viable-there is that word again-exploration program consistent with the prospectivity of the permit and the profits they can earn from expected discoveries. Acquiring an interest in a permit by way of a cash bid is no different from acquiring an interest in a permit by farming-in. Companies pay a premium analagous to a cash bid when farming-in to a permit. Farm-ins are an essential aspect of the Australian exploration industry and it is inconceivable that they could be regarded as having the effect of reducing exploration activity in Australia. It also needs to be pointed out that the cash bidding arrangement is absolutely consistent with what happens in other countries which have some parallels with Australia. It is used in the United States of America, in Canada and in the North Sea oil area of the United Kingdom, so there is nothing novel about it. We are a government very much distinguished for novelty-the most original government since the Whitlam Government of happy memory. But this is not something that we have just dreamt up on our own. It is an absolutely standard practice. It is the measure of the poor level of information opposite that people think of it as some freakish thing that has just been brought up in order to impose some swinging impost on the oil exploration industry. We do it because we believe it is the most effective way to sort out who are the serious contenders and who are the people who will put the most effort into the exploitation of this very valuable resource. Question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Barry Jones) read a third time. Consideration resumed from 15 November, on motion by Mr Barry Jones: That the Bill be now read a second time. Question put. The House divided. (Mr Deputy Speaker-Mr P. C. Millar) Ayes . . . . . . . . . . . 74 Noes . . . . . . . . . . . 57 —— Majority . . . . . . . . . 17 —— Baldwin, P. J. Jones, BarryBeddall, D. P. Keating, P. J.Blanchard, C. A. Kelly, R. J.Blewett, N. Kent, L.Bowen, Lionel Keogh, L. J.Brown, John Kerin, J. C.Brown, Robert Klugman, R. E.Brumby, J. M. Lamb, A. H.Campbell, G. Langmore, J. V.Charles, D. E. Lee, M.Child, J. Lindsay, E. J.Chynoweth, R. L. McHugh, J.Cleeland, P. R. McLeay, LeoCross, M. D. Maher, M. J.Cunningham, B. T. (Teller) Martin, S. P.Darling, E. E. Mayer, H.Dawkins, J. S. Mildren, J. B.Dubois, S. G. Milton, P.Duffy, M. J. Morris, AllanDuncan, P. Morris, PeterEdwards, Ronald Mountford, J. G.Fatin, W. F. O'Keefe, N. P.Fitzgibbon, E. J. O'Neil, L. R. T.Free, R. V. Punch, G. F.Gayler, J. Saunderson, J.Gear, G. Scholes, G. G. D.Gorman, R. N. J. Scott, J. L. (Teller)Grace, E. L. Simmons, D. W.Griffiths, A. G. Snow, J. H.Hand, G. L. Staples, P. R.Hayden, W. G. Theophanous, A. C.Holding, A. C. Tickner, R. E.Hollis, C. Uren, T.Howe, B. L. West, S. J.Hurford, C. J. Willis, R.Jacobi, R. Wright, K. W.Jakobsen, C. A. Young, M. J. Adermann, A. E. Hodgman, W. M.Andrew, J. N. (Teller) Hunt, R. J. D.Beale, J. H. Lloyd, B.Blunt, C. W. McArthur, F. S.Braithwaite, R. A. McGauran, P. J.Brown, N. A. McVeigh, D. T.Burr, M. A. Macphee, I. M.Cadman, A. G. Miles, C. G.Cameron, Donald Moore, J. C.Cameron, Ewen Nehl, G. B.Cameron, Ian Peacock, A. S.Carlton, J. J. Porter, J. R.Cobb, M. R. Reith, P. K.Connolly, D. M. Rocher, A. C.Conquest, B. J. Ruddock, P. M.Cowan, D. B. Shack, P. D.Dobie, J. D. M. Sharp, J.Downer, A. J. G. Shipton, R. F.Drummond, P. H. Sinclair, I. McC.Edwards, Harry Slipper, P. N.Fife, W. C. Smith, W.Fischer, Tim Spender, J. M.Fisher, Peter Sullivan, K. J.Goodluck, B. J. Tuckey, C. W.Hall, Steele Watson, DavidHalverson, R. G. Webster, A. P.Hawker, D. P. M. White, P. N. D.Hicks, N. J. (Teller) Wilson, I. B. C.Hodges, J. C. Humphreys, B. C. Aldred, K. J.Price, L. R. S. Coleman, W. P.Bilney, G. N. Jull, D. F. Question so resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Barry Jones) read a third time. Consideration resumed from 15 November. The Bill (Including amendments moved by Mr Dawkins). Mr CONNOLLY(Bradfield)(9.51) —I assure the House that David Combe's contract as Consul-General and Trade Commissioner in Vancouver will not be extended by a coalition government. In appointing Mr David Combe as Australian Trade Commissioner in Vancouver the Government is guilty of the most blatant misuse of political patronage since the late Senator Gair was made our Ambassador to Ireland in a bungled attempt to gain control of the Senate. Mr Combe was given his post in Vancouver not because he can lay claim to a conspicuous record in conducting international trade negotiations. He owes his preferment to the anxiety of the Prime Minister (Mr Hawke) and his colleagues to pacify the collective conscience of members of the Australian Labor Party who continue to believe that their former national secretary was badly treated by the Australian Security Intelligence Organisation and the Hope Royal Commission over what is known as the Ivanov affair. Justice Hope's final report on Combe's relationship with an alleged spy gave rise to serious implications for national security. What claim did Mr Combe have for preferment from the Hawke Government? According to his recorded conversations with the KGB's Mr Ivanov he expressed the hope that he would become Australian Ambassador to Moscow. In an edited transcript of conversation between Mr Combe and Mr Ivanov on 4 March 1983, contained in the Hope report, Mr Combe made this point very clear. British Colombia is distinctly less prestigious than frequenting the Kremlin's corridors of power. But Mr Combe's appointment to Vancouver will presumably satisfy the delegates to the 1984 ALP Federal Conference who unanimously resolved that there was no present impediment to David Combe being employed by, or dealing with, the Commonwealth Government. Mr Combe was denied access to the Federal Labor Government in April 1983 because of the adverse security report from ASIO. I quote Mr Justice Hope from his December report: The Government has acted bona fide for valid national security reasons, and Mr Combe contributed to his own injury to a significant extent. When the Prime Minister (Mr Hawke) presented his report to Parliament he said: The Government accepts the Royal Commission's conclusion in this respect and will not compensate Mr Combe other than for the legal costs he has incurred. Famous last words! Following the resolution carried by the last ALP Federal Conference Mr Combe has been compensated by the Government awarding him an enviable overseas post, with a salary in the vicinity of $45,000 plus allowances for a position for which he has exhibited no compelling qualifications. He remains a man with proven bad judgment and is not an appropriate person to represent Australia abroad. Mr DOWNER(Mayo)(9.53) —I want to make just a few brief points about the Australian Trade Commission Bill [No. 2] and the amendments. My first concern about the Bill is a fairly simple one; that is, I am a little alarmed that the marketing activity of the Department of Trade will be divorced from the policy part of the Department. Up until now those two parts of the Department have been fairly integrated. With the setting up of a statutory authority now, in the form of the Australian Trade Commission, there is every sign that those two parts of the Department will become further and further apart so that policy will be formulated without the day-to-day input of those involved in the market-place-they being, of course, the trade commissioners themselves. The second point I would like to make-I have raised this in the House before-is that the Minister for Trade (Mr Dawkins) and his predecessor as the Minister for Trade, the now Attorney-General (Mr Lionel Bowen), had from time to time arranged the issue of the establishment of an overseas trading corporation. It is quite some time since we have heard about this proposal and I am a bit surprised that the Minister has no longer discussed it. Perhaps that is due to the opposition to the proposal which has come from the various business groups and companies around Australia involved in exporting. But possibly also it is because there has been a substantial reassessment of Government policy and, in this case, a reassessment that I would welcome. The question is: Why has the Government spent thousands of dollars on a survey by the Australian Bank Ltd as to whether there is a need for an overseas trading corporation, urged the Bank to draw conclusions that the trading corporation should be established and then abandoned the proposal? I would like to hear from the Minister, at the end of the discussion, as to why that decision has been taken. The third point I would like to make about the Bill is that I do not believe it addresses sufficiently the very sensitive issue of the relationship between the Department of Trade and other government departments. For example, this piece of legislation establishes a statutory authority under which trade commissioners will now serve overseas. The Bill does not address the issue as to what the relationship is going to be between heads of missions, who are Executive Council appointees, and those trade commissioners in overseas posts. If that issue is not addressed by the Government it will lead to a considerable degree of conflict between the Department of Trade and the Department of Foreign Affairs, which is something that has to be avoided much more constructively than has been the case in the past. Interdepartmental rivalry, particularly between the Department of Foreign Affairs and the Department of Trade, is a feature of Australia's overseas service which I think I could go so far as to say is often laughed at by other Western countries. That rivalry is diverting resources from the real raison d'etre of the various departments in their service overseas. It is my understanding that when the Cabinet submission on this Bill was first drafted it was completed and sent to other departments on a Friday and yet the following Monday it was submitted to Cabinet. So those other departments had to consider the draft Cabinet submission over a weekend and were not able to have sufficient input into the final character of the Bill. In other words, it was an effort by the Minister for Trade, as far as I read the situation, to railroad the Bill through without other departments and, indeed, other Ministers being able to have sufficient input, and that is something I regret. I very much hope that the rumours around Canberra that the Department of Trade and the Minister for Trade are trying to set up that Department as the overall co-ordinator of foreign economic policy are not true because that would suggest, once more, more interdepartmental battles in both Canberra and overseas. I hope that the Minister for Trade, the Minister for Foreign Affairs (Mr Hayden) and other Ministers involved in Australia's overseas relations will do what they can as soon as possible to sort out these problems which admittedly have plagued Australia for many years. I noticed an article by Laurie Oakes in the Bulletin in August which mentioned a report prepared by the Department of Foreign Affairs entitled `Profile of Australia's Overseas Representation'. That report pointed out, amongst other things, that the Foreign Affairs Department not only provides support for the Department of Trade overseas, which I believe it should do, but also spends so much of its time as well as administrative funds on supporting other departments and so little of its time conducting the tasks of diplomacy which are so important for Australia. These issues, unfortunately, are not addressed in this piece of legislation. I believe they should be addressed, if not in the legislation, at least by the Minister, because from my own experience in the Department of Foreign Affairs and in the Public Service in general these particular rivalries have gone on for years and years and have not been addressed at the political level, which is the level ultimately at which they have to be resolved. Mr BRAITHWAITE(Dawson)(9.59) —I do not want to take up too much time but I wish to refer to a couple of items that I mentioned in the second reading debate in connection with the functions of the Australian Trade Commission. There is concern that the new Commission could trade in competition with the normal private enterprise operation that we have in Australia. I refer the Minister particularly to clause 8(a) (i), which is about representing the trading and commercial interests. I believe that could be so interpreted. But, more importantly, I refer to clause 8(a) (vi), which indicates that it is a function of the Commission to carry out certain things in competition. I refer also to clause 77. Again I ask: If the Commission is not to be set up on a commercial basis, how then can it render a commercial fee-because there is a fee for service? Appropriately in relation to this Bill, I refer to a reply which the Minister for Immigration and Ethnic Affairs (Mr Hurford) gave to a question on notice when I asked why it was not possible for the Commonwealth to provide contingencies or provisions for long service leave, superannuation and the whole lot. I mentioned in particular the difficulty that we had had with Trans Australia Airlines in that it had to be bailed out of its superannuation commitments about 12 months ago. The Minister replied, when asked how this contingency would be addressed: Those statutory authorities that are bodies corporate and could be termed `public corporations' operate their own bank accounts and are required by the `Guidelines for the Form and Standard of Financial Statements of the Commonwealth Undertakings' issued by the Minister for Finance, to prepare financial statements in accord with generally accepted (accrual) accounting practices. In this respect the Guidelines reflect the requirements of the Companies Act and the Australian Accounting Standards promulgated by the accountancy profession. Thus, these authorities are required to disclose all provisions, including those related to employee benefits. While the Commission is not a body corporate or a public corporation, I believe that if it is going to charge a commercial fee it cannot ascertain the value of that commercial fee unless it knows all its contingencies. For instance, in one year the requirements of the statutory authorities are referred to as follows: The cash based fund accounting system set out in that legislative framework is designed to meet the Constitutional requirements and the associated Parliamentary appropriation process that together, underpin the Executive Government's financial operations. If the Commission is to operate under that and there is a massive payout in any 12 months on the transfer of staff from the Commission, this should affect the commercial basis on which the fee is rendered. I believe that if we are going to set up a commission of this nature we must first establish its liabilities and its continegencies much further down the line. What clause 77 provides is that the contingency for depreciation is the only liability mentioned. Mr DAWKINS(Fremantle-Minister for Trade)(10.03) —I thank the House for its contribution to this debate, although it is a bit tiresome to hear more lectures from failed diplomats who now want to lecture this Government on how to improve Australia's performance. This is the reaction of honourable members who have been supportive of a government that participated in the decline over the last three decades of Australia's trading performance. The Australian Trade Commission Bill is an attempt to do something tangible, not only about improving that performance but also about improving the links between the Government, which has over a number of years provided services of an expanding kind, and those people who are actually involved in export itself. The Government itself, in its own name, exports very little, if anything at all. It is the private sector and the Government's statutory marketing boards which are responsible for the bulk of Australia's export activity. We are establishing this Commission so that we can provide better links between those people who are actually exporting and the Government which stands ready to assist them in the most relevant way. The points which have been made concerning the need for co-ordination between the Commission, the Department and, indeed, other departments, have been fully addressed by the Government. They are not matters which are the subject of legislation. They are matters which the Government has given very considerable attention to because we recognise that it is important to have the maximum amount of co-operation between this Commission and the Department of Trade and, indeed, the very many other departments of state which have something to do in a larger or smaller way with our economic relations with other countries. Those questions are vital ones but they are not appropriate to be the subject of this legislation. I refer to the most recent remarks of the honourable member for Dawson (Mr Braithwaite). Of course, the Australian Trade Commission can never entirely be a commercial body. The bulk of its budget will continue to come from subventions from the Appropriation Bill. The bulk of its budget will continue to provide export incentives of one kind or another under the export market development grants scheme; so there is no way in which it can be entirely commercial. However, there are activities which can command a price and, of course, arrangements will be made by the board to establish the appropriate price which can be charged for those services. But it is not as though it is in competition with anybody at the moment. If it were in competition, it would be the most unfair competition of all because at the moment through the Department of Trade we are providing services for virtually nothing whereas with the passage of this legislation we will begin the task of recouping some of the cost of providing those services to those who use them. Where it can, the Commission will work in a commercial way but there is no intention that the Commission will be fully commercial in the way the honourable member for Dawson seems to have in mind. With regard to references to the overseas trading corporation, this Bill has nothing to do with those proposals. The remarks of the honourable member for Dawson on clause 8, covering the functions of the Commission, were entirely erroneous. Amendments agreed to. Bill, as amended, agreed to. Bill reported with amendments; report-by leave-adopted. Bill (on motion by Mr Dawkins)-by leave-read a third time. Debate resumed from 12 November, on motion by Mr Dawkins: That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time. Messages from the Governor-General recommending appropriations announced. The Bill. Mr DAWKINS(Fremantle-Minister for Trade)(10.10) —by leave-I move: (1) Clause 2, page 1, line 10, omit ``11, 12, 19 and 62'', insert ``12, 19, 32 and 61''. (2) Clause 2, page 1, line 12, omit ``Section 36'', insert ``The amendment made by section 34''. (3) Clause 9, page 5, lines 34 to 44, omit sub-clauses (3) and (4), insert the following sub-clause: ``(3) The Commission shall, during the period during which the Board continues in existence by virtue of sub-section (1), pay to the members of the Board, other than a member of the Board who is Managing Director or Deputy Managing Director of the Commission or who is employed by the Commission, in respect of the preparation of the report and the financial statements referred to in sub-section (2), such remuneration and allowances as the Minister, by notice in writing given to the Commission, determines to be appropriate.''. (4) Clause 10, page 6, lines 36 to 43 and page 7, lines 1 to 3, omit sub-clauses (4) and (5), insert the following sub-clause: ``(4) The Commission shall, during the period during which the Board continues in existence by virtue of sub-section (1), pay to the members of the Board, other than a member of the Board who is Managing Director or Deputy Managing Director of the Commission or who is employed by the Commission, in respect of the preparation of the report and the financial statements referred to in sub-section (2), such remuneration and allowances as the Minister, by notice in writing given to the Commission, determines to be appropriate.''. (5) Clause 30, page 15, lines 30 to 34, omit sub-clause (3), insert the following sub-clause: ``(3) The Commission shall, during the period during which the Grants Board continues in existence by virtue of sub-section (1), pay to the members of the Grants Board, other than a member of the Grants Board who is Managing Director or Deputy Managing Director of the Commission or who is employed by the Commission, in respect of the preparation of the report referred to in sub-section (2), such remuneration and allowances as the Minister, by notice in writing given to the Commission, determines to be appropriate.''. (6) Clause 43, page 19, lines 4 to 8, omit sub-clause (3), insert the following sub-clause: ``(3) The Commission shall, during the period during which the Grants Board continues in existence by virtue of sub-section (1), pay to the members of the Grants Board, other than a member of the Grants Board who is Managing Director or Deputy Managing Director of the Commission or who is employed by the Commission, in respect of the preparation of the report referred to in sub-section (2), such remuneration and allowances as the Minister, by notice in writing given to the Commission, determines to be appropriate. (7) Clause 63, page 24, line 2, after ``sub-sections 38 (2) and 39 (2)'' insert ``, and facilitating the charging of concessional rates of interest in respect of loans made under section 49,''. Amendments to six clauses are proposed. Four of the amendments are of a similar nature and relate to the remuneration and allowances payable to members of the boards of the Export Finance and Insurance Corporation, the Australian Overseas Projects Corporation and the Export Development Grants Board for the purpose of completing the final reports of their respective organisations. The amendments provide for the Minister to determine the remuneration and allowances payable except in situations where board members are appointed to the positions of managing director or deputy managing director of the Australian Trade Commission or are employed by the Commission. In these latter situations no remuneration or allowances are payable. A further amendment provides that part of the amount appropriated for the purposes of the Commission during the financial year ending 30 June 1986 will be used in respect of the concessional interest component of loans made by the Export Finance and Insurance Corporation. This provision was inadvertently omitted from the Bill. The amendment in no way alters the purpose for which the funds are appropriated. The amendments to the remaining clauses relate to the commencement date of certain provisions of the Bill. Amendments agreed to. Bill, as amended, agreed to. Bill reported with amendments; report-by leave-adopted. Bill (on motion by Mr Dawkins)-by leave-read a third time. Motion (by Mr Dawkins) proposed: That the House do now adjourn. Mr COWAN(Lyne)(10.13) —I wish to express my grave concern about Australia's economy. My feelings in respect of the economy have been borne out by Australia's recent balance of trade figures, which showed a deficit for the year of $1.6 billion. It was of interest to note in the Australian Financial Review today the comment made that many economists throughout the country who had made certain predictions concerning the economy now admit that they were wrong. After travelling around my electorate and elsewhere in recent times I believe that there is a growing concern about where the Australian economy is being led. There is general agreement about the floating of the dollar but there is grave concern today about how the economy is working and whether Australia has the substance and the will to compete with the rest of the world. The Prime Minister (Mr Hawke) and the Treasurer (Mr Keating) have made certain promises. Even the Minister for Primary Industry (Mr Kerin) admitted during Question Time today that although he had said that interest rates would be coming down they were not. He had to admit today that they were not. When we view our interest rate situation together with our inflation rate and out unemployment position we have to appreciate that, if we are to bring employment back, this nation has to be in a position to compete with other exporting countries around the world. Based upon a 36 to 37-hour week, we are competing with other countries which are working a 48-hour week, with different industrial conditions from ours. I do not say that we should accept in globo the conditions of other countries but the important fact is that this nation is expected to meet its commitment so far as world trade is concerned, particularly in relation to the marketing of products off the farm. In practically every sector of primary industry today-sugar, dairying and other fields-the Government is considering ways in which we can rationalise the industry to decrease overall production. Many of us would agree with that to a certain degree, but I have a feeling that if our costs continue to rise, as a crisis arises in each sector of primary industry, the Government will be taking measures to reduce the production off the land in the industries concerned. This would disturb me because of the importance of our balance of trade and the importance of primary industry to this nation. I sound a warning that this is the track down which this country is going. Unless we have a different approach to our industrial relations, unless we do something about the rising costs-we are linked into the accord and the Government has indicated that it has no intention to alter or amend its arrangement with the Australian Council of Trade Unions-our economy will deteriorate more and more as time goes on. Undoubtedly the fall of our dollar today is being gauged upon this nation's future ability to produce at a reasonable cost and export around the world. As a young country with all our physical resources compared with those of other countries, we have very little fire in our belly while our competitors, with very small amounts of resources, have a lot of fire in their bellies. The trouble is that incentive is not really being given by any of us today-Government or Opposition-to awaken this country to its responsibilities before we go too far down the line. Mr SPEAKER —Order! The honourable member's time has expired. Mr MOUNTFORD(Banks)(10.18) —Mr Speaker, you will recall that on Friday in a 43-second adjournment debate I commenced an address entitled `Australian Travellers Beware'. This case constitutes perhaps the greatest travesty of justice ever to befall an Australian citizen travelling abroad. It is clear that the Australian Government must take all possible steps to defend and assist this citizen whose life and health have been shattered in circumstances which have astonished not only me but also an eminent judge and member of the United States judiciary. The facts may be briefly summarised as follows: In January 1980 Mr Les Blackstone, an Australian citizen of Kiora Street, Panania, was holidaying in Las Vegas with his wife. Mr Blackstone was hit by a car driven by a 76-year-old American while walking across a lighted pedestrian crossing. He suffered shocking injuries including head injuries, internal injuries and broken limbs. I am led to believe that the American concerned, a Mr Abraham Jaramillo, is a wealthy and influential local resident of Las Vegas. The driver of the car in question was charged with criminal negligence. The story so far is sad and unfortunate but not in itself extraordinary. I can assure honourable members, however, that it is downhill from here. Mr Blackstone, upon legal advice, commenced proceedings in Nevada for damages for the personal injuries suffered by him. Last year in Las Vegas the case against the defendant American was heard before a judge and jury. The result was staggering. First, the local jury found Mr Blackstone was 67 per cent at fault by being in the pedestrian crossing and accordingly found in essence for the defendant. Secondly, the trial judge, Judge Shearing, stated that she was `appalled' by the verdict. Thirdly, Mr Blackstone appealed this decision, which was granted, with a new trial being ordered. Fourthly, the defendant and his insurers, no doubt being given dutch courage by the astonishing first verdict themselves, appealed. The staggering decision of the Supreme Court of Nevada was that the defendant's appeal was successful. The first verdict, that Mr Blackstone was 67 per cent responsible, was confirmed. I can do no better at this stage than to quote some of what was said by Mr Blackstone's experienced American lawyer, a Mr Alan R. Harter, in a recent letter advising him of the outcome of the appeal. He states: It has been an expensive and extremely unpleasant experience for all of us. As I indicated in my letter previously, the time and out-of-pocket expenses for my office has probably exceeded $30,000. Your losses, of course, are much greater. Some extremely strange things happen in the world of law, but I have seen none stranger than the events which have taken place in this case. Mr Harter goes on: If you have any questions I will attempt to answer them as best I can, but I do not expect in this lifetime to have any rational explanation of why the jury brought in the verdict which they brought in. This is, again, not the end of the nightmare for Mr Blackstone. No doubt emboldened by the final appeal, the defendant and his insurers have renewed their motion for Mr Blackstone to pay all of their lawyer's fees and court costs. Mr and Mrs Blackstone are average working-class Australians, whose dreams of an American holiday have turned into a nightmare. If the defendant is successful in his claim for costs, it would more than likely bankrupt the Blackstones and leave them out in the cold, physically and emotionally destitute. The Blackstones believe that the perverse jury finding was a simple case of discrimination against Australian tourists. On the evidence available to me I am inclined to agree. After all, it is not every day that a local jury finds a gentleman substantially responsible for being knocked down while walking across a marked pedestrian crossing. Any discrimination, or apparent discrimination, against Australians must alarm this Parliament and every Australian citizen, notwithstanding the fact that it takes place far away from Australian soil. I therefore appeal to the Attorney-General (Mr Lionel Bowen) and the Minister for Foreign Affairs (Mr Hayden) to take this matter up with the United States authorities with the object of obtaining justice for Mr Blackstone through what must normally be a fair and just judicial system in the United States. Mr RUDDOCK(Dundas)(10.22) —Honourable members will be aware of the very considerable interest in the community in the issue of the Australian flag and of the formation of a number of organisations desirous of maintaining the flag in its present form, particularly in the context of some smaller groups that have advocated a change in the flag. One such organisation that has become known in Sydney of late is the Patriotic Research Council of Australia, and its President, Mr George Emblem. That organisation has been encouraging people to think about the question of the future of the Australian flag and to ensure that people are aware of the need to make their views known, particularly if they want to maintain the present design. In the Senate on 16 September last, Senator Chaney reported to the Senate-and I wish to make the same points tonight in the House of Representatives-that the Patriotic Research Council established, on Anzac Day 1984 and on Australia Day 1985, and again on Anzac Day this year, a number of tables in Sydney for the purposes of giving people the opportunity to signify their interest in this question. The Patriotic Research Council distributed a number of forms for petition to the Governor-General, in which it was to be stated that people wanted the flag to remain unaltered, and on Anzac Day 1985 a snap poll was taken, in which 1,000 ballot papers were distributed. The poll result showed that the great majority of those who participated in that sample were in favour of the retention of the flag in its present form. Of the 1,000 poll papers distributed, 908 individual papers were signed, and 861 people voted to save the flag in its present form and 47 voted to change it. On 7 October the same organisation held a meeting in Sydney at which it noted the interest of Senator Chaney in this matter. The Senate has passed a Bill seeking to retain the Australian flag in its present form and requiring a referendum to be passed if it is to be changed at some future date, and the organisation at its meeting wanted it to be known that it was of the view that this matter should also be debated in the House of Representatives as soon as possible to ensure that those people who are anguished as a result of the fact that this mattter has not been discussed in the House of Representatives could be reassured. The organisation certainly wants it known that it is against any change to the flag in its present form. Honourable members would know that the Opposition gave its support to this Bill in the Senate. It was overwhelmingly supported by the Opposition and the Australian Democrats. As I recall the situation in the Senate, the Government itself did not press the matter to a vote on that occasion, although it has not yet been brought on for debate in this chamber by the Government. I know that many people in the community besides those of whom I have spoken tonight are anxious to ensure that this question is resolved and that any prospective change of the Australian flag which any government might propose from time to time is one about which the Australian people are consulted. There is considerable concern in the community that this is a matter which at some future time might be addressed by stealth in much the same way as the national anthem was changed. There is concern that, if there were not legislation in this form requiring consultation with the Senate before such a Bill was changed, the flag could be changed by some form of administrative procedure rather than by positive consultation with the Australian people. I notice that some honourable members seem to be opposed to that course of conduct. I simply say to them that, if the Bill proposed by the Senate were supported in this chamber and passed, it would give the reassurance that people in the community are asking for and desirous of seeing. Certainly I for one would encourage the Government to bring this Bill on and have it dealt with. I am sure that it can be dealt with quickly and expeditiously and the assurance which people seek could then be assured. Mr SPEAKER —Order! The honourable member's time has expired. Mr KENT(Hotham)(10.28) —While looking through the latest issue of the journal of the Returned Services League, Reveille, an article entitled `Chile-A Nation Under Soviet Threat' caught my eye. I started to read the article written by W. G. Russell, whose photograph appears above the headline and resembles that of Bruce Ruxton somewhat. I thought for a minute that I was reading the war-time Berliner Zeitung or other Goebbelsian propaganda. To give a taste of what the article is like, I quote the first sentence: Chile is a classic example of how communism uses various devices to create social disorder and industrial chaos in a country trying to achieve full democracy. I could not believe my eyes. I read the sentence again. But there it is stating that Chile is a country trying to achieve full democracy being disrupted by the Union of Soviet Socialist Republics. Now, I do not know what caused the RSL's official journal to print such Goebbelsian lies. The editors probably thought that the visit by Bruce Ruxton, the Victorian President, to Moscow may have damaged the right wing image of the RSL leadership and, in order to restore it, they felt that they had to print fascist articles in their journal. I quote the article again: `A country trying to achieve full democracy'. Only a week or so ago we saw on television the Chilean police crushing a student demonstration, smashing the heads of their young intelligensia with long, heavy batons, beating up boys and girls inside the university. In this action alone, two students were killed and 345 were arrested when police chased students into the School of Engineering in Santiago, beating them brutally. The article then goes on to say: Dissident, self-interest groups and anarchists portray an impoverished lifestyle of the people which is widely supported by the Western media. Well, let me tell Mr Russell, or whoever wrote this article, and his readers, that constituents of Chilean origin in my electorate have to send part of their earnings home to help their families, as the average pay of a worker in Chile is $30 per month. I do not need the Western media to tell me how poor the people are in Latin and Central American countries, as I have visited some and I have seen how exploited and oppressed the people are while the few rich, the oligarchy, live in luxury. Only by military dictatorships and by police batons can the rich maintain their luxurious lifestyle and privileges in the midst of poverty in a country like Chile. The article in Reveille, which is based on falsehood and lies, also states that the armed forces toppled Allende on popular request. Let me quote: What called them forth from their quarters-that is, the military-was the formidable clamor of the people. We can all vividly remember the putsch engineered by Pinochet's armed forces-called forth, not by the people, but by the Central Intelligence Agency and multinationals. Following the military takeover in 1973, tens of thousands of people were herded into the open sports stadiums and beaten, machinegunned and arrested by the military. The terror of Pinochet's fascist regime has continued for the last 12 years. Thousands of Chileans are in prison or being murdered by the military fascists. They killed President Allende; they killed Chile's greatest poet, Pablo Neruda; they killed Victor Jara, a popular folksinger, as he was singing to thousands of detainees in a football stadium. The killings and imprisonments are still occurring, 12 years after Pinochet's military fascist dictatorship. The RSL journal wants to present Pinochet's Chile as a `country trying to achieve full democracy'. While the editors of Reveille may fool an old digger or two, it certainly will not be to their credit to publish articles praising fascist regimes like General Pinochet's in Chile, which is no different from the war-time regime of Mussolini, against which we fought in the Second World War and against which so many Australian diggers lost their lives in the fight against fascism. Mr MACPHEE(Goldstein)(10.33) —On rare occasions members of this House pay tribute to people who influence their lives. I wish to do the same tonight. This is the first adjournment debate in which I have had a chance to speak since the Honourable Eileen Furley, MLC, died. She was a most distinguished Liberal from New South Wales who played a most important part in my life, certainly in respect of politics. Eileen Furley was a most remarkable person. She was born in Mosman at the turn of the century as Eileen Llewelyn. She was always contemporary. She lived through the dramatic changes of this century and was always modern. She was part of the changing scene and was, in some respects, a leader of the changes. She was one who always accepted changes and she never looked back. Even in the last lively four hours which I spent with her she was always looking forward. Her grasp of current affairs was active and acute and her insights were always very perceptive. Eileen had had a happy life and she derived fulfilment from all that she did. She had a happy childhood, a fine schooling and sporting record, an extremely happy marriage and a distinguished record of service to the community. Mosman in New South Wales was the physical centre of her life but her concern was for all humanity. Mosman, in fact, became her emotional core as well. Even though many of her friends had died or become immobile and my wife and I tried to induce her to go to Melbourne, she wanted to remain in Mosman, where in fact she died. Eileen Furley was a very active member of St Clement's Anglican Church in Mosman and she was grateful for the taking of communion at her bedside for many years. She made a request regarding the funeral service in our last face to face conversation shortly before she died. Eileen and Norman Furley and my parents were next-door neighbours and very close friends when they married 50 years ago. They remained the closest of friends and we were always together as an extended family, as it were, at Christmas, New Year and on 12 July, which was the birthday Eileen's husband Norman and my mother shared. My own birthday was the following day. This was a very important occasion. Eileen was very much a second mother to me. She was a very profound influence upon my life. I want to record this in this Parliament because the New South Wales Parliament did not even deign to say one word about this truly remarkable woman who graced that Parliament for many years. I am grateful for her life. A letter she wrote me three days before she died was full of news; it spoke of her walking again and her general love of life. I believe that all who were privileged to know her have special memories of her. She was a most active woman with a vast range of friends. She accepted philosphically the fact that she had outlived the majority of them and that she was very limited in her movements. Eileen Furley was to me what Jack Lang was to the current Treasurer (Mr Keating). She was an inspiration. To me she was the source of the kind of philosophy that has guided me throughout my life and my political career. She was a strong feminist. She served for many years on the Executive and on committees of the United Associations of Women, the New South Wales League of Women Voters and the Australian Federation of Women Voters as well. Eileen was a member of the Australian Council of Women. She was very upset when in 1983 it appeared that some members of the Opposition would not support the things that she believed in. In fact, she showed me a letter that she wrote to the editor of the Daily Telegraph in which, among other things, she said: Have I given so much to achieve so little? Eileen Furley gave energy, creativity and time to the cause of equality of opportunity between women and men. This led her to be politically active. She was a foundation member of the Liberal Democratic Party and was one of the four women to serve on the provisional State Executive of the Liberal Party in 1944. She was a member of the State Executive from 1945 to 1961. She was Vice-President from 1949 to 1961. She was on the Federal Council, being Vice-President for a number of years and Chairwoman of the Federal Women's Committee. She was an unsuccessful candidate for the Senate in 1961. She became the first female Liberal Party MLC in 1962. She was there for 16 years, serving with distinction, working for migrants and particularly as Chairwoman of the Select Committee of Legislative Council on violent sex crimes. Mr SPEAKER —Order! The honourable member's time has expired. Mr HOLLIS(Throsby)(10.38) —The annual report for 1984-85 of the Advisory Council on Australian Archives was tabled in this chamber today. I am a member of this Advisory Council which has been appointed by the Government. In the report the Council advised that the establishment of a national building for the Australian Archives in a suitably prominent and central position in the national capital is a necessity. The Council is convinced of the need to go ahead with this nationally important project. I express in this chamber my support for going ahead with this building. It is proposed that the building will be located in the Parliamentary Zone near the National Library. The Parliament's formal approval for this is, of course, required. I understand that this will come forward after the Joint Committee on the New Parliament House has been able to consider what is proposed. The preliminary designs for the new building were tabled in this House some time ago. In the meantime, further design work on the building has been required and is now well advanced. I believe that the proposed location of the building is entirely appropriate. Within the Parliamentary Zone we already have represented in a formal way two of the three arms of government-the Parliament and the judiciary. The Archives will symbolise and display the executive arm in a way that no other single organisation can. It houses the record of Australia's executive government, preserves it and makes it available for public access under the terms of the archives legislation. New, diverse and widespread community interests have recently emerged as the public becomes more involved with government and acquires new rights-protection of privacy, freedom of information and redress at law. As the organisation principally involved in the management of the Government's records, the Archives has a major role in these matters. It will provide a focus on the executive arm which does not exist in the zone or anywhere else. The building will attract a very large public. The Australian Archives plans to be active by a range of imaginative display and demonstration techniques to be employed in the large exhibition and access spaces provided for in the design, in displaying the structure and manner of working of government and helping people through the complexity of realising their access rights. In support of these things, the Archives will call on its existing experience and expertise, and will have at its disposal the unique database about the functioning of government and its records which it has developed over many years. The Parliamentary Zone needs buildings and people. It needs to be brought alive. When the new Parliament House opens it will attract people in even greater numbers than the present one and in that way will help to populate the Zone. The Archives building will advance the process and in doing so will pursue a role in service to the public and in public education which is greatly needed. It will contribute enormously to the liveliness and interest of the Zone and help hundreds of thousands of Australians to better understand their heritage, their rights and their national institutions. The need for an Archives building and the services which it can provide has long been recognised by successive governments, but the reality has been long delayed. I urge the Government to attach a high priority to this building. Mr ANDREW(Wakefield)(10.41) —I rise to satisfy the curiosity of the many people, particularly parliamentarians, who have inquired about the meaning of the very tasteful tie which I have chosen to wear for the past two or three sitting days. The tie bears the logo of the sixth world three-day event which is scheduled to be held in South Australia in May 1986 as part of its 150th jubilee celebrations, its sesquicentenary. Dr Theophanous —Another great achievement of the Bannon Government. Mr ANDREW —There are those who interject and so turn what ought to be a non-partisan gesture into a partisan one. This event, which follows close on the heels of the Australian Grand Prix, has as much significance as the Grand Prix but has not, for various reasons, attracted the same level of publicity. This is the first time that a world three-day event-in this case the sixth one-has been held in the Southern Hemisphere. It is the first time that such a major equestrian event has been held in Australia. A closer examination of my tie will reveal that the logo bears a horse's head within an impression of the globe. This equestrian event which is being held in Australia ought to excite not only all South Australians in the chamber but also all Australians because it involves the bringing of 10 teams of 40 horses to Australia. That may not, in itself, seem very significant but honourable members ought to realise that in view of the quarantine provisions that currently apply in Australia this is no mean achievement. It has been my good fortune to accompany the Special Minister of State (Mr Young) on an inspection of the quarantine facilities that exist on Torrens Island in his electorate in order that these horses can be quarantined for a sufficient period to enable any exotic horse diseases to appear before the horses are brought into the even cleaner electorate of Wakefield for the sixth world three-day event. The horses will be stabled at the Roseworthy Agricultural College which is over 100 years old and which has, for 100 years, dominated agricultural education in Australia. This college will provide not only the stabling of horses but also, within its modern facilities, the recreation and billet facilities for the riders, strappers and grooms. Well honourable members may ask: What is a three-day event? Three-day events had their history in the military in that they were designed to combine finesse with endurance. Day one of a three-day event is taken up with dressage. The relationship that exists between horse and rider and control and finesse are particularly dominant. Day two is spectator day with cross-country jumping, speed and endurance, and road and track events that cover 26 kilometres and take in over 24 jumps. Day three provides an opportunity for the horses and riders who have performed in days one and two to reveal the fitness that they still have after that degree of exposure and that sort of intensity of physical activity. Day three is a show jumping day. These events will astonishingly bring to the town of Gawler, the largest provincial town in my electorate but a town of a little over 20,000 people, over 70,000 people from all over the globe to view a world event which is to be held for the first time in South Australia. The riders will be participating on a course that is recognised as one of the best in the world and one of the most picturesque in the world. It is the site of the first three-day event in Australia. The riders cannot have ridden or seen the course prior to participating in the endurance event. It is a rigorously controlled event with veterinary surgeons present to ensure that any horses that show any sign of lameness are selected out. It takes over three years for a horse and rider, no matter what their experience, to come up to the sort of quality that is necessary to participate in a three-day event. In fact, within the horse world, it is an event that is comparable to the Melbourne Cup that is so much better known in Australia. I have had an opportunity to air the event in the House tonight. There are those in the House who have already indicated their enthusiasm not only to visit the electorate of Wakefield but also to participate and witness this event at Gawler in South Australia. Mr SPEAKER —Order! The honourable member's time has expired. Mr MILTON(La Trobe)(10.46) —In speaking tonight in the adjournment debate I wish to express my total abhorrence of the tactics of the Queensland State Government in its harassment of Senator George Georges in his legitimate role as an Australian Labor Party senator for Queensland. Senator Georges's so-called crime is that he was speaking up in support of 760 to 770 workers of the South East Queensland Electricity Board who are on stike as a result of the indiscriminate sacking of 1,002 electricity workers under the declared state of emergency. It is a plain fact that the Bjelke-Petersen Government has set out to destroy the trade union movement in Queensland. The Queensland Premier appears determined to return the wages and conditions of the workers to those which prevailed in the nineteenth century. Combined meetings of unionists have been held all over Queensland and strong support has been expressed in support of the workers who remain on strike. I would like to sketch the background to the strike. Last year the South East Queensland Electricity Board introduced a policy to reduce the work force by 10 per cent by way of natural attrition. These retrenchments were meant to be across the board, both blue and white collar workers. The total reduction would have been in the vicinity of 300 to 400 people. The Board planned to have the work normally done by these people performed by contract workers, thereby depriving long term employees of permanent work, threatening the working conditions of all the employees and reducing the employment opportunities for young people in the future. I would like to take this opportunity to set out the attitude of the Electrical Trades Union of Australia to the use of private contractors in the electricity supply industry. I quote from a document which sets out the view of the ETU as follows: The E.T.U. has never had a total ban on contractors in S.E.Q.E.B. or any other Distributor Board. Quite the contrary. The E.T.U. has in the past and will in the future condone the use of contractors in the Supply and Distribution Industries, if it is necessary and warranted. The problem in S.E.Q.E.B. arose because the Board, under instructions from the State Government, set out to use contractors at the expense of permanent S.E.Q.E.B. employees. This attitude the Union could not condone, nor would accept. At present, the South East Queensland Electricity Board is providing limited services to consumers by using scab labour with the willing co-operation of unscrupulous electrical contractors. I have been informed that the ETU has photographic evidence of the lack of safety equipment in contract work. Some of these photographs show a linesman in shorts and a T-shirt, with no safety belt, standing on the top of a ladder. As the Trades and Labour Council of Queensland has pointed out, if this lack of safety becomes- Mr McGauran —That is Joh's fault, is it? Mr MILTON —Of course it is Joh's fault. If this lack of safety becomes entrenched in the work practices of the South East Queensland Electricity Board it will be only a matter of time before other electricity workers in the industry are required to employ unsafe work methods. It is clear from the attitude of the State Government that if other electricity workers object to the unsafe work methods they will be dismissed. This technically incompetent and unprofessional approach is causing widespread maintenance delays. Jobs which would normally have resulted in small sections of consumers being without power for two to three hours are now resulting in a power loss to wider sections of the community for days at a time. For all the reasons I have indicated, Senator Georges has campaigned in support of the workers in the electricity supply industry who are presently on strike. Senator Georges was arrested when making a speech outside the offices of the South East Queensland Electricity Board. Although a magistrate had ordered that Senator Georges be released, the police disputed the terms of the magistrate's order. The Attorney-General (Mr Lionel Bowen) indicated in this House last Tuesday that it was outrageous that attempts had been made to fingerprint Senator Georges to establish his identity. In my view, by treating a senior senator in this way the Queensland State Government is indicating a complete contempt for the privileges and rights of all Federal parliamentarians, and every effort to redress this situation should be made by both the House of Representatives and the Senate. Mr HALVERSON(Casey)(10.51) —The electorate of Casey boasts some of the most outstanding scenery, some of the best wine producing areas and some of the finest people in Australia. It also has, arguably, some of the worst and most neglected Telecom Australia facilities and services in the country. In days when talking to an astronaut in outer space is regarded as nothing very special, and communications satellites enable many citizens to dial their relatives and friends in countries thousands of miles away at the touch of a few buttons, many of my constituents in Casey cannot even ring their next door neighbours without, firstly, having several hours at their disposal-because it will take some hours to get through if, in fact, they do manage to get through at all-and, secondly, being prepared for the rather disconcerting experience of dialling a number in Hurstbridge or Warrandyte and being answered by some unknown and unwanted Telecom subscriber in Camberwell or Footscray. Typical of the difficulties encountered on a day to day basis by some of my constituents are those recounted by a Telecom subscriber in Warrandyte, who wrote to me recently along the following lines: I really haven't got the time at this moment to be writting this letter as I should be working. But unfortunately I can't carry on my business in an efficient manner because of the wretched telephone service offered by Telecom. The events of the last few minutes have galled me to the point of almost ripping the telephone from its connections. I have been trying to telephone a number in Glen Waverley beginning with a 561 prefix and to my surprise I got a number commencing with the prefix 844. Nobody not even I could make that much of a mistake when dialling! I thought I would report the problem and dialled 1100. But alas, nothing. No dial tone, no engaged signal-nothing. I tried to register my complaint 10 times, but my difficulty now was that I couldn't get service difficulties. I needed to talk to the person in Glen Waverley so I accepted that I had lost the cost of the first call and dialled the 561 number again-and lo and behold I got the 844 number-again. The woman who answered the telephone was most gracious and said I shouldn't be surprised with anything that happened with the Warrandyte exchange. Although I had never met the woman before, I am sure we will turn out good friends especially if I keep dialling the original number that I wanted. This constituent has not suffered a unique experience. I have been contacted by people who are literally living in fear because their telephone is their lifeline to the community-and they simply cannot make a phone call after 8.30 p.m. because the system, which is always bad, deteriorates rapidly during the peak evening hours. One distraught elderly lady had spent over three quarters of an hour trying to ring service difficulties. Another dialled the same number 12 times for 12 different results-none of them the number she was endeavouring to call. A motorist whose car had broken down in a remote area of the electorate tried without success to call the Royal Automobile Club of Victoria and instead was answered each time by a fitness centre in Balwin. He then tried calling his wife to get her to ring the RACV on his behalf, but succeeded only in contacting a recorded message which informed him his own number did not exist. This situation is explained, on inquiry to Telecom, as being the result of insufficient exchange lines, old equipment and inadequate facilities which cannot hope to serve the number of subscribers who are connected to the system. It is an intolerable state of affairs. The subscribers receive no discount for the `now you have it, now you don't' service which is provided. Certainly, in these areas, they appreciate the old saying `you pays your money and you takes your chances'. This deplorable and unacceptable state of affairs must be rectified without further buck-passing or inexcusable delays. The people of Casey deserve a better service, and I intend to see that they get it. Mr LAMB(Streeton)(10.56) —I wish to raise a topic which certainly cannot be privatised. I refer to peace and disarmament, a topic uppermost in the minds of many people, especially young people, who, public opinion polls show, believe they face a very uncertain future. While the leaders of the two super-powers-Reagan and Gorbachev-prepare to meet at the summit in Geneva to discuss the arms buildup and ways to wind it down, it is appropriate to look back on the initiatives the Australian Government has taken towards achieving peace in a world bristling with nuclear weapons. There are 50,000 nuclear missiles in the world, which is equivalent to two tonnes of TNT for each man, woman and child. While some will speak at the Geneva summit of a balance of power, I think it is probably more appropriate to say that the world exists under a Damocles sword or a balance of terror. Over recent years global peace has remained as elusive as ever. The route to global peace and disarmament is slow and testudineous. However, just as the tortoise beat the hare in Aesop's fable, it is hoped that the slow and tentative moves in international forums to bring about disarmament will win against the arms race and prevent the final holocaust. In the cause of humanity the Geneva summit has every reason to succeed, but it has been sabotaged-perhaps irreversibly-by the irresponsible leak of the advice from the United States Defense Secretary, Caspar Weinberger, to President Reagan not to improve on the SALT II Treaty. Australia is playing its part internationally. The Australian Government has made it clear to both the United States and the Soviet Union on many occasions that there is no justification for having more nuclear weapons. At the last session of the United Nations General Assembly we actively supported moves for a nuclear freeze because of our conviction that a mutual and verifiable freeze on nuclear weapons testing, production and development would be an effective first step to stopping the upward spiral of the nuclear arms race. We believe it must be a negotiated freeze leading to deep cuts in the huge stockpiles of nuclear weapons to be successful. We support such an approach at the super-powers summit right now. The Government has been active during the past year to bring about the formation of a South Pacific nuclear free zone. The provisions of the zone treaty do not go as far as some people might like, but there is no denying that this development will strengthen regional security by ensuring the nuclear weapons are not stationed in the territories of the treaty parties and that no regional state acquires nuclear weapons. That treaty, translated into legislation in this Parliament, would be most welcome. Of course, we will continue to oppose the testing of nuclear weapons by the French in the Pacific as an extension of that treaty. Australia has appointed an Ambassador for Disarmament, Mr Richard Butler, who has represented Australia in international forums, especially on the Conference on Disarmament in Geneva. Mr Butler has been able to employ the talents and experience gained from his work in the Organisation for Economic Co-operation and Development and to bring his strong personal commitment to the cause of peace and disarmament on Australia's behalf. This Government has established a peace research centre at the Australian National University. The work there will ensure that we learn more about the route and the road to peace internationally. Finally, I wish to mention that the Government has appointed a national consultative committee on peace and disarmament, which will assist the Minister for Foreign Affairs (Mr Hayden) in achieving Australia's disarmament obligations next year-the United Nations International Year of Peace. This committee will meet for the second time on Thursday and will act as a channel for the exchange of views on peace and disarmament and arms control between the Government and the community. It is clear that the Labor Government has an excellent track record in working for peace and disarmament. More is being achieved by a government which has a good international reputation and influence, and this stands in stark contrast to the minority parties and the transient parties which talk big at elections and are in no position to deliver later. Mr HODGMAN(Denison)(10.59) —I want to talk tonight about Australian values and what is happening to this country under the deliberate and, I think, very divisive and extremely dangerous policies-- Mr SPEAKER —Order! It being 11 p.m., the debate is interrupted. House adjourned at 11 p.m. The following paper was deemed to have been presented on 18 November 1985: Defence Act-Determination-1985-No. 68-Travelling Allowance and other allowances.