Thursday, 29 May 1986 Madam SPEAKER (Hon. Joan Child) took the chair at 10 a.m., and read prayers. Bill presented by Mr Holding, and read a first time. Mr HOLDING(Melbourne Ports-Minister for Aboriginal Affairs)(10.01) —I move: That the Bill be now read a second time. The purpose of the Aboriginal Land Grant (Jervis Bay Territory) Bill is to provide for the grant of inalienable freehold title to the Wreck Bay Aboriginal community over an area of some 403 hectares in Jervis Bay Territory. The Wreck Bay Aboriginal community is an established community comprising mainly descendants of the Jervis Bay and other tribes who once inhabited the general area. The land concerned at one time was gazetted as an Aboriginal reserve and administered by arrangement with the New South Wales Aborigines Protection Board. The land has always been regarded as a distinct Aboriginal area separate from other land in Jervis Bay Territory. Negotiations for land tenure, by way of a perpetual lease, commenced in 1973 and proceeded for about 10 years without resolution. During this period of negotiation a number of Ministers under previous Liberal governments with responsibility for the administration of Jervis Bay Territory gave support to the proposed tenure arrangements at Wreck Bay. Those Ministers included Senator Withers, the late Hon. Eric Robinson, the Hon. Tony Staley, the Hon. Bob Ellicott and the Hon. Michael Hodgman and I am sure on that basis that this Bill will have the support of the Opposition. This Government began negotiations with the community almost as soon as it assumed office in 1983, and in 1984 offered a land package, including a grant of inalienable freehold title to an area of approximately 403 hectares, to the Aboriginal residents of the Wreck Bay community. During this time there has been ongoing consultation with the community in relation to the land to be granted and the arrangements to apply after that date. It is appropriate in this case that, as the land concerned is under the direct control of the Commonwealth, the Government is able to give effect to its policy of providing secure tenure to land in respect of Australia's indigenous population. Scheme of the Legislation Under the arrangements proposed, title to the land will be vested in the Wreck Bay Commun- ity Council under a trust arrangement. The functions, powers and administrative arrangements in respect of the Council are detailed in the Bill. No sale or mortgage of any part of the land will be permitted. However, the Council will be empowered to issue leases of land to members of the community for residential purposes and other leases to persons wishing to obtain an interest in the land for commercial purposes subject to the approval of the Minister. Public roads through the grant area will be excluded and members of the Public will continue to have access to facilities in the Summercloud Bay area which they currently enjoy. Because of the importance of some places of special significance from an Aboriginal point of view in the area of the grant the Bill makes provision for those places to be protected. In addition, the Bill provides for the grant of title to further land adjoining the grant area if justified to the satisfaction of the Ministers for Aboriginal Affairs and Territories. Financial Impact New or additional costs to the Commonwealth in providing title to land to the Wreck Bay community will be minimal. Annual costs associated with the administration of the Council will be met by the Department of Aboriginal Affairs. Commonwealth assets on the land, including houses, will vest in the Council. Conclusion This Bill secures the land to be granted for present and future generations of Aboriginal people at Wreck Bay. I commend this Bill to the House. I should apologise to the House. I was proposing to present an explanatory memorandum accompanying this Bill. However, it is still in the process of being printed and has been delayed in its expedition to the House as a result of the fog. I undertake to table the memorandum as soon as it becomes available so that honourable members will have the benefit of it. Debate (on motion by Mr Cadman) adjourned. Motion (by Mr Young) proposed: That, unless otherwise ordered, the House shall meet for the despatch of business on the following days and at the times specified: Monday, 2 June, at 2 p.m. Tuesday, 3 June, at 2 p.m. Wednesday, 4 June, at 10 a.m. Thursday, 5 June, at 10 a.m. Mr SINCLAIR(New England-Manager of Opposition Business)(10.07) —Because a number of members have asked me what this motion is all about, and the Leader of the House (Mr Young) did not deign to tell us, might I just mention to them that it is a product of the Sessional Orders providing only for two weeks sittings and it is necessary for a special motion to be passed for the House to sit an extra week. The Opposition does not oppose the motion. Indeed, if we have a disappointment it is that the House is to sit for only one extra week. We hope that the Leader of the House will advise us as soon as possible if the House is to sit the following week. I understand that this may depend on legislation that might not get a clear passage through the other place. Quite apart from the fact that we would be delighted if the Parliament were to sit right through the winter recess, we would certainly want to know if the House is to sit for even one or two days the following week, which I suspect might be more likely. If there is to be a sitting in the following week, I urge the Leader of the House to let us know as soon as possible. I want to say two things about the actual hours of sittings. The first is that we are today sitting under a guillotine. I should perhaps explain for those who are listening to this debate on the radio that a guillotine is a process by which the Government limits the time of debate. It normally does it only in relation to sensitive Bills. It does it in respect of Bills that affect the lives, livelihoods and incomes of all Australians. In this instance it is doing so to prevent debate on the capital gains tax package which affects everyone and which is very adverse to them. This is certainly a matter which concerns us. If there is a risk that the guillotine will be used next week, I put to the Leader of the House that it would be far better if he provided for either extended hours of sitting or our sitting into the following week. We would think that that would be far better than having a guillotine which restricts debate. Secondly-I know that this is a matter which does not meet universal acclaim-I still find within coalition ranks some concern about the present hours of sittings. In fact, this motion provides for the same hours of sittings as we have been pursuing for a little while-that is, sitting four days a week with an early adjournment on the Wednesday evening and sitting at 2 o'clock on the Monday and Tuesday. I think many members of this place find the Wednesday night a rather strange evening. We adjourn from here at 8 o'clock and it is difficult to fit in normal arrangements. I put to the Leader of the House that in the Budget session it would be appropriate to review the whole question of sitting times. While the current arrangements might meet the convenience of some, I do not know that there is universal acclaim for having the Wednesday evening off. I guess that the honourable member for Mackellar (Mr Carlton), who is sitting at the table with me, rather enjoys that arrangement. I find that there are problems in the sitting hours and I know that many honourable members on this side of the House feel the same way. I put it to the Leader of the House that it might be appropriate in the Budget session to review again the convenience of the sitting pattern. I have said on other occasions that I think the three weeks on one week off routine had greater advantages that this two weeks on two weeks off pattern. I know that those honourable members from Western Australia and the Northern Territory-I see the honourable member for the Northern Territory (Mr Everingham) is in the chamber-and those honourable members from north Queensland, who are a long way from Canberra, find that there are some advantages in the present sitting pattern. But I think it should not just be accepted that the sitting pattern as it exists automatically meets the best convenience of every member of this place. On that basis I put it to the Leader of the House that perhaps in the Budget session it would be time to review again the sitting hours rather than just leaving them on the present not very satisfactory basis. Mr YOUNG(Port Adelaide-Leader of the House)(10.12) —in reply-I did not take up the time of the House explaining the sitting pattern because I thought most honourable members would have understood the reason for the third week of sitting. We sat last week because we had to introduce Bills that had to be passed this week because of the resolution of the Senate that it would not deal with any Bills passing this House after tonight. Of course, the guillotine to which the right honourable member for New England (Mr Sinclair) referred would have to be the bluntest guillotine that this Parliament has ever seen. It is a guillotine which limits the Opposition to 13 speakers on the capital gains tax today. It is some sort of guillotine! Compared with the operations of the previous Government it is a non-entity. As I said the other day, we could hardly imagine people listening to the broadcast of Parliament tonight waiting for the fourteenth speaker from the Liberal Party to tell them his or her views about the capital gains tax. As the Manager of Opposition Business (Mr Sinclair) has taken up a few minutes I might mention a few other things. Firstly, in relation to the two week sitting, four days a week, I would be open to approaches to sit on Wednesday nights because that would mean that we could do away with sitting on the Friday. The Government gets virtually no business out of a Friday sitting. Mr Tim Fischer —The Procedure Committee will be reporting this afternoon. Mr YOUNG —I thank the honourable member very much; that is the other thing I was going to mention. This afternoon the honourable member for Bowman (Mr Keogh) will present the second report of the House of Representatives Standing Committee on Procedure, which the Parliament will have an opportunity to have a look at to see what we can do. Let me say that, for the period of almost seven years that the right honourable member for New England was Leader of the House for the Fraser Government, putting ideas to him about changes in procedure was almost like hitting one's head up against a brick wall. The Fraser Government was not at all interested. I will tell honourable members opposite why they were not interested; it is because they were all old men in the Fraser Government. We have a lot of young people with young families, and the two weeks on two weeks off sitting pattern is much better for family life. Obviously, it is much better for the honourable member for the Northern Territory (Mr Everingham) to get home for a couple of weeks instead of sitting for three weeks in Canberra. Mr Cadman —He still goes home at weekends. Mr YOUNG —I know, but now he can stay home for a fortnight. However, I find that, when I go to the Northern Territory, not all that many people want to see him; they are not looking for him. There will always be different ideas as to what are the best sittings. The two weeks on two weeks off pattern makes it very difficult for the Executive, Cabinet committees, and so forth. Nonetheless, I think it certainly has the overwhelming support of our back bench as opposed to the three weeks on-- Mr Donald Cameron —It has the support of our side, too. Mr YOUNG —The honourable member says that it has the support of the Opposition, too, so the Manager of Opposition Business is obviously not speaking on behalf of honourable members opposite. Then again, I understand that there are differences of opinion between the Liberal Party of Australia and the National Party of Australia on some things. We will be looking at the report of the Procedure Committee as to the sitting of the Parliament, better use of time and better access to the Parliament by the back bench. I know that some people like to be able to utilise the bit of free time on Wednesday night, but it would be much better for the business of the House to sit Wednesday night and not sit on the Friday, because with the Friday sittings we are getting through only the same amount of Government business. As honourable members opposite are all nodding in agreement I will have a very serious look at that. Honourable members will know this afternoon what business we have to complete next week and they will know exactly how much time we will have to debate it. Question resolved in the affirmative. Mr HOLDING(Melbourne Ports-Minister for Aboriginal Affairs) —In view of my undertaking, I am pleased to say that the fog has lifted and I now present the explanatory memorandum to the Aboriginal Land Grant (Jervis Bay Territory) Bill 1986. Debate resumed from 22 May, on motion by Mr Keating: That the Bill be now read a second time. Madam SPEAKER —I understand it is the wish of the House to debate this order of the day concurrently with order of the day No. 2. There being no objection, the Chair will allow that course to be followed. Mr CARLTON(Mackellar)(10.16) —`And here let me make one point so that even our opponents can understand it, and let me make it beyond all their powers of misrepresentation and distortion. There will be no new capital gains tax!' Those were the words of R. J. L. Hawke, Leader of the Opposition, in his policy speech at the Sydney Opera House on 16 February 1983. Those were the words of the present Prime Minister, promising beyond doubt that there would be no new capital gains tax. Today in this House we have a capital gains tax in 103 pages of legislation. This is a day of infamy for this Government. Let me make one point so that even our opponents can understand it, and let me make it beyond all their powers of misrepresentation and distortion: We are opposed to this capital gains tax. We will vote against it here and in the Senate, and should the legislation pass we will repeal it on our return to office. Make no mistake: After our Bicentenary in Australia there will be no capital gains tax. Might I also say that we lodge in this House the strongest possible protest against the manner of introduction of this tax. For over eight months the people of Australia have been told that there will be a capital gains tax and they have been given only the barest outline of that tax. Individuals and businesses throughout this land have had to make decisions for the past eight and a half months on the basis of legislation the details of which were unknown. Month after month we have asked the Government for details of this legislation. We have asked questions in the House week after week which the Treasurer (Mr Keating) has been unable to answer. Finally, last Thursday night at 8 o'clock the Treasurer came into the House with 103 pages of legislation but with no explanatory memoranda. On Sunday the Opposition was provided with a proof copy of one explanatory memorandum, which was on its way to the printer. I might say that, to the eternal disgrace of this Government, of the six Bills presented last Thursday night only one had attached to it an explanatory memorandum, and might I say that as I was winding up the debate at the end of last night the final explanatory memoranda for these six Bills were put before the House. In other words, yesterday we were debating over the whole day four Bills, three of which had no explanatory memoranda. That is a record of failure to inform the House and the public which has not been equalled by any previous Treasurer of this nation. The Treasurer has had eight months and more to prepare the details of this legislation. It is immensely complex. It comes into the House in the form of a Bill of 103 pages without any explanation. Might I say that for members of this House to receive only last night an explanatory memorandum of 155 pages for this Bill and to be expected to debate the legislation here today is an absolute disgrace. We have had 275 pages of new taxation legislation with us since last Thursday night. We have been expected to debate the legislation on Wednesday-that is, yesterday-and today. We have not had a chance fully to examine all the details of the legislation or its implications for the Australian people. We have not been able, as we ought to be able, to go out into the community, to talk to the experts, to talk to people who know about these things in detail and who are accustomed to examining legislation, and to seek their advice on the arguments we might present in this Parliament on behalf of the Australian people. That is a total disgrace. The Treasurer will bear the burden of this disgrace for the rest of his very short term in office. I want to protest against the uncertainty on this matter caused in the community. Indeed, I want to protest in regard to one particular matter which is very serious indeed, a new element of this Bill which was not known when the Treasurer made his original remarks last September; that is, that any bequest made to a charity will be taxable from the estate. This means that for the last eight months and more people would have been making decisions about bequests without the knowledge of how they would be treated under the taxation law. I regard that as a total disgrace. I will come back to that specific matter because it is a further attack by this Government on charities and religious organisations. As well as being a very serious matter in that regard it also breaches taxation principles. For over eight months people in Australia have had to make decisions affecting their lives, their futures and their children and grandchildren without knowledge of the legislation, which will have effect from 20 September, the day after the Treasurer made his speech. Certain transactions that will be affected by this legislation would have been initiated after that date and completed already without any knowledge of the taxation effects on those transactions. This is a disgrace, as has been pointed out by the Taxation Institute of Australia. I have here a letter, dated yesterday, to the Prime Minister from the President of the Taxation Institute of Australia, Mr I.V. Gzell, QC. He said: The Taxation Institute of Australia, representing some 9,000 lawyers and accountants practising in the taxation field, deplores your Government's proposal to guillotine the taxation bills through the House of Representatives today and tomorrow. It has taken the Government almost a year since the Taxation Summit to bring down the bills in relation to capital gains tax and foreign tax credits. It has taken it since 16 December 1984 to bring down the amendments in relation to income accrued on discounted and other deferred interest securities. Why then the unseemly haste in introducing these important Bills on Thursday night and pushing them through the House on the next Wednesday and Thursday? Why is the Australian public being denied the opportunity for informed debate on the actual legislation effecting the most significant tax changes this Country has seen? True it is that the Treasurer has made statements about the proposed legislation. But there is a world of difference between a statement of intent and the actual legislation. The Taxation Institute of Australia is concerned that the legislation may cause undue hardship by its application in unintended situations. It has not had the opportunity to analyse the 175 odd pages of bills. In fact, there are 275 pages. To continue: Nor has it had the opportunity to read the Explanatory Memorandum in relation to capital gains tax which only became available yesterday. I might say that it became available only on the day before this letter was written because we were able to make proof copies available. The letter continued: But the Institute's experience leads it to believe that there will be aspects of the legislation which require further consideration. Its experience also leads it to believe that there is a reluctance in Government to amend legislation to overcome unforeseen problems once it has passed both Houses. . . . . . . . . . The Taxation Institute of Australia calls upon the Government: (a) to delay the passage of the bills through the House of Representatives to allow proper times for analysis and comment; The Government has ignored that request. To continue: (b) in the alternative, to entertain appropriate amendments to the bills before their passage through the Senate and to allow sufficient time for consideration of proposed amendments; The whole thing is to be rammed through the Senate before the Parliament rises at the end of this session. To continue: (c) to announce when it intends to introduce the remaining elements of its tax reform package and, in particular, the full imputation system of company tax to offset the proposed increase in corporate tax to 49 per cent. Those Bills have still not been introduced into the Parliament, a year after the National Taxation Summit and eight months after the Treasurer's statement of 19 September last year. The letter from which I have just quoted was from the President of the Taxation Institute of Australia. Overall, Labor's so-called tax reform has added to the complexity and volume of tax law. It has also increased the general level of taxation. In examining this measure, I will do so against the Prime Minister's nine principles for taxation as mentioned at the Taxation Summit. The first principle states that there must be no increase in the overall tax burden. I must say that that principle has already been broken, and taxation as a percentage of gross domestic product will be higher than it was last year; so principle number one has been breached. The second principle states that any reforms must continue the process already begun by the Government and provide further cuts in personal income tax. The actual proposals put by the Treasurer last September provided phoney cuts-all they did was allow for the effects of inflation on income tax scales. Also, those phoney cuts are not to be introduced on the promised date of 1 September; so that is the second breach of a principle. I move to the fourth principle, which says in part that any reform must lead to a simpler system. Heaven forbid that we have a simpler system! Before this so-called reform we had 1,100 pages of taxation legislation, to which we have since added 625 pages; the reform has increased taxation legislation by 57 per cent. I will quote from the draft White Paper on taxation reform where, under the heading `Simplicity', some remarks appear that honourable members will find most instructive. Dr Theophanous —That sums up your economics. Mr CARLTON —Let us turn to the Government's White Paper of last year before the disastrous Tax Summit of July. Under the heading `Simplicity' the White Paper states the following, in words that even the honourable member for Calwell (Dr Theophanous) will be able to understand, if he stops interjecting and listens: 1.8 A good tax system should be as simple as possible. A complex tax system makes it difficult for people to understand the law and apply it to their circumstances. The present law has become so complex that it is difficult to convey its meaning simply and adequately on tax return forms and in other printed matter. Complexity imposes high compliance costs on the community and high administrative costs on the tax authorities. Complex tax laws also result in socially unproductive and costly tax litigation. These considerations suggest that, where possible, tax reform measures capable of ready comprehension and application should be preferred over more complex alternatives. None of us would disagree with that statement. It continues: This review- meaning the whole review of taxation in Australia- affords an opportunity to see what can be done to reduce the burden of record-keeping on ordinary taxpayers, to increase the certainty of what is or is not taxable, and to increase the clarity of the tax system. That is what the Government's White Paper said before the Tax Summit-make it easier for people, reduce their burden of record keeping, increase the certainty of what is or is not taxable, and increase the clarity of the tax system. What have we got? We have the fringe benefits tax, a tax measure comprising 139 pages, 176 pages of explanatory memoranda and a 56-page booklet which has been sent to all taxpayers to help them work out how the system will work. That will be impossible; the complexity is unbelievable in this measure before the House on capital gains tax-103 pages of legislation, 155 pages of explanatory memoranda. The second reading speech states that the Government is preparing a booklet on the capital gains tax to send out to people to help them work out what their compliance would be. Honourable members who enjoyed reading the purple tombstone booklet on the fringe benefits tax know that it provided very interesting reading for 700,000 or 800,000 small businesses and farmers around Australia. They know what it is like. It cost, I understand, $3m to send it out. Now, a capital gains tax booklet will be prepared by the Government which will tell people that they have to keep records of their postage stamps, coin collections and works of art. That is what they will be told to record. When they receive that booklet, they will realise that it is not just the big people who might be caught by this tax; it might affect every citizen in Australia. So much for the fourth principle of simplicity of the Prime Minister. Let us look at the sixth principle: . . . any tax reform must not disadvantage recipients of welfare benefits . . . Heavens above, a fringe benefits tax will be imposed on charities, for a start. This Bill provides for death duties on bequests to charities. Therefore, people who are recipients of welfare benefits and people who are disabled and reliant on charities will be disadvantaged under at least two of these measures. So that is another principle that has been breached. The eighth principle reads: . . . any reform must provide the best possible climate for investment, growth and employment in Australia. What a joke! I will come back to that a little later. Honourable members will laugh at the ninth principle. I am referring to the Prime Minister's nine clear principles. Everybody applauded them at the Tax Summit. Everybody said that they were great. This is a corker: . . . any reform package must have widespread community support . . . All over Australia people are lighting bonfires in support of the fringe benefits tax! People are holding rallies all over Australia, applauding the capital gains tax! They are lighting bonfires-but those bonfires contain the fringe benefits tax guide booklets. If they are lighting bonfires because of the capital gains tax, it is to try to burn the people who are introducing it. Dr Theophanous —What would you know about it? Madam SPEAKER —I explain to the honourable member for Calwell that the honourable member for Mackellar has the call. I understand the honourable member for Calwell is listed to speak later. He should wait until then. Mr CARLTON —A capital gains tax is levied at the top marginal rate after allowing for inflation. This capital gains tax is the toughest capital gains tax in the Western world. I do not know what happens in communist countries in regard to these matters because they do not recognise capital. In this country we are introducing a capital gains tax which is the most savage in the world. There are some exemptions-the sole or principal residence, proceeds from superannuation or life policies, certain motor vehicles and personal use assets of less than $5,000 unless they are listed. The ones that must be listed, to make sure that one pays one's tax, are works of art, coin and stamp collections, antiques and jewellery. They must be recorded and taxed on disposal. So anybody who buys any of those items from now on, even if their value is under $5,000, will be required to keep a record of the price for which he bought them, and if he sells them, he will have to pay capital gains tax on the proceeds. In regard to deceased estates, the tax is not payable by the deceased, but is payable on disposal by the beneficiary. So there is a delayed death duty as well. Improvements of less than $50,000 to property are not taxable. But if a person is quite inventive and improves the property by an amount above $50,000 he is caught by the tax. The Government made a concession in regard to good will. It said: `We will aid small business by exempting certain elements of good will'. The new good will component of a business sold for less than $1m will be exempt. Some concession! There are certain rollover concessions. The question, I suppose, is this: What are the arguments for a capital gains tax? It is said that the absence of a capital gains tax favours those receiving income in the form of capital gains. It is said that it favours the wealthy. It is said that it encourages investment in non-income earning assets, and it is also said that it can be used for tax avoidance purposes, using devices to dress up taxable income as a non-taxable capital gain. These are quite serious arguments in favour of a capital gains tax. The Opposition acknowledges them. They are seriously put. They have also been put by senior businessmen reporting to the Economic Planning Advisory Council. I have read their remarks and I do not dismiss those arguments lightly. They are important economic arguments. It has to be pointed out, however, that over quite a long period the Fraser Government introduced quite comprehensive legislation to take action to close the major loopholes. The purpose of most of the major devices was to turn income into capital and have it untaxed. This Parliament, under the Fraser Government, introduced a long series of measures which virtually brought that kind of activity to a close. The present Treasurer has introduced a few measures. He claims he has done it all, but in fact the record of the two governments shows that it was the Fraser Government that reduced those loopholes and removed them. The extension of capital gains tax to all and sundry, which this proposal puts forward, really revolves around whether the equity principle should be taken any further than it has been. After action has been taken to remove the major inequities, taking further steps can stifle incentive, and introduce appalling bureaucratic complexity. The Opposition does not dismiss the arguments in favour of a capital gains tax at all, because those economic arguments exist. It merely says that we have got well to the point of the law of diminishing returns and that to introduce 103 pages of immensely complex legislation to try to catch all the tiddlers will have a disincentive effect on this community which will outweigh any possible economic benefit from the introduction of the tax. That, purely and simply, is the Opposition's argument. Let me examine this issue in the context of Australia's stage of development. Australia is a capital hungry country. Australia, unlike the old advanced countries of Western Europe and North America, which have vast supplies of surplus capital, is capital hungry. I have brought into the House the business investment and capital stock paper of EPAC. If any honourable members wants to understand one of the reasons why unemployment is so high, why we are desperately short of investment and why yesterday's investment figures from the Australian Statistician were so dreadful-investment still has not recovered to the levels before the last recession-this booklet published by the Government shows the desperate need for capital formation and investment of that capital. This measure strikes at the very heart of those objectives. We share with the Government a belief that there should be incentive for investment in Australia. We say to the Government that the introduction of a measure of this kind strikes right back against that objective. What does this tax do? First of all, it does not even meet one of the requirements for a capital gains tax because, for very good political reasons, it excludes the family home. We want it to exclude the family home. Might I say it does not exclude the family farm. The two big sticking points in political terms against those economic arguments that some people have put forward for a capital gains tax are what to do about the family home and what to do about the family farm. This Government has excluded the family home for political reasons, but it has included the farm. In a country which relies on family farming and on a farming community that exports 70 per cent of its product whose work is desperately required with our balance of payments problems and on whom we are still relying to meet most of those payments, what do we do? We strike at the family farm by imposing a capital gains tax. It is a stupid thing to do. On the other hand, the exclusion of the family home means that more and more money will be put into new wings on existing dwellings instead of going into more productive investment. There will be a Keating wing in every home. Instead of putting money into productive investment what will the people do? They will say: `We will have an exempt capital gain on our family home. So we will increase the capital value of our home'. Honourable members opposite cannot deny that as an economic argument-they know it is true. What does this tax do? The Treasurer says that it will not be levied on any existing holdings prior to 20 September 1985. In effect he is saying: `Do not worry, all you people with existing riches, because they will all be excluded.' Very well, but those people still have to worry if they still have any entrepreneurial spirit left in them because any major improvements they may make will be caught by this tax. Who does this tax really strike at? This tax strikes at the next generation of entrepreneurs. It strikes at the young person starting a business, wishing to build it up and wishing to see some incentive. It strikes at the person who is prepared to work in the early stages of that business for much less than union controlled wages in the hope and expectation-up until now-that there will be a capital gain somewhere at the end of it all, either for himself or herself or their children. Men and women together, building up businesses, working hard and starting new businesses in the cities or new farms-what motivates them to work harder and longer hours for a great deal less money than many people who are under awards? What about the people who run corner shops? They stay open late at night to serve the needs of organised unionists who work five days a week in ordinary working hours and who want good service after hours or a cheap meal in a restaurant. Behind those services there is often a family working for less than award wages. One of the things that motivate such families is the possibility of an untaxed capital gain as a reward for their efforts. Mr Slipper —What is wrong with that? Mr CARLTON —There is nothing wrong with that. In fact, this country needs more of those people. This country needs them desperately. If we look at the investment figures this Government must now face up to and which it should be discussing at next week's mini-summit, we realise that it should wipe this measure off before it even gets on to the books. This is a turning point in Australia's entrepreneurial history. This country has been built up by people who are prepared to work harder, to risk their money, to mortgage their homes, and to use that capital to invest in productive endeavour in businesses which have previously not been subject to any capital gains tax. Those businesses are, however, subject to all sorts of other taxes-income tax, payroll tax, stamp duties and State taxes-all of which provide an immense source of revenue to governments, State and Federal. At least at the end of the rainbow those people had the possibility of having an untaxed capital gain and that possibility is now being taken away from them. Let us not underestimate the psychological importance of this. This whole package of measures, which came in on 19 September, is anti-entrepreneurial. Consider the person of incentive and dedication who is prepared to work hard with his or her family often in the business. Before 19 September that person would not have faced a fringe benefits tax, the prospect of a capital gains tax or negative gearing legislation. That person would not have faced this vast array of new imposts on entrepreneurship and risk, which have all been brought in as part of the so-called tax reform. People might think that this package will not affect them. Well, it will. It is not only the entrepreneur who will be attacked. The charities also will be attacked. Let me deal with the matter of charities and bequests. Section 160y provides that where a post-19 September 1985 asset of a person who dies after that date passes to a tax exempt beneficiary-that is, a church, charity, school, university, art gallery or sporting club-the asset is deemed to have been disposed of by the deceased for its market value at the date of death. The special provisions otherwise dealing with assets of a deceased do not apply. The estate of the deceased would have to pay any capital gains tax on such assets. What will this do to the incentives for bequests? There will be death duties on bequests to charities. Combined with the fringe benefits tax which is being levied on charities by this Treasurer, it represents an unprecedented attack on churches and charities. We learnt during the course of this week that under the fringe benefits tax two-thirds of each manse, presbytery or rectory would be liable for fringe benefits tax, despite the guarantee from the Treasurer that religious bodies would be exempt. Mr Cowan —That couldn't be right. Mr CARLTON —That is correct, according to advice received from the Commissioner of Taxation. Now we find in this Bill that, aside from all the other things in it, any bequest made to a church, charity or whatever will be subject to death duties and that, of course, will affect the level of those bequests. I would like to refer to many other things in this Bill, but I do not have time. I merely say that over the course of this day speaker after speaker from the Liberal and National parties on this side of the House will point out why this Bill must be defeated and why, if this Bill is not defeated in this House or in the Senate, it will be repealed by us on our return to office. This Bill will not stay on the statute books into Australia's third century. Mr JACOBI(Hawker)(10.46) —The tax system in Australia when the Hawke Government came to office was little better than when Rome was flourishing and Cato wrote perceptively that `those who stole from private individuals spent their lives in stocks and chains while those who stole from the public treasury went dressed in gold and purple'. Cato was right then and his view would sit comfortably today. Professor Yuri Grbich also perceptively diagnosed the mess our tax system has become, when he said: Why did death duty get a fatal case of paralysis? Why were contrived paper tax avoidance schemes (including, significantly, a healthy dash of sales tax schemes) allowed to degenerate until they sunk to the slime at the bottom of the harbour? Why did fringe benefits entrench themselves as a multi-billion dollar tax problem? Why have abusive tax shelters been allowed to grow like a cancer in front of our collective eyes, so that they have given a bad name to some entirely necessary tax subsidy measures? The problems certainly had design aspects to them, but essentially they were management problems. Professor Grbich also said: The basic flaw in our past tax reform and tax maintenance strategies was that we did not address the hard economic and political problems at the political level. Let me ask a few more pertinent questions. Why is it that we regard and befriend the tax dodgers and hammer the shop lifter? Why is it that we unleash our corporate affairs and taxation officers on petty transgressors and shower tax evaders with honours, tax loopholes and tax free incomes? The capital gains taxation measures before us today, along with the perks tax legislation, are an attempt to redress this imbalance. The measures proposed by the Government in its tax reform package are aimed at those areas where the tax system has suffered the most in recent years from the attacks of tax avoiders, particularly fringe benefits and capital gains. The huge tax evasion rorts of the Fraser years, such as the Curran, Westraders, Slutzkin and bottom of the harbour schemes-I would like to debate them, but I do not have time-which deprived the revenue of hundreds of millions of dollars, all relied on converting income into capital gains to avoid paying tax. Tax shelters are no longer the domain of the rich or clever entrepreneur. Through intensive marketing over the years a proliferation of avenues, such as equity and property trusts, are now well established to offer the investor of more limited means a sample of capital gains. As with the Government's attack upon fringe benefits, it faces a difficult task in eliminating anomalies within legislation, as well as coping with the flak from vested interests. The tragedy of the present situation is that the range and spread of fringe benefits and methods of converting income into capital gains have escalated enormously over the past decade under the neglect of the previous Government. Had this neglect continued, we would eventually have reached the situation where virtually every non-salary and wage earner in the country would have been paid substantially in kind rather than in cash. Paying tax would have become the exclusive preserve, as indeed it was, of the pay as you earn taxpayers. Paying tax was and would have continued to be optional for the rich. Because of past neglect, not only are many more entrenched groups now fighting tooth and nail for the preservation of their privileged pos-itions, but also whole industries have had time to develop around these anomalies in our tax system. The important lesson is not that we should tolerate inequalities and inequities in our tax system because innocent people will get hurt when we close off loopholes, and regrettably they will; rather, the lesson is that maintenance of our tax system must take a much more important place on the agenda of government. In essence, the debate on capital gains is about equity. Even the Opposition cannot deny that, on the basis of equity, taxes should be paid on capital gains. There may be arguments about the details of the imposition of this tax. There may be arguments about how much we can expect to reap from such a tax. There may be quibbles about the cost effectiveness of such a tax. There may be a concern about the effects of inflation on capital gains. But there can be no serious ethical objection to the fairness of a capital gains tax. It is as simple as this: Capital gains represent gains, just as income from wages and salaries does. If one form or type of gain is taxed all should be taxed. It ought to be acknowledged that the better-off members of society are more likely to have capital gains. As the law stands, those gains are rarely taxed. Why should a greengrocer buying cabbage at one price and selling it at a higher price be taxed when a speculator buying shares or property at one price and selling them at a higher price is not? It is high time that the media-dominated public debate focused on the economic costs of defects in our tax system in general and our income tax in particular. As my good friend Professor Grbich has so cogently put it, and honourable members opposite ought to take this into account: The original rationale and only conceivable continuing justification for according this outrageously generous tax shelter for speculative profits was to encourage productive investment and the creation of long term community prosperity. Equity in the treatment of wage earners and investors was traded off in the short term for economic growth. But the tax shelter developed like topsy. With some judicious nudging from articulate advocates for the shrewd and the wealthy, the umbrella was extended indiscriminately and nobody asked hard questions about its rationale and limits. Now the shelter is much too wide and is very seriously flawed. If a camel is a horse designed by a committee of bureaucrats, then the mis-shapen, haggard, scarred face of our apology for a capital gains shelter is a tax policy created by a courtroom of barristers. By comparison, at least the camel has a quaint functional elegance. The tax shelter for capital gains over a large area of its operation achieves precisely the opposite result of its only conceivable rationale (to stimulate economic growth). It encourages sterile channelling of effort and scarce capital into unproductive (indeed highly destructive) speculation in urban land, antiques, precious metals and the like. It channels would-be venture capital into high debt/equity gearing in assets which show an inadequate real return (without the tax expenditure subsidy) in order to convert tax deductible income losses into tax-free capital gains. Hence it seriously inhibits Australian economic performance. It is pregnant with the possibilities of paper tax avoidance by converting income into capital gain with various artifices. Is anybody opposite seriously arguing with that assessment? This method of avoidance is all the worse because it is more readily available to the rich who can pay expensive advisers to help them avoid their fair contribution to society. This unholy alliance worked for years to undermine the progressive nature of the tax system. CSIRO CSIRO CSIRO CSIRO CSIRO CSIRO CSIRO CSIRO CSIRO CSIRO CSIRO CSIRO CSIRO CSIRO We have dozens of cases in the law reports describing fanciful and unscrupulous manoeuvrings to convert what is income into capital gains simply to avoid the imposition of tax. Australia already taxes some capital gains under section 26aaa and section 25a of the Income Tax Assessment Act. I understand the latter is to be abolished. We do not need to get involved in the pointless debate of whether or not those provisions are true capital gains provisions except to point out that if we tax a gain on property bought without even an intention or purpose of making a profit, as we do with section 26aaa, that has to be a capital gains tax. Call them what we like, they are capital gains tax provisions. The Opposition, when in Government for so many years, did not remove these existing provisions; quite the reverse. Thus, it is strange indeed to hear the Opposition's cries against a more thorough and fair capital gains tax. As I recall, we have taxed short term and some long term capital gains since the 1930s. It does not wash with us, or the Australian public, for the Opposition to plead ignorance of and abhorrence at capital gains tax like a gaggle of Lady Macbeths at the handbasins. As in overseas legislation, our capital gains tax will have exemptions. The owner-occupied residence and the family's personal goods and chattels up to the value of $5,000 will not be taxed. We also have averaging and `roll over' relief provisions. They will help relieve any perceived `lock in' problem where equity demands such relief and where the impositions of the tax may arguably impose a potentially damaging burden on the property owner. The Asprey Taxation Review Committee and Canada's Carter Commission suggested such relief and we have acted on those proposals. Generally we are allowing exemptions where there is no change in the continuity of the investment but there has been a change in the technical form of the investment. I think that is the best way to put it. We even allow for the effects of inflation. This is a very significant concession, certainly when we compare it with most overseas capital gains tax impositions. A tax system must strive to be equitable and just. It should not pick on the easy targets and forget the others, just because they are too hard to get at. That has been one of the problems with the Australian Taxation Office for too long. Such a tax should not catch only wage and salary earners and the like, and let those who profit by capital gain escape their responsibilities. Certainly we must do all we can to make the collection and measurement as efficient and simple as possible. We will work on that, but in the meantime we will not let such technical arguments cloud the issue or undermine our intention to do justice for all. It is also interesting to note that we have not seen the conservative governments of the United Kingdom or Canada rushing to dismantle their capital gains tax impositions. They recognise the overwhelming equity of the tax. They implicitly acknowledge that the collection of the tax can be efficient; that the discouragement of tax avoidance and the increased revenue the tax offers is real and valuable. It is neglect of practical aspects of tax administration by past governments which has caused so much damage to the existing tax structure and left us with so perverse a system. Professor Russell Mathews best summed up the mess we inherited as follows: It would be difficult to improve on the present arrangements if we deliberately set out to design a tax system that requires the poor to pay more taxes than many of the rich. If we deliberately wanted to discriminate against wage and salary earners and to distort production decisions and consumer choice. If we deliberately sought to destroy incentives to save, invest, innovate, take risks, and undertake productive activity while simultaneously rewarding speculative activity and providing incentives as well as opportunities for avoiding tax. If we deliberately set out to make the tax system as complex, cumbersome, confusing and costly to administer and comply with as possible. The extent of tax evasion-that is, fraud or failure to declare income-was estimated in the draft White Paper at, as I recall, $3,000m. This tax fraud is just one part of the problem of corporate crime in this country. It is important that Australian taxpayers recognise that all forms of corporate crime have contributed to an excessive dependence on PAYE taxpayers for raising government revenues. Not only are honest taxpayers required to make up the shortfall in revenue resulting from tax fraud-they have been doing so for two to three decades-but also they are required to pay for the frauds on government expenditure and for the growing costs of investigating and prosecuting these frauds on the Commonwealth. How then can we minimise fraud in the tax system? The secret of effective anti-avoidance strategies is to act quickly before expectations create their own bandwagon effect. This requires much better drafting techniques, a proper institutional focus and sound strategies. The public sector, because of its institutional rigidities, finds it difficult to match the mobile, smart and resourceful guerrilla tactics of the more subtle operators in the tax avoidance industry. Special Prosecutor Redlich pointed out in his 1984 report, and regrettably this is my view of the operations of the Australian Taxation Office: The Taxation Office too often elects not to unravel the corporate structure which a criminal employed to hide his assets, because tax officers could spend that time dealing with straightforward returns of other taxpayers and thereby recover the same or greater revenue. That situation has to be reformed. If the big tax evaders are not punished many smaller taxpayers lose faith in the system and look for opportunities to evade tax themselves. As old Cardinal Richelieu once put it: Nothing so upholds the law as the punishment of persons whose rank is as great as their crime. There is little point in introducing major changes to our tax system, if we are still unable successfully to prosecute those who hold our tax laws in contempt. Millions of dollars have been put into the investigation and prosecution of frauds on the Commonwealth. Bottom of the harbour frauds alone involve $600m in defrauded tax revenues. While looking for ways to save some of these vast sums lost to the Commonwealth, I have spoken to leading prosecutors. A major reason for tax fraud being so prevalent and requiring such a huge commitment of resources in investigation and prosecution is that there are not uniform and binding accounting procedures for individuals, corporations, trusts, banks and other financial institutions and the professions to adhere to when dealing with an account for assets and asset movements. In my view, a code, backed up where necessary with criminal penalties, standardising the manner in which such things are accounted for is an urgent priority if this type of conduct is to be eliminated. This code should also have within it provisions sanctioning the knowing creation of false bank accounts and these provisions should be backed up with penalties. Furthermore, there is currently no code of conduct for co-operation by private and public institutions, particularly banks and financial institutions, with law enforcement authorities that have been properly authorised to obtain information about those institutions dealing with, or on behalf of, individuals, trusts and companies. The lack of clear guidelines is presently a cause of real problems to investigators and prosecutors. To deter further those who would seek to act illegally behind the veil of companies and trusts there need to be provisions requiring regular reporting of beneficial interests and, in the case of nominees, a declaration of principals to the Corporate Affairs Commission. There may be good reasons why principals and beneficiaries may not wish to have their interests on publicly available records, so any move in this direction may need to countenance provisions restricting access to authorised State and Commonwealth agencies that have a bona fide need for such information. The point is, though, that if such records were available, not only would there be a deterrence but also, if criminal conduct was suspected, there would be a much better starting point for investigators than exists at present. I would like to conclude by making a number of observations. Beyond question, the Opposition's policies and approach to the critical need for tax reform can be very simply and bluntly summed up: The Opposition's rhetoric is long on tax reform but it is dismally and pitifully short on the issue of specific tax reform. Or to put it more cogently, as old Colonel Blimp once put it: Gad Sir, I'm a conservative, after all I believe in reform, provided it changes nothing. There has been a succession of tory governments in this country and their whole policy on tax reform has been predicated on the simple dictum that Napoleon once passed on to Kleber when Napoleon had to go back to France. Kleber had a rather sensible approach to tax as a means of raising funds to sustain his army. Napoleon said to Kleber: `Let me warn you. To tax the poor is safe, but to tax the rich beyond acceptable limits is decidedly dangerous'. I commend the Treasurer (Mr Keating) on these measures but I say to some of my colleagues on this side of the House that there are some rightful concerns by my colleagues, electorally, about the impact of these measures. Old Dr Jowett from Balliol College once said: `You will only get these issues of tax reform through with political courage because you will never get them through on consensus'. Dr Jowett also said: Never retreat, never apologise, get it done, and let them howl. Mr McARTHUR(Corangamite)(11.04) —At the 1982 Australian Labor Party National Conference in Canberra the honourable member for Wills (Mr Hawke), the present Prime Minister, tried to alter the Australian Labor Party platform and make capital gains tax the official policy of the Labor Party. One of the reasons he proposed this move was to curry favour with the Party's left wing. Although he narrowly lost the vote to the faction led by the then Leader of the Opposition, the honourable member for Oxley (Mr Hayden), his attempt to have the capital gains tax adopted as official Labor Party policy served him well. It helped him to maintain his momentum towards the leadership. In an impassioned plea as convenor of the Party's economic committee, he made this interesting comment: If we cannot sell this proposition against Malcolm Fraser and what he has been doing to prop up the privileged and make 95 per cent of the people pay what 5 per cent should be paying, then we should not be in the bloody business of politics if we cannot beat Fraser on that. Let me turn to the Labor Party's policy statement on 16 February 1983 at the Sydney Opera House. The present Prime Minister made this very categorical statement: . . . let me make one point so that even our opponents can understand it; and let me make it beyond all their powers of misrepresentation and distortion. There will be no new capital gains tax. What a change of heart! Can we trust the present Prime Minister, given those two clear positions? Let me give some background to the taxation Act. In March 1983 the Act was 1,100 pages and now that we have a simpler, fairer tax package we have legislation with another 623 pages. Accountants and lawyers will enjoy those 1723 pages of the new tax arrangements. This year, 1986-87, the Government is going to raise $5m and, in five years time, the Government is going to raise $25m. This is against a background of $44 billion of budgetary revenue in 1982-83. In the present budgetary climate of 1985-86 we have $64 billion worth of revenue being collected by this high spending Labor Government-an increase in three Budgets of $20 billion. The great danger with the Government's capital gains tax legislation is that once this tax becomes law there will be an irresistible temptation for the Government to change the rules and widen the net. Does anyone in this House seriously believe that the left wing of the Australian Labor Party-the converts to the Prime Minister's call at the Australian Labor Party Conference in 1982 for a platform change to embrace a capital gains tax-will be satisfied with a tax which produces only $5m in its first year; a sum equivalent to only 0.008 of one per cent of the Government's budgeted tax revenues for 1985-86? Even at its zenith, the capital gains tax, as proposed, will generate revenue which will be less than 10 per cent of the income derived from the Federal Government's bank accounts debit tax. The Treasurer (Mr Keating) has expressed contempt for the amount of revenue that this tax will produce. Last year he was quoted as saying that, in terms of revenue gained, capital taxes were `peripheral' and `marginal' and could not raise the revenue necessary to fund worthwhile tax cuts. The precedent that the Australian Council of Trade Unions is proposing to establish with its 3 per cent productivity claim to fund a superannuation program should be noted. The life insurance industry, the superannuation fund managers and actuaries, will tell anyone prepared to listen that 3 per cent will be the thin edge of the wedge for a 3 per cent contribution could not possibly fund a viable superannuation scheme. The message is therefore clear: Once a 3 per cent claim is accepted, employers will later be compelled to increase their contributions progressively to 5 per cent, then 7 per cent, then 9 per cent, and higher. So we can expect a capital gains tax to be expanded to satisfy the continuing demands of the Hawke Government. In the Australian Tax Review, Mr T. E. Bostock wrote: Why Australia does not need a capital gains tax. Equality demands no tax be paid on illusory gains, that losses and inflation be taken into account. Secondly, the tax be paid on realised gains only. Thirdly, that the legislation to incorporate this tax will be too complex, and fourthly, the house and household effects should be exempted. I think the House could accept the summary document in the Economic Planning Advisory Council in its paper No. 9, which sets out the capital gains tax as proposed by the Government: A tax at full marginal rates on inflation-corrected realised capital gains will be introduced. The tax only applies to assets purchased after 19 September, 1985 and is not payable on the death of the owner. Capital losses are only creditable against capital gains and only nominal capital losses are deductible. There are no rollover provisions. The capital gains tax will allow averaging of gains effectively over a five year period and 20 per cent of the goodwill of new business will be exempt from the tax. Let us look at some of the factors involved in the new tax. The marginal income tax rate will apply. It will be the toughest in the world by any standards. In the United States of America, where they have some form of capital gains tax with a background of high consumption taxes and lower income tax rates, they reduce the rate of capital gains tax from 35c to 20c, whereas here in Australia we are about to introduce a new tax of this kind. In the UK they have a problem with the inflation index, the problem of the administrative difficulty of determining what would be the inflation rate used in indexing the capital gain. What criterion do they use? In this country the Government's not going to index capital losses. Therefore, a `no-man's area' in the calculation of losses may be reached. I shall quote from the Australian Tax Forum, where the problem is identified in the UK: The most continuous debate on CGT has centred round its inflation-proofing. With inflation, CGT was taxing nominal gains which could, indeed, represent real losses. After a departmental review, including the publication of a consultative document, Mr Healey, as Chancellor, declined to index the tax but improved the exemption limit. He argued that insulation against inflation could not logically be confined to CGT payers; if they enjoyed it, in principle inflation-proofing ought to be extended to holders of building society and savings bank deposits. But, he said, `We cannot afford to go down this road'- That is just what will happen in Australia. The article continues: Sir Geoffrey Howe did not have the same inhibitions. In 1982 he provided for the indexation of the acquisition price of assets provided they had been held for more than one year. However, the provision was not retrospective and applied only to price rises after March 1982. So, we can see what would happen. If future Labor governments changed the inflation index it would make a major change to the tax gathering potential of this new tax. The measure introduced on 19 September 1985 created two classes of capitalists. Class 1 is those with capital and assets prior to 1985, and class 2 is those who are starting out anew and subject to changing provisions of the new capital gains tax. Obviously this new arrangement has a tendency to lock in previous investments, which was a factor in the recent Broken Hill Proprietary Co. Ltd takeover battle. The new classes of capitalists have no incentive to create new business under the shadow of increasing capital gains taxes. At least there has been some 20 per cent reduction in the `goodwill factor' involved in the capital gain tax in business sales, but this discriminates against anyone starting a new business. Mr Burges, Chairman of the Tax Committee of the Law Council of Australia, had this to say about the goodwill aspect of the tax: The tax will be very hard on a person who starts up a business from virtually nothing and builds it up to a significant enterprise. On disposal, he will pay tax on the whole of the goodwill component, as he would have no base costs to which the indexation adjustment can be applied. This discourages entrepreneurial effort at the very time it should be encouraged. In an article published in the Australian on 14 March 1985, Dr Ian Spry, QC, editor of the Australian Tax Review quoted the then recently expressed views of the United States economist, Mr George Gilden, who had this to say: Regardless of theory, however, the US stock market has just begun to revive after more than a decade when it dropped 50 per cent in value in real terms. More than any other measure, the capital gains costs of 1975 and 1981 were responsible for the revival of US technical and entrepreneurial leadership in the world economy. One economist, Michael Evans, estimates that these tax cuts directly created about two million jobs in the first six quarters of the recovery. Even Francois Mitterand is attempting to create similar venture and new-issue markets in France. For the US to throw aside this superlative asset is foolhardy. Dr Spry went on to say: The experience abroad has been that reductions in capital gains taxes-in those countries that have them-has increased investment and employment in critical respects. Let us now look at a couple of aspects of the Bill. First, I refer to the distortion of the home market by the fact that home owners are exempt from the tax. This will lead to larger dwellings, extensions and renovations being the order of the day. In relation to employee participation in share issues, the Bill will penalise those who wish to take up shares in the companies for which they work. The Government suggests that it is encouraging worker participation, but by this legislation it is positively discouraging it. The provisions in section 160y actively discriminate against contributions to churches, schools and charities, because those contributions will be subject to capital gains tax at marginal rates at the estate level. A short term capital gains tax is covered under section 26aaa, so there is no need for the Government to introduce the new legislation. We will need an army of public servants to interpret, to administer, and to extract the $5m. As one tax expert said: `If we make it simple it will lack fairness; if we make it fair it will lack simplicity'. In this investment climate, where Simon Crean has been demanding that employers and businessmen make more investments, we have the situation of a capital gains tax being introduced, a 3 per cent superannuation claim is demanded by the unions, a 2.3 per cent wage rise, the highest interest rates for 50 years, and a position where small businessmen and farmers will be discriminated against by the capital gains tax because they will not have the access to capital. On return to government we will repeal this legislation. We will oppose it most vigorously in the House today. Mr CHARLES(Isaacs)(11.18) —It is amazing that the honourable member for Mackellar (Mr Carlton) and the honourable member for Corangamite (Mr McArthur) in this House this morning quoted what the Prime Minister (Mr Hawke) said several years ago. Both those honourable gentlemen failed to quote what the Prime Minister said in his policy speech before the last election. They conveniently did not refer to his speech before that election, and they did that because there was no promise in regard to this tax. The Prime Minister made two promises at the last election in regard to taxation-one that there would be a thorough review of the taxation system, and the second that there would be a taxation summit. Both have occurred. First. there was a taxation summit, and secondly, all of this thorough review has been put before the Australian people. In fact, it has been put before the Australian people for the past 12 months. The draft White Paper was put out 12 months ago, yet the honourable member for Mackeller showed his intellectual deficiency by saying that before he can make a grand speech he needs the appropriate information, that is, the attachments to the legislation. Obviously he has not been in this place long enough to read the legislation correctly. It is extraordinary that he is quoting selectively and not putting the facts before the people. I commend the honourable member for Hawker (Mr Jacobi) on his speech. Everyone in Australia should have been listening to and should receive a copy of that speech by the honourable member. He touched on every point salient to this debate. I will be sending out copies of that speech to a number of people in my electorate. The draft White Paper on the Reform of the Australian Tax System pointed out: Australia is virtually unique among OECD countries in having no general capital gains tax. A 1979 comparative study of Organisation for Economic Co-operation and Development countries showed that Australia, Italy and the Netherlands were the only countries that did not have any specific tax on, or any provision to tax, capital gains. It should be remembered also that, of those three countries, the Netherlands has a comprehensive wealth tax which taxes the increased value of individuals' wealth, including their homes. Although it is fair to say that only general comparisons can realistically be drawn between the taxation systems of different OECD member countries, generally capital gains in the hands of individuals are taxed or treated as income in almost every country. In the countries in which a specific capital gains tax applies, including the United Kingdom, those taxes are relatively recent-mostly they have been introduced since 1960. Other countries incorporate capital gains taxes within their existing income tax structures by declaring that capital gains are to be treated in the same way as other forms of income, subject to varying conditions. Again, many of the OECD member countries added those provisions in the last two decades. It must be pointed out that nearly all member nations have strengthened or increased the provisions of their capital gains tax in the last decade. I move to an examination of the situation applying in the United States-probably the greatest and most extensive free enterprise system in the world-where capital gains legislation dates back to 1913. Mr Robert Brown —Back how far? Mr CHARLES —That legislation dates back to 1913. I will quote from the Australian Financial Review of Tuesday, 13 May this year-a newspaper not generally known for its radical left wing views. The article, entitled `Business bears brunt of US tax reforms' and written by Malcolm Maiden in New York, compares the United States and Australian tax reform processes. In a rather lengthy feature article Mr Maiden said: Unlike Australia, which actually had to debate the desirability of a capital gains tax, the US system already embraces capital gains-short and long term. In Australia, the Government deferred to historically powerful and emotional anti-capital gains tax pressure by introducing a gains tax that applied only to assets acquired after the date of introduction and then only taxing gains above the rate of inflation. In the US, there will be no real debate about the desirability of capital gains- I repeat: `There will be no real debate about the desirability of capital gains'. The United States system already embraces a capital gains tax. In fact, people in the United States think that their flat or lower rate of taxation is wonderful because capital gains are taxed at a reduced rate from their normal marginal rates. They think that that lower rate is a concession. However, we have the conservative Opposition, the Liberal and National parties, coming into this Parliament and putting before the people of Australia the suggestion that we should be treating income that is received in capital form as exempt income. Tax avoidance is rife. One of the reasons we have had this massive tax avoidance over the last decade, as the honourable member for Hawker said, is that people were able to take their income in the form of a capital gain and receive tax free exemptions. I return to the Draft White Paper on the Reform of the Australian Tax System which in paragraph 7.6 on page 78 states: The lack of a general capital gains tax represents a structural defect in the income tax system which lies at the core of many avoidance arrangements; if income can be converted into or dressed up as capital gains, income tax can be avoided completely. Mr Robert Brown —That is what they want. Mr CHARLES —That is what they want. We have heard a nonsensical speech by the honourable member for Mackellar, the Opposition spokesman on economic affairs. He really did not put forward any arguments against the tax at all except that it would blow investment out of the window. What nonsense. This tax is embraced in virtually every other country and in every other OECD member country. However, before the 1980 election the previous Fraser Government, of which the honourable member for Mackellar was a member, put before the Australian people outrageous full page advertisements, trying to frighten them into believing that any incoming Labor government would tax their homes and take their money. It is absolutely outrageous. It is not true now, as honourable members opposite know. That was never the intention. This situation is a little like the situation in, I think, 1977 when Fraser promised tax cuts and six months later took them back. That is the form of conservative governments going back many years. No previous government has come to an election and said: `We will not promise anything. We will have a thorough review'. We spent two months saying that during that campaign. We could quite easily have said: `Righto, we will promise this, that or the other'. The result is that the tax package that this Government has been implementing over the last few months, in particular the last few weeks, is all part of an overall tax package. As the Treasurer (Mr Keating) said in this House yesterday-and I have said so on a number of occasions-it is all part of an overall tax package and must be looked on as such. Mr McArthur —It's $20m. Mr CHARLES —I am glad the honourable member said that. The tax will bring in $5m in the first year-not $5 billion. After five years it will bring in $25m. I am glad the honourable member raised that matter because in the United States in 1983 capital gains tax on individuals raised nearly $US14 billion. In regard to corporations it raised another $US4.75 billion. In 1983 in the United Kingdom the capital gains tax on individuals raised #644m. The capital gains tax on corporations raised #194m. That is what the capital gains tax raised in those two countries. It will raise $5m here. As is stated on page 43 of the attachment to the Treasurer's speech in September last year: The restriction of the tax to assets acquired after today, the decision not to deem realisation at death, the exemption for the principal residence and reasonable curtilage, the concessional treatment of personal-use assets including motor vehicles and the taxation of only real capital gains means that, for most taxpayers, the capital gains tax will have little or no impact. That is the reality. The honourable member knows that that is the reality. In talking about the taxation package overall, let me just list a couple of the items involved: The fringe benefits tax; the entertainment expenses tax; the capital gains tax; the rationalisation of the wholesale tax system; the tax free threshold which goes in the reorganisation of the taxation scales and the taxation cuts; the prescribed payments system; the quarterly provisional tax; the tax concessions for the Australian film industry; the foreign tax credits system; the imputation system of company tax-which honourable members opposite conveniently forget-and the negative gearing and depreciation on residential income-producing buildings. They are just some of the things in the whole taxation package, which we will see as the biggest revolution in taxation in this country. It is the most equitable treatment of taxation by any government in this country. All we have seen from honourable members opposite are scare tactics and screams, as the honourable member for Hawker said. This legislation is long overdue. It is part of the overall tax package and will be thoroughly endorsed by the people of Australia. I commend the legislation to the House. Mr IAN CAMERON(Maranoa)(11.30) —I have much pleasure in opposing these two iniquitous tax Bills, the Income Tax Assessment Amendment (Capital Gains) Bill 1986 and the Income Tax (Rates) Amendment (Capital Gains) Bill 1986, which have been introduced by the socialist Government here in Canberra today. In so doing, I repeat the remarks of the Treasurer (Mr Keating) of 29 November 1984. He said that there was no certainty that a capital gains tax would raise sufficient revenue, or that it would have any beneficial effect. What did we see in February 1985? In terms of revenue capital gains are marginal, was another assertion from the so-called greatest Treasurer in the world. What do we get from the great Prime Minister (Mr Hawke)-what did he say? He has not told the truth since he has been here. He has not kept one promise since he was elected. Mr Charles —I rise on a point of order, Mr Deputy Speaker. I want that remark withdrawn, that the Prime Minister has not told the truth since he has been here. Mr DEPUTY SPEAKER(Mr Leo McLeay) — The honourable member for Isaacs has drawn my attention to the remark made by the honourable member for Maranoa, who knows that he should not cast aspersions on other members or officeholders, so I think that he should withdraw. Mr IAN CAMERON —The Prime Minister said in 1983 that there would be no capital gains tax. Mr DEPUTY SPEAKER —Order! The honourable member for Isaacs has asked that the honourable member for Maranoa withdraw his remark. Mr IAN CAMERON —I withdraw. I will not apologise. Mr DEPUTY SPEAKER —Order! The honourable member was not asked to apologise. Mr IAN CAMERON —The Prime Minister has not kept any promise to the people of Australia since he was elected. I repeat in this House that the Prime Minister said on 16 February 1983 that there would be no new capital gains tax. This socialist Government was elected to this Parliament on those sorts of statements. It did not keep its promises. The Prime Minister has not kept his promises to the people of Australia, who are totally disgusted with him. One has only to read today's Australian to see the sort of revolt going on throughout the land. We see under the heading `Declaration of Revolt' a sub-heading `Centre 2000', and a list of the sorts of things people are writing about. This shows the amount of money that people are prepared to spend on advertising. Also, there is an open letter to Senator Chipp, who is as bad as the Labor people because he allowed the fringe benefits taxes to pass. Of course, the National Party is opposed to both of these new taxes. There is no reason why we should continually have new taxes imposed upon us. I know that it will be difficult for this Labor Government to agree that there should not be a capital gains tax, because it is totally opposed to the capitalist system that we on this side of the House support-it is the only way that Australia will get back on its feet and the only way that we will get this country going again. Because of his comments, the Treasurer, of course, will go out of office at the next election. He is known for his comments on Australia and for referring to it as a banana republic. I can tell honourable members that the only republics amongst the countries operating in Central America where there are lots of bananas growing, and where this reference came from, are tax-free countries. The Bahamas, for instance, is a tax free country, and that is the only reason it has prospered. It has done damned well being tax free. One does not have to pay these exorbitant taxes for a country to prosper. The tax free countries of the world prosper merely through not having to pay the sorts of ridiculous taxes that we are paying. However, what are we doing in Australia? We are going further and further down the gurgler-`down the hole', as the Treasurer put it. How true that remark was. Down the hole we go, and we will continue to go down the hole after today. This is a black day for the House of Representatives when a new capital tax is being debated in this House. What a ridiculous situation the Government has got this country into. Nobody is suffering more than small business and farmers in this community. We are the people who must have capital to earn a living-we are not employed by anybody; we have to own capital. We have to have capital to make a living, yet the socialists on the other side of the House want to tax, tax, tax and tax us until we are completely dead. It does not need me to tell honourable members that rural Australia is dead; it has been hounded into the ground by excessive taxation and has nothing left. There is not a dollar left in us-the Government has squeezed it out of us by using oil parity pricing and by way of a number of other costs that this Labor Government has imposed on rural industry since it came to office. I reiterate that list of increased costs to primary industry: Tax averaging withdrawn by the Government, $55m; sales tax imposed on lubricants, $5.6m; removal of tax concessions for land clearing and swamp drainage, $3m; withdrawal of depreciation allowance, $142m; rural adjustment scheme, $27m; sales tax imposed on wine, $15m; petrol products freight subsidy scheme, $27m; export inspection charges, $36m; income equalisation deposits $20m; and so the list goes on. This list includes the fuel excise on petrol. The current fuel excise on petrol being charged to farmers in this country amounts to $167m. The taxes that the farming community is paying total $440m, yet this Government has the gall to say through the Minister for Primary Industry (Mr Kerin) that it is treating farmers fairly and giving them a fair go. What nonsense! While I am on this subject I will also mention-and I have said this here before-that we are presently exporting no crude oil because of the taxes imposed by the Labor Government by way of the ridiculous parity pricing arrangement that we have here. There has not been a cargo of crude oil leave Australia in the past two months. That is the ridiculous situation that we have got ourselves into. People wonder why our balance of payments is down the drain. Mr John Brown —Do you think this would have something to do with the world price of oil? Mr IAN CAMERON —The Minister wonders why our balance of payments is down. That is one of the reasons. Another matter about which I have been trying to ask the Treasurer a question for the past three weeks is: What is the Government's intention when the price of oil and petrol is increased? Is it going to reduce the excise that it has imposed, the over 200 per cent increase in excise that has gone from 6.2c a litre to 19.2c a litre? Of course the Government will not do that; it will continue to tax us heavily, out of existence. Mr Martin —Would you? Mr IAN CAMERON —Of course I would, because I believe that business in this country needs a fair go and needs to get going. We have the highest unemployment that we have ever had in this nation and it continues to rise. The Prime Minister comes in here every day telling us how the Government is spending billions of dollars on all sorts of fake schemes around Australia to take people off the dole queue. What members opposite do not seem to understand is that one needs capital to create work, to create jobs. That is what we have a farm for. That is what we have capital invested for-to create employment. However, honourable members on the other side do not understand that. They have a system set up now whereby they are sucking the capitalist system dry. The $3 billion being paid out in dole payments is not only continuing but also those payments are increasing. That is the situation we have got ourselves into, and people wonder why we are a banana republic. One does not need to be a genius to work out why. Farmers from all over Australia have stood on the steps of Parliament House telling honourable members opposite why we have become a banana republic. When one is back home working one's guts out for 90 hours a week and getting no return-the average farm income is $6,000 for working 80 or 90 hours a week; we are not on a 34-hour week-by way of income the socialists in the Government are not satisfied with that; they want to continue to tax us and to apply capital taxes. I will point out a few matters in these new Bills that I believe are wrong. Proposed new section 160a defines `asset'. A capital tax is applied to a loan forgiven. Not only will it attract a capital gains tax; it will be double taxed because the newly introduced fringe benefits taxes which have been through this House will also be applied to a loan to an employee. A station worker who is given a loan by his employer to buy a car will have to pay a fringe benefits tax on that loan. It will also be assessed as capital and he will have to pay a capital tax on it. Proposed new section 160zs applies to leases and the premiums on leases. The premiums on leases will now be termed capital and a capital gains tax will apply. I particularly direct these remarks to the Treasurer. I only wish that he were present to listen to this debate. I suppose that he does not want to be present because he did not really want to introduce the legislation. Mr Peter Fisher —He is talking to Chipp in his office. Mr IAN CAMERON —Yes, that is right. He is talking to Senator Chipp and making deals with the Australian Democrats. I say to the people of Australia that, at the next election, not only the Australian Labor Party but also the Democrats must be thrown out of office. The Democrats must not be returned at the next election. If we are to get some sense back into this country, both the Labor socialists and the Democrats must go. None of them must be re-elected to the Parliament. In regard to proposed new section 160p, I make it perfectly clear that people should not misunderstand the socialists. They have said that no capital gains tax will apply to land which was owned before 20 September 1985. I make this point loudly and clearly to everybody-to every capitalist in this country who happens to own land, including every worker who owns his house and land and also owns a beach house or something apart from the family home. I say loudly and clearly to Norm Gallagher, who has a beach house, wherever it is, that any assets that he places on that property-this applies to every landholder, every farmer and every owner of a block of land in any city that is redeveloped-after 20 September 1985 will be subject to the capital gains tax. I say loudly and clearly to this House that, in regard to the farm that I have owned for many years, any improvement that I make to that property from now on will be taxed. I say to the honourable member for Melbourne (Mr Hand): What sort of incentive is that? He is the greatest socialist in this House. Members of the left wing of the Labor Party love capital gains taxes. They want to destroy the free enterprise system. We are here to protect it. I refer also to proposed new section 160zh. The ridiculous situation we have is that the cost of stamp duties-- Honourable members interjecting- Mr DEPUTY SPEAKER(Mr Leo McLeay) — Order! The debating points that the honourable member is putting are obviously of great interest to members in the chamber. They might take some time to listen to them rather than assist him. Mr IAN CAMERON —Under proposed new section 160zh, the cost of stamp duty, legal advice, et cetera, will be allowed as a deduction. But we have the absurd situation that the legal advice given in regard to the capital gains tax will not be allowed as a deduction. How ridiculous and petty can the bureaucrats in the Treasury become? The Government is introducing 150 pages of legislation, but a person cannot go to his solicitor, get some advice and claim the cost as a deduction. That is the sort of ridiculous situation that will occur. As usual, I have all sorts of notes here to which I would like to refer: But I am being asked to cut down my speech. I conclude-- Government members-Hear, hear! Mr IAN CAMERON —Of course, it is quite obvious that Government members want me to finish because they do not like what I am saying. They will not be re-elected at the next election. I call on the Prime Minister to take us to the polls. Let us have an election on these taxes and on the promise that the Prime Minister gave when he said: `There will be no capital gains tax'. Now that the Labor Party has introduced a capital gains tax and all the other new taxes, let us have an election and see who will win. Let us call the Labor Party to account. Let us put the broken promises to the people and see who will win. The Queensland National Party, more than any other party in Australia, has taken the lead. It was the first government to withdraw death duties. Since then Queensland has gone ahead in leaps and bounds. We do not need these iniquitous taxes. I, along with my National Party and Liberal Party colleagues, totally oppose these Bills. Mr BEDDALL(Rankin)(11.45) —It is always a distinct pleasure to follow my neighbour, the honourable member for Maranoa (Mr Ian Cameron). Mr John Brown —It makes you look good. Mr BEDDALL —As the Minister says, one always looks good in comparison. The honourable member for Maranoa is obviously one of those great members of the National Party of Australia who firmly believe in capitalising their profits and socialising their losses. He speaks in the style of the Queensland Premier and is one of the Premier's great supporters. The honourable member for Maranoa is supporting poor old Joh again. The Income Tax Assessment Amendment (Capital Gains) Bill represents another important step along the road to restoring morality to the taxation system. Along with the other taxation measures introduced, this Bill aims to restore incentive and investment to productive areas. It will negate the tax evasion which has resulted from diverting income into low yielding capital investments for tax sheltering purposes. The tax will take effect from 20 September 1985, and is totally prospective. In 1987-88, it is expected to yield the modest sum of $5m, rising to $25m in the fifth year of operation. The tax will apply only to real gains on an asset-that is, the amount left over after inflation has been washed out of it. It will be the fairest capital gains tax in the world and is long overdue in Australia. The tax ensures that, in a capital scarce country like Australia, investment will be directed into productive areas of the economy. We are seeking to encourage business people who are pie makers and not pie slicers. For example, in my State of Queensland, according to the Queensland Retailers Association, investment capital being poured into shopping centres has ensured that shopping outlets are at saturation level. The over-abundance of these centres has caused Queensland to have the highest number of bankruptcies in Australia. In Queensland, superannuation funds have invested in large centres. In particular, the Westfield shopping centre at Indooroopilly was run by one large superannuation fund. Small business operators faced massive overheads as a result. In some instances, in order to repay the capital amount, their rents were based on turnover. In my electorate, Logan City has seen this proliferation, with many small operators struggling to make a living. In nearby Sunnybank, there are three major shopping centres on each corner of a very busy intersection. The point is that investors have found it easier to purchase land, put their money into retail space and sell it off for a quick capital gain. They are not to blame. There has been every incentive for them to do this. If investment money had been placed into export-oriented manufacturing industry or into high technology, I believe that the Queensland economy would not be suffering from the structural imbalance it is suffering from today. It would also be making a contribution towards reducing the current account deficit problems. The farmers organisations have had their fears of a capital gains tax allayed. Inter-generational transfer is not affected by the tax. I express my appreciation both to the farmers and to the Government's primary industry, rural and provincial affairs committee. Both groups were instrumental in putting reasoned cases on this matter to the Treasurer (Mr Keating) and the Government. I am pleased that the Government has recognised these representations. I notice also that there is provision for five-year averaging for the capital gains tax. This brings the treatment of capital gains even closer to that of other forms of primary producer income, which is consistent with the Government's overall aim in respect of the tax. Many farmers have expressed concern about the tax and its effects on property values. Studies suggest that agricultural land prices may fluctuate but over the long term do not appear to increase in real terms. There was evidence of a significant real appreciation of land prices in some areas in the late 1970s and early 1980s, especially in the Queensland cane growing areas. There is also evidence that the present lack of liquidity of many farmers is caused by high prices paid for land at that time. To the extent that the expectation of untaxed capital gains contributed to that short term appreciation of land prices, the absence of a tax on real capital gains caused these problems. High land prices, though good for sellers, are bad for land buyers. This includes those who want to remain or become farmers. At the same time as the Government's White Paper on Taxation was released, many farm leaders were exhorting their members to take to the streets in farm protests. I find it regrettable that many decent, hard-working farmers suffer because of the actions of the fools who lead them. Many of these farm leaders in my own area are card-carrying members of the National Party. Some are more interested in making a political point defending the National Party than they are in standing up for their own farmer members. They say privately to me and to other Government members that the Government is doing everything possible for them, but, publicly, they urge farmers to participate in actions that are against their best interests. Of course farmers are not the only ones being misled by their leaders over these taxes. In Queensland, the whole State is being misled by the aging Queensland Premier, who is urging people to break the law. Once these Bills are passed and become law, I urge the Attorney-General (Mr Lionel Bowen) to have the Premier arrested if he is in contravention of the Crimes Act. This legislation also relates to a capital gains tax on shares. It is worth recalling that the stock exchange today has seldom been more buoyant; yet investors have known about the tax for eight months. This effectively refutes any suggestion that a capital gains tax would drive investment away. It has always seemed unfair that a person can make a windfall on the stock exchange and not have to pay tax, yet an employee obtaining a wage rise is taxed that very week. An example of windfall profits on the stock exchange is best illustrated by the following case. The person involved was issued with an authority to prospect by a State Minister and, after obtaining the authority, he entered into an agreement with an American company, Gene Goff Pty Ltd, to form a company to acquire the prospecting authority. He agreed to transfer this interest to the new company for a nominal $4 and then to sell 51 per cent of his shares in it for $25,300. There appears to be a deception in the stated $4 nominal value, when the true value was $49,608. The same day this person incorporated a company, Artesian Basin Oil Co. Ltd, in which he was the beneficial owner of all the issued shares and sole director. The following day he requested the State Minister's consent for the transfer of the authority to the company for a consideration of $4. The consent was given. Five days earlier at a meeting of this person's company at which he was sole director, beneficial owner of all shares, and sole voter, he announced that he was satisfied that the inherent value of the authority was $49,608-not a bad capital gain. It was resolved that the value of authority in the company's books be written up accordingly, that the surplus from this revaluation be placed to the credit of an assets revaluation reserve account and that a dividend of $49,604 be declared payable wholly and exclusively out of the profits and that such dividend be satisfied by the issue of 24,802 fully paid shares of $2 each in the company. This person immediately acquired a beneficial interest in all of these shares-51 per cent of which were transferred to another company he had dealt with. For this he received $25,300 plus a reimbursement of about $2,778-51 per cent of the sum he had spent obtaining the authority to prospect. He retained a 49 per cent interest in his company, called Artesian Basin Oil Co. Ltd. A few years later, the company's prospecting authority was acquired by Exoil NL. For this this person's company was to receive payment of $500,000 and was granted a royalty of 5 per cent-not a bad capital gain. He received $56,000 for the sale of rights to a new issue of shares. Ten years later, this person held one million 50c shares in Exoil. These were valued in 1968 at $720,000. Thus from the deceit of falsely advertising that he was transferring his interest in the authority to prospect for a nominal consideration, there has flowed to him a windfall gain. The person concerned is none other, of course, than the Queensland Premier. Members of the Premier's own Party regarded the windfall capital gains as so reprehensible that they urged him to sell his shares in the company. Indeed the current Minister for Local Government, Main Roads and Racing, Mr Hinze, moved a motion at the National Party Conference urging Ministers to refrain from accepting purchasing or dealing with shares in public companies which could be expected to be involved in business with the Government. The Local Government Minister's principled stance was ignored by the Premier. Is it any wonder that as a result Queenslanders have seen a moral decline in the standards of ministerial conduct under the Bjelke-Petersen Government. Nowhere is this more evident than in the constant cloud which hangs over the ministerial conduct of Mr Hinze. Little wonder that the Queensland Premier's conscience has become so dulled when it comes to the principle of taxation morality enshrined in this Bill. If the current tax measure had been applied to the Premier's company, he would have had to pay a capital gains tax on his windfall gains. He would nevertheless have benefited from lower marginal tax rates, lower rates of company tax and the imputation of his dividends. The Premier should reflect on this before he encourages lawlessness in others with respect to taxation. These measures will restore morality to the tax system. They will encourage investment in productive areas. They will restore equity and they deserve support. Mr BEALE(Deakin)(11.55) —Today I want to add to the already lengthy and justified criticism of the Government's capital gains tax legislation. Further, I want to draw attention to the fact that the threat of this tax has already had serious effects on the private residential rental market and to the further effects that it will have if the Income Tax Assessment Amendment (Capital Gains) Bill and the Income Tax (Rates) Amendment (Capital Gains) Bill become law. Before talking in more detail, I want to draw the attention of the House to the economic climate in which this tax is being introduced. That climate must be of real concern to all Australians. We have an inflation rate of 9.2 per cent, about triple the average of that of our major trading partners. Despite growth in the economy, unemployment remains jammed at about 8 per cent. Youth unemployment, at 23 per cent, is a blight on the Australian social and economic landscape. Interest rates remain at very high levels. For example, the interest rate on new loans for housing is now 15 1/2 per cent, compared with 11 1/2 per cent 18 months ago. Enough has been said about the Government's broken promises on the capital gains tax, but let me remind the House that it is not only the capital gains tax on which promises have been broken. Time and time again in the lead-up to the last Federal election the Prime Minister (Mr Hawke) and the Treasurer (Mr Keating) assured the nation that interest rates would come down. I repeat that in the last 18 months interest rates on new home loans have increased by 4 per cent. Uncertainty in our economic situation is also due to our current account imbalance and our ever-increasing overseas debt which is well on target to be $100 billion by our Bicentenary. Governments in Australia are now taking annually about 44 per cent of our national income. They are choking initiative, stifling incentive, and strangling small business and farmers. As a result of the huge government grab of our national income an investment drought has been created. Private investment in Australia is at disappointingly low levels. I draw the attention of the House to the headlines on page 3 of this morning's Age, which read: `Private investment fall deepens gloom'. The article starts by saying: Falling investment by private industry during the March quarter added to the pall over Australia's medium to long-term economic outlook . . . Unless private investment starts to increase before too long we will not have the capacity for further economic growth. In this uncertain economic situation, the Government now proposes to impose a further disincentive to investment. The capital gains tax is the wrong tax at the wrong time. Poor timing is increasingly characteristic of the performance of this Government. What will happen is that the capital gains tax will send the wrong signals to the economic market-place. In the first place, it will slow down investment even further. What additional incentive can there be to make an investment if one knows that one will be taxed on it when that investment is realised? Secondly, whatever funds may be available for investment will tend to be channelled into unproductive areas which do not attract the capital gains tax-for example, the family home. Thirdly, the capital gains tax will reduce the number of entrepreneurs who would turn their ideas, their skills, their drive and their energy into a small business. Who would take the risks associated with those kinds of ventures, knowing that the reward would not be appropriate for the risk taken? We must ask ourselves: Why is the Government introducing this wrong tax at the wrong time? Why is the Government, in the current difficult economic situation, introducing a tax that will further slow investment growth? Why is the Government discriminating against the decreasing number of risk-takers in our community who want to take their chance at exercising their own freedom of choice in our free society? The Government is introducing this legislation for two main reasons, both of them to fulfil the quite impractical but ideological disposition of its constituencies. It is introducing this tax because the Australian Council of Trade Unions has told the Government it must do so and to placate the restiveness of the left wing of the Caucus. The Government has been warned again and again that the capital gains tax will have a significant and detrimental effect on the private rental market. For example, let me quote what the President of the Real Estate Institute of Australia had to say at the National Taxation Summit in July 1985-nearly a year ago. He said to the Government: In short, your proposals for a capital gains tax and quarantining negative gearing will attack-and very seriously damage-the private residential market in Australia. Despite continued warnings of this type, the Government now persists in introducing this punitive taxation measure. Over the past 20 years there has been a seemingly ever increasing amount of legislation which has had the effect of discouraging landlords from providing residential rental accommodation. The private rental market in Australia has nearly one million units of the total housing stock in the country. Yet over the past 20 years interest rates have climbed steadily; rates, taxes and stamp duties have become extortionate; zoning controls have restricted medium density development, various tenancy legislation has focused on the private rental landlord rather than on protecting tenants in public housing; and now we have the capital gains tax. The result of the threat of this capital gains tax has been a reduction in the construction of new flats around Australia and a reduction in annual investor yield. There are now 156,000 people on the waiting lists for public housing in Australia. The public housing waiting list is growing at nearly 20 per cent a year. At that rate there will be a quarter of a million Australians on the public housing waiting list at the time of our Bicentenary. In fact, we could celebrate those two things together-an overseas debt of $100 billion and a public housing waiting list of a quarter of a million people. What a grand Bicentenary we will have. At a time when public housing waiting lists are increasing, the Government chooses to introduce this punitive taxation measure, which will cause the stock of private rental properties to decrease. As I said, this is the wrong tax at the wrong time. Furthermore, the threat of this capital gains tax is already having an effect on the private rental market. Vacancy rates in the major cities of Sydney, Melbourne and Perth have come down since the measure was announced. For example, in Perth the vacancy rate in September 1985 was 1.7 per cent and in March 1986 it was 0.5 per cent. Falling vacancy rates have put pressure on rents. Again quoting Perth, the increase in rents from the March quarter of 1985 to the March quarter of1986 was 22 per cent. In Sydney the increase over the same period was 14 per cent. One final figure from Perth deserves mention. In November 1985 the median weekly rent of a three-bedroom house was $84.75 and in March 1986 it was $102. That is an increase of $17.25 a week over four months-an increase at a staggering annual rate of more than 100 per cent. The threat of this legislation is now turning into stark reality. The capital gains tax will go on to cause a major crisis in private rental accommodation. This crisis will put further pressure on public housing, cause rents to increase with increased hardship for low income earners, and mean a slowdown in the construction of rental accommodation. The Government should be reducing taxes on investment and savings, not increasing them. All the other Western democracies are heading in the direction of taxing consumption and spending and removing taxes on investment and savings. This Government has got its economic policies wrong. We are headed in the wrong direction. The Government should try putting us right and, as a first step, not proceed with the passage of this wrong tax that is being introduced at the wrong time. Dr THEOPHANOUS(Calwell)(12.06) —Today is an historic occasion in the House of Representatives because we have before us historic legislation-legislation which is long overdue, which is of enormous importance to this nation, and which, I believe, will establish a fair and equitable tax system in this nation for the first time. What we have had for many years is an inequitable system, a system which relies excessively on taxing those who earn their income through wages and not taxing those who earn their income through capital accumulation. In fact, for many years people have been able to make enormous gains-millions of dollars in some cases-through capital accumulation and not pay a single penny of taxation on that accumulation. For many years it has been part of the consistent philosophy of the Australian Labor Party to end this injustice. For the six years that I have been a member of this Parliament-- Mr Ian Cameron —What happens in Greece? You tell me what happens in Greece. Dr THEOPHANOUS —We will talk about Greece later. For the six years that I have been a member of this Parliament we have consistently campaigned to change the situation where capital gains have not been taxed. Our campaign has finally come to fruition with this legislation, which imposes a moderate and fair capital gains tax-in fact, in world terms it is extremely moderate. There has been talk from the Opposition about so-called broken promises. Let me make it clear that this talk is dishonest rubbish. The Government has given sections 26(a) and 26aaa of the Income Tax Assessment Act a chance to work. Let me go through the process the Labor Party adopted. In 1982 at the national conference of the Australian Labor Party several people, including the present Minister for Employment and Industrial Relations (Mr Willis) and the present Prime Minister (Mr Hawke), argued for the introduction of a new capital gains tax. Other people at that conference argued that the Labor Party, on assuming government, should strengthen the provisions of sections 26(a) and 26aaa in order to ensure that these provisions actually worked. That was the intention of the ALP. The Prime Minister made his statement in 1983 that for the term of that Government there would be no new capital gains tax, and we met that obligation. It is nonsense to claim that the Labor Party has been dishonest. What happened when we came into government? We found that not only had there been direct tax evasion through the absence of a capital gains tax, but also there had been massive indirect evasion through the conversion of income into capital gains. Various schemes, including the bottom of the harbour scheme and many others, had been used to convert income into capital gain and thereby avoid the payment of taxation. Not only that, but also we found enormous evidence of distortions in the economy in relation to this matter; distortions in the investment patterns in the economy which lead to insufficient investment in manufacturing industry. Because of those distorted patterns the manufacturing industry, under the previous Government, was virtually destroyed. That is what happened. Between 1980 and 1982 the previous Government virtually destroyed manufacturing industry in this country and we are now having to try to build it up after that absolute destruction. For what the Opposition did to industry, it deserves not to be in government for at least another 30 years. I turn to what happened in that period. The Minister for Industry, Technology and Commerce (Senator Button), after looking at the situation, made the following statement: `It looks as though we will need a more effective capital gains tax'. He made that statement and I also made a statement which was referred to in the newspapers during that period when I was the chairman of the Caucus industry committee. I was quoted in the Australian as saying: . . . a capital gains tax would have a dramatic effect on manufacturing industry by rechannelling investment funds away from opportunistic speculation gain (for example on land) and towards productive employment-creating investment in industry. What has happened? When the Government went to the people in December 1984 the Government made no commitment not to introduce a capital gains tax. It did not repeat that commitment. On the contrary, the Government said that it would set up a tax summit, would examine all of the options and would have discussions with all groups in the community to see which taxes ought to be introduced and which taxes were important, not only to ordinary people but also to industry and business. That is what the Government said and of course the Opposition attacked us. The Opposition said at the time: `You will be introducing all kinds of taxes; you will be introducing death duties, capital gains tax and all of those things'. We said: `We will not rule out anything'. As a consequence of that it could be argued that we lost a few votes and a few seats, but we had the courage of our convictions to say to the people that we would examine all options. When we examined all the options and it became absolutely clear that the existing provisions of section 26a and section 26aaa were not working, it became necessary to introduce a new capital gains tax. In fact, that came out of the determinations of the National Taxation Summit. Therefore, it is wrong for the Opposition to say that there was no consensus at the Summit on that matter-of course there was. Indeed, business leaders agreed with the importance of a capital gains tax in order to get rid of the distortions in the economy. I make it perfectly clear that the argument by the Opposition that the Government has been dishonest on this matter is rubbish. The Labor Party has tried everything it can to work within the existing provisions. The shadow Treasurer, the honourable member for Mackellar (Mr Carlton), came into this House and presented an incoherent set of arguments. He said on the one hand that there are fundamental and important economic reasons for introducing a capital gains tax. Then he said that it could be done under the existing legislation. The fact of the matter is that the Opposition's experience in government and our experience in government has shown that it cannot be done; that schemes are created which get around the provisions of the Income Tax Assessment Act. Therefore, it is nonsense to claim that we can have the economic benefits of the tax and hold on to the existing legislation. We cannot. The honourable member for Mackellar cannot have it both ways. If he agrees that there are important economic reasons, as there clearly are, for the introduction of the capital gains tax, he ought to have the courage of his convictions and ought to support the legislation going through this House today. No economy can survive on distorted patterns of investment of the kind which have been introduced over many years because of the absence of a capital gains tax. We are in a very difficult position in this nation because of insufficient investment and manufacturing industry. I put it to many people here that speculative investment of the kind that has taken place, whereby people have been overworking their brains to think of schemes to get around the tax laws, would not have taken place and we would not be in the difficulty in which we are now if provisions had been made within the tax laws to have a capital gains tax. The introduction of a capital gains tax will have enormous benefit for this nation. It is a fair tax which excludes the family home and certain personal assets. It will not apply to any property which people owned in September last year when the Treasurer (Mr Keating) announced it. Mr Ian Cameron —That is nonsense, and you know it. Dr THEOPHANOUS —It is not nonsense. It does not apply to that property; it applies only after property has been sold. The tax will be introduced at an extremely slow pace over many years. The arguments of the Opposition have been mistaken. We need this tax, and this legislation will make for a fairer and more equitable system in this country. Dr WATSON(Forde)(12.16) —I rise to speak on the Income Tax Assessment (Capital Gains) Bill 1986. This seems to be the fourth or fifth time I have been scheduled to speak in between the honourable member for Calwell (Dr Theophanous) and the honourable member for Charlton (Mr Robert Brown). The honourable member for Calwell demonstrated that he has certainly never known anything about economics, and I am sure that the honourable member for Charlton will demonstrate in a little while that he has forgotten everything he knew. I would like to address a few of the myths that are currently running in this debate. The first myth we should address is the myth propagated that the tax cuts are somehow dependent upon the passing of this taxation package which we have been discussing today, yesterday and over the past few weeks. In fact, the tax cuts which have been promised-although we are yet to see them-by the Treasurer (Mr Keating) represent approximately $2 billion in the 1986-87 tax year and approximately $4.5 billion in 1987-88. This group of taxes will raise approximately $400m in 1986-87 and approximately $650m in 1987-88. In other words, we are talking about $1 in $5 in 1986-87 and $1 in $8 being raised in 1987-88. The real truth of the matter is that this Government has been spending far too much. In the seven years of the Fraser Government, Budget outlays increased by an average of approximately 2.1 per cent in real terms per year. In the three years of this Government, under this Treasurer, the equivalent rate of increase, after inflation, in the annual outlays of government has been 4.8 per cent. Had the Treasurer been able to maintain the spending limits on his spending Ministers, such as the Minister for Social Security (Mr Howe), who is at the table, and had he been able to maintain a simple 2.1 per cent increase in real terms over the last three years, in the last two years he would have been able to reduce the Budget deficit by $5.3 billion. He would have been able to produce a Budget surplus if he had been as good as the Fraser-Howard Government at controlling spending. Alternatively, he could have maintained the deficit he has and he could have introduced this year all of the tax cuts he has promised for 1987-88, without affecting the financial position of the Government at all. In other words, had he been able to control his spending Ministers we would have had the tax cuts now that are promised for 1987-88 and would not have had one significant difference in the Budget deficit. Of course, he could have had a combination of a deficit cut and lower taxes. In fact, the myth that the Treasurer has been propagating reminds me of the $9.6 billion deficit myth that was put forward just after the Labor Government was elected in 1983. There was never any $9.6 billion deficit. In fact, it is this Treasurer who has introduced the highest deficits that Australia has ever seen. He has brought down three Budgets and they have contained the three highest deficits that this country has ever had. I know it is dangerous to do so, but I will make an economic prediction to the honourable member for Charlton. I guarantee that when the Treasurer brings down his fourth Budget in August this year he will go for four out of four-four Budgets and the four highest deficits that this country has had. The Treasurer made the following statement in his second reading speech: Australia is a capital scarce nation. How true that is. With this in mind, it is absolutely incredible that the Treasurer should actually use this capital gains tax Bill to start to tax capital. He put a tax on capital accumulation. He will put a tax on the accumulation of capital stock in this country. In other words, the response to our being capital scarce is to tax capital accumulation. Let us look at the record of capital accumulation in Australia in the last decade or so. In 1971, private business investment in Australia peaked just before the election of the last Labor Government. During that period of the Whitlam Labor Government what happened? Business investment in Australia absolutely plummeted. It was not until the Fraser Government was re-elected that investment stabilised, and, in fact, under the treasurership of the honourable member for Bennelong (Mr Howard), business investment began to increase. What has happened now? Under this Hawke-Keating-Crean-Australian Labor Party-Australian Council of Trade Unions Government, or whatever, business investment has again plummeted. This fact is confirmed in the statements of the Government's own Economic Planning Advisory Council. Why has investment plummeted? It is because this Government has destroyed incentive to invest in Australia. This high taxing Government has gone back to a policy of high inflation. Also, and very importantly, the former head of the ACTU, now the Prime Minister (Mr Hawke), helped in the Whitlam period and in the Fraser period to destroy the cost competitiveness of Australia. Manufacturing costs rose in Australia and business investment plummeted. Of course, the present Treasurer learned well in that period. He was, after all, a member of and a Minister, albeit for a brief period, in the Whitlam Labor Government. He learned to be a high taxing, high spending, high deficit Treasurer as a member of that high deficit Government. We need to be encouraging capital formation in Australia. We need to be increasing the after tax return on capital in Australia. Instead, this Government is moving in the opposite direction. The Treasurer will argue-I am sure that the honourable member for Charlton will argue-that the after tax return will be increased by the proposed taxation cuts. Let us examine this argument just for a moment. Income tax paid on average weekly earnings will actually rise, even after the tax cuts are introduced. It will rise from 22.7 per cent of average weekly earnings to 24.5 per cent. Professor Michael Porter who, with his colleagues at the Centre for Policy Studies at Monash University, has done a lot of research in this area, stated: In 1987-88, when the new 24-29-40-49 rate scale is fully in operation, around half of all taxpayers will face marginal rates of 40 per cent or more. Unless further action is taken, this percentage will increase thereafter by around 4 per cent of taxpayers annually. Further reform of the income tax rate scale will be needed by the late 1980s. In the limited time available to me I would like to address a final myth which is contained in the Treasurer's second reading speech. He stated: The tax will apply only to capital gains realised on assets acquired after 19 September 1985. Accordingly, assets acquired by taxpayers on or prior to that date will be exempt from the tax when disposed of by them. This will substantially reduce the immediate impact of the tax and allow the community a lengthy period in which to adjust to its application. The Treasurer is either an economic illiterate or someone who is prone to bending the truth to suit his own purposes. The facts are that the imposition of a capital gains tax has already impacted on everyone who owns an asset which is potentially subject to this tax. The price of an asset is determined by the current demand and supply and, just as importantly, the future expectations regarding the after tax rate of return on that asset. The imposition of the capital gains tax on future purchases and the subsequent selling of these assets will drive down the after tax returns and thus it will drive down the current value of those assets. Ask anyone who intends to buy a small business or a farm whether he would be willing to pay the same price for that business or farm after 19 September last year as he would have been willing to pay before 19 September last year. The answer will obviously be no. Who have actually been hurt by the imposition of this tax? Obviously they have been the current owners of assets. These are the people who have suffered the losses. The Treasurer is trying to fool the average Australian that it is only future generations-we have a few members of the younger generation in the gallery at the moment-who will be affected. The truth is that the present owners of capital assets, the owners of small businesses or small farms are also losers. Contrary to the incorrect assertion by the Treasurer, the majority of Australians owning assets not exempted from the capital gains tax already have been impacted by the imposition of it. Any person who owns personal assets of $5,000 or more, except for his house, is affected. While the points briefly noted are important for the current holders of capital assets, it is perhaps the future negative implications which are even more important to Australia's future development. This tax will undoubtedly help inhibit capital accumulation in Australia. This tax has been introduced at a time when net apparent capital inflow into Australia is falling. In 1984-85, the net capital inflow was some $550m less than it was in the previous year. Net capital inflow seemed to have fallen even further by the end of the last calendar year. The imposition of a capital gains tax will inhibit entrepreneurs going into high risk ventures. This will particularly apply in instances where there is a low capital money base and where the predominant asset or future asset of the venture is goodwill. Eighty per cent of the growth in goodwill will now be subject to the tax and this will affect the vast range of small manufacturing businesses, professional firms and, of course, some firms in the new high technology areas. The discouragement of entrepreneurship and risk taking in these areas is diametrically opposed to Australia's long term interests. Eventually it will lead to lower rates of growth and will thus lead to lower relative living standards, higher unemployment and, unfortunately, a further decline in Australia's international competitive position. Mr ROBERT BROWN(Charlton)(12.29) —As usual, members of the Opposition have been extremely strong on rhetoric and extremely lacking in substance. I would like to go into some of the details of the Income Tax Assessment (Capital Gains) Bill 1986 and the Income Tax (Rates) Amendment (Capital Gains) Bill 1986. However, because of the time constraint, obviously this will not be possible. I would like to refer members of parliament and members of the community generally to the statement of the Treasurer (Mr Keating) of 19 September last year, to the booklet which accompanied that statement and to the second reading speech that the Treasurer made in introducing this legislation, because both of these statements and the accompanying explanation in the booklet give the lie very clearly to a lot of the absurd propositions that have been put by members of the Opposition. The person leading for the Opposition in this debate, the honourable member for Mackellar (Mr Carlton), made a fairly emphatic statement that the Opposition would not only oppose this legislation but also repeal it. I would like to ask honourable members opposite why they have not already repealed section 26 (a) and section 26aaa in the existing taxation Act, which deal precisely with this same sort of area. Section 26 (a), from the early 1930s, and section 26aaa, from the early 1970s, were supposed to address the question of profits being made on capital gains. Honourable members opposite have made no declaration to repeal those sections of the Act because those sections have never worked. Of course, that is the sort of taxation legislation that they have been most comfortable with. They have deliberately engineered and orchestrated a situation in Australia where taxation provisions would not work if those taxation provisions were directed against their members, their benefactors and their supporters. But, of course, they have always been most concerned to make sure that the taxation provisions against the ordinary pay as you earn taxpayers, the ordinary wage and salary earners, operate most efficiently. I just want to draw attention to a point of contrast between these cynical members of the Opposition and some of the Young Liberals, some of those young idealists who have found themselves attracted to the great concepts of liberalism and who believe, in their misguided way, that perhaps there may be some sort of expression given to those great principles of liberalism through that party which masquerades as the Liberal Party of Australia. What have the Young Liberals said about the capital gains tax? I am sure that the honourable member for Forde (Dr Watson) would, on occasions, have given a great deal of encouragement to these young people. He may have advised them; he may even have advised them on this question. Early last year, the Young Liberals, at the Young Liberal Movement convention, voted overwhelmingly to support a capital gains tax. They are the young idealists of the Liberal movement in Australia. They are not the cynical people who sit on the Opposition benches at present. Mr Price —They have not been corrupted. Mr ROBERT BROWN —As is suggested by the honourable member for Chifley, they are the young people who have not yet been corrupted. I wonder how long it will take them to wake up. I wonder how long it will take them to realise that those people who masquerade as the guardians, the advancers of small `l' liberalism in Australia are nothing of the kind. What did these Young Liberals, these young idealists, say? The successful motion which was moved by Mr Darrell Williams stated that if a new or wider capital gains tax is introduced people's homes should be exempt, gains through inflation should be excluded and capital losses deductible. Let me say to Mr Williams if he is tuned in: Join us, Mr Williams. Join us, sir, because that is what we have done. Mr Williams's motion stated that the tax should be levied only when a gain was realised-join us, Mr Williams-but that the gains should only be liable on property bought after the tax was introduced. Join us, Mr Williams, because those are our provisions. He said that gains below a certain amount should be exempt and the exemption should apply to all property of a purely personal nature. Join us, Mr Williams. That is one of the provisions of our legislation. He said that the revenue raised-- Mr Goodluck —Who is Mr Williams? Mr ROBERT BROWN —Honourable members opposite ask: `Who is Mr Williams?'. That is the amount of respect and regard that they have for the young people in the Liberal movement. Honourable members opposite ask: `Who is this Mr Williams?'. Mr Howe —Andrew used to be an idealist like that. Mr ROBERT BROWN —Fortunately we still have our great idealists within the Labor movement. Mr Williams's motion stated that the revenue raised should be more than the administrative cost of collection so it could be used-I ask honourable members to listen to this-to provide tax relief in other areas. Join us, Mr Williams. That is precisely what we propose to do. It has been suggested by members of the Opposition benches, as part of their rhetoric, as part of their deliberate attempt to misrepresent and to mislead the Australian people, that this is tough legislation. In fact, the honourable member for Mackellar went so far as to say that, not only was it tough legislation but also it was the toughest capital gains tax anywhere in the world. Let us just examine whether the legislation introduces a tough capital gains tax. In the first year of its operation it will raise $5m out of a total Commonwealth revenue of $60,000m and five years down the track it will be raising the enormous amount of $25m. Mr White —Why are you bringing it in? Mr ROBERT BROWN —Let me give the fundamental reason why we have introduced this legislation. It is not for revenue purposes but to make sure that all those distortions in the investment pattern in Australia which were being encouraged by the absence of a successful capital gains tax would be lifted out of the system. That was reason No. 1. In future people will know that there is no sense in them putting their investments into purely speculative areas. In future they may be encouraged to put their investment into productive areas. When they do that they will be making a great contribution to the future development of Australia. So that was purpose No. 1. Purpose No. 2 was to make it possible for this Government to honour that commitment which it quite clearly made to the Australian people on a number of occasions-a commitment which was so emphatically and so repeatedly endorsed by the Australian people-that when we got into government all those ramps and rorts, all the lurks and perks and all the abuses of the taxation system which those people on the Opposition benches had built into the system, which they had consolidated into the system, which they had entrenched into the system and which they had institutionalised into the system, would be hauled out. We undertook to lift them all out and we are in the process of doing precisely that. Mr Fitzgibbon —And they do not like it. Mr ROBERT BROWN —As my good friend and colleague the honourable member for Hunter has said, they do not like it. I will tell the House why they do not like it. It is because most of those people who benefitted from the system, the rorts and the ramps, the lurks and the perks and the rip-offs in the past have been themselves, or their members, or their benefactors, or their supporters. Whenever they introduced tax legislation in this chamber they had to be dragged in here to put it into place. Mr White —Mr Deputy Speaker, on a point of order: I seek your guidance in this matter. As I understood it, the honourable member accused members on this side of the House of being rorters and ripping off the tax system. As I understand it, that casts a very serious reflection on honourable members on this side of the House and I ask that those words be withdrawn. Mr DEPUTY SPEAKER(Mr Ruddock) —The honourable member for McPherson takes offence at the use of those words. Mr Robert Brown —Mr Deputy Speaker, the Hansard greens will show that no such accusation was made. As the honourable member knows, he is simply trying to use my time because honourable members opposite are very sensitive about these issues. I have been allocated 10 minutes and if the honourable member continues to use my time I will take 15 minutes and I will compensate for any amount of my time which he wastes. Mr White —Mr Deputy Speaker, the words, as I understood them, were that people on this side of the House were rorters of the tax system. I ask that those words be withdrawn. Mr Robert Brown —Mr Deputy Speaker, no such claim was made as the Hansard greens will indicate. Mr DEPUTY SPEAKER —My recollection was that the words were of general application. If the honourable member takes personal offence I think he is entitled to ask for a withdrawal. Mr Robert Brown —Mr Deputy Speaker, you know that that is quite contrary to previous practice in this chamber. If a general claim of that kind is made either against the Government or against the Opposition, no individual member can claim to have been personally upset-as he is not-or to have been personally misrepresented. Mr Deputy Speaker, I appeal to you to apply the practices of the chamber on this occasion as they have traditionally been applied in the past. Mr DEPUTY SPEAKER —My understanding is that if a member is personally upset at an allegation he can ask for an allegation in relation to himself to be withdrawn. I think it might speed the process if that practice is followed. Mr ROBERT BROWN —The honourable member is just wasting time. Whatever it is that is upsetting him is withdrawn. I said that the other reason why this legislation was introduced was to ensure that all those people who have been ripping off the system would not be able to use the recourse of capital gains in order to avoid their taxation responsibilities. Of course, the overwhelming majority of my constituents who earn their income in the form of a taxable wage or salary know that now, as a result of this legislation, all the rip-off merchants in the community, who have been protected by honourable members opposite, will no longer be able to operate with the sort of impunity they had under honourable members opposite. We undertook to lift out the rorts and the ramps, and we are going to do it. Let us consider whether honourable members on the Opposition benches speak for the Australian business community. First, I refer to the Business Council of Australia, which is an organisation of some conscience. The Business Council of Australia is a legitimate, honest organisation of integrity. When the Business Council of Australia speaks I think we can listen to it with some degree of confidence. I wish we could say the same for the political expression of conservatism in Australia-those people who, as I say, masquerade as defenders, supporters, protectors and promoters of honest business men and women and an honest business community. Of course, they do nothing of the kind. They have found themselves out of step on so many occasions that the Australian people have rejected them and will continue to reject them. The Business Council of Australia in its submission to the Government's Economic Planning Advisory Council, in connection with capital gains taxes, said: A system such as the present one, which taxes interest receipts and largely exempts capital gains encourages individuals to shift funds from interest income assets to assets where most of the income appears as capital gains. In other words, what they are saying is that the absence of a capital gains tax encourages investment funds to flow into land and property rather than into more productive areas. This not only drives up land and property values-- Mr Ian Cameron —Prices are down. Mr ROBERT BROWN —The honourable member for Maranoa knows that as a result of all the speculation in land in Australia people who are operating farms have been very seriously disadvantaged. Perhaps the honourable member might adopt a more responsible attitude in this chamber. The honourable member knows, as do all the rest of the honourable members in cockies' corner, that the speculators coming in, because of the opportunity for them to make non-taxed capital gains, has not only seriously distorted the pattern of investment in rural Australia but has also very seriously disadvantaged all the people whom those in cockies' corner claim they represent. Of course they do not represent them. They are just as honest and have the same level of integrity as those who sit on the Liberal benches. We know that they are all tarred with the same brush. The failed book- keepers who declare themselves to be professional accountants, the failed businessmen who see themselves as pillars of industry-all those people who have congregated over there on the Liberal benches-have adopted a certain position. What is the alternative position adopted by some people in Australia who do qualify to be called captains of industry-people of integrity, people of substance and competence, people who are providing a lot of the engine work for Australian industry? I refer to people such as Bryan Kelman and Alan Coates. In relation to the taxation system, Bryan Kelman, Managing Director of CSR Limited, said: Australia must have proper and sensible safeguards, including-- Mr DEPUTY SPEAKER(Mr Ruddock) —Order! It being 12.45 p.m., the debate is interrupted in accordance with sessional order 106a. The debate may be resumed at a later hour. The honourable member for Charlton will have leave to continue his speech when the debate is resumed. Mr MacKELLAR(Warringah)(12.45) —I move: That this House- (1) condemns the Government for lowering CSIRO's funds for continuing research by $9 million, and (2) calls on the Government to take a more constructive approach to science and technology to ensure the continued effectiveness of our vital scientific institutions. I advise the House that I will be assisted in this debate by the honourable member for Berowra (Dr Harry Edwards), who will second the motion, the honourable member for Mayo (Mr Downer) and the honourable member for Dundas (Mr Ruddock), all of whom have a strong interest in the vital role of science in the future development of this nation. But by way of introducing the subject, I feel bound to comment that no corporation would accept a situation where a notice of motion for general business could be made on 22 February 1985 and not be debated until 8 May 1986, almost 15 months later. At the time that I gave notice of that motion, the matter of a $9m cut in research expenditure for the Commonwealth Scientific and Industrial Research Organisation in the 1984-85 Budget was a burning issue which needed to be debated at that time, not today, 15 months later. Indeed, it became such a contentious and discussed subject that in October 1984 the CSIRO and the Department of Finance formed a joint working party to examine and report on, inter alia, the interpretation of the 1984-85 budgetary outlays to the CSIRO. That joint working party reported in March 1985. It was then that the CSIRO appropriation should have been fully debated, by way of this motion. Unfortunately it was not. Regrettably for the CSIRO, the continuing mismanagement by this Government of its research policies has permitted the unsatisfactory circumstances of 1984-85 to persist to this day. My motion, therefore, is not only still appropriate-it is now a matter of some importance that the Government's handling of the CSIRO in particular, and science in general, should be debated by this House. There will be those on the Government benches who will argue that there was not a cut in funding of 3.2 per cent, or $9.2m, to the CSIRO in 1984-85. They will undoubtedly argue that the joint working party agreed that, rather than suffer a cut, the CSIRO received an increase of 6.6 per cent in Government funding in that year. But it is clear how the joint working party achieved this miraculous turnabout. It simply identified so-called non-recurring expenditure and deleted this from the appropriated expenditure. The ground for doing that was apparently that one-off expenditures distorted annual figures and prevented a proper comparison from year to year. Yet the report itself throws into doubt the value of that adjustment by admitting, at paragraph 3.4, that a major difficulty lies in identifying non-recurring expenditure. Despite that admission, the joint working party selected one of several options and proceeded to make its adjustments. The alleged 6.6 per cent increase in funding is the net result of that calculation. Even if one were to accept this managed increase of 6.6 per cent-and I certainly do not-the fact remains that the adjusted dollar increase represents zero increase in real terms, after allowance is made for inflation. This manipulation of financial data is a crude attempt to hide the unarguable fact that, without such an adjustment for so-called non-recurring expenditure, the joint working party report confirms that the net appropriated expenditure for the CSIRO was $9.2m less in 1984-85 than it was in the previous year. It is there in the report. It is not imagined. It did not go away simply by an application of the financial wizardry of the Department of Finance. It is real and had a real and adverse effect on the CSIRO, an impact that in turn forced a cut in the research programs of that body. Let me quote from the organisation's annual report: CSIRO's Budget allocation provided no additional funds to meet increased operating costs in 1983-84 and 1984-85 and insufficient funds were provided to cover the full costs of the Government directed Repairs and Maintenance and Occupational Health and Safety Program in 1984-85, thereby requiring the CSIRO Executive to cut programs. These cuts amounted to 3 per cent in real terms. Let me emphasise that. The effect of the Government's 1984-85 appropriations was to cut the research programs of the CSIRO by 3 per cent in real terms. So much for its concern for the continuing effectiveness of Australia's most important scientific institution. The Minister for Science (Mr Barry Jones) who is at the table, talks long and hard, writes lots of articles and is quoted frequently as saying how strongly he supports Australia's research efforts. What have been the effects of his strong support-a 3 per cent cut in real terms in the research programs of the CSIRO? The Government has attempted to deceive Australians by rearranging the financial facts to suit its own needs. The CSIRO's Executive was left to manage the task of spreading fewer dollars in such a way as to continue an effective commitment to its many research projects. How did it do this? Dr Wild, the then Chairman of the CSIRO, said: The CSIRO Executive decided to exempt certain areas of research from cuts because they are identified by CSIRO, Government and industry as of the highest national priority. These are: Information technology, manufacturing technology, biotechnology, advanced materials, oceanography, soils and water, and plant pathology. These areas represent about 20 per cent of CSIRO's research. The other 80 per cent will suffer staff cuts and serious reductions averaging 4.3 per cent in real term funding. If some are to be protected others must have less. What really dismays me is that the last Budget isfurther evidence that, electorally, science and technology count for almost nothing in Australia. With that disregard we, the Australian community, are imperilling the future health and well-being of our nation and sliding into Third World nationhood. Imagine that-sliding into Third World nationhood! Dr Harry Edwards —It has a familiar ring about it. Mr MacKELLAR —Yes, it has a very similar ring about it. It reminds me very abruptly of the Treasurer's (Mr Keating) recent statement about banana republics. Here is Dr Wild, the then Chairman of the CSIRO, giving him the nod a little in advance. That was the real world that had to be faced by Dr Wild, the Executive and the research scientists, technicians and other staff working on those programs-a 4.3 per cent cut in real term funding. The Minister at the table has had the effrontery over these many months to say that he strongly supports the scientific effort of Australians and to tell us how well he is doing in protecting them in this regard. How many honourable members on the Government benches can recall support being given to that research community by the Minister for Science during those difficult times? What did he say in the course of the post-1984-85 Budget National Science Forum? He said in response to a question: I have often said to people in the scientific and academic community-`You are the wimpiest collection of lobbyists imaginable. You should recall Archimedes and the lever'. Archimedes has obviously had very little impact on Australia. Scientists never apply any kind of leverage. That was not the most constructive or supportive advice to give that community after it had had to face a 3 per cent cut, in real terms, in research programs. The Minister was brave enough to return to the same forum after the 1985-86 Budget was presented, and admit: The 1985-86 science budget will attract a higher degree of support than last year's and should be a factor in raising the current level of morale among scientists and research workers. What did the Government do in that Budget to lift the admitted low morale of that institution? Not much by my reckoning, or by any reckoning. I refer to the official explanatory notes on CSIRO's Estimates of Expenditure for 1985-86. These are based on the same manipulatory formula as was used by the 1984-85 joint working party and thereby allow a precise comparison of the two years of funding to be made. We find that there is a net expenditure increase, from all sources, of 7.1 per cent in 1985-86. This is less than the Government's own foreshadowed inflation rate for 1985-86, a rate which we now know erred on the conservative side, as the mismanagement by this Government took Australia's actual inflation rate to its present annual level of 9.2 per cent, and rising. So the CSIRO has again suffered a cut in real terms. If that were not serious enough, I have closely examined the detailed figures contained in this 1985-86 estimates document and have discovered just what this deplorable situation will mean for the CSIRO's ongoing research programs. Of the 10 research programs identified in table 1 of those estimates, only four areas have enjoyed total funding dollar increases that have been in excess of the inflation rate. That is to say, only four program areas enjoyed an increase in real terms in 1985-86, and that after even more serious cutbacks had occurred in the previous year. One of the four areas which did enjoy a real increase in funding was that of CSIRONET, which has been the subject of considerable media publicity in recent weeks-publicity which suggests that the $8m Cyber 205 super computer is largely idle and is operating at a substantial loss. Further, if my research is correct, those Estimates show that the largest areas of increased funding are directed to CSIRO's headquarters-to its bureaucracy-and to salaries and allowances. The poor relations in this formula are research equipment and operational expenditures. They are almost starved of worthwhile additional funds. This is in turn reflected in declining staff resources. The Estimates show that as at 30 June 1983 7,341 staff were employed by CSIRO. By 30 June 1984 this had fallen to 7,275. One year later it had fallen to 7,195. The critical area of research scientist and other professionals is virtually static in terms of numbers, while technical staff have been seriously reduced in each of those three years. That is not exactly a picture of a dynamic scientific institution which is being constructively reshaped into a form suitable to fulfil its first five-year strategic plan, covering the period 1985 to 1990. Mr Deputy Speaker, effective and productive research is clearly an amalgam of dedicated scientists backed by the necessary equipment and facilities. This Government has obviously got its chemistry all wrong. It is allowing valuable staff resources to waste away while those who remain are being starved of the hardware essential to match their dedication and true potential. This seems hard to accept in the face of so much rhetoric from this Government, and this Minister in particular, about the importance of science and the priority it holds as the basis of Australia's future industrial development. That bastion of refreshing forthrightness, from time to time, the Minister for Science, has in fact publicly revealed the answer to the contradiction. `Science is important', he says, `but the Government is not going to pay for it-private enterprise is'. I quote from the Minister's statement to this House when tabling the CSIRO's 1984-85 annual report: The amount of tactical research CSIRO will carry out will depend largely on industry's willingness to pay for it. Just consider what the CSIRO and its staff have been subjected to over recent years. The period of change began with the Birch inquiry of 1977-78. That was the catalyst for much orderly and effective reviewing of CSIRO's functions over the ensuing years. To give just one example, a review of CSIRO's commercial practices and policies was initiated by the coalition Government in 1982-83, with the aim of ensuring that they were effective in promoting industrial applications. The outcome was the establishment, jointly by the CSIRO and other parties, of SIROTECH Ltd, whose principal objective was to provide a business-oriented approach to commercialising CSIRO- generated technology. The point I am making is that the CSIRO was well aware in the late 1970s and early 1980s of the rapidly changing environment for research in Australia and had taken the initiative in responding to those changing demands long before the election of the Hawke Government occurred in 1983. The naivety of this Government was reflected in a frantic series of reviews and inquiries immediately after coming to power. They continue to this day. This is a classic case of a steroid science policy, one which can generate prodigious effort but be artificially stimulating and capable of doing immeasurable harm to the parent body. Many in the CSIRO would endorse that sentiment and even suggest that the political and public debate about the CSIRO has gone far beyond its most productive point. For example, the Chairman said in the CSIRO's annual report: But public debate can harm the best interests of the country when it is ill-informed and excessively partisan. I think this danger has existed in the debate about Australia's science and technology. In what might be regarded as a cautious acknowledgement to those who hold the purse strings, the Chairman added: But I am pleased to sense that the debate has now reached a better informed and constructive stage. Having offered a conciliatory tone the Chairman concluded his report with an undisguised plea for an end to the frenetic years of examination, re-examination and cross-examination: The road we have travelled has been mainly uphill and the hope for my successor is that the gradient may now ease-for what the Organisation needs is a period of consolidation, stability and untroubled creativity. I endorse those sentiments totally. Finally, I ask Government supporters to reflect on what that sort of thing does to the CSIRO community. The Minister himself referred to poor morale in 1984-85. I would believe that this has continued into 1985-86. I feel great sympathy for the situation of the people of the CSIRO. They have suffered two years of funding cuts, in real terms. They are starved of much of the equipment and facilities that they need to produce first class results and are subjected to so many reviews, inquiries and task forces that they have every right to feel beleaguered. The institution is not growing. It is under political siege with reduced real dollar funding and a slow erosion of staff resources. There is nothing in the Government's management of the CSIRO to reassure us that the Government has either the ability or sincerity to take Australia's premier research institution into the twentieth century. The CSIRO research community is not suffering from what the Minister described as wimpiness. It is suffering from a surfeit of political interference and parsimonious Government funding. It has an expectation that the Australian inquiry will not only avail itself of this facility, but will do so to a timetable and with a financial commitment that will meet a planning strategy largely determined by a politician. As my motion suggests, I implore the Government, in the interests of this nation, to take a more constructive approach to science and technology in order to ensure the continued effectiveness of our vital scientific institutions. One of the ways in which it could do this, one of the ways in which we could demonstrate a real interest in science and technology, would be to set up a joint standing committee of this Parliament to look, on a continuing basis, at our science and technology. Then more people and members of this Parliament could be better informed of the situation relating to science and technology throughout the nation. I appeal to the Government to get its hands off the CSIRO, to give to that organisation the sinews of war and to enable the CSIRO to do the job which it is so eminently capable of doing. Mr DEPUTY SPEAKER(Mr Rocher) —Is the motion seconded? Dr Edwards —I second the motion and reserve my right to speak. Mr BARRY JONES(Lalor-Minister for Science)(1.02) —Mr Deputy Speaker, I welcome this motion by the honourable member for Warringah (Mr MacKellar) which was placed on the Notice Paper, as he said, as far back as 22 February 1985. After 15 months it is a period piece. The mover was then the shadow Minister for Science and we had recently passed through what was the toughest budget for science in living memory. I now have my third shadow Minister, somebody in the Senate. The Opposition has no science spokesman at all in this House. That is a telling indication of how seriously the Liberals and the Nationals take science issues. We have not even had the draft science policy leaked to us-another serious indication of lack of concern. Perhaps none has been drafted. Following the 1984-85 Budget the then shadow Minister, the honourable member for Berowra (Dr Edwards) engaged in what was, compared to the catatonic state of his colleagues, an absolute frenzy of activity-three questions in the House, two short speeches on the Budget and one speech on a computer bounty Bill-that is all. We also had, in 1985-86, a Budget which was very much better for the Department of Science, which came in the top half of the 28 departments in increased allocations. This was universally applauded. Oppositions are in a strong position to determine the political agenda for debate in the House. The rising degree of media coverage reflects heightened community interest in science and science-related issues but it has not been followed up by this sluggish and ill-informed Opposition. I await eagerly my first Opposition question in this Parliament on science issues. There has been no motion of public importance on science since my time as shadow Minister. Science is not, I regret to say, part of our political culture; I wish it were. We are getting there, but very slowly, and I welcome this debate. Back in 1982 I made five predictions to the Royal Australian Chemical Institute in Canberra: That Labor would win the next election; that we would inherit a budgetary shambles; that our science and technology policies would attract broad support; that competing priorities in welfare and other sensitive political issues at a time of budget stringency would restrict our ability to find new money for research; and that there would be a backlash from the research community. All five predictions came true, but prophets are notoriously without honour. The first point in today's motion, one that has been superseded by events, can be disposed of briefly. Perhaps the honourable member for Berowra could pass it on to the honourable member for Warringah, who is no longer with us. In 1984-85 there was perceived to be a $9m cut overall in the Commonwealth Scientific and Industrial Research Organisation but the figure is misleading. Originally it was made up of $2.7m, which Cabinet had directed was to be devoted to extra spending on repairs and maintenance, of $1.4m to cover inadequate provision for salary related costs and of $4.7m related to a lack of cost increases in operating funds. The CSIRO was later released from the $2.7m related to repairs and maintenance. A fundamental disagreement between CSIRO and the Department of Finance about the interpretation of its Budget allocation was subsequently resolved by a joint working party, as the honourable member of Warringah has said. As a result of the new formula, CSIRO in 1984-85 had a dollar increase for ongoing activity of 5.8 per cent, a figure which meant a real increase of 1.5 per cent, given the increase in the consumer price index of 4.3 per cent-a disappointing figure, as I freely conceded at the time-but in the overall context of the Budget it was realistic and CSIRO was able to adjust accordingly. There are a couple of problems to which I should allude. The first is Cyber 205, a super computer-the most powerful in the world south of Texas-in that it is seriously under-used. The previous computer in this range, the Cyber 76, was fully utilised and the belief was that when upgrading occurred from the 76 to the 205 the former users would upgrade as well. Considerable extra expenditure on software is required, also considerable rethinking about what one can do with the super computer capability. Many of the potential users have not upgraded their software capacity. They have not made that quantum leap nor, I must report, have government departments, and eager users in the academic world cannot pay for Cyber 205. At the moment we are working out the best solution to the problem. I hope in the course of the next few weeks to be able to make an announcement which will satisfy everybody. The completion of the Australian National Animal Health Laboratory, ANAHL, or AAHL, as it is now more euphoniously called, led to a reduction in the amount provided to CSIRO for capital works as well. I do not need, I think, to restate but will say anyway, that I am very deeply committed to CSIRO and am its very strong defender. The second point addressed by the motion, one that is of continuing relevance, calls on the Government `to take a more constructive approach to science and technology to ensure the continued effectiveness of our vital scientific institutions'. This is being done and will be done even more. In the Australian Labor Party's science and technology policy for 1982 I made a point that has been made even more effectively in recent weeks by Senator Button and the Treasurer (Mr Keating)-that there are alarming structural weaknesses in the Australian economy and that science and technology could play a major role in upgrading our performance. We promised that: Labor would increase Australia's total investment in research and development by 100 per cent over a five-year period, on the basis that industry itself will contribute virtually all the increase and that appropriate economic incentives should be worked out in collaboration with industry. This is well on track. I am amazed at my own moderation. Australian Bureau of Statistics figures of Tuesday last concerning private sector investment in research and development indicate that in 1984-85, for the first time in many years, there was a change in direction-not enough, but at least a change. There was a 36.3 per cent rise in person hours devoted to research and development and an actual expenditure rise of 51 per cent. The 1985-86 year will be far better, and 1986-87 better again, thanks to the 150 per cent research and development tax incentive. We promised that spending on scientific research in Antarctica would increase by 300 per cent over a three-year period. We have achieved that-just-in dollar terms, by accomplishing a rise of 313 per cent. An increase in real terms will have to wait but we can achieve that when we cut back on some of the intractable infrastructure costs, especially in transport, and the massive rebuilding program. But science remains our great rationale for being there and that is our priority. We promised that the Australian Research Grants Scheme, ARGS, would receive a real increase of 10 per cent per annum for the first three years of the Labor Government. We delivered that in the first and third years. The fourth Budget is coming up. We could only have delivered in the 1984-85 Budget at the cost of scrapping the National Research Fellowships. There was a trade off. I am glad that the NRF scheme, with its valuable links with the outside world, especially industry, was preserved and now we have both schemes operating. I know that ARGS is of particular significance to the honourable member for Berowra, who sat on the ARGS board for some years before he descended to the political arena. I have been a strong advocate of selective targeting in areas where the private sector or market response is sluggish or ill- informed and we identified a number of areas for future development which looked promising. I referred, in 1982, to 16 `sunrise' industries with a cautionary note that: . . . the list should not be regarded as exhaustive. Some areas not on the list may well emerge unexpectedly, as has often been the case in the past. Of the 16 `sunrise' industries, 10 or 11 are standing up rather well. Biotechnology was the first on the list. When I began talking about it in this place it just sounded like a buzz word. Nobody in the Fraser Government or the Confederation of Australian Industry knew what it was. In our 1982 policy document I endorsed suggestions that we should aim at funding projects to the extent of $30m over three years-$5m in the first year, $10m in the second and $15m in the third. I am pleased to advise that in 1985, our third year in government, Commonwealth investment in biotechnological research and development totalled $42m. In that one year, 40 per cent more than was suggested for the whole period was spent. It was also 280 per cent above the final year target we set in 1982. None of this includes private sector investment, which is considerable and will rise. Nor does it include investment on the part of the States, which is considerable, especially in Victoria, in New South Wales and in your own State, Mr Deputy Speaker, of Western Australia. Biotechnology may well take off even faster than did the commercial film industry-my previous success story in getting a sunrise industry going. Targeting, however unfashionable it may be with hard-line free marketeers and many Canberra-trained economists, is now very much in fashion overseas. When I attended the `Summit' of Science Ministers in Ottawa, all of the northern seven were advocating targeting in what are now called `generic technologies'. Many of the areas to be targeted are found on my 1982 list. President Reagan's then science adviser, Dr George A. `Jaye' Keyworth II, insisted 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 make things happen fast enough; `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'. Talent and technology were the only factors, he said, which could overcome comparative disadvantages in capital and labour costs. American industrialists, like our own, have now recognised the unique importance of science and technology to the national economic future. Keyworth said: Science has never before moved with such speed and breadth . . . Virtually every field is attractive. The generic technologies on which CSIRO is placing considerable emphasis include such areas as, I repeat, biotechnology, new materials especially industrial ceramics, fibre optics, artificial intelligence-in regard to which Australia has a small but significant development project, and medical technologies, which are being pursued with great success, particularly in the Parkville strip of Melbourne. So CSIRO is involved in targeting. I have been carrying out discussions with ARGS also about targeting. That may be getting into a politically sensitive area, at least I hope so. I am not satisfied that the dribble approach-just giving a little to a large number of projects-is working very well. Obviously if you have $25m to spend you can have, if you want to, 25,000 projects and devote $1,000 to each. Whether they would be able to do anything worthwhile with it is another matter. Dr Harry Edwards —If you had $70m you could do a lot better. Mr BARRY JONES —Of course, but we have to live in the real world, as they say-at least occasionally. Perhaps we can form a revolutionary party of two to bring that about but I do not see it happening. Not even the Democrats would suggest it in the current political climate. It is simply not realistic. At one extremity you can have 25,000 projects at $1,000 each, at the other 25 projects at $1m each, or two and a half projects at $10m each. You can cut your cloth whichever way you like. It may be that in a number of very significant areas, if you want to do things that are important, it may be necessary to reach a certain critical mass. That would be true, for example, in an area like new materials, something which I think, economically, is going to be of vast significance. Let me just summarise where Australia finds itself in the world. A number of clear observations can be made in comparing Australia to other developed countries. Australia's total research and development effort is low and falling while those of the industrial front runners is high and rising. Australian government support for research and development is broadly comparable with that of other medium-sized developed countries but business support of research and development is among the lowest of all industrial countries-rising, as I say, but not fast enough. Related to this, the quality and quantity of Australian research is high but its performance in applying this research in industry is dreadful. Australian science is linked with international science as a major contributor, just as Australian industry is linked to international industry in a dependent, subordinate role, but the links between Australian science and Australian industry are very tenuous. We are changing that direction and we are succeeding. Mr DEPUTY SPEAKER —Order! The honourable member's time has expired. Dr HARRY EDWARDS(Berowra)(1.17) —Mr Deputy Speaker, I will pass over the rather uncharacteristic remarks of the Minister for Science (Mr Barry Jones) at the beginning of his speech, save for this one point. In making reference to my activities in that very shortened Budget sitting in 1984 caused by the Hawke Government's premature rush to the polls, he overlooked a celebrated debate that he and I had on the lawns in front of Parliament House and in which, I venture to recall with some modesty, there was a consensus of opinion that I won. No one doubts the Minister's personal commitment to science and technology for the betterment of the human condition or as a major factor in long-term economic growth, but the fact is that the record of the Hawke Government in the science and technology area over the three years since it came to office is at best patchy, and at worst extremely disappointing, particularly in the context of the high expectations built up by the Minister concerning the great things that would be done for science and technology. By and large the `technology' area has fared better than has the `science' area. The two, science and technology, are conceptually separate, albeit in practice inextricably linked. Without science, that is, the pursuit of research and new knowledge, there would be increasingly little technology in the modern industrial environment. And without technology, science would rarely result in a widespread benefit for society. That close interrelationship is basically why, along with the Organisation for Economic Co-operation and Development's examiners, I would still plump for a department of science and technology-one department, in contrast to the separation we now have. That separation was the context in which we got certain decisions, on the one hand, that the funding for the Australian Research Grants Scheme-Australia's key research funding program, especially for the universities-to which the Minister has referred, the funding for ARGS was increased in the 1984 Budget on which we are focusing by a lousy $1.5m to an aggregate of about $25m. At the same time some $150m was provided-over five years, $35m in the first year-for `design and research' in the motor vehicle industry, an industry which, in today's technology spectrum, is rather mature and hardly perhaps the most felicitous subject for investment on a forward-looking view. I do not think that such an incongruous result could possibly have come about with an integrated science and technology department, albeit with the evident underspending in the development-technology area in Australia. That does merit some priority in budget allocation and I come back to it. Of course, the particular result to which I have referred, that achieved by the motor industry grant in contrast to that achieved by the ARGS, would have had not a little to do with the considerably greater clout of the Minister responsible for the technology side, Senator Button, in the other place! The treatment of the ARGS, which flies in the face of the firm election commitment of the Labor Party to a 10 per cent real increase for that program in each of its first three years, represents just one of the litany of broken promises that we have had from this Government. That treatment of the ARGS was one aspect of the outrageous treatment of science generally and, in particular, the CSIRO in that 1984 Budget-which is what occasioned this motion that the honourable member for Warringah (Mr MacKellar) put down some 15 months ago. My colleague has dealt fully with the matter of the effective $9m shortfall in the funding of the CSIRO and the resulting 4.3 per cent real cut in its mainstream areas of basic research, and I shall not go over the same ground. It was an unconscionable bleeding of a great institution. But the outrageous treatment of science in that Budget is an object lesson in the distorted priorities of the Hawke Government and its economic mismanagement. That Budget was one of the grandest spend-ups of all time. The broad shape of it was: Total outlays of the order of $63.9 billion and total receipts embodying a record one-off upsurge in personal income tax of nearly 25 per cent, at $57.2 billion-providing a high deficit of $6.7 billion. If one factor has brought this country to the parlous position that it is now in-with, in particular, its record high interest rates and yawning balance of payments deficit-it has been the massive Budget deficits of this Government, especially that produced by Budget 1984, put down as it was in a context of rapidly recovering activity in the private sector. We had the extraordinary spectacle of an increased provision for sport and recreation of $24.3m or 60 per cent. We saw the provision for the community employment program-that great financier of the Labor Party's left wing and way-out causes-increased by $125m, or 44 per cent. Additionally, housing grants were increased by $225m, or 83 per cent. The provision for general administrative services, a large component of additions which represented to the bureaucracy, was up by $348m, a solid 21 per cent increase. Also, the Bicentennial Authority received a 352 per cent increase! And in the midst of all that largesse, plus the giving of $1.3 billion in tax cuts, the provision for science, the matter before the Parliament today, a pursuit that is a basic foundation stone of the nation's economic health, was increased in money terms by a mere 1.6 per cent-not 60 per cent, or 40 per cent as the CEP, as for sport and recreation. I do not wish to dwell further on that subject or on the only marginally better treatment that was accorded science in the 1985 Budget, as my colleague has reminded us. Nor will I dwell on the viewpoint expressed by my colleague and, I believe, by the Minister, and commanding an increasing measure of agreement that the expansion of CSIRO's activities should be more in the direction of applications-oriented research, including actual technology development; that this should be undertaken in co-operation with industry and largely financed by the industry beneficiaries; and that the CSIRO should participate in the work and share in the returns from the commercialisation of its research results. That would be part and parcel of a process of achieving greater cost effectiveness from government-financed research and development. In the case of the CSIRO, that process would be facilitated if only the Government would stop dithering and make a decision on changes to CSIRO's organisational structure in the light of the report of the Australian Science and Technology Council on future directions for the CSIRO, brought down last November. How much longer, I ask the Minister, is that vital matter to be delayed while uncertainty reigns and vital decisions are postponed in that great organisation? I stress this: While it may be agreed that there should be a beefing up of the applied, in a word technology, side of CSIRO activities, it is certainly devoutly to be hoped that Australia's great strength, indeed its longstanding pre-eminence, in science-in basic research, the well-spring of the nation's science and technology effort, and in so-called strategic scientific research-should not be prejudiced in any way. It would indeed be tragic if that were to occur. I note that the Minister nods his head in agreement. Australia's high standing in science shows up in the sort of statistic, often quoted, that Australia, with 0.3 per cent of the world's population, produces some 2 per cent of the world's science as measured by internationally recognised scientific papers; that is a ratio of output to population that is as favourable as can be found anywhere in the world. That is the science area. It is well known-the Minister referred to it-that this contrasts very strongly with the abysmal performance in this country of what I refer to as the `technology-development' area. Development, the translation of scientific research and innovative ideas into actual industrial technologies, hopefully leading to profitable job-generating businesses-sometimes entirely new industries-more importantly, however, having the effect of furthering structural change and upgrading, revitalising and renewing existing industry-that is where our performance has lagged. A quantitative measure in that area is the statistic that we originate about 0.7 per cent of patents in the world, in contrast, as I have said, to 2 per cent of world science. Science is largely government financed, by the CSIRO, the universities, the Defence Science and Technology Organisation-DSTO-and so on. The development-technology side is predominantly the province of the private sector. So we have a situation here where the science and technology funding picture in Australia is apparently extremely unbalanced, with a ratio of 80 government to 20 private sector, whereas in other leading OECD countries it is typically 50 : 50, and in Sweden, indeed, it is 40 : 60. While this contrast is often remarked, the implication is not to reduce the public funding of science-which, as a proportion of gross domestic product, is basically in line with the public funding of science in other countries such as the United States of America, Germany, the United Kingdom and the Netherlands-but rather, in striving to encourage a manifold increase in private sector research and development, because that is where this country lags. That is why I am prepared to concede that the favouring of technology in the incremental expenditure on science and technology over the recent past has not been without justification. However, even if that activity in the development-technology area were brought up, as with science, to the order of 2 per cent of the world effort, the other 90 per cent plus of technology-development is done elsewhere and we would still be, and always will be, dependent on other countries as the principal source of new technology in Australia. It is not a matter of `colonial dependence on overseas' or any other such pejorative term that some may choose to use. In other words, we will always be a net importer of technology. There is nothing wrong with that. It is true even of Japan and West Germany. I point out, however, that in contending what we should strive for a manifold increase in private sector research and development in pursuit of a more constructive, effective science and technology effort as referred to in the motion before the House, it should be recognised that there are inherent constraints on this in Australia, including in particular the small scale of the Australian economy and the very high cost of developing new products and pro- cesses. But while those constraints are real they are not decisive, as experience in smaller countries overseas indicates, and indeed as our own experience indicates. Thus as far back as 1968-69 the business sector financed a level of spending on research and development equal to 0.5 per cent of the GDP, more than double that of recent years. That prevailed up to 1973-74. Thereafter it was in fact the onslaught on industry under the Whitlam Government which brought it low. It has stayed there, more or less, since. I recognise the specific measures that the Government has, in fact, introduced to encourage industry R and D, including the establishment of the management and investment companies-MICs-framework, which sprang from the Espie report of the preceding Fraser Government, and the 150 per cent write-off tax incentive for industry R and D-which I might say was a steal from the 1984 science and technology policy of the coalition-and so on. But, in concluding, the central point I make is that all of these measures to which I have referred will not be enough. All of these Government interventions will be ineffectual unless the economic climate, the overall economic environment is gotten right. Industry research and development, new business investment, and growth in a dynamic economy, all flourish together. While there was a welcome lift in R and D between 1981-82 and 1984-85, as was reported the other day, the level is still barely three-fifths of what it was in the late 1960s and early 1970s. It is still very low-appalling I think was the word Senator Button used. It is no coincidence that in 1984 and 1985, the level of business fixed investment as a proportion of GDP was the lowest for more than two decades. We have had today news of a further fall in business investment. It gives the lie to the talk of the Treasurer (Mr Keating), based only on a reference to growth, that the Australian economy is healthy; whereas we have this low level of business investment, the yawning balance of payments gap, the 30 per cent depreciation of the Australian dollar, the very high interest rates, inflation at 9.2 per cent, and costs rising, accelerating, with the March quarterly figures showing average weekly earnings increasing at an annual rate of 10.8 per cent. It is imperative that the Government act to get the macroeconomic settings of the economy right, which realistically means taking drastic action in the incomes and Budget areas. Beyond that, in the pursuit of this more constructive science and technology approach, it is important to address other fundamental features of the Australian economy, including business taxation-the so-called risk-reward structure-and depreciation schedules, the inflexible and restrictive Australian wages and industrial relations system, the profusion of regulations and interventions restricting competition and stifling enterprises; and so on. In sum, getting the macroeconomic settings of the economy right and addressing such fundamental features and rigidities in the Australian environment is the real requirement, not the pursuit of science and technology alone, or even primarily. Mr DEPUTY SPEAKER —Order! The honourable member's time has expired. Mr TICKNER(Hughes)(1.32) —I think today's debate is going to be a very enlightening one for the people of Australia. The notice of motion that is being debated today is a very old one. It was placed on the Notice Paper, as I understand it, on 22 February 1985. It would appear, from the contribution by the honourable member for Warringah (Mr MacKellar), that he wrote a speech around that time, put it in his top drawer, and did nothing to revise its content since. Many of the things that he has said in the course of this debate are simply factually incorrect. I would like to respond specifically to the points that he raised and to highlight the tremendous successes of the Hawke Labor Government in the area of science and technology policy. Before doing so it would be remiss of me not to pay tribute in the most glowing and fulsome terms to the Minister for Science, (Mr Barry Jones). There are few people whose intellect, commitment and driving energy are able to take them from Australia to strut the world stage in the discipline and calling of their choosing. Such is the record of the Minister for Science. I refer honourable members to a publication called `Vital Speeches of the Day'. It contains speeches by some of the prominent citizens of the world-`The best thoughts of the best minds on current national questions'. It is dated 1 May 1986 and one finds in it a few familiar names-Ronald Reagan, John Paul II, Geoffrey Howe and Barry Jones. Such is the standing of the Minister for Science. I might say that the Minister's contribution to this publication is a longer and more substantial one than that of any of the first three named people. But it is not just that publication that has given recognition to our Minister for Science. The meeting of the Science and Technology Ministers of the Seven Summit Nations that was held in Canada in October of last year was attended by the Minister for Science following a personal invitation issued to him in his own right because, as was stated publicly at that meeting, he was the greatest science Minister in the English-speaking world. I am not seeking to anoint the Minister in the same way as the Prime Minister (Mr Hawke) has given recognition to the Treasurer (Mr Keating), but there is, indeed, a very great parallel. The reputation of the Minister for Science, as I have indicated, enjoys world-wide recognition. Professor Kenneth Boulding, one of America's most famous economists, said that Sleepers Wake, which of course is one of the Minister's many books, was the most important intellectual contribution that he had come across in his year in Australia. The Minister's work was praised explicitly in the Organisation for Economic Co-operation and Development examiners' report on science policy in Australia, also the world's leading scientific journal Nature. In Australia, Sir Macfarlane Burnet, Sir Mark Oliphant and Sir Gustav Nossal have praised the Minister's commitment to, knowledge of and vision in science, a rare quality in public life. I say those things of the Minister because I believe that if anyone in the history of this Parliament is capable of bringing about a bipartisan approach to science policy, it is our Minister for Science. I refer honourable members to a function that the Minister has organised in the Parliament tonight. Sir Gustav Nossal will be talking to members of all parties about the very important question of biotechnology. That is one of many matters that the Minister has sought to highlight in terms of public discussion. I am going to be saying some things in this debate, Mr Deputy Speaker, that need to be said. I do apologise for the partisan nature of some of my comments, but regrettably this has been made a partisan issue. What I will do is perhaps put in the slipper, explain the bankruptcy of the Opposition on this question and then move on to what ought to be a proper subject of continuing debate in this place. One of the things that I would claim to have done, and I would venture to say no other Australia has ever done, is stump the Minister for Science in asking him a question relating to the administration of his own portfolio. He did not know the answer! I stumped the Minister for Science! Dr Harry Edwards —How about that! Mr TICKNER —The honourable member for Berowra says: `How about that'. It is a pity he interjected because before this debate commenced I walked up to the Minister and said: `Barry, which member of the House of Representatives represents the shadow Minister for Science, Senator Archer, in this House?' The Minister, whose grammar on this occasion left a bit to be desired, said: `I dunno'. He did not have a clue as to who was the representative of the Opposition parties, because there have been no speeches, there have been no questions, there has been no debate, there has been no probing and raising of the issues that the Opposition now comes here to raise today. I did something else: I sought information about the number of questions that had been asked on what is now this very important burning issue of funding, resources and performance of the Commonwealth Scientific and Industrial Research Organisation. I went to the Parliamentary Library-its officers took some five minutes to respond-and inquired as to what questions had been asked on notice in the House of Representatives between 1 November last year, seven months ago, and now. The answer was that the honourable member for Fraser (Mr Langmore), a Labor member, had asked a question; the honourable member for Hughes, I must modestly confess, had asked four questions, specifically on the CSIRO; the honourable member for Makin (Mr Duncan) had asked one question; the honourable member for Hindmarsh (Mr Scott)-all are Labor members-had asked another question; and the honourable member for Kooyong (Mr Peacock), the one representative of the Opposition parties, had also asked a question. The tragedy is that his question suggested a lack of competence on the part of the CSIRO to undertake research in a very important area of the nuclear winter concept. So we have not had one single supporting question, one probing question, in seven months from the Opposition. Mr Staples —They have never cared. Mr TICKNER —I am pleased that my colleague and friend the honourable member for Jagajaga interjects because I know that he is champing at the bit to take part in this debate. It was the policies of the former Fraser Government that put the member for Jagajaga in this Parliament. He was one of the dedicated young scientists who worked in the CSIRO but the policies, the cutbacks, the obstruction and the frustration that the CSIRO experienced during his employment there drove him into the House of Representatives. He is one of the champions of the CSIRO and will never let the Opposition forget its record regarding that organisation. I want to raise another very specific matter and compliment the honourable member for Warringah upon suggesting that there ought to be a greater parliamentary presence and involvement in the area of science and technology. That was a wonderful suggestion. The honourable member suggested that a joint committee be formed. On that proposition I have a slightly different view. There is, of course, already a Senate committee which undertakes research, public hearings and discussion in this important area. There is no such committee in the House of Representatives. I am pleased to report that when I raised this matter with my Caucus colleagues, including the honourable member for Jagajaga, who is the Chairman of the Caucus Education, Science and Youth Affairs Committee, I got the full support of his Committee-all Labor members. We got the full support of the Industry Committee, also the backing of the trade union movement, and last November the Labor Caucus supported the establishment of a committee on science and technology as an important standing committee of the House of Representatives. I had hoped that that would have the support of all members of the Opposition but despite the acquiescence of the honourable member for Berowra (Dr Harry Edwards) who nods his support, the tragedy is that the Opposition spokesman immediately made a statement to the media opposing the establishment of such a committee. Possibly the honourable member for Berowra did not know that. He should check what I have said. It was opposed on the ground of a need for cuts in government expenditure, the same old hobby horse that is so often trotted out by the Opposition. Before I move on to talk about the achievements of the Government, let me meet that argument head on. I appeal to those members of the Opposition who have integrity, and there are many, to re-assess where the Liberal Party is going. Not one single member of the National Party is present in the Parliament at the moment. We know of its appalling record in this area. It has no questions on the Notice Paper relating to the CSIRO. The only question that has been asked about rural research in the CSIRO was that put by myself, and I represent an urban, Labor electorate. That is how much the National Party cares. There are some people in the Liberal Party, and people participating in this debate, who have integrity and would support a far greater expenditure of public funds in this important area. But they have to be honest. They cannot just keep jumping on the bandwagon championing the cause of reduced government expenditure in all areas. Many members on this side of the chamber would agree that in some areas government expenditure could and should be reduced, but in respect of others we ought to have a bipartisan approach to national expenditure. Science and technology research and development, and the associated public debate and discussion, represent one such area. So let us not engage in this phoney debate about cutting back government expenditure when it relates to these important matters. I emphasise that when one compares the level of public expenditure in Australia on research to that of other OECD countries Australia is not seen as a big spender. In fact, we are one of the lowest spenders in the OECD group. We rank eighteenth among the 24 OECD countries in terms of government expenditure on this activity, taken as a proportion of gross domestic product. People have to realise that if they keep supporting reductions in government expenditure, they will really be cutting back effectively their standard of living. In no other area could this be more explicit and directly relevant than in the important area of science and technology, which relates not just to our quality of life but also to economic policy, industry policy, jobs, employment and all of the mainstream political issues that we ought to be concerned about. I am very privileged, Mr Deputy Speaker, to represent the electorate of Hughes in which there is, of course, a division of the CSIRO. Recently I undertook to visit that division, spoke with its very committed employees and inspected the research that is being undertaken into the conversion of shale oil. Mr DEPUTY SPEAKER —Order! It being 1.45 p.m., in accordance with standing order 109, as amended for this session, the debate on the motion is interrupted. Motion (by Mr Barry Jones) agreed to: That the time for the discussion of Notice No. 1, General Business, be extended until 2 p.m. Mr DEPUTY SPEAKER —I call the honourable member for Hughes. Mr TICKNER —Thank you, Mr Deputy Speaker. I thank the Minister also. The research that is being conducted at that division includes research into the extraction of oil from shale. I was concerned that such a vital and exciting project was not getting the support that it needed so I asked some questions about where the funding was coming from. Between 1981 and 1986 $11,297,000 of public money has been expended in that important area of research. When I compared the funds that had come from private sources I found that not $11m, not $10m, not $8m, not $9m but in fact as little as $692,000-barely half a million dollars-had been expended by the private sector. It is not as if we are talking about companies that are on the bread-line. We are talking about companies such as CSR Ltd and Esso-major companies that are involved in the development of world energy and resources. I had hoped in the course of this debate to be able to talk about so many of the Government's achievements in the area of science and technology policy. Mr Staples —You have not got time. Mr TICKNER —I have not, but I do hope that in the course of this debate I have shown the genuine commitment of members of the Government to the cause of the CSIRO and scientific research. I also hope that my plea for the establishment and formation of a national and a bipartisan approach to science and technology policy will be heeded by the Opposition because if we can reach that stage the whole scientific community and all Australians will be the better for it. Mr DOWNER(Mayo)(1.47) —I was a little disappointed in one aspect of the speech of the honourable member for Hughes (Mr Tickner). He spent much of the scarce time that he had available to him in making party political points, in a debate that I would have hoped would have displayed a degree of bipartisanship-something, rather ironically, he appealed for at the end of his speech. But it is with pleasure that I rise in this debate to support the honourable member for Warringah (Mr MacKellar) and the honourable member for Berowra (Dr Harry Edwards). I would like very briefly to look at the relationship between science and technology and industry and general economic growth. It is axiomatic that science and technology are in the longer term absolutely central to economic growth in any nation. They are extremely important to the process of developing and adapting technologies so that we can increase the competitiveness of our industries and they can therefore grow effectively in the international market-place. Technological innovation and scientific research are also vastly important in developing new products altogether. If in this country we can develop new products and, we can get those products into the international market-place, we can, of course, enhance the export earnings of Australia and move towards resolving some of our chronic balance of payments difficulties. But as other speakers have pointed out, in this general area of science and technology and research and development Australia has an extremely disappointing record. It is one of the areas of Australian economic development which for many, many years has been very disappointing. Our gross expenditure on science and technology amounts to just 0.95 per cent of our gross domestic product. The average for the OECD is 1.65 per cent. That is a fairly poor record. When we look at the balance of spending in this field we see that government funding, as a proportion, is substantially higher than funding by the private sector. Government funding represents 0.72 per cent, while the OECD average is 0.67 per cent. So government funding in Australia is higher than is the OECD average. But when we look at the business sector, the converse applies. As a proportion of our GDP, business expenditure in this area is 0.2 per cent, whereas the OECD average is 0.98, or nearly one per cent. So we do have a gross imbalance in Australia as between expenditure by government and expenditure by private enterprise. When we look at the way in which this money is expended, it is also interesting to note the balance involved. Some 83 per cent of expenditure in the agricultural area comes from the Government, so very little is expended by the private sector. That, I suppose, is a reflection of the small nature of enterprises in the agricultural sector of the economy and, therefore, the inability of primary producers to provide funds for that purpose. When we look at the manufacturing sector of our economy, we find that the Government provides 23 per cent of funds for research and development, the rest of the course coming from the private sector. The central fact is that what the private sector has done in that area has not been positive. To be quite frank about it, the private sector has a record of failure in Australia in terms of funding research and development in science and technology. When we look at Australia's record in developing new products and modifying existing products in innovative ways, we see that Australian industry is by no means innovative. As the honourable member for Berowra pointed out, Australia produces some 2 per cent of the world's scientific papers, yet we register in Australia just 0.7 per cent of the world's patents. One can see again the imbalance there. That is a constant theme that comes through in any discussion on science and technology research and development in Australia. It is a theme of imbalance. The consequence of all this is that we in Australia, despite being a developed country, and claiming to be a wealthy country, are net importers of technological know-how. About 0.1 per cent of the OECD's high technology sales are made by Australia. That is an extraordinarily poor record. In 1981-82-these are the latest figures I could get-Australia spent $127m on importing technological know-how. Yet in terms of exporting know-how we receive just $18m. Again, there is a recurring theme of imbalance and, I am sorry to say, a recurring theme over many, many years of failure in this area. Two per cent of new technology introduced in Australia, just 2 per cent, is locally produced. If ever there was an indictment of a nation's performance that 2 per cent figure is it. Of course, one has to be positive about this crisis and see how we can conceivably respond to this really quite chronic national problem. Clearly, there are two approaches that one can take. One can try to stimulate private sector involvement in science and technology research and development and look at the application of taxpayers' funds in this whole area, making an assessment of how appropriately their money is being spent-whether more should be spent or less. There is absolutely no doubt whatsoever that the key to success in the science and technology area lies with the private sector. That point was very strongly made in the recent report on technology and innovation that came from the Economic Planning Advisory Council: The economic environment is vital in persuading private enterprise to engage in effective technological development and innovation. This challenge has implications for broad ranging industry and macro-economic policies . . . What EPAC is saying, and I think it is a very important point, is that to get the private sector to invest and participate in this area of economic activity, the appropriate macroeconomic climate has to be provided. Government expenditure is, in the main, a compensation for the failure of the private sector to invest in these areas. It is extremely important that private investment in science and technology should go into areas which will reap profits, so expenditure on research and development has to be worth while. It is an extremely risky area for the private sector to invest in if the climate is wrong. If it is unable to get an appropriate return on its investments, obviously those investments are going to dry up. That unfortunately has been and indeed is, a problem in Australia. In the short time that is available to me, I do not want to go into the details of what is wrong with that climate. Suffice it to say that the very high cost structure that we have in Australia, related to such things as interest rates, labour costs, our relative inflation rate to that of other countries and the like, is a disincentive. So are the very substantial charges that are levied on any returns by our taxation system. But there are two problems, in any case, in terms of private sector investment which need to be highlighted. These would not necessarily be solved by a changing macroeconomic climate. The first is that in Australia a high proportion of investment in economic activity is carried out by multinationals. Unlike some honourable members opposite, I have no objection to that but the simple fact is that those multinationals in the main do their research at home rather than in Australia. That, of course, is just about an insurmountable problem for us. Secondly, there is an attitudinal problem in the private sector which sees expenditure on science and technology as discretionary. The statistics show that. Whenever economic times become difficult investment in this area slumps. If we take the years of the Whitlam Government, we find that investment in science and technology by the private sector collapsed almost totally. That was a reflection of the general economic problems but also, let me add, the priorities that the private sector applies to that sort of investment. Those two problems, let me say, are difficult to overcome, but instead of getting the climate right for investment in these areas we have pursued policies of expenditure by government to compensate for our failure. Some of those areas of government expenditure have been positive and successful. Direct funding for bodies like CSIRO-my colleagues have canvassed this at some length-has reaped rewards, I think, for the Australian community, and some of those have been economically positive. Certain scientific expenditure in government departments, such as in the Antarctic division of the Minister's own Department, is in my view also extremely positive. We have, in intellectual as well economic terms, gained rewards from that expenditure. Equally, the $200-odd million that has been spent in university research has reaped some results for the Australian economy and for the broader interests of the Australian community. I have no particular concerns about that. We have, also introduced a whole series of industry incentives to try to stimulate interest in the private sector. I refer to the 150 per cent tax deduction initiative; the new grants initiative announced by the Minister for Industry, Technology and Commerce (Senator Button) just last week; and the management and investment companies-initiatives which have followed from measures the Fraser Government proposed, but never introduced, back in 1983. Those were all designed to stimulate research and development in the private sector and there are early signs that the 150 per cent tax deduction is beginning to have some results. So we have done things at the governmental level and some have been extremely positive. On the other hand, let me conclude by saying that in my view government expenditure is a second-best solution. It may be the solution that we will, for all time, have to live with but it is a second-best solution because what we have failed to do in Australia is create the right economic climate to stimulate research and development in the private sector. I believe that it is a long haul for us to stimulate that research and development. It will be many years before we are able to get our performance to equal that of the other OECD countries and a large number of very hard decisions will have to be taken for us to achieve that. In the meantime, there will be a great demand on the taxpayer's dollar to ensure that at least research and development continues in Australia. That must happen because research and development is vital to our economic future. It is an area in which we are currently failing and I hope that the Government will pursue solutions for at least as long as it remains in office, perhaps another year, so that we can stimulate that sector of Australian activity. Mr STAPLES(Jagajaga)(1.59) —Madam Speaker, in the very short time left I would like to commend the member for Mayo (Mr Downer) for clearly exposing the weaknesses of private sector research and development, but unfortunately it is something that his colleagues failed to rectify in the all but six of the 37 years past when they were in Government. They failed to do anything about it. It is useless for them to come in here bleating over reduced-- Madam SPEAKER —Order! It is now 2 p.m. In accordance with standing order 104, as amended for this session, the time allotted for precedence to General Business has expired. The honourable member for Jagajaga will have leave to continue his speech when the debate is resumed. The resumption of the debate will be made an order of the day under General Business for the next sitting. Mr HAWKE(Wills-Prime Minister) —I wish to advise the House of the following ministerial arrangements: The Minister for Trade (Mr Dawkins) will be overseas on Government business from 29 May until 8 June. In his absence the Minister for Primary Industry (Mr Kerin) will act as the Minister for Trade. Mr CARLTON —My question is addressed to the Treasurer. I refer the Treasurer to his statement on 9 May, just three weeks ago, to the Economic Planning Advisory Council, when he said: Overall 1986 is emerging as a year of slower, but still satisfactory growth, a year in which we will see consolidation of the very strong gains of the past three years, and in which the economy can deal with the imbalance on our external account. That was three weeks ago. Does the Treasurer regard an absolute contraction in the non-farm economy over two successive quarters, as revealed in today's national accounts, as `slower but still satisfactory growth', or are we already in recession? Mr KEATING —I do regard it as slower but satisfactory growth. Let me indicate why. The fact is that the economy slowed in the middle of the financial year. In part, the slowing is the product of the Government's inducement of a moderation in private demand by tightening the intensity of monetary policy last October. In the first place let me just make the point that if the June quarter grows by as much as the March quarter did-we expect it will be better, the reasons for which I will go into in a moment-the economy will still grow at 4.5 per cent over the year. The reason I believe June will be stronger is that in the June quarter interest rates will have been down substantially, housing will have started to pick up from the trough it was in with the problem of housing finance, retail sales started to pick up in April and, as we know, car sales are picking up today. Therefore, there is every likelihood that June will be stronger than March. If it is, the Budget forecast probably will be attained. Let me repeat: Even if June is as weak as March was, we will still have growth of 4.5 per cent. Therefore, of course, the reference I made in my EPAC speech was entirely appropriate. I think that the difficulty in measuring quarterly movements always is evident in these accounts, in which the Commonwealth Statistician records a decline of 0.3 per cent for December and 0.3 for March but records a growth of 2.4 per cent for September and 2.7 per cent for June. The combined June and September figure of 5.1 per cent represents an annual rate of growth of 10 per cent. One has to ask oneself whether the economy would grow at an annual rate of 10 per cent for June and September and then decline for December and March. Quite obviously that is not going to happen. There may be some clear slowing, but we will not see such a sharp turn-around between one six months and another six months. Obviously we have difficulty in measuring the quarters. That is something which the Statistician quite eloquently refers to in his statistical discrepancy note at the beginning of his bulletin. However, I think I should make the point that, that said, on these numbers, in the first half of the year we will still have growth of 7.2 per cent on a non-farm basis. Mr Carlton —You think? Mr KEATING —That is on these figures-of 7.2 per cent. Mr Carlton —That is in the past. Mr KEATING —No, that is in the first six months of the year. The honourable member is asking me whether the Budget forecast will be broadly met or whether the things I said to EPAC were unrepresentative of the current condition. I am answering that no, they were not. If one wishes just to leave the quarterly things to one side and add up the actual increments to non-farm product found at page 33 of the bulletin one will find that there is a 4 1/2 per cent increase for these three quarters over that for the last year. Basically, what has happened is that the economy ran very strongly in the early part of the financial year, it slowed up in the middle of the financial year and it probably will quicken towards the end of the financial year, and that, broadly, the Government's Budget time estimate will be met. If it is not met there will be only a slight diminution of that figure. In the light of the terms of trade decline, that would be entirely appropriate. However, I think the most important message coming out of the Statistician's bulletin for this quarter is the heightened attention given to the terms of trade by the Statistician. What they reveal is that we now have the worst terms of trade since the Depression-confirming my remark in the House three weeks ago. That terms of trade decline is so marked that if Australia had the same terms of trade today as it had in December 1984 the current account deficit would be improved by $6 1/2 billion-instead of looking at a $13 billion current account deficit we would be looking at a deficit of $6 1/2 billion. The decline in the terms of trade is marked. It indicates just how the commodity markets around the world have been poisoned in terms of the way in which they are responding. More importantly, it indicates again how important it is for the exchange rate effect to continue working to try to continue to lift export volumes and reduce import volumes and the importance of other offsetting economic policy settings to help the depreciation effect in the economy. Mr HAND —Has the attention of the Minister for Sport, Recreation and Tourism been drawn to reports of the success of the Carlton Estate Residents Association recreational program for young people? Mr JOHN BROWN —I certainly have had my attention drawn to these reports. I may not answer the question in the way in which the honourable member for Melbourne might like, but I think that it is a rare opportunity to say something in this House about the sometimes anonymous work done in communities by members such as the honourable member for Melbourne and, I am sure, by lots of honourable members on the other side of the House. Therefore, I will preface my answer by telling a very short story. I remember that the honourable member for Melbourne came to see me last year to tell me about a group of street kids in the suburb of Carlton in his electorate who live in the high rise, concrete ghettos that were built in the 1950s and the 1960s. These were kids from depraved backgrounds, in every sense, who came to the honourable member and asked whether he could assist them in getting together an indoor cricket team. It was rather strange because none of them had ever played cricket or involved themselves in sport of any kind. The honourable member said yes, he would see what he could do. They needed $1,200. He thought he would get it from the local estate agent, or the fish shop or whoever else. Three days later these kids came back in their T-shirts that read `Gerry's angels'. Of course, the die was cast and he had to find the $1,200 himself-which he did. The story is that those teams of kids-three teams of boys playing cricket and two teams of girls playing netball-improved their social behaviour immeasurably over one season. He told me that on the night of the final the kids not only won the fight but also won the cricket final. All in all it has been a great social success. I suggested to the honourable member for Melbourne that it might be a good thing for my Department to fund as a pilot scheme to see what we could do in terms of getting kids from this sort of background involved in some sporting endeavour with a view to improving, first of all, their position in life and, secondly, their social behaviour. I must say, in answer to the direct question, that the report that I received from the social worker was quite illuminating. For a grant of $5,000 about 100 kids have gone through the indoor cricket and basketball teams. The results have been rather stunning. A lot of teams won their competition. More importantly, the improvement in the social behaviour of these kids, who have not had much of a chance in life, was quite stunning, and shows what can be done. Mr N.A. Brown —They have joined the Liberal Party, have they? Mr JOHN BROWN —No. This is the sort of thing that I am afraid the Liberal Party would never think of funding because it would be too stupid and insensitive. For $5,000, the success was quite stunning. The report in relation to this matter is well worth reading, and states: Throughout the games approximately 95 young people have been able to play within the teams and as well many other young people have been involved in supporting and practising. One of the long term aims is to filter young people through the program without causing too much disruption to any teams, thus giving all teams a good chance within the competitions and introducing new participants that can be supported by older team members. One of the very pleasing aspects of the program is that some of those involved have been young offenders, and they have been both good and responsible, given the situations they are in. As an aside, I remember the honourable member for Melbourne telling me that when the first team of kids won their competition last year they decided to have a photograph taken and the honourable member had his photograph taken with them wearing the `Gerry's Angels' T-shirts. He wondered why the photograph did not appear in the Press. However, it appeared that some of the kids were worried about getting their photograph in the press because they might have been on the run. The result of all this has been that, for $5,000, and with the assistance of a very compassionate member, whose actions I am sure are reflected over a whole number of people in this House, we have been able to achieve a program that has brought no end of social improvement to the behaviour and lifestyle of kids from deprived backgrounds. I hope that other members of the House can evolve similar schemes. If they do, I would be happy to look at them, because this has been one of the best investments I can think of of $5,000 of government money in this or any other area. Mr FIFE —My question is directed to the Treasurer. I refer him to his answers concerning the impact of the fringe benefits tax on farm housing. Given the wide definition contained in clause 148 of the legislation, will the Treasurer confirm that where family farms are owned and operated by family companies the imputed rental value of the family homestead, as well as the value of electricity, water, insurance and telephone, will all be subject to fringe benefits tax irrespective of whether or not the company gets a tax deduction for those items, and irrespective of whether the company is running at a profit or a loss? Will the Treasurer confirm that any benefit paid to a working director will also be subject to this new business tax? Mr KEATING —I made it clear the other day in the House that the fringe benefits tax will not apply to homesteads if they happen to be in the name of a company. I indicated that the reason a lot of farms are incorporated is that at the time when there were death duties in this country many farming families formed these companies so that they would not be penalised by a heavy level of duty if a property passed from parent to child. I do not think that is a revelation to anyone here, particularly to farmers. If a homestead is nothing other than a homestead and it happens to be held within the family it will obviously not be subjected to a fringe benefit tax. The point that I was making which may have confused the honourable gentleman when I was giving my answer was that if, under the guise of a family company, the costs of maintenance of a property had been deducted in the past-as they ought not to have been, given the fact that there is no deduction available for private residences in the tax system-of course, there could be no complaint from such a company if the fringe benefits tax was to be paid on that property. That is the point that I was making. I very quickly and firmly say to the honourable gentleman that a homestead will not be taxed in this way. Mr Carlton —Is that in the Bill? Mr KEATING —Yes, that is clear in the Bill. I did not follow the part of the question about directors' fees. Madam speaker, I invite the honourable member to mention that again. Madam SPEAKER —Will the honourable member please repeat the second part of his question. Mr FIFE —Will the Treasurer also confirm that any benefit paid to a working director will also be subjected to the new business tax? Mr KEATING —I imagine that any benefit paid to a director is subject to income tax today; if it is a benefit in kind, it will be a benefit like any other benefit paid to an employee. Mr DUBOIS —Would the Foreign Minister be prepared to put to one side his well-known modesty and respond to a description of his recent visit to the South Pacific which was described by a parliamentary colleague as `a sorry tale of ineptitude' and `a trail of disaster'? Are those descriptions justified? Mr HAYDEN —I am grateful to the honourable member for reminding me of those comments, for it can be readily appreciated the disbelief with which I greeted them when they were first reported to me. That sensation quickly gave way to one of pain when I discovered who was responsible for the comments. It was none other than the celebrated, cultivated and very much underrated member for Kooyong-Mr Forty-one per cent himself. I understand that the day after the poll came out rating him at 41 per cent-and the Leader of the Opposition at 16 per cent, if I may say so sotto voce-there was a big rally in Andrew Peacock futures on the futures exchange. That was enormously impressive until I discovered the day after that the sole buyer was the honourable member for Kooyong. I think there is a lesson in all of that for the Leader of the Opposition, who strives manfully to improve his ratings. However, the more he tries, the more they go down. Since the honourable member for Kooyong has ceased to have a ubiquitous presence around the community, and has become largely invisible, his future prospects have skyrocketed. I will keep my modesty intact, because I can leave a lock of concern about that to the honourable member for Kooyong, who, in stricturing me, said this in one of his Press statements: Mr Peacock contrasted Mr Hayden's much belated trip with his own period as foreign Minister when he had regularly visited the region. The first think that I did was check on these visits to the region. There were 12 visits to the South Pacific in the five years during which he was Minister for Foreign Affairs. Seven of them are described as transits through Fiji. This is a sort of rest and recreation to recharge the human body after it has been depleted by the demands of the job in the Northern Hemisphere, I dare say. Of the remaining five visits to the region three were for independence celebrations-no independence no visit; one was for a law of the sea meeting; and the final one was to attend the South Pacific Forum meeting. Therefore, I think that the record speaks for itself without much elaboration by me, except to recall in my fetchingly modest way that during my recent trip I visited eight of the nine independent island states of the South West Pacific, the ninth one being Papua New Guinea which I visited earlier this year and will visit again later this year. I also visited Noumea for fairly obvious reasons. I discovered that the honourable member for Kooyong never visited Tonga, West Samoa, Nauru nor cast a foot on the shore of New Caledonia in spite of its importance to us, at least according to the records that the Department of Foreign Affairs has provided. Further advice he gave me ran along these lines: The Solomon Islands Government has told Mr Hayden that his Nuclear Free Zone Treaty was unacceptable. It did not. It has yet to resolve a position and there is a difference of opinion in the Solomon Islands. He said: The Nauruan President's pleas for assistance on the future of his country had been unsympathetically rejected by Mr Hayden. The plea was that I hand over Fraser Island. I presume from what the honourable member for Kooyong was saying that he would hand it over had he been in the position that I was. The problem was that when I got to Tuvalu Dr Pua Pua, the President, proposed that he too should have a claim on Fraser Island, so presumably in his beneficence the honourable member for Kooyong would be handing out Australian islands all over the South West Pacific. Mr Beale —Watch Tasmania. Mr HAYDEN —I dare say he may have considered handing over Tasmania-an absolutely dreadful thought unless the incentive is added that the honourable member for Denison and the honourable member for Franklin go with the handover. The Press statement of the honourable member for Kooyong continued: . . . the Tongan Government had told Mr Hayden they rejected the Government's SPNFZ Treaty proposal; It did not. It said that it would sign it in its own good time. It continued: The Tuvalu and Western Samoan Governments had stated they could not afford to maintain their patrol fleets-only to have Mr Hayden reject their requests for Australian assistance; I did not. I pointed out that assistance would have to come from within the aid vote. But it gets better: the Vanuatu Government had announced that it would establish diplomatic relations with Libya. How dreadful! There is only one problem. When I looked at the record I found that, in 1978, the honourable member for Kooyong, when he was Minister for Foreign Affairs, established diplomatic relations with Libya, allowing it to establish itself in Australia. He was so excited at the development that in a Press release he stated: The Governments of the Commonwealth of Australia and the Socialist- I stress the word `socialist'- People's Libyan Arab Jamahiriya, guided by the desire to promote friendly relations and the development of co-operation between their two countries, have decided to exchange diplomatic missions at ambassadorial level. How can I go back to Vanuatu and warn it of the problems we potentially see of an on-the-ground representation by Libya when the honourable member for Kooyong said that it was necessary to have this to develop co-operation and friendly relations? Finally, the Press statement reads: Mr Peacock was particularly critical of the lack of comment from Mr Hayden on Soviet influence in the South Pacific and the implications for Australia. I will not delay honourable members, but the fact is that this was widely discussed. I recall again the historical record. In 1978-a bad year for the honourable member for Kooyong, when he was Minister for Foreign Affairs-the Soviets began fishing in the New Zealand exclusive economic zone. They signed an arrangement. The Government at the time did not express any concern as far as the Department of Foreign Affairs can establish. The facts are that there are ground operations; the Soviets have port access to Christchurch and Nelson harbours for provisioning and maintenance; there are also representatives of the Soviet fisheries industries in both places; and, worst of all, they are Soviet nationals. Dr Klugman —And John Elliott is one of the blokes who make most of the money out of it. Mr HAYDEN —Andrew always looked after the bank rollers of the Liberal Party, even if there was an ideological conflict somewhere along the line. I merely point out that there seems to be some discrepancy between the cold war principles that the honourable member for Kooyong is now trying to uphold and his record of conduct and performance at that time. Mr CONQUEST —Is the Treasurer aware that many Queensland accounting practices are un- able to obtain qualified staff due to the nationwide shortage of accountants and, as a consequence, are experiencing excessive work loads? Is the Treasurer aware that requests to the Deputy Commissioner of Taxation to gain extensions of final notices for lodgment are being denied, even though practices are spreading their work loads under the negotiated lodgment system, and that many of the clients so affected and subsequently summonsed are often due for refunds? Will the Treasurer ensure that such requests are accorded a greater measure of understanding by the relevant officers of the Australian Taxation Office so that full account is taken of the practicalities and vagaries of the working environment of country practitioners? Mr KEATING —There was a lot of on-the-job training by accountants, of course, in the 1970s under the stewardship of my colleague the honourable member for Bennelong. The fact is that, since the Labor Party came to office, we have dramatically lifted the capacity of the Australian Taxation Office and its administration to deal with the problems of taxpayers and the tax accountancy profession. I am not aware precisely of the difficulties the honourable gentleman mentioned, the Commissioner does try wherever possible to provide the best service, particularly, to accountancy firms, because they handle so much of the business of taxpayers in this country. Of course, the administration will be very greatly simplified by a move to self-assessment which the Government has now approved-this Parliament will consider legislation in this regard-which will free 400 people in the Taxation Office in this coming year. The simplification of the `S' form will also facilitate compliance by taxpayers with the taxation laws. The objective, of course, in moving to a self-assessment system is to have a higher level of audit in the Australian taxation system. We are building the audit rate to 2 per cent, which is comparable with that of the United States and other comparable countries which have moved away from the system of assessment to self-assessment. In that consequence, some of the claims or queries by tax officers which may be occasioned by the assessment system may be diminished. Of course, there will be more in-depth assessments of taxpayers' accounts under the audit system as the proportions of audit rise as the Commissioner is able to build the system over time. We think that the Commissioner will be able to offer a better service. I know the Commissioner is concerned always to keep his administration in high respect and regard within the accountancy profession. The extra resources which the Government has given him-I think about 1,200 people in three years, because of the paucity of staff provided by the former Government-will facilitate that task, including, of course, the freeing of 800 people from the job of assessment. I will pass the details which the honourable gentleman mentioned to the Commissioner. If he sees a need to improve what he considers to be the service available to accountants in remote areas of Queensland, I am sure he will be happy to oblige. Mr BEDDALL —I ask the Minister for Primary Industry whether he can inform the House of the possible implications for the Federal Budget should the primary industry policies advocated by the Opposition be adopted by this Government. Mr KERIN —In a nutshell, the policies would be pretty horrendous. No responsible government would touch them in a pink fit. I have now had a chance to analyse this draft primary industry policy document. The document contains 176 policy commitments. It is no wonder the Opposition's own policy review Committee described it as a shopping list. Of the 176 points, 17 are repetitions of others, giving a total of about 159 specific commitments. Of the 159, some 120-over three-quarters-are entirely consistent with the present Government's policies and attitudes. The words `maintain', `continue' and `retain' predicate at least 31 of the 159 commitments. That is a pretty good endorsement of what we are doing-perhaps the greatest endorsement by an Opposition in history. For example, the policies that are endorsed include replacing tariffs on farm inputs, where possible, with bounties, rural adjustment schemes, statutory marketing authority reform, other trade and marketing initiatives, an inquiry into grain transport and handling, research, soil conservation, natural disaster assistance, underwriting arrangements, and a variety of other specific policies. Actually, some of these policies leave me a little open-mouthed in wonder because the Opposition always seems to oppose these things when we debate them in the House. The major areas of difference relate to macro-economic policy. The Opposition wants reduced public spending-that one is always popular-a lower deficit and a range of measures, primarily in the taxation area, which would cost an additional $645m. As usual, the Opposition wants it both ways. Mr Hunt —Walsh said $500m yesterday. You ought to get your act together. Mr KERIN —Senator Walsh and I have the same figures. We will give them to the honourable member, if he wants them. Mr Braithwaite —You are getting together, are you? Mr KERIN —Yes, we are. We talk all the time. We did it together. Mr Howard —As you did on the rural package. Mr KERIN —Exactly, John. Do not get cocky just because Bill has praised you a bit. Another part of the Opposition's policy says that the Opposition will `diminish reliance on fuel as a source of Government revenue'. We really do not know what that means. Revenue from all fuel taxes in 1984-85 was about $6.4 billion. I do not think the Opposition would hand all that back, but it is saying that all the recent falls in world oil prices should be fully passed on to Australian consumers. The estimate I saw of the cost of that proposal-I ask honourable members not to hold me to this-was about $2.3 billion. The Opposition proposes tariff reductions. Revenue in 1984-85 was $2,927m. Perhaps the Opposition will not include all of that. It proposes to exempt farmers from the fringe benefits tax. Other Opposition statements have opposed the tax totally, along with the deductibility of entertainment expenses. That would cost something like $935m in a full year. So the sad thing about the Opposition document is that a lot of it is simply unquantifiable. Where we can quantify it, it is really grossly irresponsible. One of the things we came up with in our policy statement was a recognition of the family farm-a recognition of how resilient the farmers are in Australia in earning off-farm income. I have the example of a struggling family farm in Queensland. It is a two-income family-Joh and Flo. They have a farm. They have plenty of off-farm income, but now they are really pushing out in a very resilient way. They are endorsing advertisements. I suppose that they get paid for that. That shows how good some of our farmers are in getting additional income. Mr ANDREW —Did the Minister for Transport see the four Modest Farmer articles by the Hon. Bert Kelly which began in the Australian during March of this year and dealt with shipping and waterfront problems? Since the tabling of the report of the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union, has any action been taken to prosecute the Port Adelaide branch of the Painters and Dockers Union for what Costigan called its criminal activities? Does the Minister believe that similar activities by the painters and dockers are still occurring? Mr PETER MORRIS —I thank the honourable member for his question because for the first time it evidences, minute though it may be, an interest from the Opposition in international shipping services in this country. It is the first gleam of interest, and for the first time in my recollection, since the days of Peter Nixon, the Opposition has actually raised the issue of efficiency on the waterfront. That is some little credit to the Opposition. I did see something of the articles written by the former member for Wakefield. In many ways they maintain the old mythology that all the problems of exporters and primary producers are transport problems. Even if the transport costs were nil it would be said that the timetables were wrong. We can never satisfy them. The former member for Wakefield did deal with some issues but the articles contained much of the old mythology about shipping costs needing to be lower. Certainly the shipping costs are one leg. The honourable member for Wakefield asked about the articles. There were four of them and they covered a great deal of information. It is a very large issue. Shipping costs are one element of the total transport costs from the farm gate to the ultimate consumer abroad. Historically, in real terms there have been record low rates. To turn to the other side of the picture-the on-shore costs-this Government has set up a shore-based shipping task force, chaired by Ian Webber, of Mayne Nickless Limited, to look at those problems. That is an industry task force looking at industry problems. Embraced in the terms of reference of that task force are the matters to which the honourable member referred; namely, efficiency on the waterfront, operations on the waterfront, and how we can improve efficiency and reduce costs. As I said, this is an area that has never been addressed by the conservative parties. If we are going to talk about overall transport costs, that is the area in which attention has to be focused. Honourable members opposite could not face up to it. The only contribution from the National Party to this issue was to enrage waterside workers and to use that area for the purposes of political disputes. This is an area to which this Government is directing a lot of attention. Efficiency can be improved. There has been an improvement in shipping services as a result of the initiatives of this Government, and that remains a major priority. In respect of the recommendations in the Costigan report, they are not matters within my responsibility; they are matters for the Attorney-General. I suggest to the honourable member that the Attorney-General will have taken notice of the remarks made in the question he raised. The Attorney-General may care to respond to him at another time and in another way. Mr CHYNOWETH —My question is addressed to the Minister for Science. What progress has been made to formulate a program to search for extra-terrestrial intelligence by the detection of radio signals? Could such a program be undertaken in Australia? What significance would a SETI program have for Australian science? Mr BARRY JONES —I think there are real possibilities for Australia to benefit from this program. The National Aeronautics and Space Administration is very interested in developing the SETI program. If that is the case, we will be real beneficiaries of it, because if signals are to be picked up from planets like our own, the Southern Hemisphere is the place to do it. As honourable members will be aware, Australia played an outstanding role in the recent Giotto and Voyager expeditions. As a result, we know a great deal more about the universe than we did before. We have an enormous advantage in living in the Southern Hemisphere because the southern heavens are much more interesting to astronomers than are the northern heavens. That is why proportionately there are more astronomical establishments in the Southern Hemisphere than elsewhere, and Australia is well advanced in this regard. Honourable members will be well aware that Tidbinbilla was the place from which Giotto and Voyager were tracked, with such dramatic results. Australia is in the forefront of world astronomy. We have a great international reputation, and I think there will be very considerable advantages to Australia from this program. Any benefits will simply be flowing to us; there will be a net benefit. It has been estimated that the universe has about one million planets capable of supporting life such as ours. Any of them would provide Australia with very valuable export opportunities. Mr HOWARD —I refer the Prime Minister to today's national account figures, which disclose that in the last two quarters there has been negative growth in the Australian economy. I refer him to our excessively high inflation rate, which is over 9 per cent at a time when economies such as that of Japan are headed towards a zero inflation rate. I refer him to the alarming statements made by his colleague the Treasurer about the state of the Australian economy. I refer him to the slump in private investment figures released yesterday. I again ask the Prime Minister, as I did earlier this week: As these matters raise issues of legitimate national concern and are above partisan political point scoring to some extent, will the Prime Minister arrange for the Treasurer to make a full statement to this House before the Parliament adjourns for the winter recess to inform us of the state of the Australian economy and what the Government proposes to do about it? Mr HAWKE —I thank the Leader of the Opposition for his question. I will not seek to direct the Treasurer as to whether he should make a statement to this House. If it is his view that he should do that, that is his decision, as it appropriately should be. I simply make some observations which I believe to be relevant to the question from the Leader of the Opposition. First, as the Treasurer rightly responded earlier in Question Time, if one takes a view of the financial year as a whole, it looks as though the outcome in terms of economic growth will be quite close to that projected at the time of the last Budget forecast. Given the massive impact upon Australia of the dramatically adverse movement in the terms of trade, that is a considerable achievement. I remind the Leader of the Opposition that relevant to any assessment of the Australian economy is the 4.5 per cent increase in employment which has taken place during this period and I suggest to him that from his own personal experience he would know that that sort of movement is not consistent with an economy which is in recession, as he would have us believe ours is. Having said all those things, let me say quite specifically on behalf of the Government as a whole that we recognise that there has been imposed upon this country a very severe discipline as a result of what is happening in the external economy. It would be the height of irresponsibility simply to look at the quite magnificent achievement within Australia as a result of the Government's policies and say `Well, that is all we have to do' and ignore what is happening externally. This Government will not ignore those factors. We will do what we have done for the past three years that we have been in government; that is, frame a range of economic policies which is appropriate to the existing and foreseeable economic circumstances. I might point out that it is quite likely in terms of the Australian Statistician's own statement that the national accounts for the most recent quarters may be amended or changed to show a somewhat different picture because that is the record of the past. One thing that will not be rectified or amended is the record of the previous Government over which the current Leader of the Opposition presided because the time for rectification and statistical amendment has passed. What will stand now and for the future is the monumental rectitude of ineptitude for which the Leader of the Opposition was responsible and which he gives no sign of learning from. He was the world's most hopeless Treasurer in office and he is quickly becoming identified as the world's most hopeless Leader of the Opposition. Mr DUNCAN —I address my question to the Minister for Foreign Affairs. It seems appropriate in this week in which we have been celebrating the twenty-fifth birthday of Amnesty International to ask the Minister whether he has seen the Amnesty International report on human rights abuses in Chile. What is the Government's view on the situation as reported and what steps is it taking to prevent this situation continuing? Mr HAYDEN —The Australian Government has quite frequently expressed its concern about the issue of human rights in Chile. As recently as 20 May in this House the Minister for Defence, then acting for me, expressed the Government's concern about actions by the Chilean Government against two officials of the Catholic Church's human rights organisation in Chile, the Vicariate of Solidarity. Officers of the Australian Embassy in Santiago visited the two officials in gaol and this Government remains concerned about the potential in this situation for the invaluable work of the Vicariate to be undermined. On a number of occasions our diplomatic post in Santiago has, following my instructions, made representations of concern on behalf of Australia and in support of the rights of people whose human rights have been abused and denied in Chile. In October last year embassy officers visited two imprisoned trade union officials and made representations to the Chilean authorities on their behalf. I mention these cases as illustrations of the concern that has been consistently expressed by the Australian Government. Of course the situation will not improve decisively until Chile's long-standing democratic tradition is restored. We would welcome that occurring as quickly as possible. Mr NEHL —My question is addressed to the Attorney-General. In view of the strong statement of opposition to the iniquitous Bill of Rights Bill and the disastrous Human Rights and Equal Opportunity Commission legislation issued by the Catholic bishops following a meeting of the Australian Episcopal Conference, and continuing widespread concern throughout all sections of the Australian community, I ask the Attorney-General once again-and this time I hope he will resist the temptation to detour through the Queensland electoral system-whether he will withdraw the Bill of Rights legislative package. If not, will he let the people of Australia express their opinion on this dangerous legislation at a referendum? If not, why not? Mr LIONEL BOWEN —As the honourable member knows, Australia entered into the International Convent on Civil and Political Rights in the United Nations and under the Fraser Government it established the Human Rights Commission. Apparently it is now the policy of the Opposition to do away with the Commission. Mr McGauran —Absolutely! Mr Slipper —Hear, hear! Mr LIONEL BOWEN —I notice the `hear, hears' coming from a particular Opposition group. I do not know what the Opposition's policy is but it would appear that it no longer wants the Human Rights Commission. I do not know what that would do for Australia's image in the sense that this country is a member of the International Human Rights Commission. I would be interested to know what the honourable member for Kooyong, for example, would think of that suggestion because at least in the past those who have had responsibility in government were well aware of the good influence that the Human Rights Commission could establish in countries which do not practise human rights. In this case the Commission is important because we have already entered into an international covenant which, after all, is only talking about the rights of individuals as against governments. Of course I can understand the concern of the honourable member when he talks about Queensland, where there is a malpractice from the point of view of human rights. Mr Sharp —Here he goes. Mr LIONEL BOWEN —That malpractice is well-known, and I would suggest that it might be appropriate to hold a referendum in Queensland to find out whether people favour the electoral redistribution up there. Perhaps we should let the people of Queensland vote on whether they think the Queensland gerrymander is a fit and proper example of adult universal suffrage. The only people who seem to be concerned about human rights are those who do not want to see them practised. Mr McGauran —Ask the Catholic bishops. Mr LIONEL BOWEN —I make this point about the Catholic bishops: There have been frequent discussions with representatives of those bishops and I have answered their recent media release which suggested that there was something unusual about the Human Rights Commission in the way in which it will take evidence or listen to complaints. The answer to that is that that position is virtually the same as that which applies in existing human rights provisions, implemented by Malcolm Fraser and about which no complaint was made. Further, the bishops have made accusations about matters which have been debated in this House at length-namely, the rights of the unborn. The honourable member for Cowper is laughing and does not appear to be very interested, but the issue of the rights of the unborn was clearly debated at the time the International Covenant was entered into. The objection was rejected in the United Nations and that has been known to the Catholic bishops for a long time as well. Mr Goodluck — They are not happy about it. Mr LIONEL BOWEN —Maybe they are not happy, but if they are interested in abortion perhaps they should look at the Tasmanian law. It is important for the people of Australia to understand that the Human Rights Commission is an educative force for governments. If a government is performing in accordance with the rights of individuals, it has nothing to fear from the principles in the human rights legislation. That is the issue. We want the Senate to find the time to deal with the Bill again. It has spent some 36 hours on it already, not debating its real merits but debating it clause by clause. It appears to be a filibuster designed to guarantee that the human rights legislation will not become law. I can understand that from the point of view of the Opposition. Apparently the Opposition has a new policy and does not want to see the Human Rights and Equal Opportunity Commission established. Of course, if that is its policy, I have no doubt that that will be a major issue at the next election. Mr LIONEL BOWEN(Kingsford-Smith-Attorney-General and Minister Assisting the Prime Minister for Commonwealth-State Relations) —Pursuant to section 7 of the Advisory Council for Inter-Government Relations Act 1976, I present the tenth report of the Advisory Council for Inter-Government Relations entitled `Inter-Government aspects of the provision of post-arrival services for immigrants'. Mr HAWKE(Wills-Prime Minister) —by leave-I wish to report on the visit I undertook from 15 to 26 May to Japan, China and the Philippines. Visit to Japan In Tokyo I had cordial and useful discussions with Prime Minister Nakasone and Foreign Minister Abe, Finance Minister Takeshita, Minister of International Trade and Industry Watanabe and Agriculture Minister Hata. I had private meetings with Mr Tsukumoto and Mr Ishibashi, the leaders of the Democratic Socialist Party and the Japan Socialist Party respectively. A valuable new element in this visit was a meeting with Japanese parliamentarians concerned with agricultural issues. I also had the opportunity to meet with and address senior figures in the Japanese business community. The visit was especially timely. It took place very soon after the Tokyo Economic Summit, chaired by Prime Minister Nakasone. I was able to hear from him at first hand of the discussion which took place at the Summit. The visit also followed closely upon the visits I undertook in April to the United States and Western Europe and this allowed me to complete the process of conveying to the world's major economic powers the Australian Government's views on the need to resist protectionism and, in particular, to address the problems of world trade in agricultural products. Mr Nakasone assured me that at Tokyo the Summit countries had addressed agriculture in a thorough and positive way for the first time. Japanese leaders assured me of their support for the proposition that agriculture should have a prominent place in a new round of Multilateral Trade Negotiations. I was told that Japan stood ready to work with Australia to achieve this. I welcomed these assurances. Japan expects there to be decisive progress at the September ministerial meeting of the General Agreement on Tariffs and Trade to launch the new round. Meanwhile both Japan and Australia agree that work done in the Organisation for Economic Co-operation and Development should serve as useful preparation for these negotiations. I emphasised Australia's willingness to participate in the discussion on agriculture in the OECD but stressed that such discussion should not divert attention from the necessity of having agricultural trade issues fully and satisfactorily addressed as part of the MTN agenda. Japanese leaders also agreed with me on the value of further consultation among Asia-Pacific regional countries prior to the September meeting. The visit was also timely for another reason. Both Japan and Australia are in the midst of major structural changes in their respective economies. In the case of Japan, the recent substantial appreciation of the yen has been a major contributing factor. The market opening measures and action being taken to follow up the report of the Maekawa Committee released in early May have also been important. In the case of Australia, I drew the attention of Japanese leaders to the Government's efforts to diversify our economy and make our manufactured goods and services more competitive in export markets. The consequence for both Australia and Japan of the changes that are in train is substantial opportunities for both countries. In talking to Prime Minister Nakasone and others I applauded the principles embodied in the Maekawa report and welcomed the opportunities which market opening and structural change presented to Australia. These include opportunities in areas of traditional interest to Australia such as agricultural products and coal as well as in new areas. Mr Nakasone responded that the Japanese leadership was pledged to promote implementation of the report and that this process had only just begun. Overseas Visit by Prime Minister Overseas Visit by Prime Minister Overseas Visit by Prime Minister Overseas Visit by Prime Minister Overseas Visit by Prime Minister Overseas Visit by Prime Minister Overseas Visit by Prime Minister Overseas Visit by Prime Minister Overseas Visit by Prime Minister Japan is Australia's largest trading partner and, amongst developed countries, Australia is Japan's second largest trading partner. In discussion with Japanese leaders it was also noted with pleasure that the Australia-Japan trading relationship is broadening, partly because of Japan's market opening measures to which Australia was already well placed to respond as a result of our Japan market strategy. I expressed appreciation for Japan's co-operation with that strategy. We also noted the very significant increase in tourism between Japan and Australia and agreed that the further growth of this should be facilitated. Reference was also made to the broadening of the relationship through finance and banking, particularly as a result of significant deregulation of the Australian financial sector. I stressed Australia's interest in seeing close financial relations give impetus to new areas of trade and investment. It was agreed in principle that there should be an exchange of investment missions between Australia and Japan. These missions will identify particular areas of opportunity emerging from the structural changes now occurring in both countries. Preparatory work on these missions has already begun. Importantly, Japanese business leaders indicated directly to us their support for this initiative. In a number of areas our traditional export sectors, namely agricultural products and industrial raw materials, Japanese policies impose significant constraints on our capacity to expand our exports to Japan. I emphasised to the Japanese leadership that the Japanese market for our traditional exports of raw materials and agriculture products remains vitally important to both our countries, and that we wish to see these expand. I stressed to Japanese leaders Australia's reliability and international competitiveness in these areas. In this regard I underlined the Government's success in radically reducing the historic levels of industrial disputation in Australia. On agriculture, I expressed regret that this sector had been largely neglected in Japan's market opening measures to date. I welcomed the Maekawa report's recognition that Japan's agricultural policies should be `more befitting an age of internationalisation'. I pressed the view that, given Australia's efficient and abundant supply capacity in agriculture on the one hand, and the growing cost burden to Japan associated with its domestic agricultural support systems on the other, there would be mutual advantage to both countries in a process of winding back agricultural protectionism in Japan. I argued more specifically for liberalisation of imports in a number of commodities of particular interest to Australia. I noted also that Australia would shortly be presenting a submission to the review of Japan's agricultural policy being carried out by the Agricultural Policy Council. On coal also, I noted that a review of Japanese policies could open up new opportunities. I stressed that Australia would have a very strong interest in competing on a commercial basis for additional tonnages. I said that we would not be seeking any special advantages but would rest on our demonstrable competitiveness and reliability as a supplier. We asked only that Japan make its purchasing decisions on this basis. I received reassurances from Prime Minister Nakasone that Japan would not do bilateral deals with third parties at Australia's expense. In accordance with the Government's commitment to the Nuclear Non-Proliferation Treaty and to the provision of uranium for peaceful purposes under the most stringent safeguards, as well as with Japan's autonomous decision to continue to generate electricity through nuclear power, I also indicated Australia's interest in securing an increased share of the Japanese uranium market. I also emphasised the importance we attach to the successful development of the North West Shelf project. I also had useful exchanges on other major matters arising from the Summit, including terrorism, the United States-Soviet talks on arms control, the Chernobyl incident, and the need to strengthen the International Atomic Energy Agency machinery. On terrorism, I pointed out that steps already taken by Australia were in line with the Summit declaration on terrorism. I discussed with Mr Nakasone and Mr Abe a number of foreign policy issues important to Australia and Japan. We agreed on the need to provide relevant and appropriate support to the new Government of the Philippines in its objectives of social and economic reform. We discussed the important developments occurring in China and our relations with China. I informed Japanese leaders of Australia's views on ANZUS. Relations with the Soviet Union were discussed, as were developments in the South Pacific. With Australia and Japan each trying, in our own way, to play an increasingly active role in international affairs, it is useful to exchange views on matters such as these and to develop the habit of foreign policy consultation and co-operation. I expressed the gratitude of the Australian Government and people for the contribution Japan will be making to our bicentennial celebrations, in particular the planned contribution to the National Science Centre. Visit to China I had four basic objectives in my visit to China. The first was to reinforce the excellent relations which exist between Australia and China at the most senior governmental levels. Second, I wished to evaluate the process of economic modernisation on which China is embarked and to facilitate economic ties between Australia and China. The third objective was to conduct a thorough, high level dialogue with the Chinese leadership on international issues. Fourth, I wished to give impetus to the development of a broad, sustainable relationship going beyond commercial and foreign policy matters to include the development of stronger people-to-people relations. These objectives were accomplished. In opening our discussions Premier Zhao Ziyang said that China attached very great significance to building the relationship with Australia and to realising the full potential of our relationship. China's seriousness about this, which my Government fully reciprocates, was reflected in the exceptional opportunities provided for intensive discussions throughout the visit. I met Chairman Deng Xiaoping for an hour and had many hours of very frank, informative and friendly discussion with Premier Zhao, as well as with General Secretary Hu Yaobang and Secretary Hu Qili, who accompanied me in the provincial portions of the visit. I had extensive contact with Senior Vice-Premier Wan Li. I held discussions with the Governors and senior political figures in five provinces with a combined population exceeding one-quarter of China's population and drawn from the north, west, east and south. I met a number of other central government Ministers. The combination of modernisation at home and the opening of China's doors to the outside world is, I am convinced, capable of changing the face of China, adding an extremely important new element to the world scene and providing very important new opportunities for Australia. The determination of the Chinese leadership to pursue modernisation remains very evident. This was particularly clear from my discussion with Deng Xiaoping but it also came through consistently in discussions with other central and provincial government leaders. I found a ready realisation on the part of China that our two countries are natural partners as Chinese economic modernisation proceeds. Indeed, the Chinese leadership's expectation is that there will be a doubling of the Australia-China trade by 1990. We have taken initiatives to develop co-operation in iron and steel, non-ferrous metals, wool and transport. There is enhanced co-operation in agriculture. Premier Zhao and others expressed to me their pleasure at the strides already made in developing our economic relations. While noting that there is a substantial trade imbalance in Australia's favour at the moment, both our countries are aiming at a reciprocal increase in trade and economic co-operation. I was able to witness for myself in China tangible evidence that the Australian private sector is alert to the opportunities which change in China presents. It was particularly appropriate to be in China at a time when many Australian business leaders were there. I opened in Beijing a meeting between senior Australian executives and their Chinese counterparts, a forum designed to focus attention on both the Australian and Chinese sides on the scope for closer economic co-operation. I was present at the signing of an agreement related to investment by China in the Portland project, saw in operation a high technology manufacturing enterprise in which an Australian company is heavily involved, observed the signing of an agreement aimed at establishing a wool store in China which will enhance Australian exports of wool and opened a woollen textile mill in which an Australian company is also involved. At the same time I emphasised to Chinese leaders that the relationship still needs to be nurtured carefully. The agreement to establish a high level co-ordinating committee will keep the development of Australia-China economic co-operation under the attention of government at a very senior level on both sides. Beyond this, I raised a number of specific bilateral matters. I had detailed discussion about further prospects for co-operation in iron and steel. In particular the negotiations on the Kwinana and Channar projects were discussed. It was recognised that these were negotiations between the enterprises concerned and that governments could not direct the enterprises. At the same time it was agreed that the two governments would each continue to provide the appropriate framework within which these negotiations might be successfully concluded. I noted that Australia had been involved in the feasibility study stage of a major project for the management of urban liquid waste at Shanghai, and that we had put forward a proposal for commercial involvement in the development stage which was very attractive. The Chinese Government welcomed this proposal, which I was told would be considered on the basis of equality and mutual benefit. Similarly, in the area of transport co-operation, I noted that Australia had funded a feasibility study for the Dongdu Port at Xiamen in Fujian Province and pressed our interest in commercial involvement in subsequent development of this project. The Chinese leadership's response was encouraging. Indeed, I received clear indications while I was in Xiamen of Chinese interest not only in Australian participation in the port project but also in a number of related projects including flour milling, animal feed and animal husbandry projects. Fujian Province is also interested in promoting the sale of Chinese electronic projects in Australia. I raised the suggestion that there might be scope for relevant Australian enterprises to purchase ships from China if they were in turn allowed to carry bulk cargoes from Australia to China. It was agreed to explore this further. There was also discussion of the conclusion of a double tax agreement between Australia and China and of an investment protection agreement. Premier Zhao indicated Chinese interest in an investment protection agreement. He agreed that work should be expedited on a double tax agreement. This will now be done. China is already a significant voice in some regional and global issues and I therefore found it very valuable to have extensive discussion on these matters, particularly with Premier Zhao and General Secretary Hu Yaobang. The conversations were very frank and productive. They ranged over disarmament and arms control, the situation in the South Pacific, the policies of the Soviet Union and relations with that country, the situation regarding the ANZUS Treaty, prospects for Indo-China in general and Cambodia in particular, the situation on the Korean Peninsula, the issue of Taiwan and the transition in Hong Kong. The general thrust of what I put to the Chinese leadership was that Australia welcomed constructive Chinese involvement in Asia-Pacific regional questions, and drew encouragement from the peaceful and stabilising international role China was playing and intended to develop. I specifically commended some recent positions taken by China-for example, its decision to renounce atmospheric nuclear testing, its willingness to participate in negotiations on a comprehensive test ban in the Committee of Disarmament, and its support for the protocols to the treaty establishing the South Pacific nuclear free zone. Australia and China do not see eye to eye on all issues but, as I said during the visit, we are now able to sustain a very good relationship even where different perspectives on particular national and regional issues exist. During the talks both sides warmly welcomed the fact that much has been done in recent years to develop co-operation and exchange with China beyond the commercial and political areas. Australia now has agreements with China for exchanges in science, technology, culture, education, the media and law. I indicated that Australia would like to see a substantial expansion in the present student exchange program between China and Australia. It was agreed that work would proceed at the level of officials with a view to specific new arrangements being settled by the Minister for Education (Senator Ryan) when she visits China in September. As with Japan, China too will be participating in Australia's Bicentenary, and I expressed gratitude for China's intended involvement. To sum up, I am confident that Australia and China are well on the way to constructing a strong and well-rounded relationship covering commerce, foreign policy dialogue and co-operation, and cultural exchange in the broadest sense. Much has been done, the potential exists to do more, and I sought, I believe successfully, to provide impetus to each of these areas through the visit. Visit to the Philippines In the Philippines I had very friendly and informative discussions with President Aquino and also met Vice-President Laurel and other leaders in the new Government. I thought it important to take this early opportunity to establish personal contact with President Aquino and to talk to her about her Government's priorities, concerns and plans. President Aquino briefed me on these matters and I indicated the Australian Government's support for her efforts to achieve political and social reform and economic reconstruction in the Philippines. In this connection I informed Mrs Aquino of decisions taken by the Government on an aid strategy for the Philippines following the announcement of the Minister for Foreign Affairs (Mr Hayden) in March of a 50 per cent increase in our aid to $25m in 1986-87, and a visit of an Australian aid mission in April to consider how best to deploy these increased resources. I said that, subject to specific proposals being prepared, aid would be provided in three phases. In the first phase emphasis would be placed on the continuation of existing programs, on the introduction of a community assistance program to help at the grass roots level, mainly through non-government organisations and the church, preparation of longer term projects in key sectors such as agriculture and education, provision of technical assistance, and the introduction of a commodity supply program as a response to the immediate critical economic situation. In the second phase it is envisaged that this last program would be phased down and greater emphasis would be placed on the community assistance program, the further preparation of longer term projects and the provision of technical assistance. In the third phase the strategy anticipates the termination of commodity assistance as the need for balance of payments and Budget support hopefully diminishes, so that our aid program would then consist of fully operational long term projects and a fully operational community assistance program. I also spoke with President Aquino about international issues. I indicated our appreciation of the fact that the Philippines has offered to host the next round of regional trade consultations in Manila before the General Agreement on Tariffs and Trade ministerial meeting in September. The question of the future of the security and stability of the region was discussed, including mention of the United States bases in the Philippines, and I outlined to Mrs Aquino the positive experience of the Australian Government in our co-operative defence relationships with the United States, an experience totally consistent with the conduct of an independent Australian foreign policy. I told President Aquino of our repugnance at the actions over a long period of former President Marcos and his cronies in having misappropriated abroad massive assets, the property of the Filipino people. I said that this Government would assist in respect of inquiries about any such assets in Australia to the maximum extent possible within the framework of our legal system, including helping with provision of relevant information. In short, I have, through this brief visit to the Philippines, indicated not only that Australia wishes President Aquino and her colleagues well in their efforts to overcome the very difficult problems which they inherited, but also that we will provide tangible support to the extent we can. I stressed to her that the Australian people had been deeply moved by her struggle, and that of the Philippines people, to assert democratic values in the face of a deeply entrenched system of corruption and oppression. I told her that the Australian Government and people had applauded her success and that of her supporters then, and we looked forward to a consolidation of their achievement now. The countries I have just visited are obviously of great importance to Australia. Japan is our principal trading partner and has assumed a vital place in our economy. The far-reaching reforms taking place in China and its associated opening up to the outside world are of immense political importance for the world and our region and offer Australia a great opportunity to assist in China's development and to build a significantly enhanced relationship to the mutual benefit of both our countries. The fortunes of the Philippines, newly liberated from a despotic and deeply corrupt regime but facing grave internal problems are of major significance for stability in our region. I believe that my visit has strengthened our relationships and our opportunities for co-operation with all three countries. These opportunities will have to be taken if Australia is to achieve the role which I believe it is destined to play as an active, constructive and engaged member of the Asia-Pacific region. The Government intends to do its part to ensure that these great opportunities are seized. Mr HOWARD(Bennelong-Leader of the Opposition) —by leave-The Opposition very genuinely welcomes this statement that has been made by the Prime Minister (Mr Hawke). We think it important that overseas visits by Prime Ministers be the subject of report to the national Parliament and, whatever may be our partisan differences on other matters, there is no doubt that the goals of the Liberal Party of Australia and the National Party of Australia and the goals of the present Government in certain foreign policy areas are similar. I want in my remarks to address the areas of similarity as well as the areas where we part company with the Government. We do welcome this report to the Parliament by the Prime Minister, but I would have to say to the Prime Minister that his willingness to talk to us about his visit overseas is in marked contrast with his unwillingness, and that of his colleague the Treasurer (Mr Keating), to talk to us about the parlous state of the domestic economy in Australia. The more the Prime Minister shows a willingness to report on the emperor's progress overseas, the more culpable is his unwillingness to talk to the Parliament about the problems in our domestic economy. I would say again to the Prime Minister that the domestic problems Australia now faces, which are an important aspect of our international relations, cry aloud for the public to be taken into the confidence of the Government. The Prime Minister has a responsibility to address those problems and to tell the Australian public where he believes our economy stands and what his Government proposes to do about it. The statement of the Prime Minister says a great deal about the public pressure of the Prime Minister in Japan, China the Philippines. I am sure that a lot of members on this side of the House regret that the statement contains no reference to some of the more interesting things that were done by the Prime Minister, particularly while he was in Japan and China. We are very disappointed that we were not told about those telephone conversations that he had at the end of last week. We are very disappointed that we were not given a report of the background briefing that he gave to all those Australian journalists about how he was putting down the Treasurer and pulling him back in line in relation to the running of the Australian economy. I have to say that, while this statement is welcome, it is very short on those specifics. It is a great pity that the Prime Minister is not a little more forthcoming about matters which are of great concern to and in great contention with the Australian public. The other thing that was very interesting, of course, concerned the remarks of the Prime Minister when overseas about the state of the Australian economy, which are in such stark contrasts to the dire warning about a banana republic being made at the very same time by his colleague the Treasurer back here in Australia. Some people could easily say that Mr Hawke returned to an Australian economy which can perhaps be categorised as having taken a great leap backwards, to borrow a famous catchcry from the recent history of China. I now turn to some of the specifics in the Prime Minister's statement. In relation to Japan, it ought to be pointed out that it is now 10 years, or it will be in June, since the basic treaty of friendship and co-operation between Australia and Japan was signed. I remind the House that that basic treaty was an initiative of the previous Liberal-National Party Government. In the context of properly endorsing what the Prime Minister said about the importance of our trading relationship with Japan, I also take the opportunity to remind the House that when one looks at the history of Australia-Japan trade relations since the end of World War II, the contribution of two people to the building of that relationship stands far and away above that of anybody else, and I refer quite unreservedly to the contribution made to that relationship by the late John McEwen and Doug Anthony, former Deputy Prime Minister of Australia. Those two members of previous Liberal-National Party governments have done more than any other Australians in the post-war period to build on the important trading relationship which now exists between Australia and Japan and which is of so much importance to Australia's economic development. I have to say also that the Prime Minister's record and report of his discussions with Japanese leaders appears to me to be very much one-sided. Little of very real importance is set out concerning the results of any of the discussions, although the Opposition does welcome the assurance given by Japan that it will support the proposition that agriculture should have a prominent place in a new round of multilateral trade negotiations. That, in the view of the Opposition, is indeed a very welcome development. I must, or course, remark that the Prime Minister's comments about the Australia-Japan trading relationship dramatically demonstrate the inherent problems that will result from the fact that Japan's rate of inflation is heading towards zero while Australia's remains at over 9 per cent. I do not think that anybody could analyse the relationship between our two countries without remarking on that discrepancy. As Japan is our best customer and our major trading partner, that enormous gap between our relative inflation performances will assume much greater significance in the future-much greater significance as time goes by. The Prime Minister mentioned that he had told the Japanese that our industrial scene was getting better. That seems very ironic, of course, delivered by the Prime Minister a day after we had a 24-hour stoppage organised and encouraged by the Australian Council of Trade Unions, and not disavowed by the Government of this country, in protest against the alleged slow progress being made by the Australian Conciliation and Arbitration Commission in the recent national wage case. When the Prime Minister waxes lyrical about the improvement he claims has taken place in the industrial scene in Australia over the past three years and when he says that all of it is due to the great benefits of the prices and incomes accord, he conveniently overlooks the fact that over the same period there has been a dramatic drop in the number of strikes occurring all around the industrialised world and that on the strike front Australia is doing no better than many other industrialised countries. Mr Willis —That is not true. Mr HOWARD —I can refer the Minister for Employment and Industrial Relations to countries that do not have a centralised wage fixation system. The United States has enjoyed a dramatic drop in strikes; it does not have a centralised wage fixation system but it has quite the contrary of a centralised wage fixation system. Even the British Government, which is so roundly criticised so often by the present Government in Australia, has enjoyed a significant fall in the number of strikes over the last three years. The Opposition also welcomes the Government's commitment in relation to the export of uranium to Japan for peaceful purposes, although it remains to be seen what the Australian Labor Party Left will say on this issue and whether once again the Prime Minister at the National Conference of the ALP will be able to carry into effect what he has said to the Japanese about the export of uranium for peaceful purposes. Mr Milton —That is what Gorky Square said. Mr HOWARD —It will be very interesting to see what Gorky Square has to say about uranium when we get to the National Conference. One can rely on Gorky Square to wake up and come to life every time one mentions uranium. Members opposite are absolute rippers; they cannot help themselves, they spring to life. I thought the honourable member was sleeping or reading one of those boring tomes put out by the Treasurer about the state of the economy, but, no, the honourable member sprang to life. I reckon that uranium is going to be an absolute bobby-dazzler at the National Conference of the ALP, and it will be absolutely marvellous to see what happens. The Opposition warmly welcomes the continued priority being given by the Government to Australia's relationship with China. Those who have studied the development of our relationship with China will know of the enormous contribution that was made to it by former Prime Minister Malcolm Fraser. On behalf of the Opposition I want to take the opportunity of saying that much of the goodwill that now exists between Australia and China is due to the efforts of the previous coalition Government. Mr Robert Brown —Gough Whitlam. Mr HOWARD —I also acknowledge, as I have in the past-and I say to my friend from Charlton-the contribution that was made by former Prime Minister Gough Whitlam in developing a relationship between Australia and China. I have never been reluctant to do that. I think it is a remarkable thing that three Prime Ministers as different as Gough Whitlam, Malcolm Fraser and the present Prime Minister could all in their different ways have made a contribution. I can assure the House that I will continue that tradition after the next election. I will be continuing the tradition of Australian Prime Ministers in building upon the relationship that exists, and ought to exist, between Australia and the most populous country in the world. In fact, when I was in China myself last year I had the opportunity to observe many of the things that the Prime Minister observed and I reported in similar vein many of the things the Prime Minister has reported. The importance of our economic, social and political relationship with China in the years ahead will be of immense significance to future generations of Australians. I must say, however, one or two things about what the Prime Minister did not mention either in China or in his report to this Parliament. I think it is fair to say that, as the Prime Minister has taken a very high profile on human rights matters-he has not been reluctant to criticise human rights abuses in Indonesia or the Philippines-he has been silent on human rights abuses in China. Whilst it is important that we build a relationship, we should also recognise that there are human rights abuses in China. In many cases, they are just as serious and just as objectionable as they are in the Philippines and in Indonesia. The Prime Minister does himself no good at all in adopting this selective attitude towards our relations to different countries. Whilst I commend the importance he attaches to the relationship with China, I draw this Parliament's attention to the fact that, just as his colleague the Foreign Minister (Mr Hayden) failed to say anything about the Soviet invasion of Afghanistan when he was in the Soviet Union, the Prime Minister failed to say anything about human rights abuses whilst he was in China. The other general comment I would like to make is that in the course of the Prime Minister's visit to China he said that he wanted the Australian-Chinese relationship to be a model to the world of how two countries with quite different political systems could learn to work together, to respect each other and to get on extremely well. Stated as a goal in terms of our relationship with China, I have no quarrel with that. I agree with the Prime Minister when he says that differences in social systems and political systems should not prevent two countries from coming very close together. To the extent that he wants to apply that principle in relation to the Australian and Chinese people he will have the support of the Opposition. However, I ask once again: In the name of even-handedness and in the name of consistency, will the Prime Minister apply that same standard to Australia's relations with Indonesia? I ask that because one of the great foreign policy failures of the Hawke Government is the way in which it has presided over the sinking of our relationship with Indonesia. No speech on foreign policy and no speech in this Parliament that remotely touches foreign policy issues can be complete without a reference to the serious deterioration of Australia's relationship with Indonesia. Our relationship with China is important-I do not diminish that for a moment-but so is our relationship with Indonesia. I would hope that the Prime Minister would invest as much goodwill, as much political and diplomatic effort and as much political and diplomatic capital into improving our relationship with Indonesia as he has invested in our relationship with China. Therefore, whilst welcoming in a positive way some of the things the Prime Minister has said about our relationship with China I deplore the fact that he appears to be going in the totally opposite direction so far as our relationship with Indonesia is concerned. He raises the red herring of grovelling. Nobody has suggested that there should be any grovelling to Indonesia. I say to the Prime Minister: Get the monkey of the left wing's obsession about East Timor off your back and recognise that our relationship with Indonesia surpasses our relationship with virtually any other country in the world, and something has to be done by this Government to bring about a repair in that relationship. It will go down as one of the great foreign policy failures of this Government, when its score card is made up at the next election-when it goes out of office-that it has presided over the virtual dissolution of the close relationship that used to exist between Australia and Indonesia. That is not a matter of pride. That is not a matter about which the Government can be complacent. I say to the Prime Minister that he will do Australia a great service if he invests as much goodwill in building back our relationship with Indonesia as he has invested in developing further our relationship with China. I have to make those remarks whilst generally welcoming so much of what the Prime Minister said about his visit to China. Whatever views honourable members may have about matters related to the protection of Australian industry, I must say that I agree with the interjection made by my colleague the honourable member for Denison (Mr Hodgman), who said that the Prime Minister had failed to make any reference in his report to the Parliament about the discussions involving Australia's textile, clothing and footwear industry. If parliamentary reports are to be anything-they need to be something other than just anodyne reports of all the favourable things that take place while one is overseas-one has to be fair dinkum and report on exactly what was said. There was absolutely no reference to that industry by the Prime Minister. I think that is a great pity. I think also it is worth remarking that the expectations of the Prime Minister since his 1984 visit to China have been considerably scaled down. It is a bit like the expectations of the Prime Minister about the Australian economy. They have been considerably scaled down. The Prime Minister's pronouncements in 1984 concerning a possible steel deal with China have still not come to fruition. The Kwinana and Channar projects are still completely up in the air. The Prime Minister's 1984 suggestion-this was an interesting one-that industrial relations contracts with China should cover those industries that export to China also has come to nothing due, no doubt, to the staunch opposition from the Australian Council of Trade Unions and the Minister for Employment and Industrial Relations (Mr Willis) to these issues. I also say that, very disappointingly, the Prime Minister's speech glossed over the crucial question of the Vietnamese occupation of Cambodia and the attitude taken by Peking to the occupation of Cambodia by the invading Vietnamese forces. Once again, if one is going to presume to give a serious report to the Parliament one has to report everything, warts and all. The Prime Minister may have enjoyed all the soft publicity he got while he was in China; he may have enjoyed all the cuddling of the pandas and all those other things while a storm raged back here. He may have enjoyed himself giving some background briefings to members of the Press telling them how he dragged the Treasurer into line. However, all the hard issues-the human rights abuses; the Vietnamese occupation of Kampuchea and whether we really are to have some kind of worthwhile steel deal with China-were completely ignored in the Prime Minister's report. Of course, perhaps the real explanation as to why he did not raise the Vietnamese occupation of Cambodia to any great extent is that he still remembers the enormous embarrassment caused by the Foreign Minister's clumsy intervention on that particular subject when he succeeded in one stroke in getting the five Association of South East Asian Nations completely offside. I do not think that any Foreign Minister in Australia has ever had five strikes all in one as he did on that occasion. That would have to go down as the most united condemnation of an Australian Foreign Minister by friendly governments in South East Asia since the end of World War II. Let me simply say in concluding my remarks on China that whilst we welcome, as I said at the outset, the important relationship and the contribution being made by the Government to that relationship we are a little disappointed that we did not get it warts and all. We are a little disappointed that it was strong on travelogue and pretty light on serious detail. Most of all we are bitterly disappointed that the Prime Minister did not tell us about his famous phone call-the `I love you' call-to the Deputy Prime Minister (Mr Lionel Bowen) and all his other ministerial colleagues. We are very disappointed indeed that we did not get some report on that or on the background briefing. I turn very briefly to the Philippines section of the Prime Minister's speech. I welcome, as do all members of the Opposition, the Prime Minister's support for the continuation of United States bases in the Philippines. I say on behalf of the Opposition that continuation of those bases in the Philippines is absolutely fundamental to our views about regional security in our part of the world. We will do everything in the future, as we have done in the past, to encourage a continuation of those very important United States bases in the Philippines. We too welcome the efforts being made by President Aquino and her Government to overcome the enormous social and economic problems which face her nation. We welcome and support the decision of the Government to increase Australia's aid to the Philippines. Overseas aid, properly and intelligently provided, is an important instrument of foreign policy. We have a self-interest, as well as a humanitarian obligation, to provide appropriate levels of overseas aid. The Opposition will always take a very constructive and positive attitude to the provision of overseas aid. I regret that in the Prime Minister's report to the Parliament he did not indicate that the Australian Government firmly opposes the activities of the communist New People's Army which is currently attacking the forces of the Aquino Government. I think that the Prime Minister should have told President Aquino and her Government that they have the full support of Australia in their efforts to tackle the rebellious and socially destructive activities of the communist New People's Army. Finally, I say that while recognising the enormous importance of Australia's relations with Japan, China and the Philippines the Opposition regrets that the Prime Minister has paid so little attention to the crucial relationship that exists between Australia and Indonesia. I will continue to pursue this theme on every occasion I can in this House when matters relating to foreign policy and defence are raised. I believe that until this Government seriously addresses the deterioration that has taken place in our relationship with Indonesia it cannot fairly claim to be addressing the foreign policy concerns, demands and imperatives of this country in 1986. 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 respectfully showeth that your petitioners are gravely concerned at the failure of the government to honour its election promises to pensioners. In particular those promises relate to the following commitments: 1. That within three years of its election to office, a Hawke Labor Government would raise the level of the standard pension to 25% of Average Weekly Earnings; 2. That the lag time between the announcement of the Consumer Price Index figures and subsequent adjustment of pensions would be reduced to one month, and 3. That the disproportionate tax burden borne by low income earners would be lifted. None of these promises has been honoured to date. Your petitioners are extremely angry at the failure of the Government to live up to its commitments and as in duty bound will ever pray that these serious omissions will be given the attention they deserve. by Mr Beale,Dr Harry Edwards,Mr Nehl,Mr Snow and Mr Webster. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that persistent rumours suggest that the Hawke Government intends to reduce Government expenditure by contracting or eliminating programs for war veterans and war widows. Your Petitioners humbly pray that the Hawke Government honour its commitment and that of previous Governments to ex-servicemen and women by: Ensure no additional cut-backs will be made to the portfolio of Veterans' Affairs. Review the previous cut-backs in such areas as the travel allowances, dental scheme and repatriation pharmaceutical benefits scheme. Proceed with abolishing more stringent conditions applying the granting of the TPI pension. by Mr Blunt and 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 Richmond electorate respectfully showeth that: Persistent rumours suggest that the Hawke Government intends to reduce Government expenditure by contracting or eliminating programs for war veterans and war widows. Your Petitioners humbly pray that the House of Representatives, in Parliament assembled, urges the Government to: Honour its commitment and that of previous Governments to ex-servicemen and women by: Ensure no additional cut-backs will be made to the portfolio of Veterans' Affairs. Reviewing the previous cut-backs in such areas as the travel allowances, dental scheme and repatriation pharmaceutical benefits scheme. Proceed with abolishing more stringent conditions applying the granting of the TPI pension. And your petitioners, as in duty bound, will ever pray. by Mr Blunt. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned shows: Graduated family allowances are of important assistance to families with more than one child. All family allowances, whether for one, two, three, or more children, have not kept pace with inflation. There are suggestions that all family allowances should be paid at the one flat rate. This would severely disadvantage families with more than one child. There are also suggestions that the dependent spouse rebate be reduced or removed. This would represent another blow to the family unit. Your petitioners therefore pray that the House of Representatives, in Parliament assembled, should: ask the Federal Government to increase the value of existing family allowance payments, and reject any moves to change the payments to tamper with the spouse rebate; And your petitioners, as in duty bound, will ever pray. by Mr Blunt and Mrs Kelly. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned shows that the Hawke Government should: pass on the full benefit of lower international oil prices on 1 March 1986; not increase or extend fuel taxes; and maintain its tax cut commitments. Your petitioners humbly pray that the Hawke Government honour its commitment to the Import Parity Pricing policy. And your petitioners, as in duty bound, will ever pray. by Mr Braithwaite and Mr Fife. 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. 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. 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 to give priority to irrigation systems and the planting and growing of healthy forests, food-producing trees and other crops and vegetation to assist the greening of Australia. And your petitioners, as in duty bound, will ever pray. by Mr Brumby and Mr Snow. 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 and 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 our military expenditure to fund peace activities: 4. Actively assist the International Year of Peace in 1986 by initiating programs for peace education, self-help development and environmental repair; 5. Develop National Employment Programs to give priority to the planting and growing of forests, food-producing trees and other crops to assist the greening of Australia. 6. Implement National Recycling Programs to reuse water, and to compost all presently wasted domestic sewage-sludge and organic garbage with mineral-rich gravel dust, a by-product from rock quarries and mines, into hygienic humus, a natural fertiliser, for use in revitalising impoverished soils; 7. Propose to the United Nations General Assembly that 1989 be declared International Year for Repairing the Earth. And your petitioners, as in duty bound, will ever pray. by Mr Snow. 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 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 divisions 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 Dr Harry Edwards and Mr McArthur. To the Honourable the Speaker and Members of the House of Representatives assembled in Parliament. The petition of certain citizens of Australia draws to the attention of the House of Representatives their concern at any change to the Australian Flag without first holding a Referendum to assess the opinion of the citizens of Australia. Your petitioners therefore pray that no changes be made to the Australian Flag without reference to the citizens of Australia in the form of a Referendum. by Dr Harry Edwards. 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: (1) That we the undersigned are totally opposed to the introduction of a $2.00 fee on prescription drugs for pensioners; (2) That the impact of such a fee will be particularly felt by the chronically ill elderly who will be faced with a $2.00 burden with the purchase of each Pharmaceutical Benefit Scheme drug; Your petitioners therefore urge the House of Representatives and the Government of the Commonwealth to ensure that prescription drugs continue to be provided to the pensioner population without the $2.00 fee on each prescription. And your petitioners, as in duty bound, will ever pray. by Mr Halverson and Dr Watson. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth the legislation to tax fringe benefits is iniquitous, inequitable and unfair. Your petitioners humbly pray that you do not proceed with the legislation. And your petitioners, as in duty bound, will ever pray. by Mr Beale. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. We the undersigned call upon all Members to pay due respect to all returned service personnel. Your petitioners therefore humbly pray that all changes to benefits for veterans', and conditions of service for military personnel, as announced in the May Economic Statement, be withdrawn as to allow sufficient time for sensible community debate before any veteran or service person can be unfairly disadvantaged. And your petitioners, as in duty bound, will ever pray. by Mr Blunt. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. We, the undersigned humbly pray that a public inquiry be conducted for the migration of the Chirita family (father) Marin Chirita and (Fiance) Marc Codruta to be allowed into Australia and that the rights of Ion Chirita be recognised in Queensland. And your petitioners, as in duty bound, will ever pray. by Mr John Brown. To the Honourable, the Speaker, and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens respectfully showeth: 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 place in space; (c) The large star depicting the advent of Federation in 1901 and each point depicting a State and the Territories of the Commonwealth. 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 its form or to its acceptance as the sole Australian National Flag will produce divisions in the Australian community. Your petitioners humbly pray that the members of the House of Representatives, in Parliament assembled: will ensure that the existing Australian National Flag remains sacrosanct from change and remains the sole national flag. And your petitioners as in duty bound will ever pray. by Mr Hodgman. To the Right Honourable the Speaker and Members of the House of Representatives in 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 in duty bound will ever pray. by Mr Rocher. To the Honourable the Speaker, and Members of the House of Representatives assembled in Parliament. This petition of Australian residents shows that we strongly oppose the introduction of the ``Australia Card'' or any form of compulsory identity cards. We believe that the introduction of Identity cards will erode civil liberties; will create an increased risk of invasion of privacy; and will not result in any significant increase in Government revenue. We call on the Parliament to immediately reject any proposals for the introduction of compulsory Identity cards. by Mr Kent. To the Honourable the Speaker and the Members of the House of Representatives in Parliament assembled. The humble petition of citizens of Australia 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 the Members of the House of Representatives in Parliament assembled. The humble petition of certain electors of Australia respectfully sheweth: That the Bill of Rights Bill, the Human Rights and Equal Opportunity Commission Bill, the Human Rights and Equal Opportunity Commission Amendment Bill and the Human Rights and Equal Opportunity Commission (Transitional Provisions and Consequential Amendments) Bill, if passed by the Parliament, will undermine human and civil rights in Australia; will attack the institution of the family in our country, and will destroy States rights and the federal nature of our Commonwealth. Your petitioners humbly pray that: The Parliament rejects these Bills; abolishes the Human Rights and Equal Opportunity Commission and moves to withdraw ratification of the International Convention on Civil and Political Rights. And your petitioners, as in duty bound, will ever pray. by Mr Nehl. To the Honourable the Speaker and the Members of the House of Representatives in Parliament assembled. The petition of the undersigned respectfully showeth that: We, the undersigned petitioners, call upon the Australian Parliament to set up strong national Aboriginal land-rights legislation. We call upon Parliament to establish this legislation in line with the five principles of ALP Party Policy and to use its powers to over-ride States which do not comply with the legislation. And your petitioners, as in duty bound, will ever pray. by Mr Scott. To the Honourable the Speaker and the Members of the House of Representatives in Parliament assembled. This petition of the undersigned citizens of Australia respectfully showeth: That the humble petitioners respectfully believe that the representatives in Australia of the African National Congress of South Africa (ANC) and of the South West African People's Organisation of Namibia (SWAPO) should not have to suffer unending financial problems related to the cost of rent, food and clothing, and the maintenance of two small offices run on the most austere basis. Your petitioners therefore pray and urge Australian Government provision of: 1. Official recognition of the ANC and SWAPO as the legitimate representatives of the people of South Africa and Namibia; 2. Financial support to the offices and representatives of the ANC and SWAPO to promote the anti-Apartheid cause in Australia; 3. Additional financial support for the official representatives of the ANC and SWAPO to assist the humanitarian needs of Namibian and South African refugees who are victims of Apartheid; 4. Scholarships for South African and Namibian refugees through the ANC and SWAPO education departments. And your petitioners, as in duty bound, will ever pray. by Mr Scott. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned respectfully showeth: We most strongly oppose the process of Food Irradiation by radioactive Cobalt 60 or any other radioactive substance. We oppose the introduction of regulations that will facilitate the food irradiation process by State Governments. We express our deep concern at this attempt to extend the use of radioactive substances and exposure of workers to radiation. We call on the Government to immediately ban the importation of radioactive Cobalt 60 or other radioactive substances and to immediately disallow the regulations that permit the irradiation of food here in Australia. by Mr Scott. To the Right Honourable the Speaker and Members of the House of Representatives of the Commonwealth in Parliament assembled. The humble petition of the undersigned citizens of New South Wales respectfully showeth: That they strongly support the establishment of the Western Sydney State University as recommended in the Parry Report and call upon the House to establish the Western Sydney State University in conjunction with the New South Wales Government. And your petitioners, as in duty bound, will ever pray. by Mr Grace and Mr Price. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Cowper Electorate respectfully showeth that: The Hawke Labor Government's productivity/superannuation accord with the ACTU and its support of the superannuation claims of the trade union movement will create an imbalance in industrial power and distort the future development of the Australian economy. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, urge the Government to: Reject the superannuation claim of the trade union movement, and allow superannuation to develop without trade union domination. And your petitioners, as in duty bound, will ever pray. by Mr Nehl. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Page Electorate respectfully showeth that: The Hawke Labor Government's productivity/superannuation accord with the ACTU and its support of the superannuation claims of the trade union movement will create an imbalance in industrial power and distort the future development of the Australian economy. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, urge the Government to: Reject the superannuation claim of the trade union movement, and allow superannuation to develop without trade union domination. And your petitioners, as in duty bound, will ever pray. by Mr Ian Robinson. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Richmond respectfully request that: The world's resources be redirected to the relief of human suffering, starvation, poverty and disease. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, urge the Government to: Stop spending taxpayers' money on self promotion through high cost profile but superficial policy on nuclear disarmament and make a genuine bi-partisan commitment to positive and practical policies designed to achieve progressive world-wide nuclear disarmament. And your petitioners as in duty bound will ever pray. by Mr Blunt. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. This petition of citizens of the electorate of Farrer respectfully showeth: That all legitimate business expenses incurred in earning or producing assessable income should be allowed deductions. That the proposed Capital Gains Tax is an unwarranted burden on the rural sector, which will severely affect its long-term viability. That the delay by the Government in introducing the legislation into Parliament is causing confusion and hindering farmers in the organisation of their assets. Your petitioners humbly pray that the Government introduces the Capital Gains Tax legislation without delay and that the Australian Democrats join with the Opposition to defeat the proposed legislation. by Mr Tim Fisher. To the Honourable the Speaker and Members of the House of Representatives assembled: We, the undersigned petitioners of the electorate of Farrer, do respectfully show our opposition to the introduction of a Fringe Benefits Tax and related legislation, and humbly pray that such Tax be abandoned. Such a tax will be an additional burden upon small businesses, and lead to increased bureaucracy. It will also adversely affect the Australian car industry, and primary producers. And your petitioners, as in duty bound, will ever pray. by Mr Tim Fischer. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of certain citizens of Queensland, Australia, respectfully showeth that we are totally opposed to any change in the Australian National Flag as declared in the Flags Act (1953). Your petitioners humbly pray that Parliament in its wisdom will take no action to change the Australian National Flag. And your petitioners, as in duty bound, will ever pray. by Dr Watson. Petitions received. The following Bills were returned from the Senate without amendment or requests: Appropriation Bill (No. 3) 1985-86 Appropriation Bill (No. 4) 1985-86 Social Security Legislation Amendment Bill 1986 Message received from the Senate acquainting the House that the Senate has agreed to the consequential amendments made by the House in the Customs and Excise Legislation Amendment Bill 1986. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Madam Speaker has received a letter from the honourable member for Mackellar (Mr Carlton) proposing that a definite matter of public importance be submitted to the House for discussion, namely: The dramatically worsening economic outlook as disclosed by yesterday's private investment figures and today's national account figures. 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 CARLTON(Mackellar)(3.45) —This morning we received some very sad news from the Commonwealth Statistician. We learned that the December quarter figures, which were given to us three months ago, have been revised. These figures show that the Australian economy, in fact, contracted during the December quarter. The figures also show that there has been another contraction in the March quarter. In blunt terms, these figures indicate that the Australian economy had already moved into recession at the very time the Treasurer (Mr Keating) was hiking interest rates to their highest levels since the Great Depression. The Treasurer, who has been putting forward a line about the brilliant economic management of this Government for the last three years-and more stridently for the last 12 months-is now exposed as having put the hammer of ultra-high interest rates into an economy that was already in decline. These sad figures were brought to us this morning. The Treasurer has had a Press conference and made a statement which bears no relationship whatever to the actual state of the economy. When the balance of payments is showing a $1 1/2 billion deficit for the month of April and a $14 billion deficit for the whole year; when inflation is three times the average of the major trading nations; when unemployment in Australia has been stuck at 8 per cent for months, and is now beginning to rise; when youth unemployment has risen again to over 22 per cent; when bank interest rates are the highest in living memory; when yesterday we learnt, again from the Statistician, that private business investment on which we depend for economic growth, for jobs, and for improvement in our balance of payments has fallen over the last two quarters; when our overseas debt is up to the appallingly high figure of $70 billion, and forecast to go to $100 billion-South American levels-by the middle of next year; when interest charges in our Commonwealth Budget are $7 billion-more than we spend on national defence; when today the national accounts reveal that for the last two quarters our economy has moved into recession and, when our economy is indeed moving to that of a banana republic, to use the Treasurer's words, what is the Treasurer doing? He has had the House tied up for full two days while 275 pages of anti-business tax legislation was introduced. That is what the Treasurer has been doing. Mr N.A. Brown —Where is the Treasurer, in that case? Mr CARLTON —Where is the Treasurer to answer these charges? He is not in the chamber. He is again treating this matter with contempt. I must say that, as with the balance of payments figures we had a few weeks ago, he is hiding from the results of his own economic policies. What are his mates doing when we want investment desperately, wage restraint, and expenditure reduction? What are his mates in the Australian Council of Trade Unions doing? I certainly do not include the Prime Minister (Mr Hawke) amongst his mates. While this has been happening the Prime Minister has been doing a two-week additional tour of provincial China. The business part of that tour could have been done in three days. So in relation to all this, the Prime Minister has been, and continues to be, irrelevant, so I certainly do not include him as a mate of Keating. He is not a mate of Keating's mates any more than is Mr Richardson any more. Madam SPEAKER —Order! The honourable member for Mackellar should refer to Ministers and members by their titles. Mr CARLTON —The Treasurer is no longer a mate of the Prime Minister. What about his mates in the ACTU? What are they doing when we need investment and wage restraint? Yesterday they called a 24 hour national stoppage. People were walking off the job all over the country. Were they calling for more investment? Were they calling for wage restraint? Were they calling for cuts in expenditure? Of course, they were not. They wanted the national wage case to be advanced. They wanted higher wages across the board, regardless of whether or not they had been earned. Under the accord mark 2 they are asking for greater government expenditure. Of course, they are calling for greater investment from industry. But in order to give some evidence of their good intentions towards industry, they called out all of their members on a stoppage over the course of the last 24 hours. What did the Minister for Employment and Industrial Relations (Mr Willis) say about that? At least he is in the chamber. Maybe he is only present because he is on House duty; I do not know whether he will respond in this debate. He was silent about the stoppage by the ACTU. Mr Willis —That is not true. Mr CARLTON —What did we hear? A mouse speaks. Mr Howard —A mouse squeaks. Mr CARLTON —A mouse squeaks; a mouse speaks. Does it squeak or does it speak? The Minister for Employment and Industrial Relations tells me that he made a squeak about yesterday's protest by the ACTU. That is what the Treasurer's mates have been doing while the country has moved into recession. What about his mates in the Cabinet? What has the Minister for Social Security (Mr Howe) been doing? He has been saying to left wing conferences that there should be more social security expenditure. He has been attacking his colleague the Minister for Finance (Senator Walsh)-who is trying to show some sort of fiscal responsibility-and defending rorts in the social security system. Mr White —And Gietzelt. Mr CARLTON —What about the Minister for Veterans' Affairs (Senator Gietzelt)? He has been travelling around the country, saying that the solution to our economic problems is to increase government expenditure and to have quantitative restrictions on imports. That is what he has been saying. The Treasurer at least had to disagree with the second half of that piece of lunatic left wing advice. What about the Minister who passes for the Minister for Health in Australia today? What has he been doing? Mr N.A. Brown —Dr Death. Mr CARLTON —Dr Death. He has been spending more money on a health system that does not work. He has been offering free health care to everybody. Money is pouring out of the Treasury. The standard of health care has gone down, yet he is asking for more money. That is what the Treasurer's mates have been doing. The ACTU is striking for more pay and additional government expenditure. The seven spending Ministers, who leaked their letter of defiance to the Prime Minister when they were asked to restrain their spending, are travelling all over the country, addressing left wing conferences, attacking the basic policies of the Minister for Finance and the Treasurer. What the devil are we doing with this Government in the present state of the economy? It is quite extraordinary, but I do not know whether the Treasurer has yet recognised the problem. His line over the last couple of weeks has been that somehow we have a buoyant internal economy. Everything in the internal economy is wonderful; all we have is this trouble with the external economy. Mind you, Mr Deputy Speaker, this tune is not a constant one. When he had to meet his responsibilities regarding the Economic Planning Advisory Council on Friday, 9 May-which on my reckoning is not very long ago, only a couple of weeks ago-he stated: Overall, 1986 is emerging as a year of slower, but still satisfactory growth, a year in which we will see consolidation of the very strong gains of the past three years, and in which the economy can deal with the imbalance on our external account. That is what he said to the Economic Planning Advisory Council on 9 May. A week later we had some crook balance of payments figures. When he appeared on the John Laws program he told Australia that we were moving towards becoming a banana republic. Mr White —One week later. Mr CARLTON —So one week later everything is going down the chute. A week previously, fulfilling his important responsibilities-as we thought-to the Economic Planning Advisory Council, he said that everything was okay. When we pointed out the discrepancy, he told the House: `We have an extremely strong internal economy. You dummies over there don't understand the difference between a weak external position and a sound domestic economy'. I spoke to my wife about this. I said: `Listen, how is it that, when we are going down the chute with the bank manager, we have a sound domestic economy? How is it that when we owe $100 billion abroad we have a sound domestic economy? How is it that when inflation is over 9 per cent we have a sound domestic economy?' The Treasurer says: `That is all right. We have a sound domestic economy because it is booming and we have a weak external account, which is a great difficulty. I am not quite sure whether we are on track or, a la Laws program, we are going towards a banana republic'. So there is a dichotomy in this regard. Mr Howard —What did your wife say? Mr CARLTON —She gave me some very sound economic advice. She is a good handbag economist. Basically, she believes that a person should not spend what he does not earn; he should not borrow what he cannot pay back; and he should set something aside for his children and grandchildren. National accounts figures were produced today which, without the slightest doubt, I say to the honourable member for Charlton (Mr Robert Brown), showed that the domestic economy has gone down the chute. For two full quarters, while the Treasurer has been saying that the domestic economy is in fine shape and we need only worry about the external economy, it has been in recession. At the end of November interest rates were hiked up to their highest level since the Great Depression. This occurred after the economy had already begun to slide. The Treasurer said that this was a fine tuning adjustment to bring it back into some sort of balance. That is what he said, at the very time at which he was wielding the hammer on an already fragile economy. We now have another dichotomy. The Treasurer in the House today cited the figures for the first half of the financial year and said: `We are doing well. We have a booming economy. The figures for the first half of the financial year look very good. If you add those to what are admittedly not very good second half figures, we are coming out on target'. I say to honourable members that this car is rushing down the hill without brakes and the Treasurer is looking out of the back window. He is looking at the signposts of the December national accounts figures. I do not think he has even seen today's national accounts figures. One would hardly know he had seen them, after reading his Press statement today. He referred to the excessively optimistic Press statement issued after the December national accounts were presented during the last quarter. So we have an internal economy and an external economy. We have the figures for the first and the second half. We have the EPAC statement and the Laws statement. We have a schizophrenic Treasurer. Day by day we have a different picture of what will happen. What will happen next week? What will happen on 5 June when he has to attend the non-summit meeting with his mates? Also, the business community is being dragged into it. What will he say to its representatives? Will he say the same things to them that he said to EPAC? Will he say the same things to them that he has said to the people of Australia and this House for the last 12 months? Will he say what he said to Laws or will he modify it after he has been spoken to on a bad, leaky line from China? Will he say what he said in the House today-looking out through the back window of a car that has no brakes, as it hurtles down the hill? What will he do now about monetary policy? We still have high interest rates. Bank loans are still at a very high level. What will he do? The first thing he must do-this is what the Opposition has been saying he must do for months and months-is this: He must have a balanced mix of policies. We have said for months that he cannot rely on jamming down on the brake, using high interest rates to put it into reverse. Is that not the most dangerous thing one can do? Is that not what John Stone said? Is that not what Bernie Fraser, the present Secretary of the Treasury, said? Is that not what all the advisers from outside the Government who had any sense said? Has not the Opposition been saying for months that the Government must have a balanced policy, that it must have a wages policy that does not leap into high gear, with inflation and the balance of payments the way they are? Should we not have that? Should we not have a decent wages policy? Let us call off this national wage case before it destroys us. Let us not take any notice of Simon Crean and his bully boys in the streets yesterday. Let us take notice of economic commonsense. We want a mini-Budget to cut expenses. We want a holding-off of the national wage case. We certainly want a reduction in the tax package that is killing business. We want a relaxation in foreign investment controls, and we want it soon, because we are currently heading towards a very severe economic recession, high unemployment and, certainly, a total betrayal of everything that the Treasurer-the man who should be sitting opposite me at the moment-has said he has been doing in the area of economic policy since this Government came to office. Mr DEPUTY SPEAKER(Mr Cowan) —Order! The honourable member's time has expired. Mr ROBERT BROWN(Charlton)(4.01) —It is rather depressing for us to see the role that the Opposition-- Mr Donald Cameron —I take a point of order, Mr Deputy Speaker. There is not one Labor Minister in the House at this time. An Opposition front bencher delivered the speech on the matter of public importance and a Government front bencher should be answering the charges that the shadow Treasurer has laid here today. Mr DEPUTY SPEAKER(Mr Cowan) —Order! There is no point of order. The honourable member will resume his seat. Mr ROBERT BROWN —They were not charges, they were speculation. Five of the last seven discussions on matters of public importance have been directed against economic policy and against the Treasurer (Mr Keating), and honourable members opposite have not even dented him yet. Mr Carlton —Where is he? Mr ROBERT BROWN —I will tell the honourable member one of the main reasons why he is not here. He is just fed up with honourable members opposite. If they were to get a little substance into their claims that they make about the Australian economy and about the economic competence of the Government, the Treasurer might feel it encumbent upon him to continue coming into the House to answer some of that rubbish. He has just had it. He is not going to waste his time when the best that honourable members opposite can do is to pick up the Australian Financial Review in the morning and pore through it looking for a couple of little economic indicators which might suggest in some way that something somewhere might be going wrong. Honourable members opposite are wrong. I am very surprised that the honourable member for Mackellar (Mr Carlton) chose to raise this matter of public importance in the way that he did. As I said, it obviously arose from his reading of the Australian Financial Review this morning, or perhaps the Sydney Morning Herald. Mr Carlton —The accounts came out at half past 11. What are you talking about? Mr ROBERT BROWN —The honourable member for Mackellar claims that his proposing the matter of public importance arose from this observations and from his study of the national accounts figures. It did not, and the honourable member knows it. I have a little too much respect for his competence when reading those national accounts to believe that. If the honourable member had read the national accounts and pushed the statistical discrepancy around in a few different ways he would have come up with something quite different. I am not suggesting that that is the major reason for the figures that have been disclosed today, but the honourable member for Mackellar knows as well as I do that there is a very strong possibility that those figures will be amended later on. In fact, in some cases that I will indicate to honourable members shortly those figures are built upon assumptions which, because of the nature of the circumstances to which the assumptions relate, make them very inadequate indeed. I think it is very distressing-it is a very sorry spectacle-that an opposition which aspires to provide government leadership for this nation should have sunk to such depths in poring through newspapers and financial papers each morning, hoping to find some economic indicators that will throw some gloom somewhere. Honourable members opposite have been the merchants of gloom and doom. The sorriest thing about this is that if members of the Opposition see evidence, for example, that perhaps unemployment might start to grow, they are joyful. Mr Chynoweth —Shame! Mr ROBERT BROWN —The shame of it is that they rejoice-- Mr N.A. Brown —No, not true. Mr ROBERT BROWN —They do indeed. The honourable member for Menzies says that that is not the case. It demonstrably is the case. Honourable members opposite have been very despondent and very unhappy. They have been wearing frowns since March 1983. You have seen that, Mr Deputy Speaker; you are one of them-except when you are in the chair, of course. The only occasion when members of the Opposition wear smiles is when they feel that there is some indication that unemployment will grow. The only time they wear smiles is when they see some indication that a business might fail. The only time they wear smiles is when they think investment might lag. What a sorry spectacle it is that honourable members opposite, for their own petty, mean and miserable political objectives, rejoice in the hardships that may be being experienced by people in Australia. With reference to the national accounts, honourable members opposite are concerned about the question of growth. If they are concerned about the possibility of negative growth, they may have something to say about it, because they are experts. For the seven years that they were in office real economic growth in Australia averaged 2 per cent a year. In 1975 they inherited an economy which had been averaging real economic growth of between 4 1/2 and 5 per cent for the previous 10 years. In seven years they devastated the economy. We have been in government for three years, and the figures speak for themselves. During our three years we have had average real economic growth of 5 per cent. (Quorum formed). Before the quorum was called I said that the members of the Opposition should be able to say something about negative growth because they are the experts and that after seven years under the Fraser Government the Australian economy was absolutely devastated. In fact this is what happened to real economic growth in the last three years of the Fraser Government: In 1980-81 the rate was 3.6 per cent; in 1981-82 it had dropped to 2.6 per cent-- Mr Bilney —What about 1982-83? Mr ROBERT BROWN —In 1982-83, as my colleague has asked me, it had dropped to minus one per cent. Over that whole financial year economic growth in Australia had finally become negative. We know that the Australian economy then was in a state of free fall. It took this Government to reverse the process, resuscitate the economy, promote growth and bring about an upsurge in confidence, employment and all those elements which are so important to the economic performance of any government. There is one factor to which I wish to draw the attention of honourable members and the Opposition in particular. In the process of doing that, I want to draw this factor to the attention of the Australian people as well so that they know the penalty that was inflicted upon them as a result of the behaviour and economic incompetence of the Opposition members when they were in government. In the 10 years prior to the Fraser Government coming into office real economic growth had been maintained at an average level of between 4 1/2 and 5 per cent. We have now restored that rate of economic growth. Had the Opposition been able to maintain an equivalent level of economic growth-about 5 per cent each year-during its seven years in government every family in Australia, as a result of the productive potential which would have been created by that growth, would have been $170 a week better off at the end of the Fraser years. There is no question that not only does this Parliament generally recognise the magnificent achievements of this Government, but the Australian community has also recognised them. I wish to make brief reference to some of the matters that were raised by the honourable member for Mackellar when he referred to the national account figures for March and December. While the current account figures at present probably indicate some degree of downturn from the very high level-- Mr McGauran —Some degree? It is a disaster. Mr ROBERT BROWN —Listen to the absurdity of that interjection. The very reason that the figures have shown a downturn is that we have put into place economic policies which were designed to bring that about. I am quickly losing any regard that I had for the economic literacy of the honourable member for Mackellar. He should know that in the second six months of the last calendar year real economic growth in Australia exceeded 7 per cent. Opposition members talk about difficulty on the external account. The honourable member for Mackellar knows, or he should know, that one of the reasons for that difficulty has been our buoyant domestic economy. The Australian economy has been growing too quickly-literally. We must find, establish, and maintain a level of economic growth in Australia which is sustainable and which will not create all these bottlenecks and pressures on the availability of investment funds in Australia, for example, which will continue to force up interest rates. We must establish a level of growth that will not drag into Australia an unsustainable volume of imports. That is precisely what this Government has been all about. For God's sake, do Opposition members not realise that? Has their economic literacy fallen to such a level that-- Government members-Yes! Mr ROBERT BROWN —My colleagues assure me that Opposition members' economic literacy has fallen to such a level that they simply do not understand what is taking place. The other matter to which the Opposition drew attention was question of investment. I will not go into some of the analysis involved in throwing light on those figures except to say that there is no question that there has been a dramatic turnaround in the level of investment in Australia. In the Opposition's last year in government the real level of private sector investment in Australia fell by 10 per cent. Mr Maher —No! Mr ROBERT BROWN —The honourable member for Lowe expresses surprise at that, but I assure him that that was the case. Honourable members might believe that no government could be so incompetent but the previous Government was. It presided over a reduction in investment in its last year of 10 per cent. We have brought about a dramatic turnaround. We know that that has been the case, and one of the reasons for the high level of interest rates in Australia is the confidence and buoyancy in the economy and the fact that business people have been trying to attract the funds to carry out the investments that they know, as a result of the policies of this Government, will be productive and successful. These people will then be able to continue to make the magnificent contribution to the development of Australia's industrial capacity that they have made in the past. Mr DEPUTY SPEAKER(Mr Cowan) —Order! The discussion has now concluded. Mr KEOGH(Bowman) —On behalf of the Standing Committee on Procedure, I present the second report of the Committee entitled `Days and hours of sitting and the effective use of the time of the House', incorporating a dissenting report, together with a copy of the minutes of proceedings. Ordered that the report be printed. Mr KEOGH —by leave-The report I have just tabled is the second report of the Standing Committee on Procedure. In this inquiry the Committee has conducted a comprehensive review of the hours the House sits, the pattern of sittings and the effectiveness of the use of its time. The recommendations the Committee has made have three major thrusts: Firstly, the Committee proposes a package of measures which will significantly increase the opportunities for private members in the House-opportunities for them both to raise matters of interest and to sponsor motions and Bills for debate; secondly, the Committee recommends a completely new approach to the programming of the business of the House; and thirdly, the Committee proposes that the House sit for a longer period each year to enable it to better cope with the volume of business before it. The Committee also proposes that there be changes to the public importance procedure, that legislation committees be reintroduced, that there be alterations to the procedures for the presentation of petitions, that time be set aside for the presentation and consideration of committee reports, that there be changes to the quorum provisions of the House and that certain other proceedings be rationalised. On 20 May last the father of the House, the Minister for Local Government and Administrative Services (Mr Uren), stated in the House: The sad thing I have found about centralism in my time is that greater power is going both from the Opposition back benches to the front bench and from the Government back benches to the front bench. The Executive is taking greater authority, both in the Opposition and in the Government . . . the back bench members have to stand up for their rights . . . I am sure he and other honourable members will be pleased with the Committee's recommendations as they affect the rights of private members. The Committee proposes that there be a guaranteed adjournment debate of 30 minutes each sitting and prohibition on the moving of the closure during that period and that the adjournment debate will be broadcast. It also proposes that approximately two hours each sitting Thursday be set aside for private members' business with an improved procedure for selecting matters for debate, and that there be a 15-minute period set aside each day when members may make 90-second statements to the House as recommended in the Committee's first report. I believe that honourable members will welcome the proposed changes to the programming of business in the House. The Committee is proposing the establishment of a business committee, with broad representation from the House, to consider and make recommendations to the House concerning the sessional, weekly and daily programming of the business, thus ensuring that maximum time is allotted to substantive and debatable issues and there is a more predictable and definite program set before the House thereby minimising legislation bottlenecks at the end of each sitting period. It is also envisaged that agreement will be reached on times for holding divisions and that proposed division times will be set down on the blue program. In regard to the days and hours of sitting, the Committee has concluded that, for the House to give adequate attention to the business before it each year, there must be a significant increase in the number of hours it sits. The Committee is proposing that the House sit for a minimum of 20 weeks each year, for a total of approximately 670 hours-a 40 per cent increase over the 1981-1985 average. The Committee has also concluded that the sittings of the House should continue on a four-day week basis, with two weeks of sitting followed by two non-sitting weeks. In considering the proposed sitting pattern the Committee surveyed members of the House on their preferences for sitting patterns and timetables. The results of that survey are at Appendix 4 of the report. The Committee proposes that in each sitting week the House sit from Monday to Thursday, the advantages of this pattern being that honourable members will be able to schedule Fridays for electorate commitments and other responsibilities knowing that Fridays will always be non-sitting days; the longer break between consecutive sitting weeks will benefit the large majority of honourable members who return to their electorates between consecutive sitting weeks, whilst still allowing honourable members to stay in Canberra should they wish to do so; and time can be gained each sitting fortnight compared with the current arrangements. In regard to daily sitting hours, the basic choice facing the Committee was between a more compressed day, eliminating meal breaks and rising in the early evening, and the more traditional hours with meal breaks and a later rising. Having considered medical evidence, the Committee agreed that the practice of the House and committees meeting during meal breaks and sitting late into the night should be strongly discouraged. The Committee has therefore recommended the adoption of a sitting timetable similar to that currently in operation and that procedures be implemented that strongly discourage late sittings. Other recommendations made in this report are: that the public importance procedure be renamed `matter of public interest' and that one hour's discussion of these matters take place on Mondays, Tuesdays and Wednesdays; that a specific time for the presentation of committee and delegation reports be set aside each week and that part of that time be set aside for the resumption of debates on motions to take note of committee or delegation reports presented at earlier sittings; that legislation committees be reintroduced to examine in detail Bills referred by the House on the recommendation of the Business Committee; that the procedures for the tabling of ministerial papers following Question Time be streamlined; that, with certain exceptions, a prohibition be placed on the reading of speeches in the House- I say `with certain exceptions', and this is one such instance- that the petitions announcement be read by the Chair and be restricted to one day per week, that the number of signatories to each petition be included in the announcement, that Ministers be given the option to respond to petitions presented and that certain other changes be made to procedures for presentation and storage of petitions; and that the quorum of the House be reduced to one-fifth of the whole number of members of the House and that each party represented in the House roster one-fifth of its members for House duties to ensure that a quorum is present at all times. The Committee does not in any way see the recommendations embodied in this report as the completion of its charter `to inquire into and report upon the practices and procedures of the House generally with a view to making recommendations for their improvement or change and for the development of new procedures'. These reforms are no more than the beginning of our work, but reforms they are nevertheless. Former Speaker Snedden, when commenting on a list of reforms he had put forward, said: There is much debate on how this Parliament can become more effective and how the practices and procedures of the two Houses and of this House in particular might be made more responsive to the demands made upon a modern legislature. I have been aware of the deepening interest of the members in these matters and their belief that reform must ultimately come from the House itself. Honourable members will, I am sure, agree with Sir Billy's analysis, for only Parliament can reform its own practices and procedures and only Parliament can bring about the changes that are required not only to meet its own needs more effectively but also, and perhaps more importantly, to improve the public perception of the Parliament. The implementation of these reforms will require not merely a recognition and desire by all honourable members for reform but also an abundance of goodwill by each section of the House-the Government, the Opposition executive and all back bench members-to acknowledge and provide adequately for the needs of all, because each section of the House has a quite separate and equally important role and need within the practices and procedures of the House. I commend the report to honourable members. Mr DONALD CAMERON(Moreton) —by leave-As Deputy Chairman of the Standing Committee on Procedure, I think I should commence by simply mentioning the fact that the Committee comprises not only the Chairman, the honourable member for Bowman (Mr Keogh), and me, as Deputy Chairman, but also the honourable members for Denison (Mr Hodgman), Throsby (Mr Hollis), Herbert (Mr Lindsay), Grayndler (Mr Leo McLeay), Wide Bay (Mr Millar) and Banks (Mr Mountford). The membership of the Committee represents several years of parliamentary experience blended with the new blood and enthusiasm as brought by the honourable member for Throsby. I commend the report of the Committee to the House and express the hope that the Leader of the House (Mr Young)-I hope that the right honourable member for New England (Mr Sinclair) is listening to this-will be more open-minded in response to this report than he was with respect to the interim report that we brought in last year. Members on both sides of the House will remember when the Special Minister of State and Leader of the House ruthlessly took from us, this Parliament, the right to present notices of motion. Some months later our Committee produced the alternative proposal that we introduce the Canadian system, whereby 15 minutes is set aside each day during which individual members are allowed to rise to their feet for a 90-second speech. A member can get across much in that 90 seconds. But the Minister wiped that proposal. I guess his reluctance to accept it was based on a fear that Opposition members might take the opportunity to hammer the Government. That is all very well. I guess Committee members and members from both sides of this House bring to the deliberations of the Committee the fact that one day we are in government and the next day we are in opposition, but our supreme thought must be for the benefit of the Parliament-not only the benefit of the government of the day but also the benefit of the individuals who comprise this Parliament. One of the sad aspects of life is that there has been a great erosion, particularly since that rather sad decision to increase the size of this Parliament. As a result, private members in this place are sinking further and further behind in terms of relevance. I commend to the House the proposed res- toration of legislation committees and the establishment of a Business Committee. A Business Committee is terribly important to this place. No matter who is in power in Canberra, we always witness at the end of a session the introduction of legislation which is pushed through this place as if we were making sausages. The legislation is ground through with great speed, yet we spend the first few weeks of the session doing virtually nothing of importance, when everyone is allowed to speak for as long as they like simply because there is no real legislation before the House. I blame those in the government departments who have to piece the legislation together. They are probably like students facing an examination; they go along quietly through the year and when they know that the examination is just around the corner they speed up. That could well be an explanation for the legislation all seeming to come in together at the very end of a session. Our suggestion that there be a time set aside each day when divisions would be held covering all pieces of legislation that might have been considered that day is also worthwhile. We all know how committees of this Parliament meet during the day and that members attending to other duties are often interrupted by divisions. Nobody doubts the importance of divisions and registering who voted for what, but to have them all done together at one part of the day would be infinitely better than the disjointed system that prevails at the moment. The suggestion to reduce the size of the quorum from one-third to one-fifth of the Parliament has much virtue, particularly when it is taken in conjunction with the suggestion that we have an informal approach to keeping at least one-fifth of the members in this House on an informal roster system. That could be done, for example, by having one-fifth of the Government members and one-fifth of the Opposition members in here at all times. It could be done in a one-hour or two-hour stint, but it would be up to the members of the parties to make up their minds on that. There is nothing worse than for the public to come in here and look down and see absolutely nobody. I assure the people in the gallery today that they have a great crowd in here, compared with normal times. Mr John Brown —But a rough speaker. Mr DONALD CAMERON —They knew I was speaking, Minister; they have all come in to hear me. All that aside, if we introduce a system which brings respectability to this chamber, I am sure that the public will have a far greater respect for the institution than currently exists. The realities of life are that people come down here to see me and they look in the Parliament and say: `Where are all the members?'. I say to them: `For a start, the member for Moreton is with you-I can account for him on the spot'. The other eight or ten members who comprise this Committee had several meetings during the sittings of the House; many committees meet during that time. Mr Sinclair —You should not do that. Mr DONALD CAMERON —I know that we should not do it, but we had no alternative because all the Parliament does these days is sit, sit, and sit again and we had to complete our report. I recommend strongly that the adjournment debate be broadcast at night. I can see no sense in the radios being switched off during what is probably the most interesting time of the day, when the private members take the stage and bring their feelings and grievances into this place. I conclude by making reference to the small amount of time that is devoted to the interests of private members. I read a short extract from the report: Compared with other Parliaments private Members . . . in the House of Representatives certainly have restricted opportunities to sponsor motions and bills for debate and decision. In the period 1970-85 3.7 per cent of the House's time was devoted to legislation and motions sponsored by private Members, including the Opposition executive. In the Canadian House of Commons comparable opportunities for private Members take up 7 per cent of the House's time and the figure in New Zealand is 6 per cent. In the House of Representatives the time set aside for private Members' . . . business is 1 hour 15 minutes each alternate sitting Thursday following the adoption of the Address in Reply. In fact this time is often taken up by government business by order of the House. That is the Leader of the House at work again. To continue: During the period 1970-1985 there were 134 scheduled general business days, an average of 8.4 per year. However, government business superseded general business on 34 per cent of occasions. One has only to look at the Notice Paper and the motions that private members would like to have heard to see the little opportunity available for them to express their views. It is a shame that the Leader of the House is absent, but I am proud that the Manager of Opposition Business (Mr Sinclair), who is well steeped in the art of confining conservation in this place, is here. I hope that during the recess he and the Leader of the House will read the report and that we will come back in August and discuss it with an open mind, not thinking just of what is the greatest source of power to the Government, but of what is best for the Parliament and for the members of this place. Mr SINCLAIR(New England-Manager of Opposition Business) —Mr Deputy Speaker, I seek your indulgence. I have spoken to the Leader of the House (Mr Young), who has assured me that, given the nature of the report of the Standing Committee on Procedure; the fact that it significantly affects sitting practices and procedures; that the report consists of 85 pages, together with its appendices; and that those of us who were not on the Committee obviously have not had the time to peruse it, there should be an opportunity for debate. The Leader of the House has told me that he believed he could accommodate that debate next week, and I hope that is so. I think it is important, as I indicated when speaking on a motion earlier today, that we have some discussion about procedures and practices so that before the Budget session, if any new sessional orders are to be introduced, they can be debated properly. The practice for some years has been that changes are introduced on a sessional order rather than a standing order basis, which would enable an amendment to be introduced at the beginning of the Budget session. I commend to the Leader of the House and to the Parliament that we should have an opportunity to read this report and a few hours should be set aside for consideration before the House rises. If that were done, with a bit of luck we might be able to get some resolutions at the beginning of the Budget session which might meet the convenience of all members. I believe that there is to be a motion for the report to be noted, so that such a debate can be facilitated. I trust that the Minister for Sport, Recreation and Tourism (Mr John Brown), who is at the table, might be prepared to move such a motion. Motion (by John Brown)-by leave-proposed: That the House take note of the paper. Debate (on motion by Mr Sinclair) adjourned. Debate resumed. Mr DEPUTY SPEAKER(Mr Cowan) —Order! Before the debate is resumed, I remind the House that it has been agreed that a general debate be allowed covering the Income Tax Assessment Amendment (Capital Gains) Bill 1986 and the Income Tax (Rates) Amendment (Capital Gains) Bill 1986. Mr ROBERT BROWN(Charlton)(4.38) —I want just to put on the record the statement made by Mr Kelman. I think he is entitled to that, because the statement indicated a very high level of integrity on his part as far as the general question of capital gains taxation is concerned. This was the point at which I concluded earlier today, when the debate was interrupted to go on to other business. Mr Kelman and Mr Coates both indicated that they had no objection to a capital gains tax; in fact, their statements have indicated that they support it. The statement attributed to Mr Kelman reads: He stresses that any capital gains tax `must have proper and sensible safeguards, including no retrospectivity, indexation for inflation, protective clauses for farm properties and the exemption of certain assets such as homes'. I referred earlier to Mr Darrell Williams of the Young Liberal Movement, when I indicated that he could probably feel a great deal of satisfaction with the approach that this Government has taken. Undoubtedly people of the standing of Mr Kelman would also do that. In conclusion, I say that on previous occasions I have indicated that under the former Government tax evasion and avoidance in Australia reached the level of $7,000m every year, which represented something like $30 a week that the ordinary Australian household had to pay in tax in order to compensate for that. I indicated as well that this Government had a very clear mandate to lift out of the taxation system all those rorts and all those ramps which have distorted it and which have allowed people to abuse it. While there may be an attempt on the part of members of the Opposition to frustrate us, let me assure them that we have a mandate. The Australian people want the taxation system cleaned up. They want it applied fairly and with equity and we intend to do precisely that. Mr McGAURAN(Gippsland)(4.41) —There is an air of unreality pervading not just this chamber but also, I suspect, all of Canberra. It may be that many listeners to this debate will immediately think that that is nothing unusual, but those who have listened to debates or who have visited this place in the last two weeks when the Opposition was unrelentingly putting a number of questions to either the Treasurer (Mr Keating), or the Prime Minister (Mr Hawke), or both, will know exactly what I mean. At a time when the economy is suffering to such a degree that the Treasurer of the Government, the man with prime responsibility for its health, declares us to be nothing short of a banana republic, the introduction of a capital gains tax is economic lunacy. A consideration of the figures collated on private investment in this country, the exchange rate, the inflation rate, the balance of payments, foreign debt and interest rates will show that the Treasurer was perfectly correct to describe us as just short of, if not in actual fact, a banana republic. The Leader of the Opposition (Mr Howard) asked the Prime Minister, as late as Question Time today, whether he would permit a statement to be made to the Parliament on the state of the Australian economy. The Leader of the Opposition referred to a number of inflation figures which show up the serious position we are in. Australia has an inflation rate of 9.2 per cent; Japan, 1.1 per cent; the United States of America, 2.3 per cent; West Germany, 0.1 per cent; France, 3 per cent; and Italy, 7.7 per cent. Those comparisons are reflected also in interest rate figures. Our major trading partners have interest rates and inflation rates which are a mere fraction of our own. Yet the Prime Minister, in reply to that question, ruled out any possibility of a statement which would allow debate to take place on the basis that Australia has external problems but we have, to quote the Prime Minister, `a magnificent internal economy'. That is the same line that is pushed by the Treasurer ad nauseam, hence the unreality. Why is it not possible for the Treasurer, the Prime Minister and other members of the Government to circulate in the community amongst those who have the responsibility for generating wealth so that they know what state our economy is in? The reason we have external problems is related not just to world market trends but also to the decline in competitiveness because of our high internal cost pressures. At a time such as this, when our balance of payments shows that by 30 June 1986 we will be some $14 billion in deficit, we find the Government imposing further disincentives and tearing away initiative for the private sector. All I can say is: Will the last businessman leaving Australia lock the door? if he has the time he can pat the dog as well. The simple fact is that this Government is on a course with its entertainment taxes, its fringe benefits taxes, its capital gains taxes, its negative gearing, and its abolition of the quarantining of farm losses, which will lead to a further drying up of the wealth creating sector on which so many of the jobs and the growth and the export earnings of this country are so dependent. The Prime Minister announced some months ago that, in drawing up changes to the taxation system he would base it upon fairness, simplicity and certainty. When any, let alone all, of those criteria is applied to the fringe benefits tax or this capital gains tax it makes a mockery of his claims for reform. There are more questions that cannot be answered about this capital gains tax than there are questions that can be answered. There is certainly no incentive for a person to set up his own business because the goodwill will not have an indexed cost base. The Australian Democrats have made much of the fact that they are alleged to have won a major concession from the Government, in that 20 per cent of the goodwill component of the sale of a small business below $1m will not be taxed. Firstly, the Act does not define goodwill. We know that goodwill is commonly taken as being the residual of what is paid over and above tangible business assets. But there are differences in goodwill between different industries. For example, the goodwill component of service industries is both calculated differently and is different in size from that of, say, the manufacturing industries. The first problem is defining goodwill. The second problem is: How does the Government arrive at this magical figure of 20 per cent? Why do we not have a 50 per cent exemption for goodwill? It simply does not make sense but if the track record of the Democrats is anything to go by, anything involving them does not seem to make to much sense at the best of time. The Democrats have supported the fringe benefits tax. The Opposition is committed to repealing the fringe benefits tax. The Democrats supported the capital gains tax. The Opposition is committed to repealing the capital gains tax. Let all listening to this debate understand that the Opposition unreservedly commits itself to repealing these two iniquitous taxes. The Democrats simply have no credibility whatsoever, if they had any to start with. There are so many important technical questions to be posed in relation to this taxation. Let us look at proposed new section 160m, sub-section (8) of the legislation. That proposed new section provides that a person leaving Australia is deemed to have sold certain assets when leaving. That will force persons who otherwise might maintain ownership of Australian assets to sell them just to pay the tax. What is the logic of that? Section 160y provides the classic disincentive for people to leave assets to charities. As if the fringe benefits tax will not be a sufficient burden for charities, we now have charities being disadvantaged under the capital gains tax. That proposed new section provides that the deceased is deemed to have disposed of the assets at the time of death, thus the estate will bear a liability to capital gains tax. That will surely prove to be a disincentive to persons leaving legacies to charities. I am worried also about proposed new section 160zzu because of the onerous record keeping requirements. It is very much like the fringe benefits tax. We create a whole new administrative burden for the private sector. Looking at proposed new section 160zh, I find that the legislation is inconsistent because that provision does not tee up with proposed new section 160za. Let me explain. In calculating the cost base, all holding costs should be taken into account. In the case of negatively gearing assets, the holding cost will be deducted but it is not relevant where, for example, land is not income-producing. Further questions are posed by proposed new section 160l, sub-section (3), sub-section (4) and sub-section (5), which should also exclude from the legislation depreciated assets where an amount has been assessed to a taxpayer pursuant to some other provision, such as section 59 of the Income Tax Assessment Act. I am reluctant to continue to pursue these technical aspects of the legislation as obviously they require very detailed consideration. The fact is that this highlights the lack of time given not just to members of this place but also, outside this chamber, to accountants, tax agents, lawyers and small business people to understand properly the legislation. It was introduced into the Parliament by the Treasurer late on Thursday of last week. It is complex, detailed legislation which was introduced together with five other pieces of legislation, all of which had to be carefully considered. We find, going through it, that we simply have not had time to consider the interrelationship of these specific provisions with existing provisions under the whole welter of the Income Tax Assessment Act. Let us have a look at the legislation as it applies to a trust. It is clearly wrong, because any distribution by a trustee to a beneficiary is deemed to be a disposition at market value, thereby attracting tax under proposed new section 160ZX. This will cause assets to remain in trust and not be distributed to beneficiaries. Proposed new section 160ZYA will give rise to double taxation. I find proposed new Division 16 unsatisfactory, because it must include annuities. Furthermore, rollovers are allowed for com- panies so why are they not allowed for trusts? I am also concerned about proposed new section 160ZZO, because distributions of assets in specie, if the consistent line of tax authorities be adhered to, should enjoy the same relief as a transfer to a wholly owned company. That makes a mockery of the Government's claim that this legislation is certain and clear. It is not clear, it is not certain; and the Government stands condemned for introducing it in a slap-dash manner which does not allow proper and careful consideration of all the complex provisions. It is the philosophy behind the capital gains tax, leaving aside its technical components, which worries the Opposition more than anything else, because the capital gains tax will act as a dampener on the private sector at a time when the dependence of this country on the wealth generated by the private sector has never been greater. We learn from Australian Bureau of Statistics figures that half the Australian adult population receives either a government pension or a government salary. It is not about attacking pensioners or public servants willy-nilly, but we must acknowledge and we need to understand that half the Australian adult population depends on the Government. Governments do not create wealth; they distribute wealth. Of the other half of the Australian adult population, 60 per cent are unionised. So, one can immediately see that the wealth-creating sector, those who provide the initiative, who take the risks and who invest in capital, are a shrinking minority and have a heavier burden than ever before to carry. We need to understand that if we are going to put in place in this country the incentives necessary to ensure the growth of that sector. This taxation simply defeats that purpose. In any event, what will be gained from this tax? In France, in 1983 the capital gains tax revenue as a percentage of total tax revenue amounted to 0.04 per cent; in Italy in 1983, 0.9 per cent; in the United Kingdom in 1983, 0.7 per cent; in the USA in the same year, 2 per cent; and no figures are available for Canada, Germany and Japan because they are such small amounts. We are imposing a terrible disincentive on the private sector for no real gain whatever, except perhaps a growth in the number of officials to be employed in the Department of the Treasury. There are a number of hidden traps within the capital gains tax, which my colleagues in the Opposition highlighted in the debate this morning and which they will continue to highlight. It saddens me that there are not as many people outraged by the capital gains tax as there are in regard to the fringe benefits tax, mostly because the Government in a devious manner has hidden true effects by declaring that capital gains taxes will not be paid on assets owned prior to 19 September 1985. However, there are hidden traps. For example, a farm which is realised by family members will be taxed, and so will a family house sold by beneficiaries under a will. Capital improvements on a farm that was acquired prior to 19 September 1985 will be subject to capital gains tax, presuming that if this is left to the discretion of the Commissioner the Australian Taxation Office can evaluate what those capital improvements were that did not exist prior to 19 September 1985. It is a dark day for Australia. This measure, in line with the other tax imposts brought about by this Government, will do more than anything else to destroy incentive in this country. The Treasurer himself has declared it a banana republic. The Government is delving into the realms of the ridiculous if it thinks that it can reverse the downward trend by taxing the living daylights out of small business, farmers, the manufacturing sector and our export industries. The Government has much to answer for in the levels of poverty, the failure of young people to be able to purchase their own houses and the youth and adult unemployment rates. As long as the Government adheres to this policy of heavy taxation, together with an ever expanding public sector, we will find that the Treasurer's prophecy will be fulfilled. That worries every member of the Opposition. Every member of the Opposition is opposed to this capital gains tax. We will repeal it on returning to government, as we will the fringe benefits tax. Australia will suffer until the time comes when we are able to adhere to that commitment. Mr MARTIN(Macarthur)(4.56) —It is always a great pleasure to follow the honourable member for Gippsland (Mr McGauran), because I truly believe that he is earnest in the points of view that he puts across. He goes to some very technical arguments and I am sure that the Government will answer those in good time. However, I feel that the honourable member has missed that main point in relation to the introduction of these pieces of tax legislation over the past couple of days. For example, he talked about the philosophy as to why these tax Bills should be introduced. Quite clearly we on this side of the House believe-and I think unfortunately for him he will find that even some of his most ardent constituents will agree with this-that people perceive that over the years there have been too many rorts in the tax system and that some people have not been prepared to pay their fair share. I think that even the honourable member would agree that we are talking about trying to make the system far more equitable, to ensure that everybody pays his fair share. That is a philosophy that we on this side of the House truly embrace. We are not in the business of protecting the tax evaders and the tax avoiders. We no longer wish to see the massive millions and billions of dollars being lost to this country through the hindrance to the ability of this Government to collect those taxes because of the variety of schemes that have been put forward on paper and, or course the bottom of the harbour tax schemes, and so on. The Government has gone to the people and has been returned with a mandate for tax reform. I indicate to honourable members opposite that they should look to the results of considerations that the Government has given to the introduction of this taxation reform proposal. If they go back to September last year. When details of the reform of the Australian taxation system were tabled and debated at great length and the various parts of the taxation reform proposals were spelled out in great detail, the honourable member for Gippsland and other honourable members opposite would be able to clearly understand what this Government is endeavouring to do. Another point that the honourable member for Gippsland made was that this legislation was dumped on us-all honourable members collectively-that there was no time for consideration. The same whinge was put forward yesterday by the honourable member for Mackellar (Mr Carlton), the Opposition Treasury spokesman. All I can say to that is that it is absolute nonsense, because here it is-here is the document that says how it is going to be done. Honourable members opposite did not need the intricate pieces of legislation to get to the basis of it. Mr McGauran —Of course you do. It's like a travel brochure. Mr MARTIN —I also point out to the honourable member for Gippsland that back in October 1985 a guide was put out explaining the new capital gains tax and it clearly indicates those points of interest to which the Australian public would like to refer themselves. It goes to the very issues that the honourable member, for one, talked about and said were no longer relevant and that people really had to be frightened about. What nonsense that is. It is the same old tactic; it is the `money under the bed' sort of scare tactics that are being put to the people of Australia, trying to influence them to believe that the Government is doing terrible things, whereas in fact it is a moderate capital gains tax that we are talking about here. It is not horrendous, it is a moderate capital gains tax that is going to get people to pay their fair share. Of course, honourable members opposite subscribe to the view that the pay as you earn taxpayers are the poor blokes who are going to have to pay that for ever and a day, that those whom they represent-the rorters, the evaders and the avoiders-are the ones who should continue to gain protection, that various other schemes should be put forward so they can walk around the system. It has always been the way for honourable members opposite to take that view. We on this side of the House absolutely and totally reject that point of view. Some concern was expressed about those in the business community and what effect the tax measures, particularly the capital gains tax, might have on them. It is quite interesting to see what is happening to the business community at this point in time. The all ordinaries index, as recorded each day in the financial papers, throws up some very interesting statistics. When I was talking yesterday to the Minister for Local Government and Administrative Services (Mr Uren) he reminded me that at the time this Government came to office in March 1983 the all ordinaries index stood at 723. Yesterday, the index stood in excess of 1,200. That is an indication of how business sees the policies of this Government. Business people see a government giving clear direction to business, not giving disincentive, as was being argued by the honourable member for Gippsland (Mr McGauran). We are talking about making the system fairer so that taxpayers can reasonably expect every member of society to pay his fair share and therefore contribute to the continued growth of the economy. I recall that last year when these tax proposals were first floated and the document on the reform of the Australian tax system was published honourable members opposite immediately jumped on the bandwagon, saying: `Repeal the lot. No way in the world will we accept these proposals. We will take the tax cuts. We will accept the goodies but we will not have any of the nasties needed to recoup the money needed to give tax cuts'. I think that the effect on the business community is important as well. We are talking about capital gains tax on the business community and those people who make capital. We are not talking about imposing a capital gains tax on people who do not make capital. It would be absurd to suggest that that might be the case. What people have failed to recognise, however, is that businessmen have hardly acknowledged the fact that in the main they are the ones who will benefit from the massive tax cuts that this Government will pass on. We are talking about those same people who are being represented by honourable members opposite and who are whingeing about the terrible impost of a capital gains tax. They will be the recipients of the biggest slice of the tax rebates that will result from the tax cuts that this Government is to introduce. It is quite interesting that in the Sydney Morning Herald of Wednesday, 25 September last year-just after the publication of the taxation proposals of this Government-there appeared a very good article written by Mr Ross Gittins under the heading `Business whingeing errs on side of exaggeration'. I thought that was an excellent article. I would like to take some of the time remaining to me to quote a couple parts from that article. Ross Gittins was talking about businessmen whingeing about paying tax. He said: We all hate paying tax, but what gets me is the way businessmen never admit to a concern for their own pockets. We have the old hip pocket nerve reaction all the time from those people. The article continued: Their complaints are invariably couched in terms of concern for what the tax changes will do to others: employees, customers, renters, the economy. It is the same line that the agrarian socialists on the other side were pushing here this afternoon. The issue is never about making a quid; it is always about initiative and enterprise. I have a rule that whenever I hear a businessman rabbiting on about the disincentive to enterprise I ask myself: What lurk has this bloke been working? Does that say it? I think it does. I think it says it exactly. I think it says it 100 per cent. Quite clearly this capital gains tax before us today will make the system much fairer, for a number of simple reasons. Those reasons are spelled out clearly in the major features of the tax. It will apply only to gains on assets acquired on or after 20 September 1985. Assets acquired before that are exempt. That is it-full stop. When an asset which is exempt because it was acquired before 20 September 1985 is disposed of, the new owner will be assessed for capital gains the next time that asset changes hands. That is all. The family home or farm house and a reasonable amount of surrounding land will be exempt. What is the whinge about that? Honourable members opposite will find one. Also exempt will be the capital gains on motor vehicles of any value and on personal use items sold for less than $5,000. Again, what is the whinge about that? I cannot think of one. Capital losses in money terms will be able to be offset against capital gains. There will be an indexation for the inflation rate. Where is the harm in that? I cannot see any harm in that. What is the point of the continual whinge from honourable members opposite and those representing business interests who say that this will severely affect business. They say it will result in a big downturn in business. It is just not on. Of course, the tax also will definitely not apply when assets are transferred at death. That was one of the biggest complaints being levelled by honourable members opposite this afternoon. They are not here now. Where are the agrarian socialists who were arguing that the big factor was the transfer of their farms and so on after death. They have gone. They have disappeared from the place. Obviously they do not have the courage of their convictions. The capital gains tax is one of the most significant parts of the tax reform package that this Government has introduced over the last couple of days and, in fact, over the last couple of weeks. It has been put together carefully. It has been thought through carefully. It is aimed at meeting the commitment and the need of the general taxpayers of this economy to have a fair system instituted. We are not in the business of protecting the tax avoiders and the tax evaders. We are in the business of collecting a fair share of tax so that those receipts can then be disbursed for all the important things that this Government needs to do. I refer to the important social programs and the other economic programs that this Government is pursuing. That cannot be done without the necessary fund raising. As the Treasurer has suggested, this tax and the other taxes we have dealt with in the last couple of weeks are revenue neutral because we are passing that revenue on in the form of tax cuts. Is that fair or is that fair? This package of Bills is excellent. I commend the Bills to the House. I am only sorry that people such as Sir Joh Bjelke-Petersen and other high flyers out there such as Bob Ansett are going around bagging this tax and every other tax. In this morning's Sydney Morning Herald Sir Joh Bjelke-Petersen is quoted as saying `We won't pay', that there will be a High Court challenge and so on. He is saying that the tax is criminal. I can tell honourable members that I know what is criminal-and it is not these taxes. Mr HOWARD(Bennelong-Leader of the Opposition)(5.08) —I would like to make a very brief contribution to this debate on the Income Tax Assessment Amendment (Capital Gains) Bill 1986 and the Income Tax (Rates) Amendment (Capital Gains) Bill 1986 and to respond to some of the furphies put around by the Government concerning the nature of the Opposition's position on these measures and also to say something about reform of the Australian taxation system. I think that two things ought to be said at the outset. Firstly, what is now before the Parliament does not represent the original tax package that the Treasurer (Mr Keating) and the Government wanted. I can recall saying after the National Taxation Summit last year that at the end of the day all we would be left with would be the nasties of option A. Basically, that is what is now in front of the Parliament. Everyone knows that the Treasurer wanted to change the Australian taxation system to one with a greater reliance on indirect tax. Everyone knows that at the end of the day the Prime Minister (Mr Hawke) got together with the Australian Council of Trade Unions and dumped the Treasurer on that issue and made a deal which ultimately produced the nasties of option A. The second great canard regarding this whole issue is that the revenue from the fringe benefits tax, the capital gains tax and the foreign tax credit system and all the other measures imposing new taxes is needed to finance the cuts in personal income tax which are to be given. The honourable member for Macarthur (Mr Martin), who has just finished speaking, used that argument throughout his speech. I want to remind the House that in the second year, if the Government keeps its word about the tax cuts, something like 70 per cent or more-indeed, close to 80 per cent-of the revenue that will be needed to finance those tax cuts will not come from the measure now before the Parliament but will come from that old friend fiscal drag. In other words, all that the Government is doing is giving back to Australian taxpayers the additional moneys being ripped off them by the present inordinately high inflation rate. Whenever members of the House hear a Government speaker say that by opposing the capital gains tax, the fringe benefits tax, or the foreign tax credits system the Opposition is being hypocritical in not opposing personal tax cuts, my reply is simply to throw in that speaker's face the fact that basically tax cuts are financed out of the automatic increase in tax collections arising from the impact of the high rate of inflation on our progressive taxation system under this Treasurer (Mr Keating). Therefore, I immediately put to one side this proposition that we are in some way being hypocritical in taking that attitude, because all the Government is doing is handing back to the Australian public the additional tax that it has taken from them through the impact of inflation on a progressive taxation system. The Government talks a great deal about fairness and morality in the Australian taxation system. I think that it goes without saying that we would all, ideally speaking, like to see a fair tax system where everybody pays their fair share of taxation. That was certainly my view when in government, and it will be the view of the future Government. That is why the former Government was the one that smashed the tax avoidance industry in this country. It is interesting that there has been virtually no tax avoidance legislation introduced by the present Treasurer. The reason he has not introduced any tax avoidance legislation is that all tax avoidance of substance in the 1970s was destroyed by legislation that I introduced as Treasurer. I will match my record in smashing the tax avoidance industry in this country with the record of any Treasurer, present or past, because it was our legislation, particularly new Part IVa, that did more to annihilate the tax avoidance industry than any other measure taken by any other Treasurer in Australian history. The other general comment that has to be made is that one can talk until blue in the face about perks, lurks and tax avoidance, but until the Government does something about the cash economy it will not cripple tax evasion in Australia because the real tax evasion in Australia now is in the cash economy. The Government will not do anything about it, it has done nothing about it in this package, and I swear that it will not do anything about it for the rest of the 18 months or so that it is in government. Any person who knows the first thing about the Australian taxation system knows that the real rip-offs now go on in the cash economy and, while this Government depends increasingly in its taxation system on personal taxation as a source of revenue, it will fall more and more behind in the fight against the cash economy. The Opposition opposes this capital gains tax measure. We have said repeatedly that we will repeal it when we are elected to government. As recently as a week ago-no, I do him an injustice; it was as recently as two days ago-the Treasurer came into this Parliament and said that Australia is a capital scarce country. For once he was right-Australia is a capital scarce country. What is this Government's solution to the fact that Australia is capital scarce? It introduced more taxes to make capital even scarcer. This is an extraordinary situation; the Government has a problem with capital scarcity; so what does it do? It decides to impose a new tax which will make people even less likely to invest. This Government will impose a capital gains tax and a fringe benefits tax. What is wrong with a capital gains tax is not only its actual impact but also its psychological impact, because capital gains taxes will psychologically act against capital accumulation by small business in Australia. I think that the thing we need more than anything else in this country is more people taking more risks more of the time. One of the ways to stop that stone dead is to introduce a capital gains tax. Honourable members opposite can present me with all the arguments in the world about the alleged fairness of a capital gains tax, but I simply point to the fact that an additional penalty placed on capital accumulation, no matter how many qualifications there are at the end of the day, will discourage the accumulation of capital. I cannot think of anything that more grievously runs against the medium and long term interests of this country than to impose a tax that discourages people from saving. It is a madness, when there is a terrible shortage of domestic savings in Australia, to be imposing a tax that actually discourages people from saving. The fringe benefits tax has been paraded by the Treasurer as a great exercise in fiscal morality. He says that it is a tax to clobber all of the perks in the Australian taxation system. I do not deny that there are abuses in the area of fringe benefits and, in saying on behalf of the coalition that existing legislation will be thrown out, I want to make it quite clear that there are alternative ways of tackling abuses in the fringe benefits area and that they will be tackled by the Opposition when we come into Government. I do not want anybody to get the impression-- Mr Fitzgibbon —But what about the-- Mr HOWARD —The honourable member will have plenty of opportunity, because during the election campaign in the seat of Hunter, which I am visiting at the weekend, we will have great delight in ramming that right down the honourable member's throat. He will be one of the great oncers of this Parliament and is on my hit list. The honourable member is on my hit list in large letters and, boy, are we going to have fun. The honourable member for Hunter seeks to interject again, but one thing that was remarkable about today was that, as the decibel rating of the response of the Prime Minister (Mr Hawke) to my question during Question Time rose, so the psychological quietude of the people behind him became more and more evident. If ever there were a glum lot of back benchers and oncers, they were sitting right behind the Prime Minister today. They know some lousy national accounts when they see them, even if the Treasurer does not. They know exactly the sorts of political difficulties that they are facing. What is unfortunate is that honourable members opposite do not realise that in imposing these new taxes they will make the present situation worse. How on earth can they justify, at a time when business is not investing-and everybody agrees on this; we have rare unanimity of opinion on the fact that the business community is not investing; the ACTU says it, the Government says it, and the business community says it- Dr Harry Edwards —Simon says it. Mr HOWARD —Yes, and Simon says it. I say it-we all say it. What is the Governments response to that? We know what is the Government's response-`This is outrageous. We will make it even harder and less attractive for the business community to invest'. Mr Hand —What about-- Mr HOWARD —The honourable member can seek to interject and talk about profit share, but I say again that the real measure of the business investment climate is not profit share but the after-tax rate of return on investment. Until the Government improves that, it will not get the business community to invest. All of these measures will make the after-tax rate of return on investment lower. That is the fundamental economic reason why the Opposition is opposed to these Bills. It is worth recalling, of course, as I know everybody does, that famous promise-and let me repeat it so that even members of the Government will understand and so that there can be no doubt about it-made during the 1983 election campaign: `There will be no capital gains tax'. Of course, that promise was made by none other than the present Prime Minister of Australia. He is the man one can trust! There was something else that he said at about the same time, which was an absolute purler. Honourable members know what he said during 1983 and Gerry should listen to this because privately Gerry Hand, the honourable member for Melbourne, does not mind somebody having a go at Bob-he really quite enjoys it. Do honourable members know what our present Prime Minister said during the 1983 election campaign? He said: `You know, the Australian Public has had enough of those politicians that dispose of their promises as soon as they get into government.' Of course, the psychology of this Government on tax promises was borne out eloquently by the Treasurer when he was asked about the attitude he had taken on a capital gains tax when he was addressing the mates at the New South Wales Australian Labor Party Conference. The language he then used about a capital gains tax, when playing to a different constituency, and before he was Treasurer, was that a capital gains tax was absolute anathema to him because it hit hard at middle Australia. He happened to have that right. When he was asked about that after he became Treasurer and a capital gains tax was in the breeze, he said: `What you say when you're in Opposition, at party conferences, is for the purpose of getting into government. It doesn't really count once you get in'. I say to the Treasurer and the Prime Minister that everything they said in order to get into government will count. It will be counted against them by all the Australian people. But, apart from counting against them, it will count against Government back benchers because they are in the electoral firing line. It is all right for the Treasurer. A 25 per cent swing would be needed to remove him from his seat of Blaxland. He is okay. I do not think the swing will be that big. I do not think there are quite enough small businesses in Blaxland to lap up to his electorate shores. But Government back benchers are in very big trouble. Well may they sit here during this debate. This tax package is being rammed through this Parliament-so much so that the Taxation Institute of Australia wrote to the Prime Minister three days ago-obligingly, I have been provided with a copy of the letter-in the following terms: The Taxation Institute of Australia, representing some 9,000 lawyers and accountants practising in the taxation field, deplores your Government's proposal to guillotine the taxation bills through the House of Representatives today and tomorrow. But it get even better-- It has taken the Government almost a year since the Taxation Summit to bring down the bills in relation to capital gains tax and foreign tax credits. . . . Why is the Australian public being denied the opportunity for informed debate on the actual legislation effecting the most significant tax changes this country has seen. Yet the legislation is being guillotined over a couple of days. It shows the absolute contempt that the Government has. I make it perfectly clear that the Opposition is opposed to these measures. I remind the House that, in regard to the tax cuts that we may receive, I notice that the Prime Minister has provided a `Dear Don letter. He has written to Senator Chipp, the Leader of the Australian Democrats, in these terms: `I promise you-and I am happy to provide it in writing-that we will introduce the personal tax cuts not later than 1 December'. I think the Australian public will believe that when those personal tax cuts arrive. What they ought to remember when those personal taxation cuts arrive-if they do arrive-is that they are not the result, in the main, of the measures now before the Parliament and they are not the result of any taxation reform; they are the result of the Government handing back to the Australian taxpayer money that it has ripped off the taxpayer through the operation of inflation on a progressive taxation system. Mr Uren —Tell us what you did about the tax cuts after the 1977 election. Mr HOWARD —Do not let any Government member, Minister or the Treasurer get away with any kind of argument about that. Mr Uren —Come on; tell us this: What did you do after the 1977 election? Mr HOWARD —Of course, one of the other measures that we have before us ought to interest the Prime Minister. He has waxed lyrical-- Mr Uren —You took them back. You promised them with the one hand and took them back with the other. Mr DEPUTY SPEAKER(Mr Rocher) —Order! The Minister will be silent. Mr HOWARD —I do not mind. He helps; he is terrific. I would like Gorky Square to join in, too. The Prime Minister has waxed lyrical over the last few days-he did it in Parliament today-about the burgeoning relationship between Australia and China, Australia and Japan and Australia and South East Asia. Yet he is proposing to introduce a foreign tax credits system, the immediate impact of which will be to discourage investment by Australian companies in South East Asia. The foreign tax credit system will have no other result than to make it less attractive for Australian companies to invest in South East Asia. Even one of the Government back benchers is nodding his approval of what I am saying. I thought about having a foreign tax credit system when I was Treasurer. I announced it; I put it forward as a proposal and, as a result of the representations I received from the Australian business community, I did not go ahead with it. I am glad I did not go ahead with it because it would have been a mistake. I think it is a great mistake that this Government is going ahead with it. I listened to what the Australian business community had to say on that occasion. I think it is a great shame for the future of this country's investment in South East Asia that the Government is going ahead with this stupid foreign tax credit system. I say again that the Opposition believes that it defies description for the Government to introduce these measures at a time when business investment is depressed and the figures and falling down into the ground in front of the Government's eyes. All of the hype and all of the bold talk about the state of the economy has been demonstrated to have been false and misleading. This week we have seen the most depressing investment figures imaginable. We have seen a set of national accounts that show that the economy has been contracting for the past two quarters and the 7 per cent growth that the Treasurer boasted about has now become 1.4 per cent. The domestic economy-the alleged jewel in the Treasurer's crown-is contracting and, ironically, the export sector has made a positive contribution over the last six months. At a time like this, when what we need more than anything else is a better climate for business investment, the Government is imposing new taxes that will discourage business investment. They will not bring greater fairness to the tax system. What is fair about some of the impacts of the fringe benefits tax? What is fair about a tax that will impose, for the first time ever in Australia, a liability on a local church congregation to pay a tax in relation to private occupancy of the clergyman's residence? I say to the House that the advice that the Treasurer is giving in this Parliament is different from the advice the Australian Taxation Office is giving to people who are ringing up the Tax Office. I have had representations from clergymen in my electorate who have been told that a portion of the occupancy of a residence by a clergyman will be taxable in the hands of the provider of that residence. I defy the Treasurer to disown that statement. Government members glibly say that charities, non-profit bodies, are exempt. They do not address the charge I make. I challenge the Treasurer to disprove that that is its impact under the existing legislation. I think that is a mark that this is not a perks tax; it is a nark's tax. Mr HAND(Melbourne)(5.28) —I notice that Opposition members are leaving the chamber. I want to say something about Gorky Square. At least I do not harbour quislings and people whose performances during the last world war were questionable, as does the New South Wales branch of the Liberal Party. The previous speaker, the Leader of the Opposition (Mr Howard)-the former Treasurer of this country-talked about what he would do in terms of tax relief when he is returned to office. We all remember what he did on the last occasion that he was in office. In 1977, he promised tax cuts, gave them, got re-elected and took them away from the people of Australia. I think his record of tax reform is well known to everybody in Australia. So when he talks about what he intends to do when he is returned-if ever; and I doubt if he ever will be-to the treasury bench, I think people will dismiss him with the 16 per cent support that he currently receives throughout Australia. It is interesting to note that the honourable member for Denison (Mr Hodgman) is present. He is Mr Two per cent. He put out a Press release to the effect that he speaks for 197,361 Australians, according to a 1986 gallup poll. If one multiplies that figure by eight, one can calculate the number of people who support the Leader of the Opposition. I think that the message that the honourable member for Denison is trying to put across in his Press release is that he is gaining rapidly on the current Leader of the Opposition. I think that it will not be difficult for him to do that. Inclusion of a capital gains tax is an intrinsic and essential element in the Government's tax reform package on the grounds of equity, fairness, efficiency and the striking out of avoidance. Indeed, the capital gains tax proposal represents one of the more important in-principle innovations of the tax measures we are introducing. Principles of equity and fairness do not rank highly among members of the Opposition, particularly the ones who are leaving the chamber at the moment, so it is not surprising that they have gone into a state of quasi-hysteria over this proposal. I would have thought that their fetish for efficiency and neutrality would have been so powerful that it would override even their strong antipathy for creating a fairer tax system. Quite frankly, I find the attitude of those few honourable members opposite who have remained to be extraordinary and hypocritical. I note that I am now getting pressured and harassed by one of them. Mr DEPUTY SPEAKER(Mr Rocher) —Order! The honourable member for Denison will resume his correct seat. Mr HAND —Thank you, Mr Deputy Speaker. It is a bad practice for an honourable member to engage in that sort of activity in this chamber. Honourable members opposite say that they will not support this tax. This tax will remove a distortion in the operation of the capital market. I thought neutral outcomes and free markets were what they espoused in their political philosophy. Again, it just goes to show that the Australian people cannot believe what the Opposition says. The equity argument is understood by just about everybody else involved in the tax debate, except perhaps the speculators and the tax rip-off merchants, whom those opposite condone and support. Yesterday, before the honourable member for O'Connor (Mr Tuckey), was turfed out on his ear, he spoke about the tax issues. I said to him, and I will say again to members of the Opposition, that they allowed the greatest rip-off ever of this nation through their lack of activity in the tax collection area. They did nothing about it. When we attempted to recoup the bottom of the harbour money to pass it on to the pensioners of this country, they would not allow us. Honourable members opposite should not come into this House and talk about how they feel, how they are hurt and upset about tax reforms. They allowed the economy of this country to be torn to pieces by people engaged in ripping off the tax system. So the credibility of the Opposition is absolutely zilch. Mr Hodgman —That is not true. Mr HAND —It is 2 per cent lower than the popularity of the honourable member. That is the credibility of the Opposition in the taxation area-nothing. The principle of horizontal equity is abused since people who obtain some or all of their income from capital gains receive extremely favourable tax treatment. The principle of vertical equity is also abused. It is primarily the wealthier section of the community who own capital assets. These are the people whom those opposite are trying desperately to support. What the White Paper said and what the Government understands is that the omission of a general capital gains tax has not just facilitated tax avoidance activities; it has been at the very heart of the problem in this country. As the tax base became smaller a greater and greater burden fell on ordinary wage and salary earners, who simply did not have the means to do anything but pay their fair share of taxation. As it turned out, they paid a part of the tax share that should have been picked up by other people. What we are on about in the proposals in the package of Bills that have been debated over the last two days is to make everybody pay a fair share of the cake-no more, no less. That is what this Government is attempting to do. For too long in this country the pay as you earn taxpayer has carried on his or her back the burden of keeping the finances of this nation going. When honourable members opposite were in government they attempted to let people off paying their fair share. Now they are in Opposition they are trying to generate a state of hysteria in the community over the taxation changes. All those changes attempt to do is to bring about a fairer system. Peter Groenewegan, Professor of Economics at the University of Sydney, noted in his assessment of the tax package: The general efficiency and equity case for capital gains taxation is well known and the screams of the Opposition on the present exceedingly mild proposal can only be interpreted as a rejection of economic rationality. So much for the economic rationality of the economic rationalists within the coalition's ranks! I now wish to turn in some detail to the effects of this tax on investment. As I said earlier, the lack of a general capital gains tax has had a very disturbing impact on investment decisions. The Treasurer (Mr Keating) stated in his second reading speech that it had produced an inappropriate pattern of investment, preventing Australia from achieving the best possible economic growth rate. This distortion is something with which I would have thought the Opposition would concern itself, but apparently not. To return to the issue, the concession to capital gains has served to produce an extremely conservative pattern of savings and investment totally unsuited to the capital requirements of a dynamic and growing economy. Rather, it has encouraged savings to be put into speculative activities such as property. In this respect I think it is important to note that in the five years to 1984 just over 40 per cent of investment by the household sector went into property. To a certain extent this form of investment has been influenced by taxation considerations. Capital is a scarce commodity. If tax policy steers capital into the development of office buildings, Gold Coast apartments, flats and so on, there will be less capital for other users or other users will have to pay more. If we were looking for candidates to subsidise, I would have thought rental housing and competitive manufacturing would have been preferable to some of those activities. The responses from those who stand to lose have been predictable.They say that investment will drop, the bottom will fall out of the property market, and so on. These arguments, like the arguments of those who have gone overboard on the fringe benefits tax issue, have no substance. Predictions were made by the Opposition that up to 80,000 jobs in the entertainment industry would be dispensed with when the fringe benefits tax was introduced. Nothing could be further from the truth. There is a shortage of people in that industry. There is a shortage of chefs. There is a shortage of `waitpersons', as Ross Gittins calls them. We cannot get enough people to work in the entertainment industry. So the arguments have proved to be untrue and the scare tactics and the demonstration at the front of Parliament House have proved to be unnecessary. I am skipping massive pages in my speech in trying to make just half of it. On the assessment and comparison of capital gains tax, so far much of the heat surrounding the capital gains tax proposal appears to have been dissipated by the fringe benefits tax debate. Those who worked themselves up into a senseless, mindless frenzy over that tax proposal have perhaps worn themselves out. That is obvious from the number of honourable members opposite who have not bothered to come in to hear this debate. They are probably just resting for the last bout, when we will undoubtedly hear the same wild allegations and exaggerations about the impact of this tax on ordinary people. Fringe benefits and capital gains taxes are connected because they are both seen as nasties-not to be confused with those members of the New South Wales coalition parties who are known as the uglies-by the same self-interested people. They are also connected in a more fundamental way in that they are both base-broadening measures. As such they are integral to the establishment of a comprehensive income tax base and a fairer tax system. In this light, I was extremely pleased to read an unemotional presentation of the fringe benefits tax debacle by Ross Gittins in yesterday's Sydney Morning Herald in an article that I suggest honourable members opposite should take time to read. I make the point that this is a very mild tax. I was therefore astonished, to say the least, to read Peter Costigan's story in last Friday's Melbourne Herald. I was going to quote from that article, but again I suggest that those people who still read the Melbourne Herald should read that article, because it contains an exaggeration of the facts. The facts in the article are quite clearly not supported. Mr Deputy Speaker, I checked with the honourable member for Tangney (Mr Shack) and I now ask the House for leave to have incorporated in Hansard a table on how other countries tax capital gains. Leave granted. The table read as follows- Table 1 HOW OTHER COUNTRIES TAX CAPITAL GAINS Canada France Japan USA Britain West Germany 1. Are capital gains subject to tax on: (a) short-term property... Yes Yes Yes Yes Yes Yes (b) long-term property... Yes Yes Yes Yes Yes Yes Holding period for long-term property classification (years)... Same 2 *5 1 Same *0.5 2. Individuals' maximum rates (a) Income... 54% 65% 75% 50% 60% 56% (b) short-term gains... 27% 65% 75% 50% 30% 56% (c) long-term gains... 27% ** 37.5% 20% 30% 0% Special exemption limits for individuals... None FF6,000 Y500,000 None 5,500 None 3. Companies minimum rates (a) income... 52% 50% 45% 50% 50% 47% (b) short-term gains... 26% 50% 45% 50% 30% 47% (c) long-term gains... 26% 15% 22.5% 28% 20% 47% 4. Are unrealised capital gains accrued prior to the introduction of the capital gains tax exempt?... Yes (1972) Yes (?) Yes (1953) n.a. Yes (1965) n.a. 5. Are capital gains adjusted for inflation... No Yes No No No No 6. Are holding costs such as interest on borrowed fund deductible against the capital gains profit? (Note 1)... No No No No No No 7. Do provisions exist for the deferral of tax where the gain is reinvested?... Yes No Yes Yes Yes Yes 8. Is the family home unconditionally exempt from capital gains tax?... Yes Yes No No Yes Yes 9. Are long-term capital losses deductible against: (a) Income... No*** No Yes No No Yes (b) capital gains (Note 2)... Yes Yes Yes Yes Yes Yes 10. Are capital gains deemed to arise on death... Yes No Yes No No No * Distinction between long-term and short-term property for individuals only ** Taxed as income but rate of tax is that applicable to the first 20 per cent of the gain (after adjusting for inflation) *** Individuals may deduct C$2000 of capital losses from other income each year. Note 1: In some cases interest may be deductible against taxable income Note 2: In some cases capital losses on personal property are not deductible though the capital profits on such property are taxable. Source: `Is there Life After a Capital Gains Tax?' Personal Investment, December 1984. Mr HAND —Time has just about run out. I will conclude by going through a couple of points. The tax package we have introduced recently into this Parliament is about redistribution of the wealth in this country. Under honourable members opposite the distribution of wealth resulted in the burden falling on the backs of working men and women because they had to pay their tax every week, and it was deducted from their pay. The Opposition when in government allowed tax rip-offs of huge proportions. It did nothing about them. A while ago the Leader of the Opposition came into this Parliament and referred to what he would do when he becomes the Treasurer. I make the point again that when he was the Treasurer the system was ripped off as it had never been ripped off before. I am getting wind up signals from all around the chamber, but I want to say this: I believe that Australians will not trust the Opposition with the Treasury benches of this country, if for no other reason simply because of its performance in the distribution of wealth and administration of the tax system of this country. Mr REITH(Flinders)(5.41) —The Income Tax Assessment Amendment (Capital Gains) Bill which is being rammed through the House, along with the Income Tax (Rates) Amendment (Capital Gains) Bill, under a guillotine today legislates for two things-a broken promise and a new tax. We heard the Leader of the Opposition (Mr Howard) today recount that promise that was made in 1983, and I will repeat it because I believe it needs repeating and we certainly intend to ram it down the throats of Government members. In the 1983 election campaign the Prime Minister (Mr Hawke) said: There will be no capital gains tax. This legislation also introduces a new tax. Neither broken promises nor new taxes are new to this Government. In fact, breaking promises is its full-time occupation. This Government told us that there would be no death tax and of course that is included in the proposal before us today. This Government told us that interest rates would come down. What has happened? They have gone up. In the South Australian State election campaign this Government told the electorate that the ceiling on home loan interest rates would be maintained. As soon as the election was over the Government lifted that ceiling, as predicted by the Leader of the Opposition. This Government told us that inflation would come down to around 5 per cent. What has happened? Inflation is going up and currently it is at 9.2 per cent. If ever there was a case of Whitlam revisited, this is it. Many people in the electorate will remember the massive inflation of the Whitlam years. This Government promised us 10,000 youth traineeships. We have just heard the honourable member for Melbourne (Mr Hand) make a speech in the House. One of the promises of any Labor government is a monopoly on compassion for the homeless in our community, yet that very same member a few months ago in his capacity as the President of the ALP in Victoria told us that under Labor homelessness was on the increase. This Government told us that one of its hallmarks would be honesty and propriety, yet as soon as a senior Minister breached the line as defined by the Prime Minister, the Government rewrote the rule book. This Government went into the last election promising pensioners that their pensions would reach 25 per cent of average weekly earnings. We have not heard much more about that since then. This Government recently promised tax cuts on 1 September. Those have gone out the window and the Government is now talking about 1 December. On the basis of our experience of this Government I think we should take the attitude that we will believe it when we see it. New taxes are an everyday event for this Government. It rammed a fringe benefits tax through this House only a few days ago. It has introduced an entertainment tax and it claims that no one has lost his or her job as a result. I can assure honourable members that jobs have been lost in my electorate as a result of that tax. The superannuation tax was another recent addition to this Government's taxes. Petrol taxes have been going up virtually every day. There is no doubt that this is the biggest spending, biggest taxing and biggest deficit-creating government that we have ever had in this country. The Government talks about figures. Under Labor tax revenue is up 6.2 per cent a year in real terms. What a comparison with the 2.8 per cent of the Fraser years. The average annual increase in real tax revenue per person is 5.9 per cent under this Government; under the Fraser Government it was a mere 1.2 per cent. If people do not wish to accept the views of a member of the Opposition perhaps they would be more convinced by Eric Risstrom's comments in Melbourne yesterday. He said: Most Australians face a tax increase and not a cut, even if the promised tax changes are delivered in September. Mr Risstrom said that people earning between $18,000 and $28,000 a year were in the firing line for higher tax, with the typical married man being $3.50 a week worse off. He also said that next year millions of people would pay more in tax, partly because incomes would be higher due to inflation. He then said: Income tax next year will bite deeper into every dollar earned by 90 per cent of Australians-and even more will be taken if the promised September tax cuts are deferred or watered down. In those circumstances it is no wonder that we have a burgeoning tax revolt in this country. That revolt is not just by people who can afford to put advertisements in the Australian, but also by the man in the street. I had a letter yesterday from a man who I have known personally for a number of years-I do not know him terribly well, but we are acquainted. He wrote a letter to the Treasurer (Mr Keating) which I shall quote. He said: My wife and I shall not be paying any of these projected taxes. We have decided to retire as from 28 June. At the same time our income will be reduced substantially so you will also lose in income tax. For many years we have conducted a successful and progressive business. Apart from our personal success we feel that we have added to the common wealth-- a dirty word in Labor circles-- through taxation, community service, employment of local youth, raising a family (which is now itself productive) and those many other things that we ordinary hard-working people do. Because of your intended impositions (along with superannuation, etc.) we are to withdraw our capital and our experience and live on our past efforts even though we are young enough and competent enough to contribute for many more years. You have wasted us. That is the end of the letter from my constituent. If that is not an indication of the ramifications of the Government's tax net I do not know what is. Honourable members should have no doubt that that tax net is widening. The Pony Club Association of Victoria contacted me a couple of weeks ago. It has received a letter from the Commissioner of Taxation which is hard to believe because it is a voluntary, non-profit, youth organisation. That letter asked the association to put in a taxation return if its income exceeded $416 a year. I find that absolutely unbelievable. Not only are we getting more taxes on a daily basis, but also find that the Government is pulling in the net and bringing in sporting clubs. It is not just pony clubs that are affected. Other sporting clubs such as those involved in carting, aerobatics, motor sports, polo, power boats and rodeos-to name a few-are also affected. This latest tax package follows the 1984 election campaign when the Prime Minister, without a tax policy, announced that he would conduct a summit. He asked us basically for a blank cheque. All I can say is that he has been filling in that cheque ever since. Government Ministers went off to the National Taxation Summit-the Summit at which the Treasurer claimed that if he could not get his consumption tax through it was not worth his while being in politics. It was on for young and old. Everybody came to Canberra for a big talkfest. But of course the whole deal was settled one night in a dusty, murky motel room where the Prime Minister got his riding instructions from Kelty and Crean, who said: `Listen Bob, consumption tax is no good but we quite like the anti-business tax. Here are your riding instructions, get stuck into business'. Is it a good idea to proceed with these anti-business taxes? Perhaps there would be no better person to ask than the Treasurer. Perhaps we should ask him how things are going in the economy, whether things are good or not so good. Recently he spoke to John Laws on the radio in Sydney. He said: The problems are more intractable as it is our fourth year of office. That is great, is it not? The Government has been in office four years and things are getting worse. That is a contradiction of what he has been saying during the last three and a bit years. Talking about the prices of commodities, the Treasurer said: That's a fact of life now-it's got nothing to do with the Government. Ah! Pontius Pilate-nothing to do with the Government. At least he has stopped blaming us, which is something. Then he said that, given certain conditions: The prognosis is . . . to close the economy down. That is pretty encouraging! He continued: If we don't do anything then you have gone, you are a banana republic. He contradicted himself because one minute he said it was all the fault of somebody overseas and the next minute he recognised that the Government had to do something or Australia would become a banana republic. Thus the ball is in the Government's court, and what does it do? It brings in another tax to discourage investment. If that is not schizophrenia, I do not know what is. The Treasurer's speech, in introducing this Bill, indicated more of that schizoprenic attitude. He talked about smashing the basis of tax avoidance, yet there are many arguments that tax avoidance will not be found in the capitalisation of assets. He says the tax will make investment patterns more appropriate and fairer. All I can say is that the way this country is going there are not going to be any investment decisions to make at all. The national accounts figures are out today. I do not want to go too much into figures, but one would think that in the national accounts generally things would be up 1, 2 or 3 per cent. Gross fixed capital expenditure for the last quarter is down-not up-2.7 per cent. The figure for the last 12 months is minus 2.3 per cent. The fact is that we are going backwards. One of my other concerns about the capital gains tax proposal is that it is just the thin end of the wedge. Let me say, in the context of whether investment patterns are appropriate, that I do not think there is any doubt about what most people are going to do. If they have any spare cash, they are not going to put into some productive enterprise. They are going to add on to the family home. I think that is just obvious. It is all very well for the Government to talk about productive enterprises. Those with capital will simply whack it into their home. The same sort of thing happened in regard to the assets test; millionaires continue to receive the pension. This proposal attacks incentive. There is no point in taking a risk if one is going to be taxed by government. There is no point in building up goodwill or making capital improvements. Australia is a young country. We need to be attracting capital to create wealth and jobs. Contrary to what the Government is telling us, the level of unemployment unfortunately is higher now than it was for all but five of the 86 months of the Fraser Government. Of course, youth unemployment has been nothing but on the climb. I want to conclude by saying a couple of things about what we are going to do. I think it is fair enough when we attack a piece of legislation like this and give a commitment to vote against it and repeal it-which is what we are going to do-to point out what we are going to do. I want to mention very briefly a couple of things that we are going to do. Firstly, we have to cut back government expenditure. There is just no point in moving the chairs on the Titanic. Secondly, we want to support families. We are talking about income tax, and we are very strong on income tax splitting and rebates for child care. We have to stop this silly business of a superannuation scheme based on 3 per cent of earnings which will give more power to the trade unions. We have to start to create in this country an investment climate which will encourage people to take a risk. The other thing we are going to do is cut back the power of the unions. What remarkable hypocrisy it is for the Treasurer and Mr Crean to go to next week's summit and say that the trade unions have done their bit for the economy-that is pretty questionable-and it is now the turn of business to increase investment when yesterday Mr Crean led and encouraged a national strike and today we are debating the Treasurer's capital gains tax. We are going to vote against this tax and when we get back into government we will throw it out. Mr LEE(Dobell)(5.53) —The misinformation and hysteria which the Liberal and National parties have sought to fan in recent weeks in the tax debate is, I believe, clear proof of the hypocrisy and lack of principles of the conservative parties in Australia. I think this debate really reached its nadir this afternoon when the Leader of the Opposition, the honourable member for Bennelong (Mr Howard), came into this chamber and quoted the current Prime Minister (Mr Hawke). He sought to use that quotation to make fun of the Prime Minister. I would like to throw this quotation back in the face of the Leader of the Opposition. In 1983 the Prime Minister said that the Australian public had had enough of politicians who disposed of tax promises once they were elected to office. The man to whom the Prime Minister was referring is the current Leader of the Opposition. That honourable gentlemen demonstrates complete hypocrisy when he seeks to attack us for breaking promises on taxation, when the history of his term as Treasurer from 1978 to 1983 is simply a litany of broken promises. We all remember the famous fistful of dollars advertisements in the 1977 election. At the first opportunity after the election the honourable member for Bennelong (Mr Howard), as Treasurer, withdrew the fistful of dollars tax cuts. Not only did he do that but he imposed a 1.5 per cent temporary tax surcharge. Do honourable members remember? It was supposed to be a temporary 12-months tax surcharge. Of course, in the following Budget he broke that promise as well because it was decided by the Fraser Cabinet that the temporary income tax surcharge would continue. We all remember his promises on full tax indexation. In his first Budget he broke that promise and applied only 50 per cent tax indexation. In his second Budget he totally wiped indexation of the income tax scales. So if the Australian community wishes to make a decision about which side of the House is better at breaking promises on taxation, the Leader of the Opposition would win hands down. Mr Scholes —That is the only thing he will win. Mr LEE —It is the only thing he will win, as the Minister for Territories suggests. This legislation simply seeks to establish a mild capital gains tax and finally to put it on the statute books. Despite the claims made by the Opposition, Australia is one of the few remaining members of the Organisation for Economic Co-operation and Development which does not have a capital gains tax. In fact, as the honourable member for Isaacs (Mr Charles) pointed out, the United States of America, perhaps the bastion of free enterprise, has had a capital gains tax since 1913. The honourable member for Mackellar (Mr Carlton) has sought to suggest that the capital gains tax will, to use his phrase, stifle incentive. He suggested that it was anti-entrepreneurial and would destroy small businesses and farms. He was supported in this by many honourable members opposite. I put this simple question to him: Why has incentive not been stifled in the United States, which has had a capital gains tax since 1913? Why has entrepreneurial initiative not been destroyed in the United States? Why do businesses and farms still exist in the United States-which, I repeat, has had a capital gains tax since 1913? Mr Donald Cameron —They are not ripped off in other ways. Mr LEE —Even in Australia, under section 25 (a) and section 26aaa of the Income Tax Assessment Act, we already have a capital gains tax on short term capital gains. If the honourable member for Moreton (Mr Donald Cameron) buys shares on the stock exchange and sells them within a year he has to pay capital gains tax under the existing legislation. Mr Donald Cameron —Fair enough. Mr LEE —The honourable member interjects that that is fair enough. The simple question I put to him is: If he sells his shares a year and a day after buying them, why should he be exempt from capital gains tax? I believe that there is an excellent argument for having a capital gains tax on short term and long term investments. The honourable member for Mackellar also suggested that the capital gains tax would hurt the businessman who works for less than award wages in order to build up his business and obtains a capital gain when he sells it. I am sure that every wage and salary earner in my electorate and most wage and salary earners in Australia would love to have a scheme whereby they could avoid paying tax on part of their income which they could collect as a tax free lump sum superannuation payment when they decided to change their employment. That is an option which those small businessmen have under the current loopholes-an option which the ordinary wage and salary earners do not have. I think it is very important for us to realise which groups within the community will be paying the capital gains tax. I seek leave to incorporate in Hansard a simple table contained in the Government's White Paper on taxation which explains the position in Canada. Leave granted. The table read as follows- Grade of taxable income assessed Returns including capital gains as a percentage of all returns filed Net taxable capital gains as a percentage of all capital gains Net taxable capital gains as a percentage of total income assessed $ % % % Loss and nil... 0.5 1.2 n.a. 1-4,999... 1.2 0.8 0.3 5,000-9,999... 3.0 4.2 0.5 10,000-14,999... 4.0 4.3 0.3 15,000-19,999... 5.3 3.9 0.3 20,000-29,999... 7.3 8.6 0.3 30,000-49,999... 14.9 15.9 0.8 50,000-99,999... 33.5 19.3 2.5 100,000-149,999... 51.2 9.6 5.5 150,000 and over... 61.9 32.3 14.6 Total... 5.6 100.0 1.0 Source: Revenue Canada, Taxation 1983 Taxation Statistics Mr LEE —I thank the House. That table demonstrates that a very small proportion of the income of people earning less than $50,000 a year comes from assessable capital gain-in fact, less than 0.5 per cent. The figure for people earning from $50,000 is 2.5 per cent; for those earning from $100,000 to $150,000 it is 5 1/2 per cent; and for people in the top bracket earning over $150,000 it is more than 15 per cent. So we can see, as we would expect, that those in the highest income brackets are making the largest amounts in capital gains. Therefore, if we continue to have a loophole in our tax legislation whereby capital gains are not assessed and are not taxable, the people who gain the greatest benefit will be the people in the top income brackets. The honourable member for Deakin (Mr Beale) sought to suggest that the capital gains tax would affect the private residential rental market. An interesting article which I came across in the Brisbane Sunday Mail of 1 December 1985 stated: Capital gains and other tax changes will benefit the property market, a Brisbane investment consultant said yesterday. This view, a heresy in real estate circles, comes from investment consultant, financial columnist and real estate agent Mr Noel Whittaker, who said: `Capital gains is not the problem-ignorance is.' But Mr Whittaker agreed that the tax changes could dampen some of the more frenetic property booms seen in the past. `I never thought such booms were a good thing,' he said. `A few sharks make some money and a lot of little people get burnt.' The Opposition is seeking to protect the sharks who get involved in speculation and make big profits. The honourable member for Deakin suggested that the capital gains tax would destabilise the private residential rental market. If anything will destabilise the housing industry it is the Opposition's proposal to abolish grants under the first home owners scheme. I am outraged that the shadow spokesman on housing, the honourable member for Deakin, has not backed away from his proposal to abolish grants under the first home owners scheme which, more than anything, inject vitality and investment in the housing market. The Opposition's proposal to abolish the first home owners scheme will do more to damage the private residential rental market than any proposal to impose a capital gains tax. In fact, the absence of a capital gains tax is distorting Australia's investment market. Investment decisions are not made today as to what yield will be returned to the business; those decisions are often governed by the ratio of the return which will be in the form of a tax-free capital gain and how much of the return will be assessable income. We all recall that under the stewardship of the honourable member for Bennelong tax avoidance and evasion was Australia's fastest growing industry in the Fraser years. As the honourable member for Charlton (Mr Robert Brown) said earlier today, the tax avoidance industry was costing ordinary Australian taxpayers almost $7 billion in lost revenue, which worked out at about $30 a week for the average household. Mr Martin —Amazing! Mr LEE —That is amazing, as the honourable member for Macarthur suggests. The honourable member for Bennelong had to be dragged kicking and screaming into this chamber to take action against the rorts and ramps exposed by the McCabe-Lafranchi report, which the honourable member for Bennelong sought to dismiss as a stunt. The mild capital gains tax which the Labor Party is proposing in this legislation has many exemptions which I commend to the House. The principal residence, the family home, and reasonable curtilage for farmers are totally exempt from capital gains tax, as are all assets which were purchased before the statement of the Treasurer (Mr Keating) on taxation on 18 September 1985. In addition, capital gains tax will be payable only when that capital gain is realised; that is, when the asset is sold. In addition, the Treasurer has agreed to average any assessable capital gain over five years, which again provides a concession to those who will be affected; that small proportion of the population who will have to pay the capital gains tax. It is interesting to compare the Government's mild measures with the Opposition's proposals as outlined by its spokesman on taxation and finance, Senator Messner. I quote from an interview Senator Messner gave to the Australian Financial Review on 8 October 1985, in relation to the capital gains tax legislation, when he said: . . . as long as the law was modified, possibly to merely have specific time limits on sale of assets for capital gains, such as the existing Section 26aaa, would sufficiently serve the purpose of a capital gains tax on speculative profits. This Government is exempting the family home and is reducing the capital gain as it is affected by inflation and the tax is payable only when the asset is realised, whereas the Opposition's proposal, as outlined by Senator Messner, is to hit capital gains at the full marginal rate. The Opposition's proposal does not wash out the effect of inflation. The proposal of the Liberal Party of Australia is punitive and would affect a much larger number of Australians. I am sure that it is something that everyone on this side of the House rejects out of hand. I join with other Labor members in congratulating the Treasurer on introducing Australia's capital gains tax legislation. Mr DONALD CAMERON(Moreton)(6.05) —I might give the honourable member for Dobell (Mr Lee) a lesson or two, because he does not understand even the existing taxation laws. The Commissioner of Taxation can declare as a trader a person who sells assets after one year. That person could be paying capital gains tax, and that has been the case for years. The honourable member does not understand even the elementaries of the tax laws, yet he has come in here lecturing us and telling us how marvellous for Australia are the Income Tax Assessment Amendment (Capital Gains) Bill and the Income Tax (Rates) Amendment (Capital Gains) Bill. We have listened to speeches and politics of inspired hate from honourable members on the other side of the House. The legislation is continually justified by references to people being tax cheats and dodgers. Government members are shaking their heads in agreement. Many little people, honest Australian citizens, will be caught up by this legislation. They have been deeply offended, not only by the rhetoric of Government members but also by this legislation. Since the Labor Government has been in power we have seen the attack on the superannuation of elderly people. They were supposed to be cheats and they had to be rounded up! Then we saw the attack on elderly people with the assets test. People who spent their lives working, instead of putting their money through the urinals in the hotels, were suddenly described as cheats who had to be rounded up and lose their pensions. That was the second group. The fringe benefits tax will affect those salesmen who spend all day driving around the towns and cities of this country in vehicles which are not air-conditioned, trying to sell products to make a living and to keep their companies functioning. Suddenly, they have become branded as tax dodgers and cheats because they have a vehicle which they take home at night. That philosophy of the Government has been spelt out very clearly week after week, even going back to the time of the National Taxation Summit almost a year ago. That rhetoric of hate is justified on the grounds that we are moving in to crush the cheats. I refer to the second reading speech of the Treasurer (Mr Keating), when, in justifying this tax, he said: It will make the tax system much fairer by smashing the basis of much of the rampant tax avoidance that occurred under our predecessors. Do honourable members know what the take will be on this tax? In the first year it will be $5m and in five years time it will be $25m. Government members would spend that in five minutes, yet tax avoidance is supposed to be rampant and the people out there are supposed to be cheats. The Government will collect at best only $25m in five years time, so it cannot have been very rampant; there cannot have been many people ripping off the system, as Government members have claimed in attempting to justify the legislation. The Tax Summit was opened by the Prime Minister (Mr Hawke) in this very chamber on 1 July last year. What a charade that was. The Summit could not come to any final agreement. As the honourable member for Flinders (Mr Reith) said, the decision was finally made in a pub in Canberra by Bob Hawke, Bill Kelty and Simon Crean, probably sitting over orange juice and a couple of beers. All the talk that had gone on in this chamber for days went down the drain because the key deciding factor was what the Australian Council of Trade Unions thought. It was the power broker at this Summit and all those dumb businessmen, who came in here thinking they were going to the rescue of the nation, who were duped. They are the people whose companies, as a result of the reforms in this legislation, have had the gizzards ripped out of them. These companies are struggling to survive and make good under the approach of the Australian Labor Party in government. The most prophetic words at that Summit were the words of the Prime Minister's introductory speech, when he said: I have stressed the role of this Summit as part of a democratic process uniquely Australian. It was unique-four or five days later it was all settled in the pub with Kelty and Crean. It was uniquely Australia all right, and so prophetic were his words at that time. I want to turn to the nine points that were espoused by the Prime Minister at that time as being so important in bringing about tax reform in this country. His fourth point stated: . . . any reform must lead to a simpler system, which therefore all Australians can understand more easily . . . When the Tax summit started in Canberra last year there were 1,100 pages of tax laws in this country. People have been complaining for years about the thickness of the tax laws and how few Australians have an opportunity to understand them. Here we have the great white hope, the Prime Minister, who said a couple of years earlier: `There will be no capital gains tax.' He said that we must have a simpler system. Ladies and gentlemen of Australia, what this Government's legislation has done in the last few weeks is to add another 625 pages to the tax laws of this country. It has taken us 86 years to gather 1,100 pages of tax law and in six months the Hawke Government, which is promising to simplify the system, adds another 625 pages, which is a 57 per cent increase in one ruthless, senseless swipe. The entertainment tax Bill consists of 55 pages, the fringe benefits tax Bill 139 pages, the capital gains tax Bill 103 pages, and nine other tax Bills another 328 pages. The only people who will make a good living in this country in future will be the lawyers and the accountants because every Australian, even the little battler out there, will need an accountant to fill in an S form with the introduction of the fringe benefits tax and all these other taxes. No wonder the Australian Taxation Office has abandoned wanting to check everyone's return and it wants everyone to assess themselves. It will not take responsibility for it. The Commissioner of Taxation has shed his responsibility; he cannot get out of it quickly enough. He wants to put more people out there, chasing the little people to see whether he can rip a little more out of their pockets. Whilst I am mentioning Mr Boucher, the Commissioner of Taxation, might I say that I have never seen a Taxation Commissioner bringing so much missionary zeal to his job as he has done. I refer to the letter he sent out with the fringe benefits tax booklet which was really pre-empting the Australian Parliament because the legislation has not even gone through the Senate. Mr T. P. Boucher-God help my tax returns from now on-sent out these booklets. I believe that $3m of Australian taxpayers' money was spent in sending out that booklet with his little letter. The second last paragraph of that letter states: The Fringe Benefits Tax is an integral part of the Government's tax reform package, the overall aim of which is to cut personal marginal income tax rates and finance other benefits for the Australian community. What a political line that is! Mr O'Keefe —Hear, hear! Mr DONALD CAMERON —The honourable member would say `Hear, hear'; he is a Labor man. I am wondering what Trevor Boucher is, too, when he indulges in politics of this type. He is trying to tell people out there that taxes are good for them. Australians have had a gutful of taxes; they have had a gutful of this Government's tax reform. One thing that the Australian Labor Party did not even put on the agenda at that Tax Summit was the question of how government can get out of spending. Year in, year out, governments in this country go further and further into people's pockets. When I came to this place 20 years ago, in 1967, the first Budget that I saw introduced by the Holt Government amounted to less than $7 billion. Today, 20 years later, governments are spending about $80 billion and all that money has come from only one place-the pockets of the Australian taxpayer. The plea out in the community is for the Government to stop thinking that it knows best how to spend people's money, to leave the money in people's pockets and let them look after themselves. They do not want handouts and they do not want charity. All they want is a lucky break. They want the monkey to get off their backs and leave them alone. I really believe with all my heart that those few words epitomise the feelings of so many Australians. They want this Government to leave them alone. They do not mind paying tax but they object to the level of tax they are expected to pay. I draw the attention of the House to the words I uttered in this place on 21 November last year, when this Government was first mooting the tax cuts it was going to give. These were my words: I believe that, as an Opposition, we should reject the whole package-- meaning the taxes-- because I do not believe the Government will be able to sustain all the promised goodies that it offered to off-balance the nasties. I do not think that the Government has the ability or the financial resources to do so. I was predicting then what has happened right now. The Treasurer (Mr Keating) spends more time in the Australian Democrats den than he does in his own office, trying to get them to allow him to put off the reduction of the marginal tax rates for as long as possible because he cannot balance the books. This Government is desperate to keep the tax rates as high as it can for as long as it can. Unfortunately, I have been allocated only ten minutes in which to speak and I will abide by the agreement between the Opposition and the Government. I just hope that Mr Boucher has learnt how the Parliament functions. He should wait for legislation to go through before he starts telling people that they had better send in forms. I hope that every Australian business person tore up that form he sent out because their first real obligation on the fringe benefits tax will be towards the end of October. I cannot wait for us to get back into government to get rid of these iniquitous taxes. Government members are destroying incentive in Australia. Let me mention for the benefit of the Minister for Territories (Mr Scholes) the little shopkeeper he goes to at 11 o'clock at night, who has been open since 6 o'clock in the morning selling sausages, cigarettes, milk and bread. His hourly rate of earnings for the 17 to 18 hours he has been open would be miniscule. He has been prepared to make sacrifices during those years he has been in the shop, believing that when he finally sells out he will get a sufficient increase in the value of the shop he bought years previously to have made it all worth while. Now this Government is going to put its hand into the ice cream bucket and take its share. It is going to destroy the incentive of the average Australian. Finally, I comment that a lot of people on the other side who have academic backgrounds and failed trade union backgrounds really do not understand what it is like to be out there battling. If we are going to put a tax on success, perhaps this country should be thinking about introducing a tax on those who have permanency in occupation. It is worth thousands of dollars to know that one has gone into a job that one will have until one retires and that one will never be sacked from it. But nobody ever thinks of that. The politics and the hymns of hate are directed at those who work their guts out just to try to make an honest quid. Mr O'KEEFE(Burke)(6.18) —Having just listened to the honourable member for Moreton (Mr Donald Cameron) for 10 minutes, let me say that that speech personified the reason why this Parliament is spending the time it is on reforming the tax system. We listened for 10 to 12 minutes to platitudes and slogans-nothing of substance. We heard 2,000 words of emotive junk. The reason why we have come into office and we are reforming the tax system is that from the period 1975 to 1983 the previous government allowed the tax system to get into the mess it did. It did nothing to give the Commissioner of Taxation any chance whatsoever. It encouraged the tax avoidance industry and let it prosper. Honourable members opposite should sit there with shame on their faces as we undertake the hardest task that any Australian government has had to undertake since the Second World War-cleaning up the mess the previous Government left. Today we are debating the Income Tax Assessment Amendment (Capital Gains) Bill. I want to touch on something that is a constant theme in the rhetoric of most honourable members opposite. I must say that the honourable member for Flinders (Mr Reith) at least was reasonable in his approach to this. Honourable members opposite have constantly referred to-- Mr Reith —The kiss of death. Mr O'KEEFE —At least the honourable member for Flinders has been honest. It is the kiss of death over there, my friend. At least he has treated this continuing claim about the broken promise of the Prime Minister (Mr Hawke) honestly because he referred to the National Taxation Summit. Before this Government was elected to office in March 1983 the Prime Minister said that there would be no capital gains tax, and during the term of office of that Government there was no capital gains tax. Every time one of the honourable member's troops goes out and makes that claim it is yet another piece of emotional junk being peddled. In the lead up to the November 1984 election the Prime Minister said very clearly to the people of Australia that tax reform would become the main priority of the Government. This Government got a very clear mandate to set about tax reform, and that is what we have done. We have been prepared to take the hard decisions. We have been prepared to consult the people of Australia in that process, and honourable members opposite know that. In terms of the extent of the capital gains tax, as many members from this side of the House have clearly and succinctly put forward in the debate so far today, the capital gains tax adds a key element of fairness. It is a mild tax which is intended to direct investment in Australia towards more productive enterprise and more productive sources than those which members opposite encouraged during their time in office. At an investment seminar that I attended in my electorate a few weeks ago many key speakers talked particularly about investment in the building industry and referred to the capital gains tax as being both fair and mild. One of those speakers was in fact Mr Eric Risstrom from the Taxpayers Association of Australia, who pointed out quite clearly the facts about this tax-the fact that it is mild and fair and that it is not a problem in any way to genuine bona fide investors. I shall come back to that issue a bit later. Of course honourable members opposite have used the opportunity provided by this debate to wander off on to another key element of the tax reform package, namely, the fringe benefits tax. Nothing could put the position more clearly than a cartoon that was featured in the Australian Financial Review yesterday. It shows the Treasurer (Mr Keating) speaking to the Leader of the Democrats (Senator Chipp) about his constant meanderings on tax reform and pointing to some captains of industry-the people that honourable members opposite represent. This cartoon says it better than a thousand words. Mr Keating says to Mr Chipp: `Will you keep those bastards honest?'. He is pointing to leading business people, with their slogan: `We won't pay tax-never have and never will'. That is the position adopted by the people that honourable members opposite represent, those who were encouraged and fostered not to pay tax and to opt out of the system; that is, that they will not pay tax, that they never have and never will. I can assure honourable members opposite that, because we are in office and because we are fair dinkum, from now on they will. During this process of tax reform we have seen every single interest group come out and bleat. In Victoria today we saw the Municipal Association of Victoria, the body that represents the senior executives in local government, come out and say, with yet another piece of bleating, that the tax will add $2.2m to the annual rates bill in Victoria which ratepayers will pay. All I have to say about that is that, if the MAV had decided to put a little more expertise and concentration into running its investment fund instead of having that go down the gurgler at significant cost to many of the councils that subscribe to it, ratepayers in Victoria would not have some of the problems that have been referred to. That is the sort of thing with which we have to deal in this attempt to reintroduce a fair system in Australia. Let us consider the position of those honourable members opposite-honest John's crew-who were pledged to give credit where credit was due. Every single step that this Government has taken to produce a fairer system has produced a response of emotional junk and scare tactics. When the assets test was introduced the scream to pensioners was: `Put your money in a tin and hide it under the bed'. What a disgraceful claim to make. Members opposite scared every pensioner in Australia. Of course, the 97 per cent of pensioners whose pensions were not affected now know that they were subjected to an emotional scare tactic by members of the Opposition. In relation to the superannuation lump sum measure, members opposite let every worker in Australia believe-in fact they actively peddled this proposition-that every worker in Australia would have a third or more of his superannuation lump sum taken from him. Of course, now those people know that that was just rubbish. In relation to the rural situation, members opposite have been out there talking up the rural depression to the point where now farmers who are leaving the land cannot get a bidder on their land because all those who hive off these sorts of situations are sitting back waiting for the price to fall lower so that they can make a bigger killing at the expense of small farmers who have difficulties. The banks have added a loading to lending to farmers as a result of honourable members opposite being out there continually talking up this stuff. Let us consider the restaurant tax. Every restaurant in Australia was going to close down, apparently, and thousands of jobs were going to be lost. What is the situation now? In fact, there has been a growth in the restaurant industry. That is a further example of this emotional junk. The more honourable members opposite peddle this emotional junk, the more they are being exposed out there in Australia as being simply part of a rabble Opposition who will simply oppose things for the sake of doing so. Today I met a small business proprietor who believed that for his two company cars he would have to pay a fringe benefits tax of $8,000. He told me that that is what one of the Liberals told him. When we had sat down and done the sums and I had shown him exactly the way it would work it worked out that the amount involved would be $1,500. So there we go. I have no problems with that at all. If members opposite were smart, if they were not so out of touch, they would have seen the results of the survey published in yesterday's Australian Financial Review, clearly stating that the majority of Australians favour the introduction of the tax; they believe it is going to cut out abuses of the system, that it will help reduce tax avoidance-that honourable members opposite prospered-and that it will enable them to get a reduction in their PAYE tax rates and a better take home pay. I conclude by saying this: The Government, in bringing down this tax package, has confronted head on the issue of tax reform and we have been willing to consult the people of Australia. We have been willing to consider seriously and responsibly the issues involved. Mr N.A. Brown —You are committing suicide. Mr O'KEEFE —The Deputy Leader of the Opposition interjects and says that we are committing suicide. That is a clear indication of what the position was of honourable members opposite-no guts and no willingness to go out there and to say to people: `Hey, this is the deal, this is how it is being ripped off'. They had no guts whatsoever, were not prepared to provide any leadership, and ran away from any hard decisions. We have been willing to take hard decisions. They are essential to securing the future economic well being of the nation. They are essential if we are to recover respect and integrity for the tax system, and if all Australians are to be treated with fairness and equity. The Government is confident that the people of Australia will recognise that these measures have been introduced in the best interests of the nation and for the greater good of every single Australian. Mr SHARP(Gilmore)(6.28) —In the two minutes that my long-winded colleagues have allowed me to speak tonight I want to express a few of my views in regard to the legislation that is before the House this evening, the Income Tax Assessment Amendment (Capital Gains) Bill and the Income Tax (Rates) Amendment (Capital Gains) Bill. The first thing I want to say is that I believe that the capital gains tax legislation stinks. It will not be, as honourable members opposite say, an unobtrusive and small tax. It will be a tax which will interfere with and affect every facet of Australian life. In fact, I shall quote from an article in the Australian Financial Review of 30 October last year. This contribution was written by Mr Kevin Burges, Chairman of the Taxation Committees of the Law Society of New South Wales and the Law Council of Australia, who in a nutshell says the very thing that I think will be the long term ramification of this new capital gains tax legislation. He said: The tax will be very hard on a person who starts up a business from virtually nothing and builds up to a significant enterprise. On disposal, he will pay tax on the whole of the goodwill component, as he would have no base cost to which the indexation adjustment can be applied. This discourages entrepreneurial effort at the very time it should be encouraged. If this is not the time when we need to encourage people who have incentive and motivation to help make this country a better and wealthier nation to live in, I will be damned. Sitting suspended from 6.30 to 8 p.m. Mr MILTON(La Trobe)(8.00) —In speaking in this debate in support of the Income Tax Assessment Amendment (Capital Gains) Bill 1986 I want to make clear that I welcome this legislation as being one of the means available to improve the social wage. As the Treasurer (Mr Keating) indicated in his second reading speech, the Bill represents a fundamental reform of the Australian taxation system which is aimed at destroying the immoral and virtually criminal tax avoidance schemes which were allowed to flourish under the previous Liberal-National Party Government. The tax avoiders are the friends of the Liberal and National parties, as must be quite evident to those people who have been listening to the speeches of Opposition members in support of their unscrupulous business friends and in condemnation of a tax which will strike at those who have disguised their income as capital and thus not paid their fair share of tax. It is possible to trace the enormous growth of tax avoidance from its early beginnings in 1975 to 1979 when the High Court of Australia found in favour of Westraders Pty Ltd and against the Commissioner of Taxation in a case of blatant tax avoidance involving dividend stripping. Justice Barwick in making his judgment in favour of the tax avoider, Westraders Pty Ltd, made the now infamous statement: Parliament having prescribed the circumstances which will attract tax, or provide occasion for its reduction or elimination, the citizen has every right to mould the transaction into which he is about to enter into a form which satisfies the requirements of the statute. In plain language His Honour said that if a potential taxpayer wanted to avoid tax he could legally do so. Above all else that statement invited ingenious tax accountants and solicitors to arrange the affairs of their business clients in a manner that would enable their clients to avoid their fair share of tax. Justice Barwick's judgment made no mention of the immorality of avoiding tax and he also discarded all suggestions that he should consider what the Parliament had intended when he stated: It is not for the court to mould or to attempt to mould the language of the statute so as to produce some results which it might be thought the Parliament may have intended to achieve, though not expressed in the actual language employed. It was from that date that tax avoidance became a legitimate and lucrative business in Australia, amounting during the final years of the Liberal-National Party Government, under the stewardship of the Leader of the Opposition, the honourable member for Bennelong (Mr Howard), to thousands of millions of dollars. While this tax rort was going on the bulk of wage and salary earners were not only paying their fair share of taxes but also having to make up the shortfall in taxes arising from the tax avoidance schemes of the unscrupulous business friends of honourable members on the opposite side of the House. Despite the ill-informed comments of honourable members opposite, surveys of taxation systems overseas make it quite clear that, in comparison, Australia is not a highly taxed nation. Let me emphasise that, whilst direct comparisons are misleading because of the contributing social security programs of other governments, nevertheless we are lightly taxed by international standards. Of the 23 member countries of the Organisation for Economic Co-operation and Development, Australia ranks somewhere near the bottom when its taxation revenue is compared with the total of its gross domestic product. In general, taxation is a method used by governments to use a proportion of the incomes of the more wealthy members of society for distribution in the form of benefits for the poorer and disadvantaged sections of that society. It is not unreasonable for governments to use taxation for such purposes when one takes into account the fact that the top one per cent of Australian adults hold around 25 per cent of private wealth; the top 5 per cent, above 50 per cent; and the top 10 per cent, more than 60 per cent. These figures are taken from a survey of the distribution of wealth in Australia by John Piggott of the Australian National University. That survey also indicated the complex problems involved in obtaining the necessary information and making valid analyses to arrive at the correct figures. It is also interesting to note that the survey proves the self evident fact that great wealth is associated with high income. The survey also showed that the inequality of wealth revealed between the top 10 per cent of wealth holders and other people in Australia is the same as existing in 1915. With conservative governments in office during most of this period it is not surprising that there has been no change. At this point in my speech it is relevant to quote from a statement made on 15 April by the Director the Australian Institute of Family Studies, Dr Don Edgar, in relation to a preliminary submission made to the Economic Planning Advisory Council. He said: Much of the discussion and many of the tax proposals made so far ignore the basic purpose of raising taxes in the first place. Taxes are raised to improve the quality of life, to ensure everyone has a basic share of the nation's resources and to provide services that neither individuals nor families on their own can provide. Yet our submission shows there has been a 54.4 per cent increase in the number of two-parent families below the poverty line and a 38.6 per cent increase of one-parent families below the poverty line between 1979 and 1982. Of course, this is a period when the Liberal and National parties were in power. He continued: This means an estimated 382,000 families, with three quarters of a million children, were living in poverty in 1982. The more unemployment figures rise, the more family breakdowns there are, the worse this will become. The two are linked and a better system of both raising tax revenue and distributing it to families in need must be found. The problem, as I see it, is that unless governments are prepared to reintroduce a form of estate duty or inheritance tax there will never be a substantial redistribution of wealth in this country. Nevertheless, the capital gains tax measures set out in the Bill are another important method of redistributing wealth. This Bill should signal to the High Court of Australia that the Government considers tax avoidance to be immoral and that when legislation makes clear the intention of a government which has been given a mandate by the people in an election to carry out tax reforms it is the duty of justices of the High Court to stop preaching about a free society, as was done in their 1979 decision, and to have regard to the intention and wishes of the majority of the Australian people. The existing so-called capital gains tax which is contained in certain provisions of the Income Tax Assessment Act 1936 has always suffered from a number of serious defects which the present Bill will overcome. One has to ask the question why an increase of wealth due to skill and effort should be treated differently because it is deemed to be of a capital nature rather than of a revenue nature. The difference between these two concepts is frequently difficult to establish in legal terms and mostly impossible to establish in economic terms. Dividend stripping tax avoidance arrangements and other such notorious schemes have shown that the lack of a capital gains tax has encouraged people to engage in transactions which do not lead to an increase in the resources of Australia but rather lead to a misallocation of those resources. Of course, as the Treasurer has pointed out, section 26aaa of the existing Income Tax Assessment Act will continue to apply a capital gains tax on assets bought and sold within 12 months. This is reasonable because it is obvious in such cases that the intention of the proprietors of the businesses concerned is to indulge in short term capital speculation for income purposes. It is unfortunate, however, that the present Bill will not be able to catch those people who have taken advantage of the lack of a capital gains tax on property bought before 19 September 1985. As I mentioned previously, the only way to introduce real equity in our taxation system is to introduce an inheritance tax which would catch the pre-19 September 1985 tax avoiders who took advantage of the ideological sympathy which the previous Treasurer, the present Leader of the Opposition, has for those Australians not willing to pay their fair share of taxes. Apart from ideological sympathies, from a purely economic point of view, the strident attacks we hear from honourable members opposite are hard to understand. A tax favoured treatment of capital gains causes distortion in those sectors of the economy which receive the greatest benefit from capital gains. The major beneficiaries include the real estate and minerals sectors of the economy. There is no doubt that the huge capital investments in real estate and mining ventures have caused a serious structural imbalance in our economy, particularly as the corollary has been a lack of investment in our manufacturing industry. The lack of a capital gains tax has also distorted the choice between different forms of business organisations such as partnerships, private companies, public companies and trusts. Financial decisions involving the pay-out decisions of companies have also been distorted. Some people gain and some people lose; obviously, the honourable member for Mayo (Mr Downer) is going to lose as a result of the ingenious systems of tax avoidance practised by the tax cheats. The bottom line is that Australian society as a whole stands to lose, and has lost very heavily over the past decade, as a result of the economically inefficient allocation of our resources which has occurred. Mr Downer —I rise on a point of order, Madam Speaker. I ask that the honourable member withdraw the imputation that I am in some way a tax cheat. Mr MILTON —I did not say anything about the honourable member being a tax cheat. I said that you were suffering at the hands of tax cheats. Madam SPEAKER —Order! The honourable member for La Trobe will speak through the Chair. Mr MILTON —I am sorry, Madam Speaker. Madam SPEAKER —Did the honourable member for La Trobe make any imputation against the honourable member for Mayo? Mr MILTON —I did not, Madam Speaker. Madam SPEAKER —There is no point of order. I call the honourable member for La Trobe. Mr MILTON —The importance of the present Bill in relation to our taxation system has been emphasised by the Treasurer, who has rightfully described it as an important fundamental reform of the Australian taxation system. Unless all the types of income from capital can be taxed in a comprehensive, consistent and uniform manner our income tax system can never be described as efficient and equitable. I compliment the Treasurer on this Bill and, indeed, on the other taxation Bills which he has introduced in this House during the past few weeks. I do not often have the opportunity to congratulate officers of Treasury as I frequently find myself in disagreement with them. However, on this occasion, in commending the Bill to the House, I congratulate all those public servants, both in the Treasurer's office and in Treasury, who have been involved in the preparation and explanation of the comprehensive and important package of tax Bills which have been presented to the House this month. Mr HAWKER(Wannon)(8.12) —In speaking to this iniquitous capital gains tax, I will begin by taking up a few points with the honourable member for La Trobe (Mr Milton). I think that we heard one of the typical diatribes that come from the other side of the House on the question of the politics of envy-we must try to cut people down and reduce everyone to the lowest common denominator, and if we cannot get them in that way we will get them another way. It is interesting to note that the honourable member talked of tax avoidance, but we hear nothing from him or his ilk about the problems of the cash economy. I have read that the size of the cash economy is approaching $30 billion. I wonder what the member for La Trobe will do about that. I wonder whether he is even concerned about it. He talks of tax avoidance, yet right before his eyes is the greatest form of tax avoidance in this country today-the cash economy. As I said, estimates show that it is approaching $30 billion, yet the honourable member remains remarkably silent when we talk about that matter. I hope that every person listening tonight took in very carefully his words about death duties. It is interesting to note that, as part of this politics of envy, we have Government spokesmen calling for the reintroduction of death duties. I would have thought Australians would have realised what a terrible thing death duties are, what terrible things they can do to people such as farmers, and what a wonderful decision it was of the previous Government in 1977 when, as part of its election policy, it promised their abolition. The honourable member for La Trobe ought to have a close listen to some of his colleagues in the Victorian State Government, because when the Premier, Mr Cain, decided that he might reintroduce some form of death duties he had to back down because the community will not accept them, and for very good reason. It might also be interesting to note some of the comments of the Minister for Primary Industry (Mr Kerin) when he was questioned about both capital gains taxes and death duties whilst in Horsham just prior to the last election. It is amazing how the Minister for Primary Industry can say one thing just before an election and after that election remain remarkably silent on the same issue. It is something that I guess we have got used to with this government. As many speakers on this side of the chamber have already reminded us, it was only back in 1983 when the Prime Minister made that wonderful statement-`Let us put it in a way that not even our opponents can misunderstand; there will be no capital gains tax'. We are now in 1986 and that announcement in relation to a capital gains tax was made less than three years ago. Therefore, had the first Hawke Government run its normal term it would have broken its promise in relation to that matter in its first term. I do not think that Government members can say that this is a new parliament and that, therefore, what was said in 1983 does not matter. The Minister for Primary Industry, when asked whether he would oppose a capital gains tax, an assets tax and death duties, if such issues arose in Cabinet, was reported as saying that he would oppose such measures in the strongest terms, that he had seen the effect of probate, that it split a farm and made it less viable, and that so, too, would a capital gains tax. I suggest that the honourable member for La Trobe should take on board some of those words, because, when the Minister for Primary Industry was saying that, it was not some cheap election gimmick; he was speaking from experience and saying what he believed. The honourable member for La Trobe overlooked the fact, when talking about reintroduction of death duties, capital taxes and wealth taxes, that Australia already has a wealth tax. Anybody who owns a bit of land pays rates on it on an annual basis, and those rates are nothing more than a wealth tax. Mr Milton —I didn't mention a wealth tax. Mr HAWKER —It is the same thing; it is tax on capital and something that the honourable member for La Trobe ought to take into account when talking of new capital taxes. He talks of welfare problems. Naturally, we are all concerned about welfare problems, but I suggested to the honourable member that one of the great causes of welfare problems is the high tax regime that his Government is bringing upon this country. If taxes were reduced, a lot of welfare problems would evaporate. I suggest that the honourable member think about that, and exercise his mind as to how to reduce the cost of government and reduce taxes, because that would do an awful lot to solve some of the welfare problems that are so enormous in this country today. In opposing this capital gains tax I will highlight a number of reasons for so doing. First, I point out its complexity. I think that this is an extremely complex bit of legislation. It consists of over 100 pages, and is something that 95 per cent of Australians would probably find extremely difficult to understand, if they could understand it at all. It is also extremely complex for those people trying to comply with it. It is all very well to say that this tax must be introduced, but, because it is as complex as it is, inevitably people will make mistakes and will have extreme difficulty in trying to comply with it. Also, it will divert a lot of productive resources to people trying to understand what is going on and trying to keep the sorts of records necessary to comply with this legislation. The other reason I believe this tax is plain stupid is that it will be extremely costly to administer. It will cost the Taxation Office, and therefore the Government, an awful lot of money to administer. And what for? In the first year it is expected to net $5m in a Budget that this year will probably exceed $70 billion. Some tax! I think that honourable members will find, if they look further, that not only will the revenue gained be small but also, I suggest, the Government will lose out in the long run because it will discourage investment and risk taking. It is also a highly discriminatory tax, as the Minister for Primary Industry knows. I am pleased to see that he has come into the chamber. He knows what it can do to a family farm or to a capital intensive industry. Obviously it is highly discriminatory against industries that are capital intensive. Farming is a classic example of that. I would have thought that, if the Minister is to represent primary producers, as he is supposed to do, he would have made a slightly greater effort to carry out that great promise he made in Horsham in 1984. I think that another point about this matter is that it is quite obvious that the Government will not go to the trouble of bringing in such a complex piece of tax legislation for $5m in the first year and maybe $25m after five years unless there is a hidden agenda. There is no doubt that this hidden agenda involves raising the rates. As we already know, the rates for the capital gains tax are extremely high. They are probably the highest of any capital gains tax in the Western world. At the moment-I emphasise `at the moment'-the Treasurer (Mr Keating) has said: `We will allow a discount for the rate of inflation'. I suggest that that will be the easiest way to start raising the rate of this tax. Once the Treasurer has gone through the painful process of introducing it, when he thinks people have accepted it, there is little doubt that he will seek ways to increase the revenue. When all is said and done, these new taxes-the capital gains tax, the fringe benefits tax and all the other taxes we have been debating in the last few days-are there for one reason, and one reason alone. They are there because this Government must find more revenue. It is a big taxing government. It is the highest taxing government since the last war. One has only to look at the increase in Budget receipts from the time this Government came to office to the current financial year. Heaven knows what the figures will be next year. We see that, in the last Budget of the Fraser Government, total Budget receipts were just over $48 billion. It is estimated that in 1985-86 they will be over $64 billion-a huge increase of nearly $16 billion. There is no doubt that, even though this Government has screwed taxpayers for every dollar it can get, it still needs more taxes. That is why we are looking at all of these various new taxes that have been introduced in the last few days. Since the Minister for Primary Industry is still present, I would like him to take on board the fact that this tax is a form of death duty. I do not care how it is dressed up; if is a form of death duty. Let me give a simple example. If a husband dies and leaves a property, shares or whatever to his wife and the market happens to be down-something that is occurring in agriculture right now-and it is rolled over at what is considered to be a fair market value, if the wife finds, 18 months later, that because of various family commitments she must sell that piece of land, shares or whatever and the market has risen, she will be taxed, and taxed heavily under this capital gains tax. If that is not a form of death duty, I would like to know what on earth it is. We must look at this measure and remember that the capital gains tax breaks one of the Prime Minister's great principles. I refer to his nine principles, including the one about the simplicity of tax. The fourth principle was this: . . . any reform must lead to a simpler system, which therefore all Australians can understand easily. Under any criterion, this tax is a failure. It is a failure under the Prime Minister's principles that he brought to the Tax Summit. Furthermore, I think I can demonstrate that the report of the Asprey Taxation Review Committee, which the Government is often fond of quoting, shows that the capital gains tax fails. As the Asprey report stated: It is a tax which, in any administrable form, must be complex and difficult, and produce some anomalies and inequities of its own. There is no doubt whatever that any revenue it raises could be more cheaply and easily raised in other ways. By the criterion of simplicity it fails. So it is condemned again. Members of the Government are very keen to support it, but they need only read what the experts have said to learn that it will be a failure. Madam Speaker, my time is restricted. I will cut short my remarks at this point. I must say that the Opposition is totally opposed to this capital gains tax. It is complex, it will discriminate, it will discourage investment, and it will discourage risk taking. It is the thin end of the wedge. It is obvious that the Government is looking at was of bringing it in at the minimum revenue level and, after it has been introduced, it will look at ways of increasing it. There is absolutely no reason why this Parliament should support this tax. It will fail on all the criteria that the Prime Minister set up. It will be highly discriminatory. It is yet another tax of the `politics of envy' type that I spoke about at the beginning of my remarks. The Opposition is opposing it now and we have stated very clearly that when we are returned to government we will throw out Labor's capital gains tax. Mr PRICE(Chifley)(8.25) —I was very disappointed to hear the contribution of the honourable member for Wannon (Mr Hawker). I had thought better of him. I want to correct one of the serious allegations he made concerning the Minister for Primary Industry (Mr Kerin). It is true that the Minister said that he was opposed to a capital gains tax that would have the effect of splitting up family farms. What the honourable member for Wannon fails to recognise, concede or understand is that there is an effective exemption for family farms, without creating a tax shelter. Whilstever the family farm remains in the family's hands, no capital gains tax will ever be paid. The honourable member for Wannon failed to address the principle that there should be a capital gains tax. What is there to stop people transforming income into capital gains and never paying tax? This has meant that family farmers have had to pay more tax to subsidise the tax avoiders. I say this about the honourable member for Wannon: He talked about the expenditures of the Hawke Government. I will cite one statistic to the Opposition-that is, the record of the honourable member for Bennelong (Mr Howard), the present Leader of the Opposition, when he was Treasurer, concerning the size of the government deficit. In 1981-82 the deficit, as a percentage of gross domestic product, was 0.8 per cent. What happened in 1982-83? That deficit climbed to 3.2 per cent-a 400 per cent increase in the government deficit as a percentage of GDP. Mr Hawker —Ha, ha! Mr PRICE —Honourable members opposite are laughing. They should look at the Budget Papers and they will see those figures. Mr Hawker —I have them here. Mr PRICE —Page 388 of Budget Paper No. 1 shows an increase from 0.8 per cent to 3.2 per cent. That was what happened under the economic wizard who is acclaimed by the Opposition but who has been completely and utterly rejected by the people of Australia. Mr Hawker —What was it the next year? Mr PRICE —It was 4.8 per cent and it is down to 3.2 per cent. That is not a 400 per cent increase. Does the honourable member not understand mathematics? I refer in general terms to a comment made in the debate on taxation measures yesterday by the honourable member for O'Connor (Mr Tuckey) when he stated: I am pleased that the Liberal Party in Western Australia is lodging a complaint on behalf of the Australian people. Let me tell honourable members about the Western Australian Liberal Party. That branch of the Liberal Party was completely penetrated and taken over by tax evaders, tax avoiders and bottom of the harbour merchants. We had the scandalous situation, under the Government of which the present Leader of the Opposition was a member, whereby the Attorney-General's Department in Western Australia not only assisted avoiders and evaders but also ran a brothel from a Commonwealth Government office. That was absolutely disgraceful. I find it extremely offensive that the Liberal Party in Western Australia should be proclaimed in glowing terms to the people of Australia. What Opposition members fail to understand is that the average person-the great bulk of Australians-recognises that the Government's trials and travails in regard to taxation will provide a fairer system. By and large, Madam Speaker, You will find that the majority of people in Australia support the Government's approach. They concede that fringe benefits and capital gains are unfair. They are pleased that this Government is taking action. Mr Reith —Ha, ha! Mr PRICE —Let us look at the capital gains tax. The honourable member might well laugh. He is one who advocates that fringe benefits tax should be paid by employees. I hope he tells that to all of his constituents. As I was saying in regard to the taxation package and capital gains in particular, we have heard scream after scream from the Opposition about how terrible this will be for Australia and Australians. What will this measure raise? In the first year, for all the screams by the Opposition, it will raise $5m. That is what we are talking about-a measure that will raise $5m. As this vicious and pernicious tax gathers strength, after five years we will have a massive amount of $25m. The people of Australia recognise the hypocrisy of honourable members opposite. Quite frankly, if we want to have a serious discussion about this tax, I can say that I have reservations about capital gains tax. Let me tell honourable members why. Every time the Australian Labor Party has attempted to do something in a reasonable way about this anomaly in our taxation system, we have been belted around the head by the Opposition, which has done nothing but use scare tactics and put fear into every Australian. I well remember the 1980 campaign and those rotten advertisements the coalition ran suggesting that everyone's home would be subject to capital gains. Mr Saunderson —The lies. Mr PRICE —They were. I must say that it was a most dishonest campaign. What it has really done is set back tax reform and sensible discussion by many years. This Government has had the courage to say in an election campaign that it would tackle the problem, and it would tackle it by a process of consensus and consultation. It is true to say that not everything the Government wanted to do has been done, but this is the most significant tax reform package this country has seen in a long time. I say, with respect, that we will not see anything like it in the future. What has been the role of the Opposition? I appreciate that it is difficult being in opposition. I hope that honourable members opposite are learning well and I trust that they will be in opposition for a while. Let me just ask this: Did honourable members opposite take a bipartisan approach? Did they say: `Here is Australia-a country we love. We want to do something for the people of Australia. We want to right a wrong. We want to take part in this process. We are not saying to the Government that we are committed to it every inch of the way'. Did honourable members opposite take that approach? Did they attend the National Taxation Summit, which was attended by business leaders, trade union leaders, and a whole variety of Australians concerned about reforming the taxation system? Did they come as an opposition and say: `We want to play a constructive role'? Of course they did not. The people of Australia understand that. They understand the hypocritical approach the Opposition is taking towards the reformation of the taxation system. This is its death knell as it claws away to save its supporters and to save the rorters. As each proposal has come forward has the Opposition said: `On balance we can support this, but we have some reservations'? Is there one taxation bill the Opposition has supported? Of course there is not. The people of Australia understand that the Opposition is not furthering a bipartisan process. The Leader of the Opposition spoke in this debate and said the Government was suddenly bringing on taxation reform. I think the people will realise that this reform has been a long and painful process. Its timing was not of our making, but we are committed to reforming the taxation system. We have a mandate from the Australian people to reform it, and we will reform it, but without one scintilla of assistance from members of the Opposition. Frankly, I think democracy is the poorer for that. Undoubtedly issues will arise for this nation that will require political parties, whether they be in government or in opposition, to come together for the good and for the betterment of the nation. I would have thought that after the Opposition's sorry experience of having so many evaders and rorters in its midst it would have seized this opportunity in both hands, but I am afraid that it has not. I was very disappointed with the contribution of the Leader of the Opposition. I want to remind honourable members of some of the outrageous things the Leader of the Opposition did when he was Treasurer in relation to taxation measures and economic measures. One of the problems for honourable members opposite is that the people do not forget. The new element in this debate on taxation matters is that as surely as night follows day, it is quite clear that the popularity of the Leader of the Opposition is failing. It is quite clear that, as surely as night follows day, the shadow Treasurer the honourable member for Mackellar (Mr Carlton), is not performing, and that as surely as night follows day, it is clear they will not survive come the Ides of March. The real question is who will go first. What did the Leader of the Opposition do in his term as Treasurer? My colleague the honourable member for Dobell (Mr Lee) outlined on a previous occasion the seven honest mistakes of honest John, and I want to refer to a few of them. We can recall the outrageous fistful of dollars advertisement in 1977. On one side of the television screen was a fistful of dollars, with the message `Liberals give'. On the other side of the television screen was an empty hand, with the message `Labor takes'. The advertisement appealed to the Liberal Party's greatest backstop, a backstop used by the Liberals in every election campaign. That backstop is greed. The advertisement referred to an income tax cut announced in the 1977 Budget and to a promise by the honourable member for Bennelong, the present Leader of the Opposition, to implement full tax indexation of all income tax brackets. This tax cut and the tax indexation promise were the centrepiece of the Liberal Party's platform in 1977. What happened? The Government decided that as a temporary measure for 1978-79 only the standard rate of personal income tax would be increased by 1.5 per cent. That increase was to be effective from 1 July, and therefore an extra deduction was to be made from taxpayers' wages or salaries after 1 November, designed to meet his or her additional tax liability for the whole of 1978-79. In one hit the former Treasurer's two tax promises were broken. That is the sorry record. I could go on to outline to the House the other broken promises of the honourable member for Bennelong. As I have said-I want to conclude on this note-I have always had a great deal of hesitation about a capital gains tax because of the way capital gains has been used and abused by members of the Opposition at election time to instil fear. I am pleased that the Government has come to grips with this issue in its total tax package. No longer will members of the Opposition be able to intimidate and instil fear in and frighten ordinary Australians. They will know that the sum total of the effect of the capital gains tax will not be as was painted by honourable members opposite in their horror stories in election campaign after election campaign, but that in fact, this measure will bring in $5m in its first year and, after five years, $25m. I am pleased to support the legislation. Like most Australians, I welcome this package. It will lead to fairer taxation-something to which members of the Opposition are bitterly opposed. Mr COWAN(Lyne)(8.38) —I know that people are tuned in around Australia and that they are listening to the debate on the Income Tax Assessment (Capital Gains) Bill 1986 and the Income Tax (Rates) Amendment (Capital Gains) Bill 1986. I do not think our constituents want us to criticise each other across the floor, because things are rather desperate in Australia today. If we wanted to be constructive I am sure we would join together as a team to look at the future of the country, and particularly at the economy of Australia. I do not think our constituents want to hear us criticising each other for what we have failed to do. Maybe this is why we as parliamentarians get a very bad name with the people. I think the people want us to look at Australia as they see it. So many people say to me: `I think about my children and my grandchildren in later years'. I wonder whether we are thinking about this. I wonder whether the Government is thinking about this. I wonder whether we have considered what the people of this country expect us to examine, to act upon and to be constructive about. I have a feeling that a great majority of the people of this country have lost faith in the ability of the Parliament actually to adopt difficult measures. We may have to do bad things in the short term, but in the long term those measures will get this country back on the footing on which the pioneers had it. These legislative tax measures that are before the Parliament are not those that this country should be expected to adopt; neither are they measures that our friends around the Western world would want us to adopt. Looking deeper into the problems we have today, I even doubt whether the Opposition parties' industrial relations policy will be adequate to cater for this land of ours in the years to come. I think the people of this nation believe that this country is in such an economic mess today that they want the Opposition to return to power and do something constructive. I believe that there are members on the Government side who would like to see this happen as well. One only has to look at the faces of honourable members opposite at Question Time each day to see that they are well meaning people who are trying to represent their constituents. They see the Treasurer having a job to answer questions put by the Opposition. Mr Braithwaite —They are not happy. Mr COWAN —As the honourable member for Dawson says, they are not happy. We must be statesmen in this place. We must recognise the problems facing Australia today. I believe that the average worker, the person who wants to get a job, the person who wants to see more young people employed in the community and the person who wants to see Australia, an exporting nation, producing goods at reasonable costs all realise that we are living in a fools' paradise. One realises that it is a fools' paradise when one looks at our working week from Monday to Friday with time and a half and double time at weekends, our payroll taxes, our 17 1/2 per cent holiday pay loading; and the wages of some people in the unions. The expedient measures that are operating in this country today make us believe that surely we must go back to taws. It is a shame that we have to do so. I have said in my electorate of Lyne that perhaps we should have a wages pause. However a wages pause is really not the answer to this. A wages pause certainly helped this Government over its first years, but it is feeling the pressure now. A wages and prices pause is not the answer. We must tackle the problem of this nation from the floorboards up-from the foundations. We must be prepared. We in opposition must be prepared to do this because those in Government are not. Some of those people from industry and elsewhere who attended the National Taxation Summit agreed that there should be a capital gains tax and I was certainly surprised by that. But honourable members opposite cannot tell me that those people would say the same thing today. Given the situation that this country is now in, those people would take the opposite view. If we went to them now and said `Do you think we should still have a capital gains tax in Australia?' I do not think they would agree to it. We must engender in the Australian people some incentive and some of the confidence that we do not have at present. We should be ashamed of ourselves. What other people in the world could turn around a young country like Australia with its great natural resources in the ground and on our soil, and the natural resources that Australians have within them, and make it uncompetitive with the rest of the world? My colleague the honourable member for Dawson (Mr Braithwaite) and I had a seminar in Taree a week ago and 400 people turned up. The honourable member for Dawson spoke and he was very well received. He did not make a political speech, he simply cited the problems that are facing Australia today. This was what our people wanted to hear. It is certainly what people in rural areas want to hear. I believe that this message is going forward into our big provincial towns and our major cities. The National Farmers Federation and the Small Business Association are helping to take the message there and I wish them well. They realise that this is the last chance that we have to get this country back on the rails. I am not saying much about the Income Tax Assessment (Capital Gains) Bill, although I could quote it verse by verse. I am not so concerned about those issues. We will talk about them later. I am concerned about the future of this nation. I am concerned about having a sensible monetary fund, a sensible economy if we can get back on the rails and giving to the people of Australia the incentive for which they are looking. It is so important that we do this. Let us look at the position of our friends in other parts of the world in relation to these tax proposals. Many people on this side of the House have compared us with other western countries in relation to inflation, unemployment and so on. It is true that we are lagging far behind them. We have had the examples of Argentina, Brazil, Mexico and other countries which have gone through difficulties. These people have had the experience. Honourable members should realise that we are no better off. Mr Braithwaite —We are following in their footsteps. Mr COWAN —We are following in their footsteps day by day. The Government claims to be responsible yet it is introducing into this Parliament legislation which it has been forced to bring in, not of its own wish, but by the wish of the Australian Council of Trade Unions. The Government is full of faceless men and the Australian public does not want this. We know that the Government is dominated by the people in the ACTU and I doubt whether those people really have the interests of this nation at heart. Perhaps I can give an example. As a result of the Russian nuclear accident the other day radioactive fallout is floating around the countryside and damaging many people. However, did we see many demonstrations in this country against that accident? Had there been a leak at Lucas Heights, had the Americans or the British had an accident, the protesters would have stormed out in their hundreds of thousands. We must wake up. Unless this country wakes up and gets back on the track again we will be in trouble. No wonder groups such as the NFF and the Small Business Association are saying to us: `If the Opposition parties cannot put people into Parliament, we will'. But they will come on our side because they realise that we face up to our responsibilities. Honourable members should look closely at these tax Bills before the House and think about their provisions-capital gains tax, negative gearing, fringe benefits tax. If one goes back a little further one remembers the tax on superannuation which our servicemen, who are there to defend our country, will have to pay on their retirement. Then of course there was the assets test. These are all part of the Government's formula; it is one thing after the other. The Government is achieving its aim and this is the important factor. This Government is achieving its aim in the policies it is introducing for this nation. We in the Opposition and the people of this country must stand up and say that we do not agree with the Government's policies. We must put our policies before the Australian people and tell them our plans for taxation and incentive. Let us not stop foreign capital from coming into Australia. Look at this capital gains tax Bill. It includes disincentives to people from other countries-- Mr Braithwaite —They won't come in. Mr COWAN —As the honourable member for Dawson says, they will not come here and spend money to employ our people so that we can invest capital in overseas countries. This has been how Australia has grown in past years. Mr Tim Fischer —For 200 years. Mr COWAN —As the honourable member for Farrer says, this is how it has been for 200 years. We are letting down the people who had faith in us, who bred us and who put us into the House of Representatives and the Senate to do the job of representing them. Let us all be reasonable. Let us stop and think about this. If we overtax the people we give them no incentive. We should give them incentive in the way that Ronald Reagan gave the American people incentive when he became President. I understand that he reduced personal income tax by 20 per cent and created 6.1 million new jobs in America. That is why America is thriving. America is strong and President Reagan has no worries. He will not be told what to do about MX missiles; he does not have to go to the unions of America to get advice. This country needs strength and I am afraid it is not getting it. The Australian people expect it. These taxation Bills before the House are a worry. They are detrimental and they are causing great concern to the great majority of Australian people. Mr LAMB(Streeton)(8.50) —It is not often that I compliment the honourable member for Lyne (Mr Cowan). However, my compliment is a bit of a back hander. He gave his usual, predictable National Party speech of gloom and doom, but what was missing was the hysteria that has accompanied every other speaker from the Opposition-an hysteria lacking any rationale or rationality in its attack on the fringe benefits and capital gains taxes. We are debating the Income Tax Assessment (Capital Gains) Bill 1986 which, as the other speakers have said, is just one measure in a complete package of tax reform introduced by the Treasurer (Mr Keating). The package includes such fundamental reforms as rationalising sales tax, acting on negative gearing and clamping down on entertainment expenditure, the fringe benefits tax and capital gains tax. It is interesting to note the overall package is revenue neutral, and that is important in regard to the total impact on the macroeconomics of this country. I think we should also realise that it is revenue neutral because huge cuts will be made in the marginal rates of personal income tax as a result of revenue being gained elsewhere. There is to be an end to double taxation on dividends. Yet we do not hear any of the members of the Opposition referring to the goodies in the tax package. They refer only to what they see as the nasties. The overall tax package will restore equity to the tax system. It will reintroduce fairness and progressiveness to the tax system. More important than that, it will restore public faith in the tax system. The honourable member for Lyne asked what he would tell his children and grandchildren in the years to come about this episode that is occuring in this Parliament. If he is honest, if is decent, if he is rational and if he is objective, he will tell his children and grandchildren that this Government reintroduced fairness into the taxation and economic systems so that no longer will the rich get richer and the haves get more while the have-nots remain in the poverty cycle and the lower income brackets. There will be a fair go for all. He should tell his children and grandchildren that this Government did not shirk its responsibility in respect of tax reform whereas time and time again over many years the Opposition, in government, turned their back on that responsibility, put it in the too-hard basket and was not prepared to grasp the nettle in that difficult area. Each major reform has met with a campaign of personal interest and self-based hysteria. Hysteria is no substitute for rational argument; it is no substitute for decent opposition. Let us just take the reaction to the tax on entertainment. The Opposition came in here and told us that thousands would be put out of work, that the restaurants would be putting up the `closed' signs. None of this happened. What did happen was that the catering industry, the hotel industry and the restaurant industry grew by 19,000 jobs. We see advertisements for more staff for restaurants. We now see a healthy industry standing on its own feet, appealing to the customers in the right way and not depending on the tax lurks as they had. What did we hear from the Opposition? What was its reaction when on 2 May we introduced the fringe benefits tax? There was more hysteria. Over the weeks since then this hysteria has reached fever pitch. Those who are usually the law and order men of our society are now advocating breaking the law. These people include Sir Joh Bjelke-Petersen, the Premier of Queensland. He has said that people should refuse to pay that legitimate tax. We heard Bob Ansett say: `Let us have a modern Boston tea party'. That campaign in early America was based soundly on the principle of no tax because of no representation. But the Bob Ansetts of the world and the Joh Bjelke-Petersons of the world have their representatives and they have been put into Opposition because the people of Australia did not vote them into office. They voted this Government into office on a sound and practical tax reform mandate. Even the Leader of the Opposition in Victoria recognised, in the Australian context, the corollary of the Boston tea party and the principle behind it when he rightly castigated those who advocated breaking the law, saying that the right way, the correct way, was to accept the law of the democratically elected Government and to use the ballot box to replace that Government if the public was not satisfied. The big snag in that scenario is that the Leader of the Opposition (Mr Howard), who sits opposite in this Parliament, does not have the courage to say that he would reject the fringe benefits tax when he assumed office, should he ever do so-and what a tragedy that would be for this country. He refuses to indicate whether he would remove the new tax because the truth-and he recognises it-is that the fringe benefits tax is fair, just and right. Mr Lloyd —I rise on a point of order. The Leader of the Opposition has just said that we will repeal the tax. Mr LAMB —It is a pretty poor performance that, after three weeks of tramping backwards and forwards around this country, he has been cajoled and badgered into finally making the weak statement that he apparently made today. I would have thought that a leader of the Liberal Party of Australia would have had the courage, the conviction, to stand up on the first day and utter those words. Now we find that, mealy-mouthed, he crawls into this Parliament and in a few apologetic words says that now he might consider removing the fringe benefits tax. The trouble with those-- Mr Lloyd —I raise a point of order. The Leader of the Opposition has said that a coalition Government will remove the fringe benefits tax. Mr LAMB —That is hardly a point of order. The point of this debate and the order of this debate lie firmly with this Government, which is getting on with the proper tax reform as it was elected to do at the last election. This brings me to my next point. The Leader of the Opposition must have come across the airwaves today to our listening public as quite a character when he led a singsong in this Parliament like a choirmaster. The Opposition delivered a rather puerile effort in singing: `There will be no capital gains tax'. Fancy reducing an argument or debate on such an important matter as tax reform in this country to a singsong. The Leader of the Opposition has completely forgotten that there was another election after the one during which the Prime Minister (Mr Hawke) has said that there would be no capital gains tax. In that election in 1983 the Opposition was soundly trounced. The Opposition was soundly trounced again in 1984 after the Prime Minister had gone to the people and said: `We will have tax reform in this country. We will hold full consultations with the wider community to develop the right route to tax reform'. The Leader of the Opposition has completely forgotten that. Honourable members opposite have conveniently forgotten also that the then Leader of the Opposition went from corner to corner, capital to capital in this country saying: `If you do not want a capital gains tax, vote for me'. What did the people do? They voted in their thousands for the Government that now sits on these benches. They voted in their thousands for tax reform. It is hard to imagine a clearer, more definite or stronger mandate than that given in the election of 1984, when people said to the Government of this country: `We want fair tax; we want just tax; we are sick of paying excessive tax for those who enjoy the lurks and perks of fringe benefits and those who are able to adjust their affairs so that they can turn their income into capital to escape their just and fair burden of tax'. As I said in respect of the fringe benefits tax, and as I say again in respect of the capital gains tax, the rort is over. This is a very mild form of capital gains tax compared with any other capital gains tax in the world. It is indexed for inflation. Also, small business will be allowed 20 per cent of its capital gains or goodwill before the taxation provisions are applied. One must realise that capital gains tax does not apply to a farm unless it is sold by the family. Mr Deputy Speaker, you know that farms handed down from father to son or daughter do not attract capital gains tax. Even if a farm were disposed of outside the family, the private residential house and a decent curtilage would not be subject to the capital gains tax. In fact, no home, no principal residence in this country, will come under the capital gains tax. Mr Slipper —Your father would be ashamed of you. Mr LAMB —We know that the Opposition, by using hysterical outbursts such as that one by the honourable member for Fisher, which I could not understand, and mumbo-jumbo, has tried to muddy the waters and confuse the people. We know that the people know that these Bills will make a significant contribution to the equity, fairness and acceptance of our taxation system. No longer will people be able to arrange their affairs so as to take their income as capital and avoid paying their fair share of tax liability. As I have said, these Bills have the full support of the electorate, the Australian people. They have my support also. Mr RUDDOCK(Dundas)(9.00) —The Income Tax Assessment Amendment (Capital Gains) Bill and the Income Tax (Rates) Amendment (Capital Gains) Bill will impose a new tax-a capital gains tax. The honourable member for Streeton (Mr Lamb) would have us believe that this new capital gains tax is a mild tax. Nothing could be further from the truth. This new tax is one of the toughest taxes of its type in the world for those who will have to pay it. The reason is that it is levelled at the marginal tax rate of the person required to pay the tax. That could be anything from 30 per cent to 60 per cent of the amount of profit on which that person is required to pay tax. That makes it a very tough tax. It needs to be understood that, in comparison with other taxes imposed in the world, this one is tough. The legislation needs to be considered against its economic impact upon the nation and the financial gain to government as a result of its introduction. If one reads the financial impact statement in the explanatory memorandum, it is clear that, while this tax is tough for those who will have to pay it, it is not expected to gain significant revenue for the Government. If our economic problems at the moment are such that increased taxation is the order of the day to get the nation out of its economic malaise, there may be some justification for it, but the financial impact statement associated with this Bill states: The estimated revenue gain from introducing the tax on capital gains is $5m in 1987-88 rising to $25m in the fifth year of operation. That point needs to be understood. In the Government's own statement, the impact is said to be absolutely minimal and will pay no regard to assisting this nation out of its parlous economic situation. Why are we seeing this legislation introduced at this time? It is not for the reasons of equity given to us by the honourable member for Streeton but because this Government, in the context of the economic debate that has been going on, has to appease the Left of the trade union movement. This tax has been introduced to appease the unions. The second point I make is that the tax is designed to appease the bureaucracy; those people who, because they opt for security rather than the willingness to take a risk, have very little prospect or expectation of having assets other than their own home and a superannuation benefit, two groups of assets excluded from the legislation. Of course, the efforts of the Left of the Australian Labor Party ought to be understood in relation to this matter. This tax is based on envy and nothing else; it is certainly not based on equity or any expectation that it will get this nation out of its parlous economic situation. That brings me to another point I wish to make in relation to this legislation. The tax is being introduced at a time when our economy is most fragile. If the Australian people-my children and your children, Mr Deputy Speaker-are to have any future at all, something needs to be done to get the Government and this nation back on track. Our economic growth has slowed significantly in the last six months. In the June quarter last it fell to 2.6 per cent, in September to 1.4 per cent and in December to 0.5 per cent. The Treasury and all the independent economic commentators and indicators suggest that economic growth will continue to fall. The value of the Australian dollar fell considerably in 1985, particularly against the yen and the trade weighted index. Mr Beale —It has only halved against the yen. Mr RUDDOCK —It has only halved. Total unemployment has remained above 600,000 people-over 8 per cent of the total work force. Australia's inflation rate is three times the Organisation for Economic Co-operation and Development average-that is, the average inflation rate of the developed nations of the world-and similar figures exist in relation to those countries with which we compete. As against Australia's inflation rate of 9.2 per cent, Japan has 1.1 per cent, the United States of America has 2.3 per cent, West Germany has 0.1 per cent and the United Kingdom has 4.1 per cent. This is the worst comparative disadvantage Australia has suffered in terms of inflation for more than 25 years. In terms of the balance of payments, the deficit on trade for the last 10 months of this financial year was $12.1 billion, the worst result since 1951-52. Our foreign debt has doubled from $35 billion to $70 billion in 2 1/2 years. This represents $6,000 for every man, woman and child in Australia. Interest rates are at excessive levels, as anybody who has to pay them would know. The prime rate for businesses-for those people regarded as a good risk-is 18 per cent. Those interest rates are well above the interest rates that our competitors have to pay. This Bill needs to be considered against that background. The Government has to address these factors urgently if this nation is to have any future at all. The Treasurer (Mr Keating) knows this. We have heard him try to emphasise the magnitude of the problem we face, but his colleagues refuse to recognise what has to be done. While the Opposition has a multi-faceted approach to addressing these questions, the Government seems to be falling back upon one criticism; that is, to find a scapegoat for what is happening at this time. That scapegoat is business. The Government and the trade union movement are saying that if we are to get out of our present malaise we need new investment by business. At every turn we hear the trade union movement arguing that business has to reinvest in Australia. We are being warned of a possible strike of capital. Those are the sorts of arguments we have heard from such distinguished commentators as Mr Crean of the Australian Council of Trade Unions. It is crucial, if we are to see any investment, that business has confidence in the direction in which we are going. The Government has committed itself to a conference to try to work out these things. Mr Slipper —A summit. Mr RUDDOCK —The Government does not wish to call it a summit, but that was one of the statements that came out of the meeting at which it was announced that this particular meeting would take place. The fact of the matter is that in the September and December quarters of last year fixed business investment fell. I know that honourable members opposite do not wish to hear this, but not only has fixed business investment fallen for those two quarters but also yesterday we saw figures which demonstrate that investment by business has declined further. This is now overwhelmingly a trend. The question that the Government and the unions have to ask themselves is: Why is this happening? It is not a right wing plot or a strike by capitalists. All of the reasons for this lack of confidence by business are in the hands of the Government. My discussions with business have revealed that there are two causes for this falling off in business investment in this country. The first is the high interest rates we now suffer; the second is the new business taxes this Government has imposed, and first and foremost amongst those new business taxes is the capital gains tax. We also have the fringe benefits tax, which is clearly a payroll tax on employers, increased company tax from 46 per cent to 49 per cent, and the foreign tax credit schemes. Each of these increased taxes has occurred while net profits to shareholders on funds invested have fallen over the last 15 years from 11 per cent to 4 per cent. Is it any wonder that people want to invest in government bonds, government paper, at 16 per cent? Why would prudent investors want to put new capital into plant and equipment in this situation? In my view, the only avenues left to the Government to solve this problem are to reduce taxes that impact upon business. Its capital gains tax could go immediately and the impact upon the economy, on the taxation revenue of the Government, would be minimal-according to the Government's own statement a measly $5m this year. It needs to be understood that the tax is a disastrous tax. Business knows that it is the toughest tax in the world. It is paid on the marginal tax rate. The Government knows that it is taxing a scarce resource-capital. The Government knows that, if it is to get out of the enormous difficulties we face, it will have to abandon this proposal along with its fringe benefits tax, and the sooner the better. I think that announcement should be made at the meeting the Treasurer and the Minister for Employment and Industrial Relations (Mr Willis) will be attending with business in the next few weeks. Mr PUNCH(Barton)(9.12) —The measures before the House tonight are part of a fundamental reorganisation of the tax system of our nation. They are an attempt to reintroduce fairness, honesty and decency to a tax system that was presided over by those opposite for so long that it has almost ceased to be relevant to Australia as a modern nation. The capital gains tax, the fringe benefits tax and other measures that will come before the House in this session of the Parliament are designed so that the payment of tax by the select few is no longer optional but, as it is for the vast majority of the population, it is their right and their obligation. Mr Beale —Their obligation, not their right. Mr PUNCH —No, it is their right. It is important to note that these taxation measures, of which the capital gains tax is a part, are revenue neutral-that is, the revenue from the capital gains tax and the fringe benefits tax is all ploughed back to taxpayers in lower rates of income tax. If there is one thing that is long overdue in this nation it is reduced income tax. Honourable members opposite talked about it for years. The gabfest-that is the Liberal Party of Australia and the National Party of Australia-have talked about lower taxation for longer than I have been on the earth but they have never delivered it. This Government is now in the process of doing that. The vast majority of Australians will be better off. I estimate that at least 98 per cent of the people in my electorate of Barton, in the southern suburbs of Sydney, will be better off. The overwhelming majority of my constituents have been paying their fair share of taxes all their lives and, as a result, they have been subsidising those who have not. The Sydney North Shore representatives in this House must really question whether their constituents have been paying their fair share of tax, as mine have, and they should relate that very directly to the measure before the House tonight. This capital gains tax exempts the family home. It is discounted fully for inflation, for costs and capital investments. Very importantly, it has a 20 per cent exemption for goodwill for small businesses, as the honourable member for Streeton (Mr Lamb) has already pointed out to this House. This capital gains tax is not the capital gains tax of 1980, as proposed by the Australian Labor Party at that election. That tax would have been unfair. This capital gains tax is demonstrably fair. As proof of that and has been admitted by the honourable member for Dundas (Mr Ruddock), the revenue raised by this capital gains tax is only $5m in the first year, rising to $25m in the fifth year. The raising of $5m is hardly an impost that will send the business community of this nation broke. Rather than being a revenue measure, it provides a solid platform under the tax system to stop the minority of greedy would-be taxpayers-who, like any minority, always cruel it for the majority-who have been converting income for many years into capital to avoid paying their fair share of tax. Of course, every dollar that those people have avoided paying in tax is another dollar that my constituents and the vast majority of the constituents that we on this side of the House represent have to pick up. Every dollar that is evaded by converting income into capital is a dollar our constituents have to pay over and above their fair share of tax. That is simply immoral. It is not right. It has to stop, and we are stopping it now. Mr Deputy Speaker, I ask in all fairness: Can those opposite honestly say that this is really a harsh measure? Let me give honourable members one very good example. Mr Hand —Give us two examples. Mr PUNCH —All right, for the benefit of the honourable member for Melbourne, I will give two examples. The capital gains tax of the United States of America, the Ronald Reagan Republican capital gains tax, is struck at 40 per cent of the nominal capital gain. It is then taxed at the normal rate of tax with no discount for inflation. The second example I cite is the current Packwood proposal that is being mooted in the United States taxation reform debate. That would be levied at a full level of 27 per cent, but it would be levied on 100 per cent of the capital gains. Therefore, it would actually be even worse than the current American capital gains tax. Let me give honourable members an example so that even those opposite can understand-I do not want to cast any aspersions on the intelligence of those opposite-of how that works in dollars and cents. Let us take a $100,000 investment, an inflation rate of 10 per cent, with a capital gain of $10,000. In the United States, under the Ronald Reagan Republican capital gains tax one would pay $2,000 capital gains tax. Under the Packwood proposal that is now being mooted one would pay $2700 capital gains tax. In Australia, under the Hawke-Keating proposal one would pay no such tax because our capital gains tax is discounted for inflation, and that is more than fair and reasonable. The United States capital gains tax hits the ordinary man; it hits the small business community of the United States. On the contrary, ours is a fat cat capital gains tax which hits those who deserve to be hit. Australia and Britain are the only nations I know of that provide a full discount for inflation. I ask those opposite, those devotees of Katharine West: Is Ronald Reagan a socialist? Is Ronald Reagan a mad dog commo? Is he sending business broke? Is he destroying private enterprise? Of course not. Our capital gains proposal is far less harsh and far more lenient than his. It is about time that honourable members opposite recognised those facts. Honourable members opposite have been talking for 30 years about representing the business community, but all they have done is to send a good number of them broke. Providing a fair and equitable tax system in this country must have two spontaneous effects. It must firstly be to the very great betterment of the national economy, both on the fiscal side and in terms of the economic morality of the nation. Secondly, let me say this to honourable members opposite: In the current climate of our having to re-evaluate the relationships between business, unions and the national share of income, it is important that every working man and woman of this country sees that each and every one of their fellow Australians is paying his fair share of tax. One cannot expect the wage and salary earners of this nation to give more while so many whom honourable members opposite represent pay none. One cannot expect the working men and women of this nation to carry a greater burden for the economic survival and enhancement of this nation when many of those whom honourable members opposite represent do not make any contributions whatsoever, or, at the very least, they do not make the contribution they should make to the national purse. All Australians benefit from the services of government, be it local, State or Federal. It is morally incumbent on every Australian to pay his fair share. This Government is no longer going to retain a tax system that benefits the people on the north shore of Sydney to the detriment of the constituents of my electorate and other electorates where wage and salary earners comprise the vast majority of the population. It is now time for a fair deal. We are restoring morality to the tax system. The thing that I like most about it, Mr Deputy Speaker, if I can conclude on this, is that every time we bring a measure into this House to bring honesty, fairness and decency back into the taxation system the Opposition squirms-and that is what I like best about it. Mr SLIPPER(Fisher)(9.22) —The only thing that the previous speaker mentioned that I agree with is that he said he would conclude. What a diatribe, what utter nonsense this Parliament has been treated to for the past 10 minutes. I refer to the words of the Prime Minister of Australia (Mr Hawke) when he was Leader of the Opposition. On 16 February 1983 he said: And here let me make one point so that even our opponents can understand it; and let me make it beyond all their powers of misrepresentation and distortion. There will be no new capital gains tax. On 19 September 1985 the Treasurer (Mr Keating) told Federal Parliament: The Government has decided to introduce a capital gains tax. That proved once and for all that Mr Hawke is the Prime Minister whose promises have a use-by date. It also proves that the so-called honourable Paul Keating, Treasurer of Australia, is the dishonourable Paul Cheating, who masquerades as the temporary Treasurer of this country until such time as the people of Australia at the next election sweep this Government from office. We all understand why this Treasurer is called the bowser bandit-and, I know that the honourable member for Denison (Mr Hodgman) is going to say, the fiscal ferret. It is a tragedy that these people stand up before Australians and announce what is going to happen and then just a couple of years down the track we find there is a complete and utter about-face and that the promises, made with a view to attracting votes in order to become the government of Australia, are in fact torn up. We simply cannot believe what the Australian Labor Party chooses to tell the people of Australia. It was 245 days from 19 September 1985 until 22 May this year when finally the Income Tax Assessment (Capital Gains) Bill and the Income Tax (Rates) Amendment (Capital Gains) Bill were introduced into Parliament. They were 245 days of uncertainty, 245 days of fear and 245 days of terror. People are frightened as to what is going to be the effect of this tax-and they are frightened with just cause. Labor's capital gains tax will raise a very small amount of money in fiscal terms. It is going to raise $5m in 1986-87, and in the fifth year it will raise $25m. So, from an economic point of view there are no real grounds for introducing this legislation. It is a quid pro quo, a sell-out to the trade union movement. An article in the Age of 21 September 1985 referred to the capital gains tax as follows: The introduction of some sort of capital gains impost was a necessary price to pay for keeping alive the wages accord with the Australian Council of Trade Unions and for the Labor left's reluctant acceptance of cuts in the top marginal rates of income tax. Why is it that the Australian Labor Party has decided to slap in the face the many people in middle Australia, some of whom are swinging voters and therefore determine the composition of the party or parties which from time to time occupy the treasury bench? People who trade, people in the business of buying and selling for the purpose of profit making by sale, have always paid capital gains tax. The people who are being caught are the average Mr and Mrs Australia, the average person who largely is on pay as you earn tax, and the idea of making a capital gain was one of the few methods that these people have had to get ahead. The ALP has written its own obituary. In fact, the ALP is ensuring that it cannot be returned at the next election, because the people who, rightly, have such an influential say in who governs Australia are being slugged; they are being hurt and are being treated with utter disdain and contempt. Mr Downer —Hear, hear! Mr SLIPPER —The honourable member for Mayo agrees with what I am saying, because I am correct. Mr Beale —Hear, hear! Mr SLIPPER —The honourable member for Deakin agrees as well. Obviously he also shares the vision that I have that we must have in this country less tax. The National Party will not have a bar of Labour's capital gains tax or its fringe benefits tax. We are utterly opposed to the abolition of negative gearing, because we believe that in Australia there should be reward and incentive for initiative and hard work. Mr Hodgman —Why are they taxing the churches and charities? Mr SLIPPER —I do not know why they are taxing the churches and charities, but what they are doing will ensure that they are condemned by the people of Australia. We find that this capital gains tax is the toughest and the highest in the world. The taxpayers who have to pay it will be taxed at the marginal tax rates-anything from about 30 per cent to over 60 per cent, or thereabouts, of the profit. I do not know why the Government insists on doing this and the people of Australia will be asking that question at the time of the next election. The Institute of Chartered Accountants, an eminently reputable and respected body, has criticised the Government's proposed capital gains tax. In its annual tax submission, released recently, it said. Even allowing for the indexation of tax thresholds, the tax would seriously hamper development and limit growth. There would be a disincentive against factory owners moving from unsuitable and inefficient premises to better sites if owners were to be taxed on profits gained from selling their existing factories. Businesses would also be discouraged from expanding into new fields if money gained from selling obsolete assets were to be subjected to a capital gains tax. Why will the Government not take note of the prevailing climate in Australia? Why will it not take note of how Australians feel? We should remember and we should think on the various points, the various principles of tax reform which the Government has outlined. The ninth principle was that any reform package must have widespread community support. What a sick joke! There is absolutely no community support for this capital gains tax-absolutely none whatsoever. In fact the futures of many small businesses have been shattered because prices will now drop dramatically to reflect the capital gains tax. Why will this Government continue to act like an ostrich with its head in the sand until such time as the next election comes along? We in the National and Liberal parties are 100 per cent in favour of lower taxes. That is why we can discount most of what the honourable member for Barton (Mr Punch) said before. The Nationals in Queensland spearheaded the abolition of gift duties, probate duties and success duties. The Nationals in the Federal Parliament spearheaded the abolition of the Commonwealth estate and gift duties in 1978. The Australian newspaper of 30 September 1985 contained a report on the Australian Small Business Association. The spokesman for that organisation, Mr Boyle, is reported as saying: . . . the ASBA was strongly opposed to the capital gains tax because it would be a tax on enterprise and hard work and could mean the loss of thousands of jobs in small businesses. This indicates the idle rhetoric of the Australian Labor Party when it claims to be the party which is encouraging job and employment prospects. John Leard, one of the great gurus of economics in Australia, has pointed out that the family home would be included in the capital gains area within a decade. He is reported as saying: It will become a tax shelter unacceptable to the Left-wing people in this country . . . It is interesting that the honourable member for Aston (Mr Saunderson) is laughing because obviously he is part of the Left of the ALP. One of my colleagues asked me before why it is that the Government is taking such a strong line against charities. Proposed new section 160y provides that where a post-19 September 1985 asset of a person who dies after that date passes to a tax exempt beneficiary, such as a church, a charity, a school, a university, an art gallery or a sporting club, the asset is deemed to have been disposed of by the deceased for its market value at the date of death, and the estate of the deceased would have to pay a capital gains tax on such assets. It is quite clear that this proposal will lessen the desire to make bequests as the capital gains tax will have to be funded out of the other assets of the estate. This is a criminal impost on organisations that are attempting to assist the under-privileged in our society. Once again we find after 245 days this Bill has been brought into the Parliament. Insufficient time has been given to members of the Opposition to debate it. This very complicated package of Bills brought in by the Australian Labor Party in recent times will add 625 pages to the already existing 1,100 pages of tax legislation-a 57 per cent increase, as was pointed out today by the honourable member for Mackellar (Mr Carlton). The legislation does not simplify the law as the ALP would have us believe. The time for debate has been chopped. This is unfortunate. In conclusion, I would like to outline to the House the terms of a letter which I received today from Mr C. E. Redenbach of Western Australia. He said that the fringe benefits tax and the capital gains tax are `horrendous' and `draconian' and are `another nail in the coffin of small business'. He went on to say: Government and politicians can no longer even pay lip service to the so-called encouragement of the Small Business sector and have now shown a complete disregard and contempt for the largest employers of labour in this country. He said further: Big Government Big Unions Big Business and Big Brother The Anzac tradition, incentive, and the rugged Australian individualists are all dead. It is a tragedy that Labor's capital gains tax will be, and is, in effect, capital punishment being imposed on the Australian economy. The ALP stands condemned. There is no doubt that it will be tossed from office at the next election. Mr SAUNDERSON(Aston)(9.35) —I rise to speak to the Income Tax Assessment Amendment (Capital Gains) Bill 1986. I support a capital gains tax. As happened when I spoke in the debate on the fringe benefits tax legislation, once again we hear from the Opposition cries of fear and the scaremongering that is so typical of honourable members opposite. With this legislation we propose to reform the tax system into one that will be fairer for all. What we find is that, because some of those people who support honourable members opposite are now going to have to pay their fair share of tax, those honourable members come in here screaming and saying that this is unfair and not right because their people will have to pay tax for the first time. Honourable members opposite are saying: `When we were on the Government benches we looked after them. We made sure they did not pay any tax'. We are now bringing in a fairer taxation system which means that those people who have been avoiding paying their tax and not carrying their fair share of the load will have to do that. The lack of a capital gains tax in Australia has meant that for many years investment in Australia has been in non-productive areas in which people have been getting a quick quid. What we are seeking to do by introducing a capital gains tax is to redirect those investments into areas where we will see jobs created-areas where investment will now become attractive-instead of areas where there is no job creation. It is not surprising to hear representatives of the National Party of Australia stand up here and criticise the legislation because they do not understand what it is about. They should be one group supporting the capital gains tax because if anybody has suffered in Australia through the lack of a capital gains tax it has been the farmers. The investors and speculators have been buying up land, forcing up prices and putting genuine farmers behind the eight ball. I do not intend to cover all the ground covered by my colleagues previously because most of them have covered all of the benefits of a capital gains tax extensively. We are hearing in this debate the same cries about inequity as we heard from honourable members opposite in the debate on the fringe benefits tax. When we look at the whole package of legislation brought forward covering the fringe benefits tax and the capital gains tax and look at the groups of people in the community and who receives what we can see which people honourable members opposite represent. They represent the minority groups who receive all the benefits. If, for instance, we take some of the fringe benefits about which honourable members have been screaming we find that of the people who represent the 11 per cent of highest wage and salary earners in this country one in six receives private transport, one in seven receives an entertainment allowance, one in 12 enjoys employer provided or employer subsidised housing and one in 12 has his medical or hospital costs paid. Let us look at what happens at the other end of the scale. What sort of fringe benefits do the 74 per cent of wage and salary earners who are paid below average earnings get? Only one in 20 receives a private transport fringe benefit, only one in 50 receives an entertainment allowance, less than one in 17 gets a telephone benefit, only one in 35 gets a housing benefit, and only one in 40 receives any form of medical cost. We can see whom honourable members opposite are screaming for. They are screaming for the privileged in the community, those people who have not paid their fair share. In talking about this tax package I refer honourable members to an article in the Sydney Morning Herald the other day which described a company complaining about the impact of the fringe benefits tax on it. That company had 14 vehicles. It was going to cost the company $16,000 a year in fringe benefits tax. What sorts of cars did that company have that were going to cost $16,000 a year? It had one Holden, five Ford Falcons and six Sigmas. It had a Porsche and a Mercedes. We can guess who had those cars; it was not the salesmen. The co-directors said that they liked their cars because they were the small pleasures that made working worth while. That company was going to keep all its cars because they were essential and because all were used for sales work during the week. We can imagine the co-director driving around in the Mercedes knocking on doors and selling stuff. Of course, they had two vehicles for prestige. We do not dispute the fact that there are people out there who genuinely need cars and who are provided with them for work purposes. Mr DEPUTY SPEAKER(Mr Rocher) —Order! The honourable member will resume his seat. The time allotted for the remaining stages of the Bill has expired. The question is: That the Bill be now read a second time. Question put. The House divided. (Mr Deputy Speaker-Mr A. C. Rocher) Ayes . . . . . . . . . . . 73 Noes . . . . . . . . . . . 54 —— Majority . . . . . . . . . 19 —— Baldwin, P. J. Kelly, R. J. Beazley, K. C. Kent, L. Beddall, D. P. Keogh, L. J. Bilney, G. N. Kerin, J. C. Blanchard, C. A. Klugman, R. E. Blewett, N. Lamb, A. H. Bowen, Lionel Langmore, J. V. Brown, John Lee, M. Brown, Robert Lindsay, E. J. Brumby, J. M. McHugh, J. Campbell, G. McLeay, LeoCharles, D. E Maher, M. J. Charlesworth, R. I. Martin, S. P. Chynoweth. R. L. Mayer, H. Cleeland, P. R. Mildren, J. B. Cross, M. D. Milton, P. Cunningham, B. T. (Teller) Morris, AllanDubois, S. G. Morris, PeterDuncan, P Mountford, J. G. Fatin, W. F. O'Keefe, N. P. Fitzgibbon, E. J. O'Neil, L. R. T. Free, R. V. Price, L. R. S. Gayler, J. Punch, G. F. Gear, G. Saunderson, J. Gorman, R. N. J. Scholes, G. G. D. Grace, E. L. Scott, J. L. (Teller)Griffiths, A. G. Simmons, D. W. Hand, G. L. Snow, J. H. Hayden, W. G. Staples, P. R. Hollis, C. Theophanous, A. C. Howe, B. L. Tickner, R. E. Hurford, C. J. Uren, T. Jacobi, R. West, S. J. Jakobsen, C. A. Willis, R. Jenkins, H. A. Wright, K. W. Jones, Barry Young, M. J. Keating, P. J. Adermann, A. E. Hodges, J. C. Andrew, J. N. (Teller) Hodgman, W. M. Beale, J. H. Hunt, R. J. D. Blunt, C. W. Jull, D. F. Braithwaite, R. A. Katter, R. C. Brown, N. A. Lloyd, B. Burr, M. A. McArthur, F. S. Cadman, A. G. McGauran, P. J. Cameron, Donald MacKellar, M. J. R. Cameron, Ewen Macphee, I. M. Cameron, Ian Miles, C. G. Carlton, J. J. Moore, J. C. Coleman, W. P. Peacock, A. S. Connolly, D. M. Porter, J. R. Conquest, B. J. Reith, P. K. Cowan, D. B. Robinson, IanDobie, J. D. M. Ruddock, P. M. Downer, A. J. G. Shack, P. D. Drummond, P. H. Shipton, R. F. Edwards, Harry Sinclair, I. McC. Fife, W. C. Slipper, P. N. Fischer, Tim Spender, J. M. Fisher, Peter Tuckey, C. W. Goodluck, B. J. Watson, D. J. H. Hall, Steele Webster, A. P. Hawker, D. P. M. White, P. N. D. Hicks, N. J. (Teller) Wilson, I. B. C. Cohen, B. Smith, W. Humphreys, B. C. Cobb, M. R. Dawkins, J. S. Sullivan, K. J. Duffy, M. G. Aldred, K. J. Question so resolved in the affirmative. Bill read a second time. Remaining stages of the Bill agreed to. Bill read a third time. Debate resumed from 22 May, on motion by Mr Keating: That the Bill be now read a second time. Mr DOWNER(Mayo)(9.48) —These Bills on the capital gains tax show only too clearly that the Australian Labor Party is not concerned about the need for capital accumulation in this economy. When the investment figures came out yesterday showing that for the third consecutive quarter private sector investment in Australia had fallen and when our economy, according to national account figures, is going backwards, it is staggering that the Government has the audacity to bring before this House legislation which taxes capital and is a disincentive to investment-above all, a disincentive to investment in the small business sector. If I had only had time, I would have read out the submission of the small business corporation in South Australia condemning this capital gains tax and pointing out the effects it will have on incentives to invest and on the livelihoods of so many people in that small business sector. The impact is not so great on big business, but the impact on small business is, without doubt, absolutely devastating. To do this at a time when investment is desperately sought in our economy, and at a time when our economy is clearly moving backwards and our national accounts show that for two consecutive quarters the Australian economy has been contracting, is in my view a staggering indictment of this Government. It is concerned not about wealth creation, but only about wealth redistribution. Mr DEPUTY SPEAKER(Mr Rocher) —Order! It being 9.50 p.m., the time allotted for the remaining stages of the Bill has expired. The question is: That this Bill be now read a second time. Question resolved in the affirmative. Bill read a second time. Remaining stages of the Bill agreed to. Bill read a third time. Motion (by Mr Young) proposed: That the House do now adjourn. Mr RUDDOCK(Dundas)(9.51) —Tax evasion and avoidance have become issues of importance in recent years. Emphasis has been placed on schemes which, while legal, result in reduced tax obligations and those who have indulged in such arrangements have been accused of indulging in ramps, rorts and ripoffs. In my view, of greater import are blatant avoidance arrangements where people knowingly defraud the revenue and do so by deceit and dishonesty. It has therefore been of great disappointment to me that evidence has been adduced and a prima facie case established to the satisfaction of a magistrate that, in the area of our sales tax law, serious breaches occurred, and involved in those breaches have been a person, or people, involved in a charitable organisation. The breaches involved the forging of exemption status certificates, the avoidance of sales tax and breach of valuation requirements for State stamp duty assessments on the sale of motor vehicles. In the cases about which I speak, motor vehicles were purchased by a charity and then on-sold to third parties. The vehicles were purchased free of tax, for use by the charity but were sold in a market where a considerable profit and the tax avoided, could be taken. I have asked questions about these matters of the Treasurer (Mr Keating) but he has declined to give this House details. His justification was the secrecy provisions in taxation law. I have now placed questions on notice to ascertain whether these matters have been referred to the Director of Public Prosecutions for advice and prosecution. To date I have had no reply to these questions. They must be answered for the Parliament to be satisfied that the sales tax law is being properly and fairly applied. By reading the questions, numbered 3853, 3854 and 3855, honourable members will be aware that the charity to which I have referred is the Parramatta Police Citizens Boys' Club and the person principally involved was a former policeman, Chris Jones. The reason why I speak about this matter is news reports and particularly the item in the National Times of 16 May last. It reveals that, of 36 charges for which Jones was committed for trial, 21 have been dropped by the New South Wales Attorney-General. Prima facie evidence was established in hearings before Mr McKenzie, SM, on 2 August 1984. I understand five of the charges dropped relate to charges of defrauding the Commonwealth, relating to the purchase and re-sale of motor vehicles through the Parramatta Police Citizens Boys' Club. My source is the Daily Telegraph of 15 May last. I have now asked, by question No. 4046, whether the Commonwealth was consulted in relation to this no bill by the State Attorney-General. If the answer is no, the Commonwealth, it seems to me, must now proceed with these charges itself. At the very least, the Director of Public Prosecutions must consider the question independently, as is his duty. This matter has the potential to be a major public scandal. The public and the Parliament need to be satisfied that the charges have not been the subject of some special plea bargaining, where the Commonwealth's rights have been traded away to avoid embarrassing questions arising out of the Police Boys' Club scandal. Important questions include: Were the five charges the only cases of sales tax fraud involving this club and other Police Boys' Clubs in New South Wales? I suspect they were not. Are other police or individuals involved? For how long did these schemes operate? Did the tax avoided go to the organiser, the Club, or was the benefit shared with the purchasers of the motor vehicles? What action has been taken to recoup the tax lost? Do the unusual circumstances of the discontinued proceedings involve any attempted cover-up of the wide issues involved in this case? What measures have been instituted in the Australian Taxation Office to ensure that excessive car purchases by charities are brought to notice? These questions require full and frank explanations to the Parliament from the Treasurer and the Attorney-General (Mr Lionel Bowen). I informed both that I would be raising matters tonight which impact upon their portfolios. Finally, and incidentally, what is the role of others in this matter? For instance, the Minister for Sport, Recreation and Tourism (Mr John Brown) has told the House that he was at the relevant time a director of the Parramatta Police Citizens Boys' Club. To what extent was the Board involved? Did it supervise the purchase and re-sale of motor vehicles in the Club's name? Mr MILTON(La Trobe)(9.56) —On 11 September 1985, I asked the Minister for Trade (Mr Dawkins), in his capacity as Minister representing the Minister for Education (Senator Ryan), a number of questions in relation to Commonwealth support funding for privately funded universities. In particular, I referred to a feasibility study into the establishment of a privately funded international university in Western Australia. The reply from the Minister, given on 30 April, stated in essence that, as universities are established under State government legislation, the Federal Government has no direct power to prevent the establishment of private universities. The Minister also stated that the Commonwealth Government had decided not to support the establishment in Australia of private institutions for the marketing of education overseas. Existing policy allows for marketing of award courses at full cost to overseas students in Commonwealth-funded higher educational institutions. I have made it clear that I am opposed to the policy of marketing of award courses at full cost to overseas students. It is in my view manifestly unfair to have some students enrolled in courses paying full fees while other students are paying part fees and still others are not paying fees at all. The overall policy of the Australian Labor Party is presently to maintain the provision of free tertiary education. It is, of course, true that the policy could be said to relate to Australian students only and that the students who are paying fees or part fees are overseas students. Apart from the fact that many overseas students are in poverty as a result of being required to pay 35 per cent of a full course fee this year, rising to 45 per cent next year, I am sure that those ALP members who helped to frame the policy had not anticipated that the policy would be qualified to exclude overseas students. However, I have no doubt that this matter will be debated at length at the July 1986 National Conference and finally decided one way or another at that time. So I will say no more here about the apparent contradictions between our platform and Government policy. I am concerned at the latest reports from Western Australia in relation to negotiations between the Western Australian Institute of Technology and Yanchep Sun City, a subsidiary company of a Japanese multinational, Tokyo Corporation, for an expansion of WAIT teaching facilities to Sun City. As the reply to my question of 29 April has indicated, the Federal Government does not have the constitutional power to approve or deny the proposed establishment of a private tertiary education institution in Western Australia. The Federation of College Academics, in its May issue of the Journal of Advanced Education, expressed its concern at the proposal. An article in the journal states: . . . why are WAIT management able to claim that initial negotiations between themselves and YSC do not require Commonwealth Government approval, but only agreement between WAIT, YSC and the State Government? If this signifies that the Federal authorities are in the process of surrendering decision-making power on major issues, is it because a change in ALP policy is underway? Are State Governments to be elevated in status along the lines previously favoured by the opposing, conservative parties? As I pointed out, however, the Commonwealth Government does not have the power to intervene, even if it wished to intervene. The article in the journal was also concerned about the support of the State Government for the marketing of land in Sun City which the journal claims is the reason why WAIT is being encouraged to move to Sun City. My own concern is that it should be made very clear that Commonwealth funding will not be provided to support the establishment costs of the proposed private tertiary institution. The article in the journal also states: If WAIT, YSC and the State Government are able to conclude initial negotiations on the deal without receiving the approval of the Commonwealth Government, as one senior administrator claimed on the Bentley campus recently, what are the implications for Australian federalism? WAIT, YSC and the State Government will be able to force the Commonwealth Government to long-term commitments on recurrent, and probably also capital, expenditure without the Federal administrative machinery having been a party to initial negotiations. By presenting agreement as an accomplished fact, great pressure will be exerted on national authorities to come to the party, possibly even to provide up to 20% of the initial capital costs of the project. I hope that the Minister for Education will make it very clear that the Commonwealth Government will not provide any funding for this project, whether by way of direct funding or by way of hidden subsidy. Hidden subsidies would relate particularly to permitting WAIT to use any of its administrative facilities which are supported by Commonwealth funding, such as the student records office or the Bursar's office, to support the establishment of the new institution. I hope the Minister can assure me that my concerns are unfounded. Mr DEPUTY SPEAKER(Mr Rocher) —Order! The honourable member's time has expired. Mr COLEMAN(Wentworth)(10.01) —I want to discuss briefly the conduct of Australian affairs by the Australian Ambassador to the United Nations Educational, Scientific and Cultural Organisation, Mr Whitlam. During Question Time on 22 May I asked the Minister representing the Acting Minister for Foreign Affairs, the Minister for Defence (Mr Beazley), whether he could confirm that Mr Whitlam had been responsible for the unauthorised dis- closure-the leaking-of confidential Geneva Group decisions to the Director-General of UNESCO, Mr M'Bow, as stated in an article in News Weekly by the respected Washington-based Australian journalist, Peter Samuel. Let me remind the House that the Geneva Group is the name given to the Organisation for Economic Co-operation and Development or Western United Nations members, including Australia. The Geneva Group decisions dealt with the tenure of Mr M'Bow and directors-general of the United Nations agencies, and in particular, with the decision that tenure should be limited to two terms, a decision with which the Australian Government agreed. The article by Peter Samuel reported the substance of a telegram to the United States Secretary of State, George Shultz, in Washington, from the United States mission in Geneva, which stated that Mr Whitlam had leaked Geneva Group decisions concerning Mr M'Bow to Mr M'Bow. The article went on to say: At least one United States State Department officer is outraged that Australia, through Ambassador Whitlam, has been leaking information about confidential Western tactics and breaching understood Western alliance arrangements. Far from apologising for his leaking, Mr Whitlam has threatened to leak more! Peter Samuel quoted the number of the telegram, its date, and the signature on the telegram as evidence of authenticity. He stated that he had sent a copy of the telegram to Mr Schultz, the Secretary of State. I do not think anyone would doubt the authenticity of that telegram, in view of all the evidence given. In any case, no one has doubted it. In answer to my question on 22 May, the Minister for Defence, representing the Acting Minister for Foreign Affairs, said that he did not know the circumstances and would rather leave the question for the Minister for Foreign Affairs (Mr Hayden) to answer on his return. The Minister for Foreign Affairs gave his answer yesterday, which I read as confirming the accuracy of the Peter Samuel article and the claims about Mr Whitlam's leaking the telegram. However, this morning the Sydney Morning Herald reported the Minister's answer under the heading: `Whitlam did not leak United Nations documents, Hayden says'. In these circumstances, with the Sydney Morning Herald interpreting the answer from the Minister for Foreign Affairs so differently from the way in which I think it must be interpreted-that is, as confirming Peter Samuel's statement-I want to spell out what I believe is the correct reading of the Foreign Minister's answer. The Minister's answer outlined these basic facts. Firstly, on 20 March or 21 March the Geneva Group agreed on the principle of limiting to two terms the tenure in office of the heads of specialised agencies and other United Nations bodies. Secondly, on 11 April the Geneva Group, including Mr Whitlam, agreed that the co-chairman of the Geneva Group should take up this decision formally with Mr M'Bow on 30 April. Thirdly, the Minister for Foreign Affairs said that on 23 April, one week before it was agreed that the co-chairmen would see Mr M'Bow on this matter, Mr Whitlam saw Mr M'Bow and leaked everything to him, in blatant breach of his agreement at the Geneva Group meeting on 11 April. This was clearly a disclosure unauthorised by the Geneva Group of which Mr Whitlam is a member and which had settled on 30 April as the date on which the co-chairmen of the Geneva Group would see Mr M'Bow. The Foreign Affairs Minister said in his answer to my question that Australian policy was and is to have discussions with Mr M'Bow about his tenure. Mr Whitlam did this, but of course the Foreign Minister did not-naturally did not-say that it approved having these discussions at a time which breached an agreement made by and within the Geneva Group. The Minister's answer clearly states that Mr Whitlam was an unauthorised leaker. There is no other way of reading his answer, although he uses rubbery words. But the fact are plain so despite the Sydney Morning Herald's headlines, it is important that this House know how Mr Whitlam handles himself and Australian business in UNESCO. He leaks, in breach of agreements with Australia's allies, and apparently does it all the time. Mr HOLLIS(Throsby)(10.06) —Yet again we have listened to an unfounded attack by the honourable member for Wentworth (Mr Coleman) on Australia's Ambassador to the United Nations Educational, Scientific and Cultural Organisation. It compounds the offence of asking the question the other day. His question was adequately answered yesterday afternoon by the Minister for Foreign Affairs (Mr Hayden). If the honourable member is too thick to understand the answer-I know he is a lightweight-I suppose he is more to be pitied than blamed. I was going to devote my time this evening to talking about some of the cant that is so often heard in this chamber. Over the last couple of nights in the adjournment debate we have heard speeches on tax measures, and we have heard such speeches again today. I recommend to members of this House that they read the Ross Gittins article in yesterday's Sydney Morning Herald, which I think sums up the whole issue and indicates what nonsense some honourable members are talking. Some of the greatest cant I have heard recently in this House was in the contribution of the honourable member for Fisher (Mr Slipper) on Tuesday evening in regard to a film, which I think was called Hail Mary. Listening to the view expressed that evening by the honourable member for Fisher, one would think that this Hawke socialist Government had made the viewing of this film compulsory for all Australians. I say to honourable members: Let us face it. Most people would not even know about the film were it not for the campaign to have it banned. The distributors of the film Hail Mary must be rubbing their hands together in glee. It will really ensure that it gets a good audience. I doubt whether the honourable member for Fisher has seen the film. I most certainly have not seen it, but after all the information we have heard about it, I am thinking of going up to Sydney this weekend to try to see the film. The Attorney-General (Mr Lionel Bowen) summed up what most enlightened people would be thinking when he said that those who might find the film offensive-I admit there may be some-should not go to see it. I really thought that honourable members opposite were in favour of free choice, but no, they are not in favour of free choice when it comes to censorship. It wants to enforce its narrow bigoted views on everyone. There is really nothing wrong in portraying biblical situations in a modern setting. The same happens in the case of plays on historical events. Last weekend, I happened to see a performance of Shakespeare's Winter's Tale, in a modern setting. I found it most enjoyable. Those people who, like those opposite, want to ban everything only want views expressed that coincide with their own. Honourable members opposite come into this House day after day, wrapped in the flag, and call for censorship. Honourable members might remember that a few years back they wanted the Life of Brian banned. This film has brought enjoyment to millions of people throughout the world, but honourable members opposite wanted it banned. Not so long ago Australian became the laughing stock of the world when some people in this country-I am not saying that honourable members opposite were involved-actually wanted to ban the display in Sydney of Michelangelo's masterpiece David. Finally, the honourable member for Fisher called for the sacking of the Film Censorship Board. As a practising Catholic I believe that those who want to see the film should have the right to do so. Those who might find the film offensive would not bother to go to it. It is really nonsense for the honourable member for Fisher to come into this House and make a speech such as the one he made on Tuesday night about this film. As I said before, it will have a great audience now. It would have been a film very few Australians would have heard about, but now the honourable member has ensured that it will have a wide distribution and a wide audience. Mr TUCKEY(O'Connor)(10.11) —Madam Speaker, as you are well aware-you have met these young people today-on two occasions each year I arrange to bring two students from the high schools of my electorate to Canberra so that they can participate in the operations of the Parliament and get some idea of its workings. They are then able to transmit that information to their colleagues. As part of that process I request that they write a very short speech about their schools and districts. Tonight I wish to present those speeches for Dean Watts and Anthony Watson, who are in the House tonight. The first speech is by Dean Watts and it states: My name is Dean Watts and I come from Narrogin, one of the many country districts in the State. I live in a small town not far from Narrogin called Pingelly, where I have lived all my life and where I have attended both primary and high school. Once I completed high school, I successfully applied for the course at Narrogin Agricultural College where I am in my second year. It is most enjoyable and I think that the two year course is a must for anyone wanting to become a farmer. The town of Narrogin is situated 190 kms south east of Perth and has a population of 5200. It is the regional centre for the Upper Great Southern area of W.A. Most of the town's industry is concerned with servicing the well established farming community. The main emphasis in the area is on sheep with cropping, beef and pigs being other major income earners. The town has good facilities for its active cultural, service and sporting clubs. Education is well catered for with three primary schools, a high school with a large hostel and an agricultural college. Narrogin Agricultural College, of which I have been elected college captain, is of a type peculiar to Western Australia. The college provides a two-year residential course in vocational agriculture, at the secondary level of education. The college caters for 108 students and typically most students enrolling at the college will return to family farms or gain employment in industry associated with farming. The course at the college is divided approximately 50:50 between theory and practical work. Theory subjects are concerned with crop and animal husbandry and economic practices of farm management. A student's practical time is split between learning skills on the college's 1000-hectare farm and the manual arts workshops. Farm construction techniques and maintenance methods are practiced within this section of the course. It is not all work and no play at the college. Students spend a considerable part of their free time on a variety of sports. A number of future state representatives have been produced during the college's 70 or so years. The college has taught 3 generations of farming families and is now well established in the farming community. With this sort of progress, Narrogin Agricultural College, like Narrogin itself, seems assured of a strong future. Anthony Watson writes: My name is Anthony Watson and I was honoured to be selected by my school, St. Patrick's College, Geraldton as the recipient of the Wilson Tuckey Scholarship. On behalf of the College, I would like to thank Mr. Tuckey for creating this scholarship, which enables students to gain a first hand understanding of the Australian Federal Parliament. My family has lived in Geraldton for 68 years and I am in my matriculation year. St. Patrick's College is a boarding and day high school conducted by the Christian Brothers for boys from Kununurra in the north to Ravensthorpe in the South. The Principal is Brother John Murray and I am the head prefect. This year the college celebrates its Diamond Jubilee. St. Patrick's is only one of the many educational institutions in Geraldton. Geraldton is the educational hub of the mid-west and although opportunities are available for tertiary and technical education, we fall short of the opportunities and amenities available in the city. Being the centre of a rapidly expanding and progressive community, we would like to see more funds made available for the extension of these services. Geraldton has a population of 22,000 and will be acknowledged as a city in 1988, with celebrations incorporated with the Bicentennial. Geraldton is proud of its rock lobster industry which has been established along its coast line and the Abrolhos Islands. This unique asset is one of the major export earning industries for the town. The port of Geraldton is also an outlet for rich mineral sands, and the agricultural and pastoral production of the region. We look forward to the proposed expansion and upgrading of the facilities of the port. The employment of Geraldton youth depends heavily on the primary and service industries, which brings about a critical need for the development of the secondary industry. Job creation and youth training schemes are activities I would like to see maintained in the Geraldton region. The tourist potential of the Geraldton region is just being tapped and with the introduction of the Batavia Coast concept of promoting the industry, we can look forward to an ever-increasing tourist flow. The bizarre history of the Abrolhos Islands-where the `Batavia' of Batavia Coast was wrecked-coupled with the existence of the southern most coral reefs in Australia, could see these islands developed as an attraction of world-wide fame. Due to this attraction, I extend an invitation to all of you to make the trip to Geraldton and experience this unspoilt country town of the mid-west of western Australia. Mr SCOTT(Hindmarsh)(10.16) —The irradiation of food using radioactive cobalt 60 is a highly controversial issue. This is a recently developed process whereby pallets of food are passed through a concrete chamber and irradiated by the radioactive cobalt 60. The gamma rays, which are equivalent to those used in more than two million chest X-rays, have to be contained in concrete buildings with walls some two metres thick. At present there are two irradiation plants operating in Australia-one in Dandenong in Victoria and the latest one in the Sydney suburb of Wetherill Park. Both plants have been restricted to the irradiation of cosmetics, medical and surgical materials and wine corks. However, this could be greatly expanded to include cereals, fruit and dried fruits, poultry, herbs and spices, vegetables and dehydrated vegetables. The Public Health Committee of the National Health and Medical Research Council has just recently endorsed regulations that will accommodate the irradiation of food using radioactive Cobalt 60. Draft regulations prepared by the Food Standards Committee of the Public Health Committee provided for a reasonable system of labelling irradiated food. However, in some very mysterious way, those labelling provisions were watered down and to date we have been unable to find out by whom or for what reason. The most obvious reason would be to allow the irradiation of food to be covered up. In fact, it will lead to the consuming public being deceived in a most underhand way. It is this cover-up that I particularly want to raise. It is no accident that the labelling provisions are being covered up in this way. Consumers in the United States of America are experiencing exactly the same problems. The Australian draft regulations for food irradiation required that the label on irradiated food should say `treated with ionising radiation'. But then they were changed, changed in the dark of night, and now they allow for `or words having the same or similar effect'. Honourable members might well say that that is okay. But before they do they should look at just how devious the supporters of food irradiation can be. One word contrived as having the same or similar effect was `picowave'. An employee of the United States Food and Drug Administration said that `picowave' was not even in the dictionary. The word was contrived by Mr E. Nielson, the President of Emergent Technologies Inc., of California, as a way to avoid the term `food irradiation'. `Picowave' described the wave lengths of ionising radiation in the electromagnetic spectrum. One food irradiation processor, Radiation Technologies Inc., went even further. It called the food `picofresh'. The alterations to the labelling provisions in Australia will now allow this type of gross deceit, but we, as legislators, must not let this happen. Some other contrived words being used include `radappertisation'. Perhaps the editorial of the Adelaide Advertiser best sums up this deception. The title of the editorial is `Cute nukespeak' and it says: A radioactive treatment of food has been cleared by most health authorities, including Australia's, as a safe way of increasing shelf life, and thus national health. But caution is needed with all new technologies, which was a lesson of Challenger and Chernobyl, and some community unease is inevitable about irradiating food. Proponents of such treatment have done themselves no service by adopting the nukespeak of ``picowave'' as a marketing term for irradiation. Words are tools of conventional meaning, and the public will suspect that if the irradiators cannot use the conventional word they must be hiding something. Even if they convince all that irradiation is no bad thing, by refusing to use the conventional word they would be hampering freedom of choice of those who for whatever reasons wanted to shun food treated with Cobalt 60. As I said at the beginning, the irradiation of food using radioactive cobalt 60 is an extremely controversial subject. Some scientists are telling us that it is safe. However, these same scientists were telling us 10 years ago that ethylene dibromide or EDB was safe. Now we know it is carcinogenic. They say that irradiation of food will stop the use of EDB, but other scientists are saying that aflatoxins, which are some 1,000 times more cancer causing, have been found more abundantly after irradiation by gamma rays. Whom do we believe? Why should the consuming public have this questionable food processing system deposited on them and not have the right to know that the food they are eating has been treated with radioactive cobalt 60? The consumers of Australia have a right to know whether their food has been irradiated. Madam SPEAKER —Order! The honourable member's time has expired. Mr HAWKER(Wannon)(10.21) —I rise tonight to bring forward a matter which a constituent of mine has drawn to my attention. In so doing I realise that sometimes an elected member has some difficulty in trying to balance what is in the public interest and at the same time not wishing to undermine public support for an institution that does in fact need public confidence. In fact, I am referring to the Australian Bureau of Statistics. I think every honourable member would realise the importance of the Bureau and the need for public confidence in the Bureau if it is to function properly. In this case I am talking about the agricultural census form which is sent out to all farmers once a year. I guess all honourable members would know that the material collected in the census is of great assistance both to governments and to farming groups in the development of policies which are in the best interests of agriculture. It is important that the agricultural census have the confidence of those people who are filling in the form. In particular, they must feel confident that the details of what is actually going on in a farmer's business, many of which are very private, are in fact kept confidential. I think any breach of confidentiality would have to be seen as totally unacceptable. The case that has been drawn to my attention involves a blatant breach of this confidentiality-a blatant breach of the confidentiality of the private business affairs of two farmers. I would also have to hasten to add that this case obviously shows the incompetence of an officer of the Australian Bureau of Statistics. I draw the attention of honourable members to section 19 (1) of the Census and Statistics Act, which states very clearly: A person who is, or has been, the Statistician or an officer shall not.... . . . . either directly or indirectly, divulge or communicate any information furnished in pursuance of this Act to any person (other than the person from whom the information was obtained). That is fairly clear. Section 20 (1) of the Act states: An offence against this Act, other than an offence against sub-section 19 (2), shall be prosecuted summarily. My constituent filled in the ABS farm census form believing what he was told-that is, that the form was sent out to farmers in every State. A dodger sent out with the form explained under the heading `Confidentiality': You should note that you are obliged by law to fill in this form. However, the law protects the confidentiality of the information you provide. The following words appear at the beginning of the statistics form itself: This return is collected under the authority of the Census and Statistics Act 1905 which provides for the compulsory furnishing of a completed form. Individual returns remain confidential to the ABS and statistics are only released in the form of aggregated data. My constituent filled in the form and a few weeks later he was surprised to be asked to fill in another form because, apparently, the Bureau did not have his form. So he said: `Okay, send me some new forms'. Two forms did arrive but they turned out to be forms completed by other farmers. My constituent's first reaction was quite natural. He said: `Someone else's forms have been sent out. Where are mine?'. He told the Bureau he would not fill in any new forms until his were brought to him. The Bureau said that not only would he have to fill in more forms but he should also return the two that he had been sent. He got a rather threatening phone call to this effect from someone within the Bureau. Quite obviously the Bureau was desperately trying to stop the cat getting out of the bag. The long and short of it is that someone has bungled. Someone has breached this confidentiality. I think the Treasurer (Mr Keating), who is the Minister responsible for the Bureau, is going to have to do something about this extremely serious matter. If the Bureau wants people to divulge private and confidential information, it has to respect that confidentiality. It is quite obvious in the case that has been drawn to my attention that this confidentiality has been breached and in fact two farmers have filled out forms which, unbeknown to them, could have fallen into the hands of unscrupulous people and become public knowledge. Madam SPEAKER —Order! The honourable member's time has expired. Mr LANGMORE(Fraser)(10.26) —The cross-border attacks by the South African army on three of its neighbouring countries last week were acts of state terrorism. They were a totally unacceptable intervention into the internal affairs of other sovereign nations and showed complete disregard for international law and convention. The demolition of homes in the settlement at Crossroads outside Capetown taking place at this moment is further evidence of the inhuman ruthlessness of the South African Government. These events confirm the interpretation of the anti-apartheid organisations in South Africa, that there has been no change in the nature of the South African regime. Speakers for these organisations are correct in saying that recent changes in South Africa are only cosmetic. While great publicity has accompanied the ending of the pass laws, the invidious Registration of the Population Act is still in force. Under this law last year more than 1,000 people were reclassified from one race to another, 702 coloured people became white, 19 whites became coloured, one Indian became white, three Chinese became white, 50 Indians became coloured, 249 blacks became coloured, while 20 coloureds became black. What a joke in bad taste! Significantly, no blacks became white and no whites became black. This is the system which the raids on Harare, Lusaka and Gaborone were designed to protect. The South African raids on Zimbabwe, Zambia and Botswana coincided with the arrival in South Africa of the Commonwealth's Eminent Persons Group. This is the surest sign we have yet seen of the total disregard which the Government of President Botha has for a negotiated settlement. While it remains to be seen whether the Eminent Persons Group will produce any substantial change, the recent events direct our attention towards much stronger measures which must be taken by Commonwealth countries, including Australia, should it not succeed. For some time now anti-apartheid leaders in South Africa have been urging the international community to play a greater role in hastening the end of apartheid by the imposition of economic sanctions. On 2 April this year, Bishop Tutu-who had hitherto stopped short of advocating sanctions-announced that he now unequivocally supported the call for economic sanctions. He added: We are heading for a catastrophe in this country and only actions by the international community, the exertion of pressure, can save us. Later in April, 33 South African Catholic bishops, in a pastoral letter read in churches throughout the country, called for economic pressure against the Government of South Africa to compel it to dismantle apartheid. This letter describes economic pressure as the most effective form of non-violent action and implicitly calls for sanctions and disinvestment. Australia voted at the United Nations Security Council last week in support of comprehensive mandatory sanctions against South Africa. The United States of America and Britain vetoed that resolution. Australia must continue to advocate to these two countries the importance of economic sanctions as a last chance for peaceful transition to a non-racial, democratic, just and peaceful South Africa. Yesterday the Prime Minister of Malaysia called for the expulsion of Britain from the Commonwealth if it would not agree to back sanctions. That demonstrates the strength of feeling in the Commonwealth about the issue. Should the United States and Britain not respond to the rest of the international community, and should the South African Government continue with its intransigence, the Australian Government must be prepared immediately to expel South African diplomats, to withdraw landing rights from South African Airways, to ban the import of all minerals and agricultural products from South Africa and to strongly discourage tourism from Australia to South Africa. The greatest problem South Africa faces now is the escalation of violence in the townships and the urban areas. It is clear that the violence of the state and of the apartheid system has led many opponents of apartheid into further arbitrary violence as their only response. Without economic sanctions, it is very difficult to see how intensifying violence can be avoided in the transition to democracy in South Africa. Mr HODGMAN(Denison)(10.30) —The capital gains tax and the fringe benefits tax will savagely hit Australia's churches and charities. Once sacrosanct, the churches of Australia will now fall victim to this wicked and vicious legislation which can be described only as anti-Christ. Two-thirds of the residential value of every rectory, presbytery and manse in Australia will attract the fringe benefits tax payable by the employer, namely, the church. I ask honourable members to contemplate that, as the legislation has gone through our chamber, two-thirds of the residential value of every rectory, presbytery and manse in Australia will attract the fringe benefits tax. Mr Chynoweth —I raise a point of order. I believe that the honourable member for Denison implied that we on this side of the House were anti-Christ. I believe that that is not correct. Madam SPEAKER —There is no point of order. Mr HODGMAN —That fringe benefits tax will be payable by the employer, which is the church. This means that the Church of England, the Catholic Church and every single church in Australia is, under the legislation, the employer and is obliged to pay the fringe benefits tax on two-thirds of the residential value of each rectory, presbytery and manse occupied by a minister. That is absolutely disgraceful and totally indefensible. I am appalled that in 1986 such legislation could come before this Parliament and, worse still, would be forced through the House of Representatives by weight of numbers. The second aspect of the legislation which I find totally objectionable is the provision of proposed new section 160y in the Income Tax Assessment Amendment (Capital Gains) Bill, under which every bequest of property acquired or purchased after 20 September 1985 to every church and charity in Australia will fall foul of the Hawke-Keating capital gains tax. Mr Shipton —Shame! Mr HODGMAN —I agree with the honourable member for Higgins; it is shameful. I read into the Hansard the provisions of proposed new section 160y, sub-sections (1), (2) and (3): Asset bequeathed to tax-exempt person ``160y. (1) A person is a tax-exempt person in relation to the year of income for the purposes of this section if the person is a person whose income of the year of income is exempt from tax by virtue of a relevant exempting provision. ``(2) Where- (a) a person died on or after 20 September 1985; (b) an asset that formed part of the estate of the deceased person and was acquired by the deceased person on or after that date has passed to a beneficiary in the estate of the deceased person; and (c) the beneficiary is a tax-exempt person in relation to the year of income, section 160x does not apply in respect of the asset but the following provisions of this section have effect. ``(3) The asset shall be deemed for the purposes of this Part to have been disposed of by the deceased person, and acquired by the beneficiary-- that is, a church, charity or school-- immediately before the death of the person for a consideration equal to the market value of the asset at the date of the death. That means that all property which has been bequeathed to churches from 20 September last year to the present date will now be subject to payment of capital gains tax. Mr Cunningham —On what? Mr HODGMAN —That capital gains tax will be payable by virtue of the provisions of proposed new section 160y, which the honourable member opposite clearly has not read. I repeat: Under proposed new section 160y in this disgraceful and iniquitous Income Tax Assessment Amendment (Capital Gains) Bill every bequest of property acquired or purchased after 20 September 1985 to every church and charity in Australia will fall foul of the Hawke-Keating capital gains tax. That is disgraceful. This sacrilegious Government will extract its 30 pieces of silver from the churches of Australia at the Judas rate of 46 per cent, rising to 49 per cent on 1 July 1987-the date of the Feast of the Precious Blood and the anniversary of the death of Martin Luther. Shame on the Government! Every church in Australia will condemn it for what it has done in this Parliament. It has behaved in a manner which is absolutely contemptible, shameful and totally indefensible. Mr HAND(Melbourne)(10.35) —It is no wonder that the honourable member for Denison (Mr Hodgman) has a write-up in the current edition of Matilda, after a speech such as that. I doubt whether he will have 2 per cent support in the community after that sort of contribution. Mr Hodgman —You will read it in every church newspaper in Australia, comrade. Mr HAND —One of these days the churches and other people will wake right up to you, because you would have to be the greatest phoney that this place ever produced. Madam SPEAKER —Order! The honourable member for Melbourne will direct his remarks through the chair. Mr HAND —I want to raise the question of the attack on recipients of benefits from the Government. I do so because I am concerned about the tone of this attack which has been waged against people who are not able to defend themselves. I refer to the general broad brush approach of spokespersons of the New Right and the Opposition and the way in which they have tackled this question. I am also going to say that I believe that some members of the Government have been a bit careless in the way they have approached this. Opposition members interjecting- Mr HAND —If those opposite were quiet, they may learn something. The facts are that $3.5 billion in tax is outstanding. In the year we took office approximately $2.9 billion was outstanding. It seems to me that the first priority for the Government ought to be to get back taxation that is owed. There is a possibility that the Australian Taxation Office, through its various branches, would be able to supply the names and addresses of those people who owe money. On the other side we have an obsession by people to make a broad brush attack against those who are not able to defend themselves. I am sure that those people who take the time to read the Hansard would know that the members of this Government are addressing this problem. It has been addressed by the various departments in quite deliberate ways, such as the introduction of computers, tougher proof of identity procedures, direct deposits of pensions and benefits into bank accounts and a more stringent review of the processes. It seems to me to be a tragedy that we are chasing hypothetical figures on how many people are engaged in this fraud. If people are engaged in fraud, I make no apology for saying that I believe that they ought to pay back that money and they ought to cease the fraud. The inference in the debate which has been carried on is that all people in receipt of Commonwealth benefits of one form or another are engaged in fraud. That is a tragedy. I do not think anybody in this House would want to create that impression, but unless we take heed of ourselves and act in a responsible manner, that is the impression which we will all be a party to creating in the community. I do not believe that anybody in this chamber or the other chamber would want to become engaged in that. I make a plea, on behalf of those people in receipt of benefits, for people to be a little more careful with the type of language they use when they blandly get up and blast off and make those accusations. We ought to be more concerned about the levels of income these people are receiving. It seems to me that in a community where millions, or even billions, of dollars are hurled around the stock exchange every day, when we look at the levels of income that these people are expected to live on we see that something is not quite right in our society. We ought to be paying more attention to the collection of taxes that were owed under the previous Government and which are owed under this Government. If we are able to get in that $3.5 billion, which exceeds the total amount of money paid out in unemployment benefit-- Mr Hawker —What about the cash economy? Mr HAND —I will deal with the cash economy another day. This happens to be fact. This is the Auditor-General's report which states that $3.5 billion is owed. We quibble and we score points off each other over a piddly amount of money such as the value of the unemployment benefit or the supporting parent's benefit. Madam SPEAKER —Order! The honourable member's time has expired. Mr COWAN(Lyne)(10.40) —Listening to the honourable member for Melbourne (Mr Hand), I can understand the situation he has referred to, but does he not realise that he and his Government are responsible for this? There are many social welfare schemes in Australia today, and we have developed such a welfare state that there are many people around the place who expect the Government to keep them. The reason for this is the reason the honourable member for Melbourne was talking about. For months we have had taxation and other legislation in this chamber which will have the effect of bleeding those who have the money-the workers. How long can this country afford to keep up its social welfare payments? If the Minister for Social Security (Mr Howe), who is at the table, has any common sense, and I am sure he has because he applies himself fairly well to matters in the House, how long does he think the Government and the taxpayers of this country can afford to support our welfare system? I do not think we can afford to support it for very long. Honourable members opposite should be reversing their thinking. Instead of the legislation we have before the Parliament, they should be giving some incentive to some of the young people who leave school and cannot get jobs. In every honourable member's electorate there are people between 40 and 50 years of age who are honest, hard working people and who have no future. Mr Hand —What about their sons and daughters? Mr COWAN —I know that the honourable member for Melbourne is talking about people in this chamber. He will hear more about this. As the weeks go on and the Budget is brought down in August this year, honourable members should look at that and at the rest of the legislation that is introduced. They will have every reason to get to their feet night after night in this House and talk about the things that are being said not only in this chamber but also by people outside. The honourable member for Melbourne should look at himself. He is a member of the Left. The honourable member for Melbourne dictates to Ministers, to the Prime Minister (Mr Hawke), to the Treasurer (Mr Keating) and those who sit on the Treasury bench of this country. He is the one who does that, yet he turns around and accuses people of talking about others who should not be drawing social security benefits. The honourable member for Melbourne had better have a look at himself. Madam Speaker, when you look at the speakers' list you will see that I spoke on the taxation Bills this afternoon. I would love to have said something about the various clauses of those Bills but I did not get around to that. I purposely did not do that because, as I have said, the average person in Australia is darned concerned about the future of this nation of ours. The Leader of the Opposition (Mr Howard) is the man who will pull it around, and the people will elect him, make no mistake about that. The honourable member for O'Connor (Mr Tuckey) and others are prepared to get up and say what they think should be happening in this land of ours. The honourable member for Melbourne is adding to this nation's problems day after day, in this support, with the rest of the Left, of the Australian Council of Trade Unions and others who are running this nation. To a degree the ACTU ran the previous Government, but it will not run us next time. I did not really get on my feet to talk for very long about this subject, but that issue is much more important than some of the other issues we quibble about day and night in this chamber. The Australian people expect better of us. Let me conclude by saying that I am concerned about the Sydney (Kingsford-Smith) Airport because it is inadequate to take the aircraft from overseas and from around Australia and the commuter aircraft that will use it in the years to come. I want to register my grave concern about it because the Minister for Aviation (Mr Peter Morris) and the Government have no intention whatsoever of proceeding with a new airport for Sydney. They have to acquire land, they have to find the money to build it, and they have to go through the construction process, which will take about 14 or 15 years. As far as I am concerned, as a representative of a country electorate, this is not good enough for the people of Sydney or for the people of Australia. We are looking for tourist trade and we are looking to getting people into and our of the metropolitan area. That airport will not be able to cope simply because the Minister will not agree to another runway being built. That is a great shame. If we looked at issues such as that instead of worrying about these other things we would be better off. Madam SPEAKER —Order! The honourable member's time has expired. Mr CHYNOWETH(Dunkley)(10.45) —I should like to continue dealing with what I believe is the most important issue facing Australia today. I spoke about it last night on the adjournment debate. I wish to continue reading into Hansard the Nobel Peace Prize lecture which was given last year by Bernard Lown. It continues: It is sheer hubris to pretend that there would be human survival after such a man-made catastrophe. We know, therefore, that a nuclear war must never occur. Is this merely a hope or a certainty? Since no national interest would justify inflicting genocide on the victim and suicide on the aggressor, a prevalent misconception is that a nuclear war will never be fought. But the realities of our age compel an opposite assessment. In no previous epoch were adversaries so continuously and totally mobilised for instant war. It is a statistical certainty that hair-trigger readiness cannot endure as a permanent condition. Furthermore, the unrelenting growth in nuclear arsenals, the increasing accuracy of missiles, and the continuing computerisation of response systems all promote instabilities that court nuclear war by technical malfunction, miscalculation, human aberration, or criminal act. The ever-decreasing time between missile launch and nuclear detonation relegates critical decision making to computers programmed by fallible human beings. The possession of these weapons has been justified by the theory of deterrence. Such a view of human affairs has held sway throughout the ages. But the Roman adage Si vis pacem, para bellum has consistently been a prelude to war, not a guarantor of peace. No more untenable view of human affairs has ever gained such widespread public acceptance. In order to be effective, nuclear deterrence must operate perfectly and forever. No such expectations are permissible for any human activities. The pretension to inhibit aggression by threatening to inflict unacceptable damage is jarred with contradictions. How is one to account for an overkill capacity equivalent to more than 1 million Hiroshimas? Would annihilation of only a few major cities not inflict unacceptable damage? A single modern submarine has approximately eight times the total firepower of World War II-sufficient to destroy every major city in the Northern Hemisphere. Why, then, the stockpiling of 18,000 strategic weapons? In this race, the runners are no longer in control of their limbs. How did we reach such a dangerous and tragic impasse? Since the dawn of history, the tools forged by humans have imposed their laws on behaviour. As tools were transformed into ever more complex machines, technology shaped our consciousness while providing mastery over our environment. This was not to be some Faustian bargain. Technology was intended to serve human interests-to enlarge the domain of freedom against life's compelling necessities. Increasingly, though, as Thoreau observed, ``We are becoming the tools of our tools.'' Worse still, our tools are beginning to operate against our will and to threaten us with extinction. An additional misperception propels the arms race. Throughout human history, when confronted with what was deemed a deadly enemy, the fixed human response has been to gather more rocks, muskets, cannons, and-now-nuclear bombs. Nuclear weapons have no military utility-indeed, they are not weapons but instruments of genocide-but this essential truth is obscured by the notion of an ``evil enemy.'' The ``myth of the other,'' the stereotyping and demonising of human beings beyond recognition, is still pervasive and now exacts inordinate economic, psychological, and moral costs. The British physicist P. M. S. Blackett anticipated this state of paranoia when he said, ``Once a nation bases its security on an absolute weapon, such as the atom bomb, it becomes psychologically necessary to believe in an absolute enemy.'' The imagined enemy is eventually banished from the human family and reduced to an inanimate object whose annihilation loses all moral dimension. Mr DOWNER(Mayo)(10.50) —Last night in the adjournment debate the honourable member for Canning (Mr Gear) made a rather uncalled for and unnecessary attack on the Opposition's most effective Waste Watch Committee, which is becoming increasingly well known to honourable members opposite in exposing gross extravagance by Government departments and by the Government itself. In this uncalled for attack on the Waste Watch Committee the honourable member for Canning made two basic points to support his argument: First, he objected to the Waste Watch Committee exposing the funding by taxpayers of a whole range of union activities; and, secondly, and even more extraordinarily, he attacked the Waste Watch Committee for using questions on notice and freedom of information requests in order to get information on what the Government is doing. I want to respond quite clearly and unequivocally to the points that were raised by the honourable member for Canning. First, the Waste Watch Committee is by no means contrite about its attacks on the Government for its funding of union activities. When one considers that the top 20 unions of Australia have assets of some $118m it is really not fair that the taxpayer be asked to spend thousands upon thousands, indeed millions upon millions, of dollars topping up the coffers of the trade unions. I could understand it if a member of this House were outraged if the Western Mining Corporation, Broken Hill Proprietary Co. Ltd or some other big company in Australia were to receive hand- outs for story tellers in residence or for muralists or to put on concerts, and so on. Of course one would be outraged. However, the double standards of the Labor Party know no bounds because, apparently-according to the honour- able member for Canning-to spend taxpayers' money, to spend other peoples' money on employing artists in residence or muralists or on concerts by trade unions and all those sorts of activities is justifiable. In South Australia, just since the Hawke Government has been in power, the trade union movement has received a grant getting on towards half a million dollars, and so much of this money has been spent on strange things, such as concerts for the Trade and Labour Council centenary, commissioning the writing of a centenary song for the Trades and Labour Council and putting on a whole range of plays. The Waste Watch Committee is by no means contrite in its activity of drawing to the attention of the Australian taxpayers what the Government is doing with their money. I want to take up the second point that the honourable member for Canning made, and I refer to his quite extraordinary objection to members of parliament on this side of the House trying to find out what the Government is doing. The Labor Party, to its enduring credit, has argued in favour of open government. Of course, it took the Fraser Government to introduce the freedom of information legislation, but nevertheless the Labor Party has always supported these sorts of initiatives. Apparently, when it comes to the Opposition seeking information through freedom of information requests the honourable member for Canning objects. Apparently, if we put questions on notice to find out how the taxpayers' money is being spent, the honourable member for Canning objects to that as well. I wonder whether he is concerned that the Waste Watch Committee is going to find still more things on which the Government is wasting the taxpayers' money. He can rest assured that we will. One point made by the honourable member for Canning related to me personally. He complained that I had put on notice some 80 questions and implied that there was something wrong with that. I point out to the ignorant member that the honourable member for Hughes (Mr Tickner) has asked not 80 questions-I am glad to see him in here-but has put on notice 322 questions. That is all right, I do not object to that; but why does the honourable member for Canning object to that? The honourable member for Hawker (Mr Jacobi) has apparently put 114 questions on notice, and there is nothing wrong with that. I do not object to honourable members seeking information. Why does the honourable member for Canning do so? If that is the strength of the Labor Party's attack on the Waste Watch Committee, all I can say is that, first, we have had enormous success in exposing government waste and, in the second place, the Labor Party must really be panicking if the best it can do is attack members of parliament for genuinely seeking information on how taxpayers' money is spent. Madam SPEAKER —I call the honourable member for Melbourne. Mr HAND(Melbourne)(10.55) —Thank you, Madam Speaker. It is not often one gets two bites of the cherry here. I would like to continue-- Mr Tuckey —On a point of order, Madam Speaker-- Madam SPEAKER —I am sorry, the honourable member for Wakefield stood. He has not spoken tonight. I am obliged to give him the call. I did not see him stand. The honourable member for Wakefield stood in the first round of standing and I did not see him. Mr ANDREW(Wakefield)(10.56) —Thank you, Madam Speaker, for your interpretation of Standing Orders. I appreciate your protection. Mr Hand —I will call a quorum on you after that. Mr ANDREW —I invite the honourable member for Melbourne so to do if he desires, Madam Speaker. I rise tonight on two accounts. First, I was prompted to speak after Mr Goodman of the National Diabetic Association convened a breakfast, at which he encouraged all Australians to consume foods that were in the interests of their good health. This coincided with a letter to me that arrived from the almond industry. It is in the context of those two events that I wish to address the chamber this evening. The almond industry has had a unique history in terms of horticultural industries in Australia. It has been an industry of marked growth and the consumption of health foods, particularly nuts and especially almonds, in Australia has quadrupled since the 1970s. One can understand people wanting to keep their cholesterol and sugar levels to what are considered nationally to be acceptable levels for good health being, concerned about what they eat and one can understand their turning to healthy foods, such as nuts, as an essential part of their diet. I represent a group in South Australia which grows in excess of 80 per cent of all of the almonds grown in Australia. This group is known as the Almond Co-operative Ltd and it has 300 growers who farm large and productive areas along the River Murray, in the Gawler area and south of Adelaide in the Willunga area, in the electorate of the honourable member for Mayo (Mr Downer). These farmers have modern farms, mostly in excess of 50 hectares, and they run their farms using modern techniques. They grow 2,000 tonnes of almonds per annum at an estimated value of $8.75m, and they recently entered into a joint agreement with Berrivale Orchards-formerly Berri Fruit Juices-so that the crop could be most efficiently processed. It is interesting to note that in Australia there is a real shortfall of almonds available for consumption and that 60 per cent of almonds consumed in Australia are imported from the United States of America. The growth in consumption has meant that imports from the USA have increased from 900 to 2,500 tonnes per year. It also means that the price paid to Australian growers largely depends on the price dictated by the American market, thus keeping Australian growers at their efficient best. The letter from the Almond Co-operative Ltd, which prompted me to address the House tonight, states: Dear Mr Andrew I am writing to you under instruction from the Board of Management of the Almond Co-operative Limited. The Co-operative recently purchased some equipment from Spain to upgrade our Almond blanching process at Berri. This equipment was purchased at a cost of A$150,000. The equipment arrived in Melbourne on 26 March, it then took 31 days to arrive in Berri. Strikes within the Victorian rail system for some 2 to 3 weeks held the equipment on a rail siding in Victoria. We were unable to either trace the consignment or have it trans-shipped to road transport. Our Board's concern is that this equipment was urgently needed. We had product sold under contract and yet due to an industrial dispute the equipment was laying idle. Madam SPEAKER —Order! It being 11 p.m., the debate is interrupted. Mr Howe —Madam Speaker, I require that the debate be extended. Madam SPEAKER —The debate may continue until 11.10 p.m. Mr HOWE(Batman-Minister for Social Security)(11.00) —I want very briefly to refer to some remarks made by the honourable member for Melbourne (Mr Hand) and the honourable member for Lyne (Mr Cowan) on the question of the relative importance, if I might say so, of the unpaid taxation debt as opposed to overpayments in relation to the social security system. I think that it is important that the House recognise that the honourable member for Melbourne was making an extremely important point in terms of the relative dollars involved in the two systems. On the one hand, we have a problem in terms of assessed but unpaid tax in this country running into billions of dollars. However, today we have seen the Opposition obsessed with measures designed to tighten up the tax system and to reduce fraud and the avoidance and evasion of tax in this country. The Government is concerned to introduce those measures; the Opposition is fighting tooth and nail to stop them. On the other hand, we have suggestions and imputations day in and day out that somehow tens of millions of dollars, indeed hundreds of millons of dollars, are being ripped off the social security system as a result of fraud. However, there has not been a single occasion on which any member of the Opposition has advanced a scintilla of evidence to support the figures that are regularly repeated within this Parliament. Of course, the reason that they have not been able to do that is that it is impossible to assess accurately to what extent there is fraud, although there are estimates which I have made available to the House from time to time relating to outstanding debt in the social security system. Of course, that runs into a substantial amount of money. However, that is relatively small money compared with the total social security bill. Certainly the outstanding debt accumulated over a number of years and running into something like $100m is very small money compared with, for example, the figure of $3 billion for the social security system as a whole. I think that the relativities are extremely important. Of course, what the Opposition is about essentially is attacking those people who, as the honourable member for Melbourne said, are least able to defend themselves. It is not talking about the big people but talking about the smallest people. These are the people who are unfortunate enough to be living on extremely low levels of payment. In relation to this, I want briefly to refer to an interview tonight on the Willesee program with Peter Sawyer. I want to make the point that Mr Sawyer is proposing, apparently, to publish a book entitled Dole Bludging for Beginners. In that book he explains to people who are stupid enough to take any notice of what he says how to rip off the social security system. The extraordinary thing about this is that the honourable member for Richmond (Mr Blunt), who has come into the House tonight, has never at any point sought, as far as I am aware-certainly, he has not sought it in this House-- Mr Blunt —You are wrong. Mr HOWE —Let me read from a transcript of an interview with the honourable member. The compere said in reference to the book: This is a bit of a mongrel act isn't it? He was referring to the publication of that book with the theme of how to rip off the social security system. What did the honourable member say? Did he say: `Yes this is a terrible thing for someone to be doing; it is appalling that someone should be suggesting to people how to rip off a system.'? Did he say: `That would be similar to a former bank manager suggesting to people how they might rob a bank.'? But no; he says that what he is trying to do is to alert the Government and the Minister to the real problems in social security. In other words the honourable member for Richmond seeks to avoid the point. He wants to make use of Sawyer for his own miserable purposes. That is extremely unfortunate. There is no integrity in the honourable member for Richmond, no integrity in the Opposition on these matters. Mr Blunt —I raise a point of order, Madam Speaker. I find the Minister's references to me offensive and I ask him to withdraw. Mr HOWE —I am happy to withdraw. Madam SPEAKER —Order! The Minister's time has expired. As no other Minister has risen, the Minister may continue. Mr HOWE —We see dishonesty and hypocrisy in the Opposition in relation to these matters. It will be remembered that the honourable member for Melbourne (Mr Hand) was talking about a section of the population which is, in many respects, the poorest in the community. One must remember on the other hand that we have heard today the Liberal Party and the National Party defending people who have been avoiding tax and opposing changes in the tax laws that would mean that people would pay their fair share of tax. The matter should be put in that context. So Opposition members raise questions which go to their lack of responsibility. If the honourable member for Richmond is right, for example, about New Zealanders who are on unemployment benefit in Australia, he should know that the agreement with New Zealand under which people are paid unemployment benefit in this country goes back to the late 1940s. At no time since then have we seen the Opposition, when in government, seeking to amend that agreement to limit that payment. The honourable member for Richmond knows that I told him soon after I became Minister that I would seek to renegotiate that agreement. There has been no acknowledgement of that because it makes political capital for the honourable member for Richmond to go on radio on Sunday nights and to put out a Press Release attacking the New Zealanders and attacking people in this country without any attempt to be discriminatory. Let me take a second example. Yesterday, there came into the hands of the honourable member for Richmond some documents suggesting that some people on remand were being paid sickness benefit. On investigating the matter I discovered that since 1947 the position has been that people on remand in prison, people not convicted of crimes, have been paid sickness benefits. Successive Liberal governments for the whole of that period did absolutely nothing about it. Mr Blunt —Does that make it right? Mr HOWE —It might just make it right. Have successive governments sought to stop people being paid sickness benefit in psychiatric hospitals, in refuges and in every situation where they are receiving some other support from the Government? Of course not. It so happens that there is an association there which the honourable member for Richmond sought to exploit. He is on about the cheapest kind of attack which has nothing to do with the development of policy in social security and nothing to do with the well-being of low income people in this community. He is not on about thinking through a policy; he is on about lambasting the poor and attacking people in an indiscriminate way. This results in stereotyping and in a situation where people who are on very low levels of payment and in extremely difficult circumstances have to wear the kind of stigma that is being dished out by the Opposition. We deserve in this country in respect of social security a higher standard of debate than that evidenced by the honourable member for Lyne and other members of the National Party who appear on any kind of radio program and answer any kind of question which they believe will help in this process of making them sound like policemen rather than people who are concerned about the well-being of the social security system in this country. Madam SPEAKER —The debate having concluded, the House stands adjourned until Monday next at 2 p.m. in accordance with the resolution agreed to this day. House adjourned at 11.10 p.m. The following papers were deemed to have been presented on 29 May 1986: Lands Acquisition Act-Statement of lands acquired by agreement authorised under sub-section 7 (1). Public Service Act-Determinations-1986-Nos. 27, 34, 35, 36. The following answers to questions were circulated: (Question No. 1570) Mr Smith asked the Minister representing the Minister for Industry, Technology and Commerce, upon notice, on 23 August 1985: (1) Will the Minister provide details of all expenditure within his Department in 1984-85 for compensation and legal expenses as outlined in Appropriation Bill (No. 1) 1985-86. (2) What was the (a) amount and (b) nature of the expenditure in each case for (i) compensation and (ii) legal expenses. (3) What was the name of each recipient of payment for legal expenses. Mr Barry Jones —The Minister for Industry, Technology and Commerce has provided the following answer to the honourable member's question: (1) The expenditure in 1984-85 for compensation and legal expenses as outlined in Appropriation Bill (No. 1) was $1,291,062. (2) (a) (i) Expenditure on compensation in 1984-85 was $921,493. (a) (ii) Expenditure on legal expenses in 1984-85 was $369,569. (b) (i) Compensation expenditure consisted of: regular payments to former employees; payments to medical practitioners; payments to chemists and hospitals; lump sum settlements; and payments for damage to property and clothing. (b) (ii) Legal expenditure consisted of: payments to the Australian Government Solicitor; non-government Solicitors; legal practitioners; witness expenses; service fees; and court costs. (3) Recipients of payments from the Department of Industry Technology and Commerce for legal expenses in 1984-85 were: Accident Assessors P/L. Ainsworth M. G. Aitchison J. S. Amundsen P. Anderson Dr. G. Ansett. Appleby R. Ardouin L. H. Attard L. Aust. Government Solicitor. Balfour R. Basil W. Batt J. Batt J. M. Bennett D. Black M. Blackwood A. Blance J. Blaxell P. Bob Whyms Automotive. Bohler Steel P/L. Booker R. Brown G. Burbidge R. J. Bureau of Corporate Affairs. Butterbee J. Carmody D. Casey P. Chance J. M. Cheryls Bake-n-Serve. Christesen R. Coburn G. Cocks Macnish & Co. Connant V. Constantinou M. Cooke G. Court Recording Service. Crown Law Dept. Dahl B. Davey C. David Caple & Assoc P/L. Dept Administrative Services. Dibiaglo O. Dobson N. Dominion Press. Douglas F. M. Doyle M. Dunstun B. Farmer J. Fenbury A. Fennessy F. Finkelstein R. Flemming P. Fletcher F. Forensic Document Services. Fox M. Fraser G. Giles-Arterrued R. Ginnane T. Gordon P. Grimes G. Groves J. Groves K. Gwillan L. Harris J. Hastings P. Hayes P. Hebb Investigations. Heenan E. Hill A. Hobbs S. Houghton W. T. Hoy M. Ingper Dr. M. Injuries Investigation Service. Ipp D. A. Ipp Esq D. Jenkins D. Jessup Dr. C. Judd J. Kalidoudi M. Karkar J. Katz L. King F & J. Kirland P. Knight W. H. Lamb E. Larkin E. Lawscripts P/L. Lee M. Lloyd G. Magistrates Court. Mantechnic Pty Ltd. Marchinsky N. Mason K. Mayfield Manager CBC Mayfield. McConigal P. McDonald I. J. McDonald J. McInerny M. McLernon H. Merker R. Middleton J. Milburn T. A. Milekich R. Muir Williams and Co. Mulvenna R. Muslin G. Myers Dr. T. NSW Corporate Affairs. NSW Court of Petty Sessions. NSW Registry. National Bank. Neilson E. Nettle G. O'Neil H. O'Neil H. T. O'Sullivan M. PW Carmont & Co. Parish R. Phipps G. Piper + Assoc. Professional Report Services. Register of Companies. Reoch A. Riordan J. Ritchie H. G. Robson R. Rodgers L. Ronzani D. Ross L. Rowling G. Rutherford J. M. Rymer J. Scragg G. Seaton I. Shapkaris A. Shaw J. Shore H. Simes T. Skinner B. J. Smith R. Spencer L. St. James Court. Stanley R. Steele J. Stepnell V. Stevens C. J. Sutherland R. F. TAA. Tan K. Tovey M. Troy D. Vickery P. Viol R. WA Baxter & Co. Ward T. Wenning N. Wetzler M. Whitfield S. Wilson C. Wilson G. Wilson R. B. Young N. Young N. Zelestis C. Zhang X. Zissos T. 4319 REPRESENTATIVES 29 MAY 1986 tREPRESENTATIVES 29 MAY 1986 4320 (Question No. 2406) Mr Scott asked the Minister for Defence, upon notice, on 13 November 1985: (1) Has the Minister's attention been drawn to the answer given by the former Minister for Defence to my Question No. 1492 (Hansard, 4 September 1984, page 557) stating that Australia's co-operation with the US on electromagnetic launcher weapons projects was not related to any possible strategic or space applications. (2) Is it a fact that the Minister for Foreign Affairs stated on 16 November 1984 that Australia would suspend high velocity weapons research with the US immediately if the research was contributing to the US Strategic Defence Initiative (SDI). (3) What restrictions are there on access of (a) US scientists, (b) the US Defense Department and (c) the US Arms Control and Disarmament Agency to Australian electromagnetic gun research. (4) Has Australia indicated to the US and the USSR its policy in respect of development of weapons which could breach anti-ballistic missile, chemical, outer space and other weapon limitation treaties; if so, what statements were made to those countries. (5) Have published papers for scientists involved in Australia's rail gun research discussed their work's potential for development as outer-space weaponry. (6) Is the US Defence Advance Research Projects Agency (DARPA) the principal US party to the agreement for transfer of Australian rail gun research findings to the US. (7) Has DARPA directly funded Australian research. (8) Is the Minister able to say whether (a) DARPA Head, Dr Robert Cooper, told the US Congress in March 1984 that DARPA (i) is represented on the SDI Executive Committee, (ii) gets SDI budget funds for electromagnetic guns technology and (iii) will co-operate with SDI in all fields and (b) during the same Congress hearings, US Under-Secretary of Defense for Research and Engineering, Dr Richard De Lauer, indicated 5 technical areas of SDI including kinetic energy weapons, such as interceptor missiles and hypervelocity guns. (9) Has the Minister's attention been drawn to a report on guns in Aviation Week and Space Technology of July 1984, which indicated that past conventional rail gun concepts were overshadowed by the concept of basing the gun in space to fire 60 shots per second at over 100 km per second to ranges over 1600 km, with research proceeding, among other fields, on generators and plasma drive systems, and with prospects of SDI applications rather than those of particle beams or high-energy lasers; if so, is Australia proceeding with those 2 fields of rail gun research. Mr Beazley —The answer to the honourable member's question is as follows: (1) Yes. (2) and (4) The Minister for Foreign Affairs has answered these parts of the question in his response to Question No. 2405 (Hansard 14 February 1984, page 802). (3) No restrictions have been placed on access to Australian Defence electromagnetic propulsion research work. Indeed, in 1981, Australian media representatives attended a comprehensive presentation on the electromagnetic propulsion research program at Materials Research Laboratories (MRL) in Melbourne. (5) Papers published by defence scientists working at MRL on rail gun research have not discussed the application of this work to outer-space weaponry. A scientist from the Australian National University was attached to MRL for consultation on electromagnetic rails guns in 1984. One of his papers, which gave his current address as MRL, treated the speculative question of using a rail gun for launching large objects from the earth into space. This was based on his previous work at ANU. (6) Yes. (7) No. (8) No. If the honourable member could give me explicit references to any such statements I would be pleased to answer any questions he has about them. However, I am aware that the Annual Report to the Congress for FY 1987 of the US Secretary of Defense lists the exploration of technologies relating to precision rocket interceptors and hypervelocity guns under the Kinetic Energy Weapons Technology element of the SDI research program. (9) Yes. `Generators' i.e. suitable power sources for rail guns and `plasma drive systems' i.e. the means of transferring this power to the projectile, are common to all electromagnetic gun systems. MRL has studied these fields in the context of tactical applications, but not `with prospects of SDI applications' MRL is not proceeding with these two fields of research. (Question No. 3080) Mr Blunt asked the Minister for Aviation, upon notice, on 29 November 1985: (1) Did the Prime Minister commend the valuable community service performed by rescue helicopter ser- vices when he launched the Westpac sponsorship of helicopter rescue services in Sydney. (2) Has his attention been drawn to the existence of the Lismore-based North Coast Helicopter Rescue Ser- vice which serves the far north coast region of N.S.W. (3) What level of support is the Government providing to (a) the North Coast Helicopter Rescue Service and (b) any other helicopter rescue services in 1985-86. (4) Will he consider increasing the level of support in future years for the North Coast Helicopter Rescue Service. (5) Will he consider establishing a review of the funding and operational needs of helicopter rescue services with a view to giving these services a stable funding base in future years. Mr Peter Morris —The answer to the honourable member's question is as follows: (1) Yes. (2) Yes. (3) Government does not provide subsidy to any helicopter rescue service. Payment to these organisations is made for services rendered. (4) The Department of Aviation has undertaken a program of training selected semi-dedicated fixed wing operators. These selected operators are paid for aircraft hire as part of the training program. It is proposed to extend the semi-detached Search and Rescue program to helicopters during 1986. (5) No review is proposed at this stage. (Question No. 3314) Mr Slipper asked the Minister for Foreign Affairs, upon notice, on 11 March 1986: Is there any office of an Australian mission abroad that does not have a portrait of the Queen placed prominently on the wall: if so, will the Government ensure that portraits of the Queen are placed on the walls of offices of all Australian missions abroad in prominent places so that they are clearly visible to members of the public. Mr Hayden —The answer to the honourable member's question is as follows: As I advised in answer to the honourable member's question No. 114, of 27 February 1985, while there is a requirement for all Australian Government buildings and diplomatic missions to display the Australian Coat of Arms and the Australian flag, there is no formal requirement to display portraits of the Queen. Portraits of Her Majesty the Queen are available for display at all missions abroad and I listed those missions which have them on public display in my answers to the following questions: no. 114 of 27 February 1985, question from Mr Slipper; no. 1223 of 23 May 1985, question from Mr Hodges; and no. 2215 of 16 October 1985, question from Mr Hodges. The missions are as follows: Dhaka, Malta, Mexico City, Washington, New Delhi, Rome, Vancouver, Toronto, New York, Auckland, Seoul, Los Angeles, Tarawa, Algiers, Johannesburg, San Francisco, Osaka, Damascus, Bonn, Addis Ababa, Houston, Lima, Ottawa, Tehran, Holy See, Lagos, Berlin, Kingston, Honolulu, Katmandu, Pretoria, Dar es Salaam, Nairobi, Paris, Caracas, Bangkok, Athens, Port Louis. (Question No. 3471) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: (1) Is he able to confirm that chemical weapons activities in the Soviet Union include a large chemical warfare organisation directed by the Headquarters Chemical Troops in the Ministry of Defence. (2) Is he also able to confirm that the organisation is headed by a 3-star General and numbers more than 45,000 officers and enlisted men in the ground forces. Mr Hayden —The answer to the honourable member's question is as follows: (1) and (2) The Soviet Union does not make such information available about its forces. The Government is aware, however, of a statement to this effect in a publication entitled `Soviet Chemical Weapons Threat 1985' by the United States Defence Intelligence Agency and has no reason to dispute it. (Question No. 3472) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: Is he able to say whether the Soviet Union's chemical industry has the capability to produce toxic chemical warfare agents at manufacturing rates sufficient to meet military needs and can supply a variety of chemical agents as blister, choking, blood and nerve gases. Mr Hayden —The answer to the honourable member's question is as follows: The Government is not aware that the Soviet Union has made public sufficient detail concerning its chemical industry to permit a firm judgment to be made. It is aware, however, of a statement to this effect in a publication entitled ``Soviet Chemical Weapons Threat 1985'' by the United States Defense Intelligence Agency and has no reason to dispute it. It seems reasonable to suppose that a country with the capabilities of the Soviet Union could produce all the agents listed in the question. (Question No. 3565) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: (1) Is he able to say whether on 15 October 1985 the Nicaraguan Government suspended civil liberties such as freedom of the press, freedom of assembly, freedom of expression and freedom from arbitrary imprisonment. (2) Did he make representations to the Nicaraguan Government concerning this suspension. (3) If so, when and to whom; if not, why not. Mr Hayden —The answer to the honourable member's question is as follows: (1) Yes. On that date the Nicaraguan Government reimposed a State of Emergency which was originally declared in March 1982 and had been partially lifted for the election of November 1984. (2) Yes. (3) I made representations to senior members of the Nicaraguan Government on the State of Emergency and other human rights issues well before October 1985. I raised Australian concerns over restrictions of civil rights in Nicaragua with the Nicaraguan Minister for Foreign Trade, Dr Martinez, during his visit to Australia in February 1984. During my visit to Nicaragua in September 1984, I raised Australian concerns on the issues of pluralism, freedom of worship, and expression, and the State of Emergency with President Ortega and Foreign Minister d'Escoto. Following the reimposition of the State of Emergency, the Prime Minister and I raised Australian concerns over the human rights situation in Nicaragua with Foreign Minister d'Escoto during his visit to Canberra in late November 1985. Earlier representations were made, on my instructions, by officers of the Australian Embassy in Mexico City to the Minister-Counsellor of the Nicaraguan Embassy on 30 October 1985 expressing the Government's concern over the reimposition of a State of Emergency in Nicaragua. (Question No. 3473) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: Is he able to confirm whether since the late 1970s, the Soviets have constructed several new chemical agent-weapon test facilities at the Shikhany Chemical Warfare Proving Ground and construction is continuing. Mr Hayden —The answer to the honourable member's question is as follows: The Soviet Union does not make such information available about its military activities. The Government is aware, however, of a statement to this effect in a publication entitled `Soviet Chemical Weapons Threat 1985' by the United States Defense Intelligence Agency and has no reason to dispute it. (Question No. 3474) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: Is he able to say whether there are research institutes in the Soviet Union that are actively engaged in developing the theoretical foundations for producing chemical warfare agents of even greater lethality than already available and designing the equipment necessary to make them; if so, did he raise the matter with the relevant Soviet officials during his visit to the Soviet Union; if not, why not. Mr Hayden —The answer to the honourable member's question is as follows: The Soviet Union does not make such information available about its research activities. The Government is aware, however, of a statement to this effect in a publication entitled `Soviet Chemical Weapons Threat 1985' by the United States Defense Intelligence Agency and has no reason to dispute it. I would point out that such activity is not currently constrained by existing international agreements: These matters were not therefore raised during my last visit to the Soviet Union. (Question No. 3475) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: Is he able to confirm that the Soviets have developed the firing data required to use chemical weapons in battle situations. Mr Hayden —The answer to the honourable member's question is as follows: The Soviet Union does not make such information available about its forces. The Government is aware, however, of a statement to this effect in a publication entitled `Soviet Chemical Weapons Threat 1985' by the United States Defense Intelligence Agency and has no reason to dispute it. (Question No. 3476) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: (1) Is he able to confirm that the Soviets have long held a policy and doctrine that acknowledges the military utility of chemical weapons in warfare. (2) Is he also able to confirm that the Soviets are exploiting state-of-the-art technology for new or improved chemical warfare agents with the intent of extending their advantage over the West. Mr Hayden —The answer to the honourable member's question is as follows: (1) and (2) The Soviet Union does not make such information available about its military activities. The Government is aware, however, of a statement to this effect in a publication entitled `Soviet Chemical Weapons Threat 1985' by the United States Defense Intelligence Agency and has no reason to dispute it. (Question No. 3477) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: (1) Is he able to confirm that the Soviets have an unmatched capability to survive and operate on a contaminated battlefield. (2) Is he also able to confirm that all Soviet forces receive extensive training in chemical protection; if so, did the Minister raise the matter with the relevant Soviet officials during his last visit to the Soviet Union. Mr Hayden —The answer to the honourable member's question is as follows: (1) and (2) The Soviet Union does not make such information available about its forces. The Government is aware, however, of statements to this effect in a publication entitled `Soviet Chemical Weapons Threat 1985' by the United States Defence Intelligence Agency. I would point out, however, that NATO forces also receive extensive training in chemical protection and the suggestion in the question that the Soviet Union has an unmatched capability to survive and operate on a contaminated battlefield involved judgments on a number of factors. The ability to survive and operate in a battlefield contaminated by chemical weapons, and training in chemical protection, are not prohibited under existing international law. These matters were not therefore raised during my last visit to the Soviet Union. (Question No. 3478) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: (1) Is he able to confirm that almost all Soviet conventional weapons systems from mortars to long-range tactical missiles have compatible chemical ammunition or warheads, and are available to their land, air and naval forces. If so, did the Minister raise the matter with the relevant Soviet officials during his last visit to the Soviet Union. Mr Hayden —The answer to the honourable member's question is as follows: The Soviet Union does not make such information available about its forces. The Government is aware, however, of a statement to this effect in a publication entitled `Soviet Chemical Weapons Threat 1985' by the United States Defence Intelligence Agency and has no reason to dispute it. As a general principal, however, possession of such munitions is not contrary to existing international law. This matter was not therefore raised during my last visit to the Soviet Union. Australia is however committed to the early conclusion of a comprehensive chemical weapons convention which would ban the production, stockpiling and use of all chemical weapons and which would provide the destruction of all existing chemical stocks of chemical weapons and their production facilities. This is a high priority of the Australian Delegation to the Conference on Disarmament where negotiations towards a chemical weapons convention take place. (Question No. 3499) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: (1) Did he reply to my question No. 1981 (Hansard, 30 November 1985, page 4087) on the use of mycotoxins, nerve gases, blister agents and incapacitants by the Soviet Union in Afghanistan that the Government had noted the inconclusive nature of much of the evidence, nevertheless the Government viewed these reports and allegations with considerable concern. In part 2 of Question 1981, I asked the Minister whether he had raised the matter on his last visit to the Soviet Union. (2) Did he also reply that this particular issue had not been raised with the Soviet Union on his last visit there. (3) In view of community concern over chemical warfare will he now make representations to the Soviet Union over this issue. Mr Hayden —The answer to the honourable member's question is as follows: (1) Yes. (2) Yes. (3) The Government is not satisfied that there are sufficient grounds for it to make representations to the Soviet Union specifically about these particular allegations. The Government has made clear to the Soviet Union-and indeed to the international community at large-its strong opposition to the use of chemical weapons in any circumstances. It has also expressed support for standing measures to investigate all such reports. Australia is engaged in direct negotiations with the Soviet Union and other countries for the conclusion of a Convention to ban the possession, production or use of chemical weapons and to require the destruction of existing stocks of such weapons and their means of production. (Question No. 3613) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: What was the cost of 1,000 employees of his Department participating in an equal opportunity workshop. Mr Hayden —The answer to the honourable member's question is as follows: There has been no equal opportunity workshop run by the Department of Foreign Affairs, nor has there been participation by 1,000 officers of the Department in equal opportunity workshops conducted by other agencies. A small number of employees of the Department have however participated in a variety of workshops and seminars which include an equal opportunity component, but I regret to advise that it is not possible to quantify the costs attributable to the equal opportunity sections of these. (Question No. 3614) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: Why was $1,102,000 required from the 1985 Advance to the Minister for Finance for salaries and payments in the nature of salaries for the overseas service. Mr Hayden —The answer to the honourable member's question is as follows: The Department of Foreign Affairs did not require an amount of $1,102,000 from the 1985 Advance to the Minister for Finance for salary and payment in the nature of salary for the overseas service. It did, however, request the sum of $1,566,500 from this Advance as supplementation for exchange rate variations, of which $1,222,346 was eventually expended. The full reason given to the Department of Finance for this request was as follows: Supplementation for exchange variation under this sub-division was not sought in the Additional Estimates because slightly favourable exchange rates during the first seven months of the financial year had cushioned the immediate effect of the depreciation of the Australian dollar. In the period following finalisation of the Revised Estimates, the average depreciation against major currencies was 7.8% and an amount of $1,481,600 was thus sought from the Advance to the Minister for Finance to meet overseas salaries commitments. Funding of $84,856 to cover the unforeseen retirement of a senior Head of Mission was also provided. (Question No. 3615) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: Why was $140,000 required for salaries and payment in the nature of salary from the 1985 Advance to the Minister for Finance. Mr Hayden —The answer to the honourable member's question is as follows: The Department of Foreign Affairs did not require an amount of $140,000 from the 1985 Advance to the Minister for Finance for salaries and payment in the nature of salary. The only request for funds from this advance made by my Department was for $1,566,500 (of which $1,222,346 was eventually expended), which was required for exchange rate variations. Full details of the reason for this requirement were contained in my answer to question on notice No. 3614. (Question No. 3616) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: (1) Further to his answer to my question No. 2276 (Hansard, 29 November 1985, page 4104) how many officers have resigned or left his Department since 17 October 1985. (2) What level were these officers. Mr Hayden —The answer to the honourable member's question is as follows: (1) 20 officers of the Foreign Affairs Officer stream have left the Department of Foreign Affairs since 17 October 1985. Of these, seven resigned from the Public Service and 13 transferred to other Departments. (2) The levels of these officers were: Senior Executive Level 1-one; Foreign Affairs Officer Class 4-3; Foreign Affairs Officer Class 3-4; Foreign Affairs Officer Class 2-7; Foreign Affairs Officer Class 1-3; Assistant Research Officer-2. (Question No. 3617) Mr Peacock asked the Minister for Foreign Affairs, upon notice, on 20 March 1986: (1) How many Foreign Affairs Officers were there in (a) 1975 and (b) 1985, overseas and (c) in his Department. (2) What proportion of Departmental staff did the overseas contingent constitute in (a) 1975 and (b) 1985. Mr Hayden —The answer to the honourable member's question is as follows: (1) At 30 June 1975, there were 241 Foreign Affairs Officers serving overseas and 207 serving in Australia. At 30 June 1985, there were 195 Foreign Affairs Officers serving overseas and 262 serving in Australia. (2) At 30 June 1975, the number of Foreign Affairs Officers serving overseas constituted 5.19 per cent of Departmental staff. At 30 June 1985, they constituted 4.69 per cent of Departmental staff. (Question No. 3650) Mr Conquest asked the Minister representing the Minister for Industry, Technology and Commerce, upon notice, on 20 March 1986. (1) Is it a fact that Australia (a) voted in favour of the Lima Declaration on 27 March 1975, (b) is a signatory to it and (c) has subsequently ratified the declaration. (2) Do points numbered 59(c) and 61(d) of the Declaration militate against the interests of Australian manufacturers by suggesting that certain productive capacities be redeployed to developing countries. (3) If so, why has the agreement been signed. (4) Will the Government implement the points contained in the Declaration; (b) if so, what is the time-frame for this to be achieved. Mr Barry Jones —The Minister for Industry, Technology and Commerce has provided the following answer to the honourable member's question: (1) (a) Yes. (b) and (c) The so called `Lima Declaration' is a declaration agreed to by the Second General Conference of the United Nations Industrial Development Organisation at Lima, Peru, in March 1975. It is not an international instrument requiring either signature or ratification. (2) (3) and (4) As explained above, Australia has not signed the Lima Declaration. In supporting the Declaration in 1975 the leader of the Australian delegation presented a statement of reservation and interpretation in which the Australian Government's position was effectively explained. In that statement the delegation leader said, inter alia: `The Australian delegation has supported the Declaration and Plan of Action because of the aspirations it embodies for a fairer, more co-operative and more progressive world order. We have done so notwithstanding reservations on a number of matters.' Reference was then made to Australian reservations made on the program of Action on the Establishment of a New International Economic Order (NIEO) and on the Charter of Economic Rights and Duties of States (CERDS). The delegation leader then expressed specific reservations or interpretations on a number of paragraphs in the Declaration, including paragraphs 17, 19, 28, 40, 42, 43, 44, 47, 59(c) (d) and (e) and 60(e) and (f). Around the time that statement was made and subsequently, a more difficult economic environment and increasing competition, particularly from developing countries in the region, was revealing major deficiencies in Australian manufacturing industry. This resulted in a significant change in the Government's approach to manufacturing industry policy. That policy is now aimed at making the manufacturing sector more internationally competitive, export-oriented, flexible and innovative, and capable of operating in the longer-term with minimal levels of government assistance and regulatory intervention. A recognised consequence of this approach is the need for a gradual restructuring of industry. The Government also continues to be actively involved as appropriate in assisting the process of industrialisation in developing countries. Means by which Australia pursues this objective include the Australian System of Tariff Preferences, the foreign aid program, and involvement in a range of activities under the auspices of the United Nations Industrial Development Organisation (UNIDO) and the Commonwealth Heads of Government Regional Meeting (CHOGRM) Working Group on Industry. The Government will continue to pursue its broad industry policy which is aimed at achieving a high and sustained rate of economic growth, and a resultant improvement in overall living standards and increased employment. Continued pursuit of this policy will be to the overall benefit both of Australia and the developing countries of the world. (Question No. 3668) Mr White asked the Minister for Sport, Recreation and Tourism, upon notice, on 8 April 1986: Did he state on 26 August 1983 that he wanted to see a public inquiry into penalty rates; if so, what action has been taken to establish an inquiry? Mr John Brown —The answer to the honourable member's question is as follows: On 26 August 1983 I reiterated my desire to see a public inquiry conducted into penalty rates and accompanying low base rates of pay as they affect the tourism industry. I stressed however that such an inquiry should take place only with the full participation of the industries concerned, the trade union movement and various State Governments as well as the Federal Government. I have also acknowledged that the question of penalty rates is not one to be looked at in isolation. Recent independent studies into the effect of penalty rates on employment opportunities have been inconclusive. Tourism, as a seven-day-a-week industry, needs a sensible wage formula and greater flexibility in award provisions to fulfil its potential for job generation but this can only be achieved if all interests are considered. The Government considers that the issue of penalty rates should be discussed in the appropriate forum-the Conciliation and Arbitration Commission-where the merits of any particular proposal can be fully examined taking into account the interests of all parties involved. (Question No. 3678) Mr Conquest asked the Minister representing the Minister for Industry, Technology and Commerce, upon notice, on 8 April 1986: (1) Has the Minister's attention been drawn to claims that Australian citrus juice producers are suffering as a result of market penetration by low cost Brazilian citrus juice concentrate imports. (2) Will the Minister initiate an investigation into the claim to ensure the protection of the Australian citrus industry against dumping action. Mr Barry Jones —The Minister for Industry, Technology and Commerce has provided the following answer to the honourable member's question: (1) Yes. I am aware of concerns raised by members of the citrus industry. However, it must be noted that world prices for orange juice concentrate have fallen recently from the high levels achieved during 1984-85. The prices of imported juice can therefore be expected to also drop in line with world trends. The Australian market for orange juice has traditionally been supplemented by imports, mainly from Brazil. However, Australian Bureau of Statistics (ABS) Data shows that imports peaked at 13.8 million kg TSS (total soluble solids) in 1983-84 and have since declined to around 7.6 million kg TSS in 1984-85. In the 7 months to January 1986 imports were 2.3 million kg TSS indicating a continued drop in imports. At the same time Australian production has increased steadily both on an absolute and on a market share basis. (2) The Australian Customs Service has the responsibility for conducting a dumping investigation upon the lodgement of a formal dumping complaint including sufficient prima facie evidence of dumping injury; and a causal link between the dumped imports and the alleged injury. I am advised that a dumping complaint has not been lodged. (Question No. 3739) Mr Coleman asked the Minister for Foreign Affairs, upon notice, on 10 April 1986: Did Australia abstain in a vote on a Security Council resolution condemning Israel for the interception of an aircraft returning from a meeting of terrorist organisations in Libya; if so, why. Mr Hayden —The answer to the honourable member's question is as follows: On 6 February 1986, Australia, with Denmark, France and the United Kingdom, abstained in the Security Council on a draft resolution (S/17796/Rev.1) concerning the interception by Israel of a Libyan aircraft. In an explanation of vote, Australia expressed understanding for Israel's motives in seeking to act against international terrorism. The explanation of vote also made clear that the Government deplored the interception of the Libyan aircraft over international waters which, in the circumstances, could not be justified. There were elements in the draft resolution which Australia could support but there were some aspects with which we could not agree. One example was the portrayal of the interception as ``piracy''. The accepted definition of piracy is that it is an act perpetrated for private purposes. The Israeli action did not fit into this definition. The United States vetoed the draft resolution. (Question No. 3748) Mr Lloyd asked the Minister for Transport, upon notice, on 11 April 1986: (1) Further to the answer to my question No. 2758 (Hansard, 11 March 1986, page 1134) concerning notification of dangers to shipping, what co-operative arrangements has the Commonwealth made with Western Australia concerning the implementation of (a) the International Convention for the Safety of Life at Sea, 1974 and (b) the United Nations Convention on the Territorial Sea and the Contiguous Zone by the Fremantle Port Authority. (2) Does the Commonwealth remain responsible and accountable for the implementation of the conventions; if not, who is responsible. (3) Who is responsible for ensuring that notifications of dangers to shipping are issued in the appropriate manner. (4) What other co-operative arrangements exist between the States and the Commonwealth in relation to these conventions and what is their legal and legislative status. Mr Peter Morris —The answer to the honourable member's question is as follows: (1) The co-operative arrangement between the Commonwealth and Western Australia in respect of responsibility for notification of dangers to shipping stem from an exchange of letters between the Prime Minister and the Premier of Western Australia in 1934. This arrangement provides that the responsibility of the Commonwealth in regard to provision and maintenance of lights and other aids to navigation ends with erection and maintenance of those aids necessary for ocean navigation. Provision of port, river and minor aids to navigation is a matter for the State Government or local authority. In this context radio warnings are regarded as `other aids to navigation'. Information contained in radio warnings issued by the Federal Department of Transport is to advise mariners of dangers that exist at sea and to assist mariners to safely reach the entrance ports. The provision of aids to navigation (including radio warnings) within the port limits is a matter for State Governments or local authorities. It is not necessary for the co-operative arrangement with Western Australia to identify the Western Australian local authority or authorities concerned, that being a matter for the Western Australian Government. (2) At international law, although the Commonwealth accepts international obligations and benefits from rights under international treaties, the means by which any such obligations are to be given effect domestically is a matter for the Commonwealth. Consistent with international law, responsibility for implementation of such obligations domestically can rest with the Australian States for areas within the jurisdiction of the States. Any question regarding any adverse effect on an Australian citizen of an alleged failure by Australia to comply with international law is a matter to be determined solely in accordance with arrangements in Australian law, both Commonwealth and State. (3) See answer to (1) above. (4) In relation to those provisions of the Conventions concerning notification of dangers to shipping, co-operative arrangements similar to those described in (1) above exist between the Commonwealth and each of the States. These provisions of the Conventions can be implemented by administrative means and do not require legislation. In relation to other provisions of these Conventions, the broad terms of the agreement between the Commonwealth and the States on responsibility for regulation of shipping and navigation were confirmed as part of the Offshore Constitutional Settlement of 1979. Commonwealth and State legislation reflects these arrangements in giving effect to those provisions of the Conventions which require legislation for implementation. (Question No. 3753) Mr Downer asked the Minister representing the Minister for Industry, Technology and Commerce, upon notice, on 14 April 1986: What (a) were the amounts paid to and (b) projects undertaken by Mr Phillip Adams and Mr Rod Cameron, their associated companies or principals of those companies, for work on behalf of the Minister's Department or authorities under the Minister's control in (i) 1983-84, (ii) 1984-85 (iii) 1985-86 to the date of answering this question. Mr Barry Jones —The Minister for Industry, Technology and Commerce has provided the following answer to the honourable member's question: (a) (i) nil, (ii) nil, (iii) nil. (b) (i) nil, (ii) nil, (iii) nil. (Question No. 3763) Mr Downer asked the Minister for Primary Industry, upon notice, on 14 April 1986: What (a) were the amounts paid to and (b) projects undertaken by Mr Phillip Adams and Mr Rod Cameron, their associated companies or principals of those companies, for work on behalf of the Minister's Department or authorities under the Minister's control in (i) 1983/84, (ii) 1984/85 and (iii) 1985/86 to the date of answering this question. Mr Kerin —The answer to the honourable member's question is as follows: I refer the honourable member to my reply to a similar question on notice from Mr Blunt which appeared in Hansard on 11 February 1986 on page 39. The only further payments made since that reply total $244,230 paid by the Australian Wool Corporation to Monahan, Dayman Adams Ltd for advertising. (Question No. 3792) Mr Coleman asked the Minister for Foreign Affairs, upon notice, on 16 April 1986: (1) Did Australia vote in favour of UN Security Council Resolutions 574 and 577 requesting member states to extend assistance to the People's Republic of Angola to strengthen its defence capacity and economic infrastructure; if so, why. (2) Will the Government provide assistance to the People's Republic of Angola in order to (a) strengthen its defence capacity and (b) reconstruct its economic infrastructure; if not, why not. Mr Hayden —The answer to the honourable member's question is as follows: (1) Australia voted in favour of UN Security Council Resolutions 574 and 577, condemning South African armed aggression violating the sovereignty, airspace and territorial integrity of the People's Republic of Angola. Both of these resolutions were adopted unanimously. Australia's support for these resolutions is based on its concerns over South African actions and its rejection of South Africa's claims to any rights to violate the territorial integrity of its neighbours. (2) Amongst their various provisions, the two resolutions together request Member States of the United Nations to consider assistance to the People's Republic of Angola towards strengthening its defence capacity and economic infrastructure so that it may better withstand South African aggression. It is a matter for each Member State to determine the extent to which it will respond-within its own policy and resource priorities and constraints-to Security Council requests. For its part, Australia: (a) Does not have a tradition of bilateral defence programs in Africa. It is unlikely that this situation will change in the near future; (b) Currently provides no bilateral aid to Angola. As at 24 April 1986, however, Australia had provided an estimated $919,200 worth of food aid to Angola as part of its multilateral food aid program for 1985/86. Australia will continue to participate in multilateral aid programs for Angola. (Question No. 3795) Mr Reith asked the Minister for Health, upon notice, on 16 April 1986: (1) Has the Government implemented a decision to reduce the free supply of colostomy bags; if so, how many users in each State and Territory will be affected. (2) What are the expected cost savings and how are they calculated. (3) Will he review the decision. Dr Blewett —The answer to the honourable member's question is as follows: (1) With effect from 1 April 1986 the maximum quantities for a number of ostomy bags were reduced. This decision was part of the result of a review of the Stoma Appliance Scheme undertaken by my Department in late 1985. In the initial stages of this review various bodies associated with the supply of stoma appliances expressed concern that the listed maximum quantities for some items were far in excess of the requirements for a month's supply. Accordingly the Department in its review consulted with manufacturers, some stomal therapists and a number of Ostomy Associations to obtain information as to what the appropriate maximum quantities for a month's supply should be. The revised maximum quantities were considered by the manufacturers and Associations to be sufficient for one month's supply and represented an average usage rate of 2 bags per day. On 5 April 1986 the Annual General Meeting of the Australian Council of Stoma Associations was held in Launceston. At this meeting affiliated State Associations supported the changes to the Stoma Appliance Scheme with modifications to increase the maximum quantity for closed bags from 60 to 90 and to increase the maximum quantity of wafers from 20 to 30. I supported these modifications and my Department implemented the changes with effect from 1 May 1986. It is not known how many users in each State and Territory might have been affected. However, Associations consider that with the changes implemented from 1 May, few users will be affected. Provision does exist for those users who require more than the listed maximum quantity to obtain a medical certificate to authorise Associations to issue the required quantity free of charge. (2) There are no expected cost savings as the changes only reflected what some Associations and patients were doing in practice. (3) There was a review after comments were received from the Australian Council of Stoma Association and affiliated State Associations. (Question No. 3814) Mr White asked the Minister for Sport, Recreation and Tourism, upon notice, on 29 April 1986: (1) Did he or his Department order a cartoon from Mr Mark Lynch of the Bulletin; if so where (a) has the cartoon been displayed and (b) is it now. (2) Who paid for the cartoon. Mr John Brown —The answer to the honourable member's question is as follows: (1) Yes. (a) and (b) The office of the Minister for Sport, Recreation and Tourism. (2) The Department of Sport, Recreation and Tourism.