Thursday, 14 May 1987 Madam SPEAKER (Hon. Joan Child) took the chair at 9 a.m., and read prayers. Debate resumed from 13 May, on motion by Mr Hurford: That the Bill be now read a second time. Mr WRIGHT(Capricornia)(9.01) —Prior to the adjournment of the debate last night to allow the Treasurer (Mr Keating) to bring in what was an excellent economic statement, I pointed out that the purpose of the Nursing Homes and Hostels Legislation Amendment Bill was to enable the introduction of new recurrent funding arrangements for nursing homes, and also to enable the introduction of a new quality of care standard in nursing homes and improve the arrangements for granting capital assistance to non-profit organisations. The Minister for Community Services (Mr Hurford) did say, and I echo those comments, that these measures will improve the quality of care and the quality of life provided for aged people, and will achieve greater efficiency in Government funding of nursing homes. Honourable members will recall that I made some comparisons between our attitude and commitment to the aged and the attitude and commitment of those on the other side. I also mentioned the proposals put forward by the National Farmers Federation, by economic groups at universities, the New Right and the Liberal and National parties, to slash Government expenditure, particularly in relation to welfare and education, by something like $12 billion. I note this morning that Ian McLachlan of the National Farmers Federation said that, yes, he welcomes the economic statement and that he realises that the Government is heading in the right direction, but that it could have gone further and cut another $8 billion or $9 billion off Government expenditure. My point is that, if that occurred, it would be the people in the nursing homes and hostels, the aged, the disadvantaged and the people in low income groups who would be affected. It is not the high-faluting Tories out there on properties worth $5m or $6m and whose incomes are some hundreds of thousands of dollars a year who would be affected; it is the ordinary people. It would affect nursing home subsidies, so it would be the aged people whom we care for who would be affected if such savage cuts were made. I will be interested to hear tonight the comments made by the Leader of the Opposition (Mr Howard) as to what he intends to do. However, the point is that the whole attitude put forward by the Liberal and National parties is to attack the aged and those in the low income group. Government expenditure for aged people would end. We spend some $1.1 billion just in the provision of care for the aged, and a lot of that money is spent on people in nursing homes. It would also mean an end to the Government's new home and community care program, a special program which arose out of all those studies and reports. The Government realised that some 93 per cent of our aged people live in their own homes, and yet we are spending only about 7 per cent of the money on them. So a new approach, a new thrust, was adopted by this Government. It was an approach to give those people who needed to live in their own homes, who needed that independence, a new level and a new quality of life. Mr Hodgman —You have declared war on the grandparents of Australia. Mr WRIGHT —That is nonsense; we do not believe anything that the honourable member for Denison says, as we know the nonsense that he goes on with. This Government has extended the total area of care to the aged. It has extended the range of hostel subsidies; it has agreed to annual indexation; it has introduced a hostel care subsidy of $13.65 a week per bed; and it has introduced a respite care subsidy of $52.50 a week. Further, there has been a 150 per cent increase in the personal care subsidy, from a miserable $30 in 1982-83-when the honourable member for Denison (Mr Hodgman) who interjected before, was a member of the Fraser Government-to $77 under the Hawke Labor Government. It is in this area of the nursing home subsidies that this Government has continued its generous funding program because we now have a strategy; not like the hotchpotch that the Liberal and National parties were involved in. Their political attitude was that Liberal and National Party electorates got funding. This Government has a strategy and a plan that involves all the aged-those 1.4 million people who need assistance. This is done by achieving efficiency in expenditure and, more importantly, a quality of life that means that those who are in need get assistance. Bed subsidies are being increased annually. Expenditure has increased from $734m in 1982-83 to an estimated $1,072m this financial year. In the area of capital funding, the number of hostel places has doubled since the Hawke Government was elected in March 1983. The Opposition members talk about looking after the aged. In government, they had no understanding whatsoever of the needs of people who wanted to stay in their own homes or did not want to be institutionalised but wanted, instead, hostel care. This Government has doubled the number of hostel places in just under four years. More than $200m was allocated in our first three-year program. Now we have a major expansion plan for our capital works program over the next three years. What is our objective? It is not as the honourable member for Petrie (Mr Hodges) said, to forget about people in nursing homes; it is not to forget about people who want to live in hostels; but, rather, it is to meet everybody's needs with a domiciliary care program for those who stay in their own homes and with the provision of more hostel places and more beds, the objective being to provide an additional 12,880 beds, most of which will be hostels. The legislation also moves to address the problem of standards. We are committed to the improvement of quality of care and the quality of life in nursing homes. I believe the legislation is timely because, in my State of Queensland, the State National Party Government is moving away from awards and towards contracts. Recently I met with officers of the Nurses Union in that State. They expressed grave concern to me and to other members of this Government about the quality of care for aged people if contracts are introduced in nursing homes. Their introduction would mean that less qualified people would be employed, and the quality of care of the aged would suffer. Every person who has a relative, a parent, or someone in a home, a hospital or a nursing home at the moment would have to be concerned at what the Premier of Queensland and the National Party Government are proposing. Their aim is to cut wages; and once people start cutting wages as a cost saving measure, they start cutting the quality of service-and that service is to the aged. Fortunately, we have new legislation coming in. I believe this will mean that this Government will have some monitoring power over the quality of care; that is, the standards in those nursing homes. If those contracts that the Premier wants to introduce in Queensland bring down standards, this Government will be able to act. The important point is that that approach to contracts is a threat to the aged, and to the quality of life and the quality of care of aged people in Queensland. We do not want a return to those days when the aged were crowded on to verandahs in large houses that some organisation purchased or some private individual got hold of and were required to pay to live there. In one Brisbane suburb old men were sleeping in beds on dirt floors downstairs. We had situations where some of the aged were being fed soup twice a day, and an egg as their main meal. There was no concern for nutrition and no concern about dietary needs. In fact a `roof over the head' mentality prevailed. That mentality prevailed because the Liberal-National Party Government that was in control in Canberra did not have a plan or a strategy; it was not really concerned. We do not want a return to those days; and I suggest that, if we go to contracts, cutting awards and not having proper nursing staff with the expertise that is required to care for the aged, that could be the ultimate result. Every person in this chamber, regardless of his or her political persuasion, must understand just that. So it is timely that we have this legislation, legislation that will require particular standards of care in our nursing homes. I am most pleased that the Minister has seen fit to bring on this legislation. This Government has a commendable record in the area of aged care that has been developed in a matter of only four years, and that has occurred despite the economic circumstances, as we heard last night. We have had a capital funding increase of 27 per cent in the last financial year. In 1985-86 the amount spent was $42m and this year this has been increased to $53.5m. It is money being spent throughout Australia. I welcome the latest grant that has just been announced by the Minister for Community Services (Mr Hurford) for my area-$316 960 to the Sisters of Mercy to replace 31 hostel places. It is part of the first round of funding under the Hawke Labor Government's new strategy for the provision of accommodation for the frail aged. It is part of $14m of expenditure in Queensland. It will enable voluntary welfare and church groups and local government to build 397 new or replacement hostel places, and also provide 225 replacement nursing home beds. It is all part of an approach by this Government right across Australia. The money is not being spent in areas because they are in electorates held by a Labor member of parliament; it is being spent where there is a need. For instance, last week I was in Biloela when we gave $18 000 to the Country Women's Association for one cottage. It may not sound much, but, Madam Speaker, you should have seen the pleasure on the women's faces at the CWA because it will mean one more cottage in a program of four. To them it was really an achievement. It was achieved because this Government has a plan and a strategy to care. People are beginning to appreciate what we are about. They are appreciating that money is being spent for the aged. They realise that we have a new approach based on the social, medical and emotional needs of people; that our thrust is one of independence-to meet the independent requirements of people. It is a thrust of strategy and planning-and it is not politically inspired as it was under the honourable member for Denison (Mr Hodgman) and the Fraser Government. We have a new emphasis on domiciliary hostel care and yet at the same time, despite what the honourable member for Petrie said, we are maintaining our nursing home care. This Government is meeting its responsibility to meet the needs and expectations of people. We are also accepting our responsibility of careful stewardship of very limited funds. This Government has been successful in nursing care. We are bringing about a new quality of life for the aged. Mr IAN ROBINSON(Page)(9.12) —I rise to speak on the Nursing Homes and Hostels Legislation Amendment Bill, which is one of the most important pieces of legislation this session. There is no more vital need in the community today than that of nursing home care for the aged. I take this first opportunity to congratulate the Minister for Community Services (Mr Hurford), who is at the table, on his appointment as Minister for Community Services. I wish him well in this important field of administration in the Commonwealth of Australia. Since the early 1950s it has been a tradition that the Federal Government has encouraged, financed and administered services for the care of the aged through capital funding and maintenance funding for facilities in the field of nursing homes, hostels and other services for the aged. Of course, during this time there has been an enormous growth in need brought about by the transition of an aging population in this nation. I listened with some bewilderment to the honourable member for Capricornia (Mr Wright). He heaped scorn on past administrations for what was done in this field. I think he knows very little about it; it reflects upon his capacity and understanding of the field that he made the comments that he made this morning. The fact is that over the last three decades there has been a fairly bipartisan approach in this field. I hope that that will continue in the future. However, there are important issues that do impinge upon the political considerations. They relate to the requirements of the Federal Gov- ernment in respect of the administration of nur-sing homes, the initial approvals of nursing homes and the allocation of beds, including the right to construct additional facilities in the category of either community or private nursing homes. For a very long time, since the inception of this scheme under the Menzies Government in the early 1950s, there was never a question about seeking a bed allocation. It was merely a matter of local communities being able to assemble enough contribution towards the cost of the capi-tal construction of a nursing home, and it was virtually automatic that Federal assistance would then be available. There was not even a waiting list. The funds provided by the Federal Government virtually ran ahead of the community's capacity to provide its share. This changed, and it changed dramatically as a result of the demand that generally grew because of an aging population. Quite understandably, there then had to be some measures to deal with that situation. It then became obvious that there was not an unlimited pool of funds for capital purposes and for maintenance purposes. Quite understandably, there has to be guidelines and consideration had to be given to how to administer them from that day on. I believe that past governments and the present Government have tackled this situation objectively. However, we must beware that the bureaucrat does not take charge to the extent that the local community's participation is in any way moderated. I urge the Minister, who is at the table, to give special consideration to that aspect because the raising of local funds for community nursing homes is a vital element. Without it, no government could ever have provided the services in the field of nursing homes which have been provided over the years. We can think of all the small community nursing homes throughout this nation. We can think of those that are under the umbrella of important organisations, such as the St Vincent de Paul Society and its sister community organisations within the Catholic Church. We can think of homes for the aged under the umbrella of the Frank Whiddon Masonic Homes of New South Wales. This organisation is interested in the care of those in the community who are less fortunate. There are many others throughout this nation. Collectively, the funds that have been raised, administered and put to use in the interests of the aged in the last 30 years from these sources have been of enormous value in providing the services that we now have. Before the Government entered the field, some of these organisations were the forerunners in providing services of the sort that are needed today. More recently, nursing homes have been provided through the private sector. Again, without the contribution from and enterprise of those who have been prepared to construct, through raising the capital nursing homes of a standard that is equal to any in the world, today we would not have the capacity to care for our aged as we are doing. This legislation deals with some administrative matters. They are important. In recent weeks there have been problems in relation to the maintenance funding of nursing homes and delays in the payment of funds. I have taken up this matter with the Minister in respect of organisations in my electorate. He has responded, and I know that he is concerned that local organisations cannot carry the amount of funding necessary for maintenance purposes for up to six, eight or 10 weeks. The amounts involved are too large for local organisations to carry for such periods. I hope that some of the measures contained in this legislation will assist in overcoming those delays. It is recognised since the McLeay report of, I think, four years ago that there is a real problem in meeting the needs. So the emphasis is on the way in which bed allocations are made and how to recognise the need in each locality that wishes to establish a nursing home. The present Government, in the early stages of its administration, established a State-Commonwealth co-ordinating committee to set the priorities for the allocation of beds for nursing homes which, as I said earlier, really means licensing for the construction of a nursing home and setting the number of beds that will be available in each community. this has led to some complexities in communities where there was an on-going support, through public fund raising, for the provision of additional capacity through nursing homes. The complexities arise from a rather rigid bureaucratic approach, an approach based entirely on statistics within the community. It may seem to make sense to those sitting behind a desk administering the scheme, but there are many considerations in the community which must be taken into account, such as the distance from the community of need. In northern New South Wales, the ageing population is located mainly along the seaboard. People have moved from the metropolitan areas to that part of the State for their retirement. The statistics, even the age groups, do not give the whole picture. We must consider the question of people having to travel from residential areas to the location of the new facilities. When someone is admitted to a nursing home, obviously there is a family link; there is a wife or a husband, sons and daughters. They must have access so they can provide through their regular visits, that important care that goes hand in hand with nursing home care. There is a great need for the Minister to consider that element within the activities of the co-ordinating committees which provides an effective link with local communities. Perhaps there could be a representative in each zone; someone who is not merely an official of a State health department who does not have direct links with the community or the time to go around and talk to local committees, local officials and local people who are concerned with the care of the aged. We know that there is great competition on the part of organisations for additional space through the extension of their nursing home or the creation of a new one. Those proposals cannot receive funding straight away; there must be priorities. We understand the difficulties that confront us in this area, but we must press on. I deplore the comments of the honourable member for Capricornia who asserted that there has been a huge increase in capital funding. We know that that is not the case. When we consider the construction costs of buildings in terms of the consumer price index we see that there is a real dilemma regarding capital funding for the extension of nursing home facilities. We must do the best with what we have. We must find our way through these real challenges. I wish the Minister well in that regard. A further element that came primarily from the McLeay report was that we should place more emphasis on home care, on keeping people in their own homes for as long as possible. That concept is strongly supported throughout the community. There is an understanding of that very vital approach in the care of the aged. Much more needs to be done. Home services are slowly increasing in all communities, but there is a long way to go. The provisions of this legislation, I hope, will give further impetus in that direction. We must be aware of the other frustration that exists in this legislation. I refer to the system that will determine the right of entry into a nursing home. Earlier I spoke about the operation of the State-Commonwealth co-ordinating committee on the allocation of beds and the approval for extensions to or the construction of new homes. Virtually the same considerations that I mentioned earlier in that respect must apply to the administration that is set up or amended as a result of this legislation in relation to approval for admission of a person to a nursing home. There are many considerations. Health, on the basis of a medical report alone, is not enough; there are other considerations. We do not want to see people occupying beds when they do not need them, but on the other hand we do not want to see people left high and dry because the right of entry into a nursing home is too rigidly controlled. Aged people encounter many problems, and health is basic to those problems. At all times they need the kind of lift that can come only by ensuring that they are encouraged, not discouraged. Very often encouragement comes from local service organisations and from families, where family support is adequate. But on many occasions that is not so. Lonely people who are aged and who do not have close relatives but perhaps have a close friend may find it hard to cope. The doctor may say: `Perhaps you should consider going into a nursing home'. That is the last thing such people want to do. They are worried, concerned and apprehensive. A rigid approach to testing their eligibility can impose even greater strains upon them. This is a sensitive area and it needs to be transmitted from legislation to implementation and administration with a great deal of sympathy and understanding. I am sure the Minister will not overlook that in the implementation of the regulatory requirements of this legislation. In the time scale available it is not possible for me to cover a number of other important aspects of nursing homes. I say in conclusion that we must encourage as far as possible, and without impinging too heavily on the public purse, the facilities that are so vital to meet the needs of the growing numbers of aged people in our community. Mr LEE(Dobell)(9.28) —Before I commence detailed discussion of the Nursing Homes and Hostels Legislation Amendment Bill, I wish to associate myself with some of the comments made by the honourable member for Page (Mr Ian Robinson), who preceded me in this debate. In his closing comments he said that this area should be dealt with sensitively by the Minister for Community Services (Mr Hurford) and his Department. When I hear some of the more extreme elements in our community calling for further and further cuts in Government expenditure-some people have called for $16 billion to be cut from Commonwealth expenditure-I often wonder whether areas such as nursing homes and hostels would pay the penalty should these peoples' policies be implemented. Due to problems of available time in Parliament today, it is possible that the Minister may not have an opportunity to respond to the debate. I intend to respond to some of the points raised in the debate and what I aim to say has the support of the Minister. He has asked me to tell the House that if he does not get the opportunity to respond to all the points made by speakers in this debate, he will endorse my contribution. The first point that should be made is that the shadow Minister for Community Services, the honourable member for Barker (Mr Porter), has shown abysmal ignorance of this subject. He has spoken mainly about Medicare and the health system, not about nursing homes and hostels, and he has shown great heartlessness by virtually wanting the Government to vacate this area. He wishes to leave nursing homes and hostels to private health insurance funds with the result that only the wealthy could afford nursing homes. The Australian Labor Party totally rejects this approach. The honourable member for Barker also suggested that Commonwealth regulations are currently preventing people from setting up nursing homes. That is completely incorrect. As the honourable member for Lowe (Mr Maher) rightly pointed out, the various State licensing authorities may stop people from opening nursing homes, because the State governments have the power to set standards and issue licences. However, the Commonwealth certainly has no objection to people establishing nursing homes, provided no taxpayers funds are required for the capital or recurrent funding. As I shall point out in a moment in greater detail, the need for regulation is related to the need to make sure that expensive care, heavily subsidised by ordinary taxpayers, goes to those who really need it and not to those who want it. We should remember that, in the period from 1973 to 1985, there has been a 606 per cent increase in the Commonwealth subsidy per bed per day for nursing homes. During that period, average weekly earnings have increased by only 308 per cent and the consumer price index has gone up by only 233 per cent. We can see that the subsidy money that the Commonwealth Government puts into funding nursing homes has increased startlingly since 1973. All the significant changes in the Bill represent responses to recommendations made by parliamentary committees such as the Senate Select Committee on Private Hospitals and Nursing Homes, chaired ably by Senator Patricia Giles, and the House of Representatives Standing Committee on Expenditure, chaired ably by its former Chairman, the Chairman of Committees, the honourable member for Grayndler (Mr Leo McLeay). In addition, this legislation also responds to demands made by the nursing home industry and by consumer representatives. Some Opposition speakers have suggested that there has been inadequate time for this Parliament and for the industry to consider the initiatives now before the House. All major elements of the legislation have been discussed in great detail over the past 12 months with organisations such as the Australian Nursing Homes Association, the Australian Affiliation of Voluntary Care Associations, and the Victorian Aged Services Peak Council. In addition, there have been discussions with consumer bodies and union and professional organisations. The new arrangements that the legislation implements will be introduced gradually over the next five years so as to ensure that the interests of the 75,000 frail aged residents of nursing homes and hostels are protected. In addition, the interests of the employees and the proprietors will be considered. In commenting on the new funding arrangements, the President of the Australian Affiliation of Voluntary Care Associations, the Reverend Donald Stewart, representing church and charitable service providers in all States and Territories, wrote to the Minister on 12 May this year as follows: With the Nursing Homes and Hostels Legislation Amendment Bill now before Parliament, I wish on behalf of the AAVCA to express satisfaction at the general direction of the new legislation. The AAVCA, whose member bodies provide about 80,000 beds in nursing homes and hostels across Australia, has consistently campaigned for the sorts of changes that have now been introduced into Parliament. When commenting on the funding arrangements, he wrote: It is a welcome change for the management of the financial side of care to be placed in the hands of the care providing organisations. I believe the Australian taxpayer will not be disappointed with the result of our balancing of cost and care. On the care side we welcome the emphasis upon care outcomes. The Government welcomes the undertaking given by the honourable member for Barker that the Opposition supports the legislation. That attitude reflects a welcome degree of bipartisanship that is to be commended. The Government trusts that the Opposition will honour this undertaking and not seek to repudiate it in the Senate, thereby negating the broad thrust of the reforms that it is presently welcoming. The honourable member for Barker raised one point that caused me concern when he suggested that administration of this program be handed over to the various State governments. No Opposition speaker produced any factual reason for that action, and presumably the honourable member's proposal reflects a doctrinaire approach rather than a well considered analysis. To anyone who heard the previous speaker, the honourable member for Page, it would be hard to reconcile what he said with the views of the honourable member for Barker that authority in this area should be handed over to the States. As the member for Page pointed out, since the 1950s the Commonwealth has played a significant role in providing funds for nursing homes and hostels. In addition, many industry and consumer representatives have urged that the Commonwealth continue its stewardship of the provision of adequate nursing home and hostel accommodation. The Giles report states: . . . the committee does not favour this method of financing- that is, providing grants for the States- However, the concept of a uniform system of program grants has many advantages if the grants are made by the Commonwealth to individual homes . . . That is exactly what this legislation will implement. The Government's approach is directed to maximising the quality and availability of care. The Government expressly rejects any proposal that it should shirk its traditional responsibilities by passing them over to other levels of government. I could site an example in my own electorate of Dobell, on the New South Wales central coast. Only yesterday I was pleased to receive advice from the Minister for Community Services that he had agreed to extend capital assistance to the Brisbane Water Legacy organisation in my electorate. That organisation in the coming financial year will be able to establish a 40-bed hostel at Norah Head. It is a beautiful location on land which the New South Wales Crown Lands Office has kindly made available through the work of my colleague Harry Moore, the State Labor member for Tuggerah. I wish to congratulate people such as the President of Brisbane Water Legacy, Mr Stan Brown, on their efforts in ensuring that hostel accommodation will be available to people in my local area. It the policies of the honourable member for Barker were implemented, it would mean that groups such as Brisbane Water Legacy would no longer receive capital assistance to enable them to establish a 40-bed hostel. I cannot imagine State governments providing $800,000 to organisations such as Brisbane Water Legacy to help construct a hostel. That is exactly how much money is being provided in my local area. The honourable member for Barker also criticised the proposals as leading to increased regulation. This Government has an impressive record of deregulation where regulation is not necessary-areas such as finance and the foreign exchange rate. However, the shadow Minister will be aware that inappropriate deregulation can in fact lead to greater costs. In this case in my view there is a strong need for regulation. Admission to nursing homes must be regulated to ensure that available beds go to those who need them. Nursing home residents are generally frail and vulnerable and regulation of standards is essential. If these were not monitored, care providers could unreasonably maximise profits through exploiting their monopoly and thereby impose unwarranted additional costs on the residents as well as the taxpayers. The honourable member for Petrie (Mr Hodges) and the honourable member for Barker queried the arrangements that will apply when the Minister determines, upon reassessment, that a resident no longer needs nursing home care. This legislation contains such a provision. Increasing emphasis is being placed on rehabilitation in the Government's current policies. Under present arrangements residents may remain in a nursing home even when there is not a continuing need for intense nursing home treatment. In my view where such a case exists it sometimes works to the disadvantage of the resident. We should not forget that people remain in nursing homes at a substantial cost to the taxpayer-of the order of $15,000 to $20,000 a year for each resident. One could take the example of a person who suffers a stroke, who is admitted to a nursing home and who, because of the treatment and therapy he receives, experiences an improvement in his medical condition to such an extent that it is in his interests to move away from the nursing home, perhaps into a hostel or back to his own residence at home, with the support of community nurses or programs sponsored under the home and community nurses or programs sponsored under the home and community care program. That is in the interests not only of the taxpayer but also of totally rehabilitating that person. In any event, the Minister's power will be exercised only if the Minister is satisfied that there is no longer a medical need and that more appropriate alternative forms of care are available. In these cases residents and their families have a right to appeal to the Administrative Appeals Tribunal. The honourable member for Petrie and the honourable member for Barker also raised a number of questions relating to standards, including how and when the new nursing home outcome standards are to be gazetted, why the Commonwealth Government should be enforcing those standards and the basis for the review of inspection decisions. The Commonwealth has developed the outcome standards in close consultation with the representatives of all State and Territory governments and it is envisaged that Commonwealth and State authorities will jointly enforce them. As soon as possible after this Bill becomes law, the new outcome standards will be gazetted by the Government. In addition, the Minister has outlined that a peer review mechanism will be established. That is in response to the strong demands from industry groups for the introduction of such a professional peer review rather than the more legalistic quasi-judicial approach. The peer review approach is intended to provide speedy redress for proprietors dissatisfied with any inspection decision. Because the peer review bodies will include industry and professional representatives, they will have the technical competence and the local knowledge to make decisions which represent practical and professionally competent solutions. Of course, any proprietor who is unhappy with these processes has the right of appeal to the Federal Court of Australia under the relevant legislation. The honourable member for Lyne (Mr Cowan) indicated that nursing homes should be compared to primary schools, and treated with `a certain amount of discipline'. The new standards emphasise that nursing home residents are human beings with human rights and freedoms, and are expressly intended to overcome this type of dictatorial, demeaning attitude. The standards are intended to emphasise that frail aged people should continue as far as is possible to make decisions about activities of daily living, such as the clothes they will wear and so on. It is accepted that there will be some restrictions on their freedoms because of their medical condition and the constraints of communal living, but these should not go beyond those restrictions that are inescapable. The honourable member for Lyne at one point suggested that, every time a new resident moved into a particular room, under the Government's guidelines that resident could perhaps demand that the colour of the curtains be changed or the carpet be removed and a colour or shading which was to that particular resident's choice should be installed. That is really taking things to the extreme. This legislation does not implement any such proposal. It simply means that if a proprietor is refurbishing a nursing home or modifying the environment, he has the responsibility to consult with the residents so that their views are taken into consideration because, ultimately, any decision will affect the lifestyle of those residents. The standards are intended to reflect the fact that nursing homes are not short term acute care institutions, but rather places which residents should be able to regard as their own home. The honourable member for Lyne queried costs and the role of the geriatric assessment teams. It is estimated that inappropriate admissions to nursing homes represent up to 25 per cent of all residents at a cost in excess of $250m annually, thereby preventing those who genuinely need nursing home beds from gaining access. Assessment teams have always had access to the knowledge and experience of the aged person's general practitioner. As the multidisciplinary geriatric assessment teams have a detailed knowledge of aged care options in their regions and usually have good links with the various care services, they are well placed to facilitate access to the most appropriate form of care to match the needs of the assessed persons. The honourable member for Petrie expressed concern that there would be an acute shortage of nursing home beds in four to five years' time resulting from the new nursing home growth control guidelines. This assertion ignores the Government's decision to maintain the existing ratio of residential care places at nursing homes and hostels at 100 places per 1,000 persons aged 70 years and over. The current planning guideline is for the construction of some 38,300 additional places by 1996-an increase of 35 per cent. The Government is rapidly expanding home and community care services to assist frail aged people to remain at home or with their families. The honourable member for Petrie raised the question of how the new arrangements will affect homes serving younger disabled people. The homes which cater exclusively or predominantly for younger people with disabilities will continue under the present arrangements and be subsumed into the new disability services program from 1 July next year. Those homes whose clientele are mainly aged will be funded under the new arrangements provided for under this legislation, even though they might have a minority of younger residents. The honourable member for Petrie expressed concern at the appropriateness of a standard grant system given the significant variations around Australia in the cost of individual items. The honourable member for Barker also queried the possible impact of standard grant funding on the financial situation of nursing home proprietors who have entered into expensive long term contracts or lease arrangements. I point out that the Commonwealth bed subsidy varies significantly from State to State and from home to home within each State. It varies from a maximum of $54.60 per day in Victoria to a minimum of $35.25 in Queensland, which is an amazing range. The phasing in over five years of new funding proposals will seek to ensure that that is not the case five years from now. The Government acknowledges that there are significant variations from area to area in the cost of particular items. However, studies by the Department of Community Services have shown that higher prices in one category will often be offset by lower prices in other cost items. The new standard grant arrangements will provide nursing home managers with the flexibility to ensure that the most cost effective approach is provided. The Department's detailed analysis of nursing home costs has also shown that in some cases high costs are closely associated with leasing and other contract arrangements. There is little doubt that, particularly in Victoria, dubious arrangements have been entered into by private nursing home proprietors which have had the effect of substantially increasing the costs imposed on the taxpayer and on vulnerable nursing home residents. I point out that the Government's new funding arrangements will ensure that proprietors who introduce more efficient operational standards will not be penalised by having their returns reduced. While the Department had expected its analysis to show significant economies of scale in nursing home infrastructure costs, that was not the case in any State; nor was any relationship found between the infrastructure costs and the dependency of residents and the characteristics of the physical structure of the home. This legislation has the full support of every member on this side of the House. I commend the Minister for introducing the second stage of this Government's reforms to nursing homes and hostels. I am sure it will go on record as another great achievement of the second term of the Hawke Labor Government. Mr CONQUEST(Hinkler)(9.47) —I welcome any measure to improve the quality of care and quality of life provided for the aged which at the same time achieves greater efficiency in government funding of nursing homes. I recognise that in the existing system recurrent funding impacts directly on the aged in that there can be a variation between the standard fee and the approved fee. Where the latter is more than the standard fee, it is the aged patient who makes up the difference by way of an increase in his or her contribution or, in some cases, the caring relatives make up the difference. The fees of nursing homes have been controlled by the Commonwealth since 1 January 1973 and at present are related to the cost structure of each individual nursing home. Patients in these homes are required to make a contribution towards the cost of their accommodation. The statutory minimum contribution is currently equivalent to 87.5 per cent of the maximum single rate pension plus supplementary assistance. The Commonwealth pays benefits on behalf of all qualified nursing home patients who are accommodated in nursing homes approved under the National Health Act. The basic benefit varies from State to State and is reviewed annually. In reviewing basic benefits each year the principle adopted by the Commonwealth has been that benefits be set at a level in each State which, together with the statutory minimum patient contribution, covers fees charged for 70 per cent of beds in the State in non-government nursing homes approved under the National Health Act. The current level in my State of Queensland of $35.25 per day, plus minimum patient contribution, would meet the fees charged in respect of 77 per cent of the total number of non-government National Health Act approved beds as at February 1986. The Commonwealth presently has a role in the area of nursing home care related to the provision of health benefits and other financial assistance. To ensure proper controls over the provision of this assistance, the Commonwealth has provided in its legislation for admission control and growth control, in addition to fees control in participating nursing homes, and budgetary control in deficit financed homes. State governments have the prime responsibility for licensing, determining and supervising the maintenance of standards for nursing homes in individual States. Of course, there are three types of nursing homes, which are subject to legislation, for which the Commonwealth Department of Community Services has responsibility. They are: The non-government nursing homes approved under the National Health Act known as participating nursing homes; those State government nursing homes approved under the National Health Act; and nursing homes approved under the Nursing Homes Assistance Act conducted by charitable and benevolent organisations or local government bodies, and which are currently deficit funded. The approval of these homes under the respective legislation is subject to various conditions, which are specified on the certificate of approval issued to the nursing home. I am pleased to see that under the new arrangements the Commonwealth will fund a specified level of service of nursing home care at a predetermined price. However, I am greatly interested in the means by which the price is calculated. I have long wondered at the variation in nursing home benefits paid to the various States. The fact that Victoria's benefit is presently at $54.60 a day while Queensland's is only $35.25 demonstrates a remarkable disparity. I certainly agree with the comments of the Minister for Community Services (Mr Hurford) in his second reading speech, when he said: Cost savings by efficient nursing homes proprietors do not produce increased profits and there is, therefore, no incentive to operate efficiently. That is very important and we must examine the new scheme to ensure that it will not entrench and even encourage new inefficiencies. The per capita inequities in benefits paid to the various States have been attributed to the variation in costs. I am not sure how costs can be changed by the mere passage of legislation. The fact that in the period 1973-85 the increase in Commonwealth per bed day expenditure was 60 per cent, compared with a 233 per cent increase in the consumer price index and a 308 per cent movement in average weekly earnings, means what? To say the cost of nursing home care has risen out of all proportion to other indicators seems to imply that goods and services which affect nursing home costs are represented by the basket of goods and services used in the consumer price index calculations. Does it mean that movements in their costs necessarily follow these other indicators? I see no reason for accepting such universal application. I do appreciate that the huge disparity in nursing home benefit payments between the low cost State of Queensland and the high cost State of Victoria could be, as the Minister alluded to in his second reading speech, unscrupulous proprietors exploiting the system to increase profits at the expense of residents and taxpayers. It is possible that a uniformly applied benefit rate may harm those nursing homes where costs, for justifiable reasons, are higher than the predetermined level? If so, what is to become of them? I do note that in response to requests from industry organisations, the Government has agreed to regular reviews of the appropriateness of the level of the standard aggregated module based on surveys of industry costs. Movement in the composite infrastructure costs, embodied in the standard aggregated module, which comprises transport, laundry, food and so on, maybe adequately represented by a formula involving movements in average weekly earnings and consumer price index indices. However, in the other cost component area, namely, those costs related to direct nursing and personal care, I still maintain that the consumer price index and average weekly earnings are not necessarily accurate or suitable indicators. I repeat this because both components, that is, care costs and infrastructure costs, make up the total bed day costs about which the Minister expresses concern because of their variance to consumer price index and average weekly earnings movements. Because the Nursing Homes and Hostels Legislation Amendment Bill is seeking to redress the interstate inequities, indeed inequities between individual homes insofar as funding is concerned, I strongly support it. As a Queensland National Party member, I am frequently in contact with the administrators of nursing homes in my electorate of Hinkler and I am always greatly impressed with the dedication of all involved in the caring process-staff and committee and the wonderful people in the communities who support them. I am also frequently reminded that there is still a greater need for nursing home care in the electorate. Of course, the fact that Queensland's nursing home benefit costs are the lowest in the Country, would seem to augur well for those existing homes. They should be able to utilise that funding over the transition period which is above the predetermined standard aggregated module level, by using it to improve even further the quality of care they offer their patients. The term `resident classification system' conjures up in my mind a situation where a home reports in with a roll call of 20 type A patients, 14 type B and so on. It is my hope that such an impersonalised system will not be incorporated at the expense of compassion and other related factors. I can see the reason for doing it but I repeat that I hope the bureaucrats and others involved in the process never lose sight of the fact that they are dealing with human beings. I note the consultative process undertaken by the Minister and his predecessor in the formulation of the Nursing Homes and Hostels Legislation Amendment Bill, and I also note the measures taken to prevent corners being cut in the standard of care of nursing home residents with the introduction of the standard grant arrangements. The clarification of care standards required in nursing homes has been quantified in a document which incorporated extensive contributions from service providers, unions and professional groups, consumer bodies and many others. The introduction of measures to ensure that the minority of homes that have a record of providing poor quality care are discouraged from such a course of action concerns me somewhat. The withholding of funds for new residents admitted and the withholding of infrastructure spending surplus income surely impacts on the aged, whom we are all trying to assist. While all this withholding is going on, what is happening to the residents of the homes? Disincentives to the proprietors are all very well but they may also encourage a further deterioration of the already poor standard of care so that they can maintain a particular level of profitability. It may not be a permanent position but I would ask the Minister to have another look at this matter. Where a Minister exercises the right to reassess a resident's need for nursing care and finds that he or she no longer needs such nursing care, I trust the statement made by the Minister in his second reading speech can be taken literally. He said: Where it is found that a resident no longer requires nursing home care he or she will be counselled and given every assistance to find the necessary appropriate accommodation and support services. I was under the impression the validity of approved applications for admission was already limited to 90 days, and that a further nh5 form was needed to be completed by the applicant's doctor. I would appreciate clarification on that point. In conclusion, I would like to complement the Minister for tackling such a complex issue and I would hope that if and when any problems emerge in the practical application of this legislation, speedy resolution, tempered with compassion, will be the order of the day. Motion (by Mr Humphreys) agreed to: That the question be now put. Original question resolved in the affirmative. Bill read a second time. Message from the Governor-General recommending appropriation announced. Leave granted for third reading to be moved forthwith. Motion (by Mr Hurford) proposed: That the Bill be now read a third time Mr PORTER(Barker)(9.59) —A number of points raised during the second reading debate were responded to by a Government back bencher, apparently on behalf of the Minister for Community Services (Mr Hurford). One of the significant points that the Government has made in relation to the concerns expressed by the Opposition about the increasing complexity of Commonwealth Government administration of the nursing homes legislation, under both the Nursing Homes and Hostels Act and under the National Health Act, is that these provisions in themselves-and the Government admits this-will add significantly to the administration of the program. Administration at the Commonwealth level is becoming increasingly complex and detailed. During debate we raised the question as to whether the Commonwealth should continue to be so heavily involved in the administration of the program. It does not mean that funding to this area would be cut if there were to be a transfer to responsibility for the program to the States. Mr Hurford —Not half. I mean, it has always happened. This is the way the Liberals camouflage their cutting, their rejecting of the-- Mr PORTER —This is extraordinary. The Government does not seem to understand. The Minister can get up and speak to this Bill if he wants, or will he let me speak? Mr Hurford —I cannot, because I did not know about this and I have moved the third reading. So I cannot respond to you now. Mr PORTER —It is quite extraordinary. The Minister has had three opportunities to speak to this Bill. He refuses to do so, but seeks continually to interject on me. Mr DEPUTY SPEAKER(Mr Leo McLeay) -Order! The honourable member might get to the matter before the House. Mr PORTER —The point is that the administration of this program is not as efficient as it should be. There is a great deal of overlap between the Commonwealth, the States and most of the voluntary organisations which provide the services. As I said, this legislation will greatly increase the cost of administration of the provision of aged care, both home care in hostels and in nursing homes. As was suggested by some Government back benchers, we would not in any way want to reduce the provision of aged care services to the elderly. In fact, we want to enhance it. But we want to get rid of the duplication and waste that is involved in the current administration. As I said in my speech during the second reading debate, we will be considering ways in which we can go back to the recommendations of the report of a committee, of which you, Mr Deputy Speaker, were a member, which recommended that the administration of this program be handled by the States, by those closest to the provision of the services. As I said, we will be looking closely at making such changes to see whether we can reduce the administrative costs of this program and provide more opportunities for those closest to the people, that is, the State governments and the voluntary organisations, to meet the needs of people in the various regions. I made the point during my speech in the second reading debate that the needs of aged people vary between regions and between States. There ought to be greater opportunity for local authorities to meet those needs in the best way they see fit. I gave the example of two Victorian towns. One has a massive nursing home and the other has very little nursing home accommodation but a very extensive home care service provided out of the hospital. We want to encourage that sort of diversity. Mr DEPUTY SPEAKER —Order! I remind the honourable member that in a third reading debate honourable members must stick to the specifics of the legislation. It is not a wide ranging debate like a second reading debate. Mr PORTER —I accept your ruling, Mr Deputy Speaker. I am referring specifically to the increased cost of the administration of this scheme outlined by the Government to be $14m as a result of these changes in a full financial year. I am saying that there could well be better ways of handling the administration of this funding program that we ought to be looking at, encouraging more diversity in the provision of care for the aged, a most important subject. Rather than taking a blinkered view of change, we will be considering the recommendations of the McLeay report. Unlike the Government we are not going to rule them out, as the Government and Government back benchers seem to have done. The most significant point made by some Government back benchers was that there is total freedom in the market now for health insurers and others to provide a full range of care, including nursing home care. The Minister for Community Services, as is his wont, interjected during my speech in the second reading debate, saying that what I was saying was quite wrong, that there was no limitation on the provision of nursing home care. That is an extraordinary statement. Mr Hurford —By the Commonwealth. Mr PORTER —If that is the case, I wonder why the Minister said in his second reading speech: For higher cost homes whose residents may prefer, and are prepared to pay for- - Mr DEPUTY SPEAKER —Order! The honourable member for Barker cannot advert to the second reading debate when we are dealing with the third reading of a Bill. He has to speak specifically to the matters that are in the Bill. Mr PORTER —These are matters in the Bill because the matters in the Bill deal with controls on nursing homes. The discussion is as to whether there should be increased controls, as is proposed by this legislation, or whether there should be fewer controls. The Government says that there is no need to express concern about the level of controls because there is freedom in the market. Yet the Minister himself says: For higher cost homes whose residents may prefer, and are prepared to pay for, higher quality and more expensive services, the Government has given in-principle support for the concept of fee exemption. If we have to get- - Mr Hurford —This is where the home is already going, where it has partly subsidised beds. Mr PORTER —Oh! `Where the homes are already going', the Minister says. It is not partly subsidised beds because the Minister goes on to say: `This would involve exempting entire nursing homes'. It is not partly subsidised beds or some beds in nursing homes. The Minister is saying; `We, as a government, are looking at giving or have given in-principle support to the concept of fee exemption'. Why on earth is the Government looking at giving in-principle support to fee exemption if that avenue is already open to the private sector? Quite clearly it is not. The Minister, in his own words, has indicated the extent of government control over nursing homes. It is the most highly regulated and highly controlled area of health care delivery in this country. The Opposition is saying that, whilst we will not oppose this legislation, we will be reconsidering the whole gamut of aged care to see whether the Commonwealth should continue its detailed, regulatory control and whether those controls would not be better handled by States and local authorities. As I said in opening my address on the third reading, the allegations by the Government are somewhat irrationally made. It alleges that because we are going to look at the administration of this scheme it means that we are going to walk away from care for the aged. This is a typically irrational statement from Government members in trying to make political capital out of care for the aged. We are not interested in that sort of thing. Mr DEPUTY SPEAKER —Order! The honourable member for Barker is getting a little away from the matters contained in the clauses and Schedules of the Bill. Mr PORTER —Mr Deputy Speaker, I have nearly concluded my remarks. We are not interested in playing petty politics with the aged; we are concerned about ensuring that the funds provided go to those most in need and that the programs for the delivery of services to the aged are as efficient as we can make them. Undoubtedly, there is enormous concern in the community about the current state of the provision of age care services. Almost no one is happy with the current arrangements. Nursing home proprietors complain about the level of Commonwealth regulation. Patients and the elderly cannot get into beds when they want to. Mr DEPUTY SPEAKER —Order! I am really having difficulty allowing the honourable member for Barker to proceed along this line. Essentially he is making an extension of his speech on the second reading. The debate on the third reading has to be restricted to those matters contained in the clauses and the Schedules of the Bill. If he wants to relate what he is saying to the specific clauses and Schedule of the Bill, his is order; if he continues with a broader speech, he is not. Mr PORTER —Thank you, Mr Deputy Speaker. The legislation quite clearly involves extending the controls over nursing homes. The final point I make is that already there is great discontent amongst the aged and those providing services for the aged about the degree of regulation and control, and I was saying that, interestingly enough, the Commonwealth has total control and yet no-one is happy. Those in receipt of the services are concerned that they cannot get appropriate services when they need them. Almost all honourable members in this debate have referred to the shortage of appropriate care for constituents in their electorates, particularly nursing home beds, when they need them. What we need to do is look at the more appropriate provision of aged care in this community, and that is exactly what the Opposition will be doing. We will not be hogtied to existing programs; we will be looking at a more efficient administration of the money that is available to ensure that the aged get better services certainly than those currently provided. Mr HODGES(Petrie)(10.11) —I want to add my considerable weight to the arguments just put by the honourable member for Barker (Mr Porter). The Nursing Homes and Hostels Legislation Amendment Bill is a very complex piece of legislation containing 45 clauses. Members of the Opposition have sought assurances on a number of those clauses from the Minister for Community Services, and the Minister has not responded to a number of queries raised. I am aware that the honourable member for Dobell (Mr Lee) did respond to some of them, but I think that is most unsatisfactory. I do not mean any disrespect to the honourable member for Dobell, but what we need is the organ grinder, not the monkey. I asked the Minister whether he would provide detailed answers to some of the inquiries that have been made during this debate, but he refuses to do so. It means either that he cannot answer the questions or he will not answer them. I think that is most unsatisfactory. This is a multi-billion dollar business, and the Government outlays are considerable. There are some 70,000 to 80,000 people in nursing homes around Australia, and it is an outrage that the Minister refused to make reference to those clauses of the Bill in his summing up on the second reading debate. After all, the formula-that is, the standard aggregated module, or SAM, as he calls it-requires payment to all nursing homes throughout Australia on a standard basis. I wonder what is going to happen to those people affected and I seek the Minister's response in regard to those nursing homes in remote areas. Mr Hurford —If you would sit down and give me an opportunity, I would do so. While you are talking, I cannot. Because of the time pressure I have not been able to get up. I have a Whip here who moved that the question be put. Mr HODGES —I do not care what the Whip is doing; the fact is that these are very important questions that ought to be answered for all nursing home residents and proprietors around Australia, and I ask the Minister to do the right thing by his portfolio and by the people of this nation and answer these queries. Mr HURFORD(Adelaide-Minister for Community Services)(10.14) —in reply-I thank the House, as nobody else has risen to speak, because I am now given the opportunity to do so. Regrettably, there are time constraints, as the honourable member for Dobell (Mr Lee) said. We know that the honourable member for Petrie (Mr Hodges) is an experienced member, but the new front bench dry shadow Minister for Community Services, the honourable member for Barker (Mr Porter), is still new to this place and pretty wet behind the ears and probably does not understand, as the honourable member for Petrie does, that there is a very great pressure on the time of this parliament. The Whip moved that the question be put, therefore I was not able to reply to the second reading debate. But I did manage to do what most Ministers have not been able to do over the years; that is, get the answers into the speech of a very competent back bench member, the honourable member for Dobell. I stand behind what he has said absolutely. In my response on the third reading I will stay in order by responding just to the points raised by the honourable member for Barker, the new shadow Minister, and the honourable member for Petrie. The main point is that our Government will not vacate this field of nursing homes and hostels and home care for the aged. We shall not reject these responsibilities as, indeed, this new dry shadow Minister is now stating that the Liberal Party will do. Opposition members camouflage this by saying that they will hand the matter over to the States. Over the next six to eight months-whatever time we have until the next election-I will have great pleasure going to every nursing home and hostel in this country telling people that this is the new policy of the New Right, of this new conservative party that is now the alternative government of this country. I have been a member of this House for 17 1/2 years and I have visited many such places in that time. I have not found one that wants administration of this area handed over to the States; they want the Commonwealth to stay in the field. While they have a Federal Labor government, while they have this Hawke Labor Government, they will have the Commonwealth in this field. What the Liberals are promising in this proposal put forward by this new dry shadow Minister has been supported by the honourable member for Lyne (Mr Cowan) but fortunately not by the honourable member for Page (Mr Ian Robinson) and the honourable member for Hinkler (Mr Conquest) in this debate. They showed some compassion, concern and understanding for this problem. The honourable member for Lyne, I suppose under the pressure of the Bjelke-Petersen push, has identified himself and the Nationals with this dry push. It is to camouflage nothing more than their trying to do something about the $16 billion credibility gap that they have between what they say they will spend and what they are not going to collect, according to the details that they are giving us. Mr Porter —Mr Deputy Speaker, I raise a point of order. The Minister has yet to address himself-- Mr HURFORD —I am responding to the points that the honourable member has made. Mr Porter —The Minister has yet to address himself to the legislation. This purely hypothetical figure and suggestions by the Government-- Mr DEPUTY SPEAKER(Mr Leo McLeay) -Order! I take it that the honourable member for Barker will get to the point of order. Mr Porter —About cuts that are going to be made by the Opposition across all sorts of other fields have no relevance to this legislation. Mr HURFORD —I therefore move away and come back to the-- Mr Porter —Excuse me! The Deputy Speaker has not ruled on the point of order yet. Mr DEPUTY SPEAKER —I thought the Minister was coming back to the specific clauses of the Bill but the Minister did say that he was responding to some of the wider remarks that the honourable member for Barker had made. Mr Porter —You did not let me do that. Mr DEPUTY SPEAKER —The honourable member for Barker did not come back as closely as he might have. Mr HURFORD —Mr Deputy Speaker, I am responding just to the points made by the Opposition. You will remember that the honourable member made a big play on deregulation. That is another camouflage. It is the latest one now that the Opposition has got rid of the previous small `l' liberal shadow Minister, Senator Peter Baume, who in no way would identify himself with the proposals put forward by the honourable member for Barker, any more than the honourable member for Goldstein (Mr Macphee) would. This is New Right policy, deregulation. Of course the conservatives want to deregulate. That means leaving this field to the private sector only, and that means no subsidies because one cannot subsidise unless one has regulations. Taxpayers will not like their contributions going to people who do not need taxpayers funds paid as contributions. Of course there has to be some control and planning. It cannot be left to the private sector or to local government with an open cheque when taxpayers' funds are involved. Let us be clear that when the Opposition talks about deregulation it is talking about vacating this field and ignoring the needs of the aged in this country. The Australian Labor Party will not desert the old. We will not allow the conservatives to get away with this camouflaged method of seeking to desert the old. This legislation is about sensible funding and improved standards in nursing homes. We are proud of it. We are pleased that in spite of the threats of the honourable member for Barker the Opposition does not oppose this legislation. I make this point: It is now up to the Senate to see that this legislation is in place to commence a new era from 1 July next. I hope that the Senate does not make any amendments because the industry has been waiting for a year for the provisions in this legislation and it excepts them to start on 1 July. This cannot happen if the Senate amends the legislation after this House has gone into recess. I urge the Opposition not to allow this to happen. More legislation will be introduced in the Budget session and if amendments are found to be needed they will be made then. I thank all honourable members who have taken part in the debate and I urge the House to pass this legislation. Question resolved in the affirmative. Bill read a third time. Bill presented by Mr Willis, and read a first time. Mr WILLIS(Gellibrand-Minister for Employment and Industrial Relations)(10.21) - I move: That the Bill be now read a second time. The Industrial Relations Bill is an historic legislative initiative by the Hawke Labor Government. The Bill follows the first thorough review of Federal industrial relations machinery since the Conciliation and Arbitration Act was proclaimed in 1904. The proposals which it incorporates will establish a Federal industrial relations system in keeping with Australia's economic and industrial needs. The Bill is based primarily, but by no means exclusively, on the findings of the Tripartite Committee of Review into Australian Industrial Relations Law and Systems. The Committee was set up by this Government soon after it came to office in 1983. Its establishment reflected broad-based acknowledgment that the present Conciliation and Arbitration Act required a major overhaul. That Act, one of the oldest of this Parliament, is a patchwork of amendments. Its structure is confusing and many of its provisions are unduly complex and out of date. More importantly, the Government was concerned that all avenues should be explored to ensure that Australia would have the most appropriate industrial relations system to meet its present and future needs. The Committee members - Professor Keith Hancock, now a Deputy President of the Commission, Mr George Polites and Mr Charlie Fitzgibbon - were outstandingly well qualified for the task. The Committee was given a very broad charter. It was required to examine, report and make recommendations on: All aspects of Commonwealth law relating to the prevention and settlement of industrial disputes. All aspects of Commonwealth law relating to the recognition and operation of associations of employers and workers. The extent of which and the manner in which the Federal and State industrial relations institutional and legislative arrangements might better inter-relate. The terms of reference were unanimously endorsed by the National Labour Consultative Council and the Conference of Labour Ministers. The Inquiry was exhaustive. The Committee sought submissions from interested parties, consulted widely and undertook an extensive program of public hearings. The Committee went out of its way to ascertain the views of critics of the present system, including conducting a conference on `Alternatives to Arbitration', which brought together academics and industrial relations practitioners specifically to address alternatives to the present system. The Committee's report was presented in April 1985. Its central conclusion was that the existing system of conciliation and arbitration should be retained, but that it should be extensively modified. Despite devoting considerable attention to an examination of alternative systems, such as collective bargaining, the Committee had been unable to find convincing arguments that another system could produce better results. The Committee concluded that `no substantial case had been made that industrial relations would improve if conciliation and arbitration were abandoned in favour of some other system'. As I indicated soon after the report was released, the Government agrees strongly with the Committee's conclusion that conciliation and arbitration should remain the mechanism for regulating industrial relations in Australia. This view is based on a clear understanding of the social, historical and structural characteristics of our industrial relations system as it has evolved over the past 80 years. It recognises the federal nature of government in Australia and the constitutional constraints imposed on the Commonwealth at Federation. Under our federal system of government, Federal and State tribunals work in parallel in each State. The State tribunals are similar to the Federal body in that each is based on a conciliation and arbitration model. In developing appropriate legislation to regulate industrial relations on a federal basis, regard must be had to the States' industrial systems and the need for the federal system to operate concurrently with them. Furthermore, the Commonwealth power to determine the Federal industrial relations framework derives principally from its power to provide for conciliation and arbitration of interstate industrial disputes. The Constitution does not lend itself readily to the development of any other industrial relations system and, indeed, imposes real difficulties for those who would seek to implement an alternative system. The Government's support for continuance of the conciliation and arbitration system also stems from its recognition of the immense social benefits which have stemmed from the system of awards providing minimum conditions of employment for the vast majority of wage and salary earners. By this means, we have, to a far greater extent than most comparable countries, prevented the exploitation of employees who lack bargaining power. The system has also provided a capacity for development and delivery of a responsible national wages policy which has been effectively utilised only since the present Government came to office. The Bill reflects many of the Committee's recommendations, but it is by no means a faithful legislative replica of the report. Indeed, some key recommendations of the report have been rejected, whilst others have been substantially varied. There has been extensive consultation on all recommendations between the Government, the Australian Council of Trade Unions and the Confederation of Australian Industry through the National Labour Consultative Council and its legislation sub-committee. While agreement was reached during such consultations on the majority of changes which the Committee proposed, there remained a number of areas of disagreement. In respect of these particular issues the Government has not shirked from making some hard decisions. Rather it has, I believe, acted responsibly in the interests of the community as a whole in determining these matters. The changes to the industrial relations system which the Government intends to effect are extensive, without being a leap in the dark. They represent an evolutionary development of our industrial relations system which addresses various inadequacies in that system, increases its efficiency and effectiveness, and makes it relevant to contemporary requirements. The Government's Industrial Relations Strategy This legislation is a key element in the Government's industrial relations strategy. By providing a much improved industrial relations framework, we will be able to build on our very considerable achievements on the industrial relations front. These achievements have flowed from our development of a co-operative, rather than confrontationist, approach to trade unions, from the successful application of appropriate wages policy and, more latterly, from improvements in the work place relationships and practices. The success of the Government's strategy to date is undeniable. During the Hawke Government's period in office, there has been a dramatic improvement in industrial relations outcomes. Time lost in industrial disputes has fallen markedly. The average annual number of working days lost in industrial disputes per 1,000 employees under the Hawke Government has been 60 per cent less than that recorded under the Fraser Government. At the same time, the average rate of wage increases has slowed from 12 per cent per annum to 7 per cent per annum, thus enabling a remarkable 6 per cent decline in real unit labour costs. Wages policy has also been flexible enough to adjust to the needs of an economy beset by drastic falls in its terms of trade and the consequent large devaluation of the Australian dollar. Furthermore, these wage outcomes have been achieved without the need to severely depress the economy and with remarkably little increase in unemployment. On the basis of past experience, it is impossible to believe that, in the absence of the system prevailing in the last couple of years, we could have achieved the wage outcomes we in fact attained without a severe recession and a large rise in unemployment. The success of that system owes much to the trade unions which, with rare exceptions, have adhered strictly to the wages policy adopted by the Conciliation and Arbitration Commission, even though it resulted in reduced real wages. Indeed, events over the past four years have demonstrated a distinct attitudinal change by the unions which has been a major factor in improved industrial relations outcomes. The development and application of the prices and incomes accord was undoubtedly a major factor in that constructive attitudinal change, and has provided a co-operative framework for unions and Government which is without precedent in our industrial relations history. The Conciliation and Arbitration Commission can also take credit for these achievements. Whilst being much maligned by the right wing ideologues, it has worked responsibly and effectively at developing and implementing appropriate wages policy. The existence of the Commission, and the sensible application of its powers, has provided the means of implementing an appropriate wages policy that would not have been possible in its absence. Important and substantial as these achievements have been, however, there is certainly further scope for improvement. A major means by which the Government is seeking such additional improvement is by encouraging a greater focus on shop floor or work place industrial relations. In particular, the Government has stressed the need for the parties to review restrictive work and management practices, and instituted action at a national and industry level to promote these developments. Such action is essential for enhancement of productivity which is especially important in our present economic circumstances. A major feature of the new two-tier wages system is that it builds on these initiatives and provides direct incentive to employees to eliminate restrictive work practices and otherwise increase work place productivity as a means of achieving a second tier wage rise. The successful implementation of this wages system will therefore reinforce the Government's industrial relations strategy. Work place industrial relations can also be improved by the development of employee participation and industrial democracy. I recently tabled in the House a policy discussion paper on this subject which is designed to promote discussion on means of achieving greater participation in industry. Following a review of reaction to that paper, the Government will be announcing initiatives to stimulate development in this area. The Bill now before the House is not, therefore, to be seen in isolation. It is part of a comprehensive industrial relations strategy which has already demonstrated its effectiveness. The measures contained in this legislation will ensure that the effectiveness of that strategy is further enhanced. Key Elements I now turn to the Bill itself. Full details of the Bill are provided in the explanatory memorandum. Here I wish to refer to its most significant features. The legislation introduces vital changes to our industrial relations system in the crucial areas of the institutional framework, the jurisdiction of the tribunal, dispute prevention and settlement, compliance, and matters relating to the regulation of registered organisations. Effectively it addresses every aspect of our industrial relations and the Government's philosophies on a vast range of relevant industrial issues are comprehended within it. It reflects the Government's view that its industrial legislation must afford the industrial parties the capacity to regulate all elements of their industrial relationships through the processes of conciliation and arbitration. Since all industrial benefits stem from the industrial legislation, it is appropriate, in our view, that all industrial remedies and penalties should likewise be derived from it. Reliance on remedies which might be available outside the industrial legislation simply should not be necessary if the legislation adequately provides for ensuring adherence to its own rules. Of paramount importance in any industrial relationship involving employers and their employees is the availability of appropriate machinery for the resolution of any industrial disputes which may arise in the course of their work. It is that ready access to an independent industrial tribunal to assist in the prevention and settlement of industrial disputes which characterises Australia's unique conciliation and arbitration system and is one of its greatest attributes. Institutional Framework The Bill provides for the establishment of the Australian Industrial Relations Commission. The Commission will replace the existing Australian Conciliation and Arbitration Commission. This new Commission will be capable of responding quickly, consistently and effectively to the needs of the parties, particularly in the prevention and settlement of industrial disputes. The Commission will possess the means to enforce its authority and secure compliance with its decisions. Whilst the Commission will be exclusively responsible for the conciliation and arbitration function involving federally registered organisations, a new Australian Labour Court will also be created to replace the present Industrial Division of the Federal Court and to exercise the necessary judicial powers. The legislation will enable presidential members of the Industrial Relations Commission to hold separate and concurrent appointments to the Labour Court and the Commission. It is not proposed, however, to prevent the appointment of other suitably qualified persons as judges. The establishment of the two new bodies has been strongly supported by both union and employer organisations and accords with the recommendations of Sir John Moore, the former President of the Australian Conciliation and Arbitration Commission, to the Hancock inquiry. These new institutional arrangements will permit the achievement of closer integration between the separate yet indisputably related arbitral and judicial processes of the industrial relations system and will enable a greater rationalisation of the exercise of the respective powers. The Bill requires persons who are to be appointed as judges to have skills and experience in the field of industrial relations. The appointment to the Labour Court of persons who possess an appreciation and awareness of industrial relations considerations recognises the unique requirements of the industrial relations system and will promote consistency and understanding in the application, interpretation and enforcement of the law with respect to industrial issues and particularly in the law regulating organisations. The existence of the specialist arbitral and judicial tribunals with closely related jurisdictions will ensure that their specific powers are exercised in a co-ordinated and complementary manner to the overall advantage of the system. The Office of the Industrial Registrar is to be established as a statutory authority. This will enable it to provide effective support to both the Commission and the Court. However, the power to register organisations or to amend eligibility rules will now be vested in a Deputy President of the Commission. The Bill provides for a general rationalisation of existing specialist federal industrial tribunals and the special jurisdictions under the existing Conciliation and Arbitration Act, and incorporates them into the mainstream jurisdiction. The Academic Salaries Tribunal, the Flight Crew Officers Industrial Tribunal and the present arrangements concerning the Australian Federal Police will be abolished. There will no longer be a separate Division of the Act to cover Commonwealth and Territory employees. They will be dealt with within the general powers and functions of the Commission. In relation to the Coal Industry Tribunal, the Government is introducing new compliance measures to enhance the Tribunal's authority and to achieve adherence to its decisions. These measures will be the equivalent of those which will apply in relation to the new Commission. However, the Government recognises that further changes to the Tribunal's operations may be necessary. Since the Tribunal's powers and functions are governed by both Federal and New South Wales State legislation, under an agreement between the two governments, all changes require the concurrence of the New South Wales Government. Whilst this Government has not been able, at this stage, to obtain the requisite concurrence of the New South Wales Government to additional amendments to the Tribunal's operations, it intends to pursue discussions with a view to achieving an agreed approach for future change. The Hancock Committee recommended that the co-operation of the States should be sought towards the establishment-in the long term-of a national integrated system of industrial relations. Whilst the Government undertook extensive discussions with the States, disappointingly, they were not prepared to explore in depth the achievement of a national integrated system, embodying both the Federal and State industrial tribunals. The Bill nevertheless contains specific proposals which are designed to facilitate greater co-operation between the Federal and State industrial tribunals and to promote in the systems greater uniformity of treatment of the parties. Once the States have enacted complementary legislation, members of State and Federal tribunals will be able to hold, concurrently, dual commissions which will enable them to exercise both State and Federal powers. Further, meetings of the heads of tribunals will be placed on a statutory footing. Jurisdiction In accordance with the Hancock recommendation, the jurisdiction of the Industrial Relations Commission will be framed as broadly as possible within the limits of the conciliation and arbitration power, subject only to the requirement that disputes relate to matters concerning employers and employees. It is intended that disputes involving all such matters will be able to come before the Commission. By this means, the arbitrary constraint on Commission involvement brought about by the current definitions of `industrial dispute' and `industrial matter' in the Conciliation and Arbitration Act will be removed and the parties will not be limited in the range of matters which they bring to the Commission as agreements or disputes. This does not mean, however, that the Commission will be arbitrating or interfering in matters which may properly be regarded as coming within managerial prerogative. Certainly, in its own area of employment, the Commonwealth will vigorously assert its right to exercise appropriate managerial prerogative without Commission interference. We recognise, however, that, in the event of a dispute over such matters, the Commission can play a helpful role through conciliation and that denial of jurisdiction would prevent such assistance being made available to the parties. The Court will be empowered to order reinstatement and/or compensation for breaches of the unfair dismissal provisions of Federal awards. This is a power that resides in the State tribunals for employees under State awards but has not hitherto been available in the Federal jurisdiction. The Court, however, will not be able to exercise its jurisdiction until the Commission has issued a certificate to the effect that it has been unable to resolve the disputed dismissal by conciliation. Again, the introduction of such procedures does not deny an employer the right to `hire and fire'; rather it ensures that an employee is afforded the protection of due process being followed in such matters. In relation to the question of whether the Commission's jurisdiction should be extended to cover quasi-employees, the Government does not believe that the Hancock Committee's recommendation 19 represents an adequate response to the complex issue of industrial relations involving independent contractors. Accordingly the Government has not taken up that recommendation in this Bill. Certified Agreements Whilst the emphasis in the legislation is on conciliation and arbitration, the Bill recognises that there must be sufficient flexibility in the industrial relations system to allow for agreement between the parties on terms and conditions of employment-bearing in mind that outcomes which suit the best interests of immediate protagonists may not be consistent with the public interest. The Hancock Committee's recommendation in this regard was to provide for so-called `opting-out' of the system. However, the Government views this recommendation as being totally contrary to the overall direction supported by the Hancock Committee elsewhere in its report. Such `opting-out' arrangements would undermine the proposed institutional framework of the new Industrial Relations Commission by allowing the parties to set up private conciliation and arbitration procedures without any recourse to the independent tribunal. This would encourage the growth of a `black market' conciliation and arbitration industry which would not be required to pay any attention to the public interest, and would be likely to lead to economically disastrous sweetheart deals for some, and sweatshop arrangements for others. In order to allow flexibility, yet avoid the undesirable elements of `opting-out', the Bill provides for both the currently available consent awards and for fixed-term, non-variable, binding agreements which will be certified by the Commission. Such agreements differ from the current consent award provisions in that they will have a specified life, after which they will lapse, and will not be able to be varied during that period, except in special and compelling circumstances. The agreements will afford an employer guaranteed certainty in relation to the labour costs which will apply during the period of the agreement and will enable him to take appropriate management decisions in the knowledge of such predetermined stable costs. It will be open to the parties to insert in their agreement measures designed to deal with the enforcement of its terms. In the absence of such procedures, a party alleging a breach of the agreement will be able to seek enforcement in the Labour Court. In addition, in the event that a party takes industrial action in relation to a matter embodied in the agreement, the other party will be permitted, upon the Commission's approval, to treat the agreement as terminated. Where all parties consent and the Commission declares that it is in the public interest, it will be possible for the agreement to be terminated. This could be necessary in special and compelling circumstances, for instance, where the employer has sustained a drastic decline in profitability through an unforeseen drop in the price of his product which could force him to lay off large numbers of his employees unless he is able to end the agreement. There is provision in the legislation for the Minister to intervene in the public interest to seek to have the Commission review the operation of a certified agreement if the Minister considers such a review is warranted. As all such agreements will require Commission certification before they take effect, the Commission will be able to ensure that they do not prejudice its wages system. Public Interest The inclusion of a review function further underlines the Commission's essential position as guardian of the public interest in all aspects of the industrial relations system. Indeed, the overall importance of this role is reinforced in the Bill by the expansion of the Government's power to intervene in matters before the Commission. Further, the objects of the Act will include specific reference to economic considerations and the Commission will be required to have regard to the economic consequences of its decisions in all proceedings, not just Full Bench matters. Dispute Prevention and Settlement Demarcation disputes can be particularly intractable and damaging to industry. Employees frequently have little influence on such disputes. The Bill recognises the responsibilities of the trade union movement in resolving demarcation disputes. It affords the Commission the discretion to allow the Australian Council of Trade Unions to attempt to settle a dispute before it exercises its own powers. Where the trade union movement cannot effect a timely resolution of the dispute the Commission will be able to address both the immediate and the long term issues relating to the demarcation of specific work. It will be able to make orders as to coverage and to change rules to give effect to its decisions, thereby ensuring lasting relief. The inclusion of grievance procedures in all awards provides an important means of placing greater emphasis on improved industrial relations in the workplace. Whilst the Government does not have the ability, under the conciliation and arbitration power, to give effect to the Hancock recommendation that the Commission be required to insert such grievance procedures in all awards, the Bill does provide for the Commission to encourage the parties to include such processes in all their awards. Where such procedures do exist, it is imperative that they be followed. To this end, the Commission will be able to take into account the extent to which the procedure has been used by the parties in determining whether it proceeds to deal with a dispute. Model grievance procedures will be further developed through the National Labour Consultative Council to enable national union and employer organisations to encourage their members to adopt a uniform standard for inclusion in all awards. Organisations Reforms in the overall industrial structure must keep pace with changes in the work place. The institutional initiatives which I have outlined are one element of this. An equally significant component is the revitalisation of the structure of trade unions. It is generally agreed that Australia has too many trade unions. The present organisational structure of trade unions reflects historical factors, which are less relevant to contemporary industry, and contributes to damaging demarcation disputes between unions. Further, employers complain of being frustrated in their attempts to negotiate agreements when confronted by a multiplicity of unions, in their industries and even individual enterprises, which are making quite disparate claims. It also causes problems for smaller unions which cannot effectively represent the interests of their members due to their limited resources. The Conciliation and Arbitration Amendment Act 1983 incorporated provisions which facilitated amalgamations between unions and introduced the `community of interest' criterion for amalgamations. This Bill builds upon those initiatives. Amalgamations will be made easier. Where the unions satisfy the community of interest test, a simple majority of votes cast in favour will approve the amalgamation. Where no community of interest criterion applies, at least a quarter of eligible members of the organisations will be required to vote with a simple majority of these votes being necessary to approve the amalgamation. Special transitional arrangements will be provided for existing office holders in the amalgamating organisations. Registration requirements will be more stringent. Unions will be required, except in special circumstances, to have at least 1,000 members before they can be registered. At present, the threshold is 100 members. Furthermore, the continued registration of a union with less than the minimum number will be reviewed by a designated presidential member with a view to deciding if its registration should be cancelled. The future registration of unions will be restricted to associations which are industry-based, except in special circumstances, thus precluding the future registration of craft or occupationally-based associations. It must, nevertheless, be recognised that a government can never successfully impose organisational change from above if there is outright rejection or resistance at the grass roots level. The previous Government tried to legislate for industry unions and failed. Such prescriptive legislative endeavours are bound to be counter-productive. Reform must be an on-going process, consistent with the changing patterns of Australian industry and in accord with community attitudes and aspirations. The Government's view is that reform of the structure of trade unions can be positively encouraged with the appropriate legislative framework. The proposals which I have just outlined are directed towards that end. Registered trade unions are required to observe a wide range of provisions regulating their affairs. They must meet proper standards of internal administration and satisfy requirements for democratic control. The legislation contains many initiatives which will enhance the accountability and efficient operations of trade unions. These include the entitlement of the registrar to require an organisation to provide membership records when requested by a member, the right of a member to a membership statement, and the requirement that all elections by a direct voting system for offices, other than administrative positions, be by secret postal ballot and be officially conducted except where an exemption is granted by the registrar. Members' rights to participate actively in the affairs of their organisation are protected. They are entitled to challenge rules, to seek their enforcement, to initiate election inquiries and to seek a secret ballot on strike action. Individuals are also protected from discriminatory action based on their membership of organisations or their non-participation in industrial action. The Bill also prescribes action by an organisation, its officers, members or representatives which are likely to prejudice the employment of a member of the organisation. It extends the provisions for individuals to apply for a certificate of conscientious objection exempting them from belonging to an organisation of either employees or employers. Further, the legislation continues the existing prohibition on discriminatory action against independent contractors. Compliance An essential element of any industrial relations system which provides benefits and protections to registered organisations and their members is that there should be effective means of ensuring adherence to the principles on which the system is founded and compliance with the decisions of its institutions. The means of ensuring compliance should not be the focal point of the system; they should be available only after the processes of conciliation and arbitration have been exhausted. The Hancock report recommended that the Federal industrial relations system should not provide for monetary penalties, fines or imprisonment as sanctions for industrial action. However, the Government considers that non-monetary penalties alone are not necessarily sufficient to deal with the relatively few cases where there is a refusal to conform with conciliation and arbitration processes. Instead, the Government believes that there must be a wide range of consequences, including monetary penalties, which are capable of being applied as circumstances demand and which constitute an integrated and comprehensive scheme Accordingly, there are effective measures designed to achieve compliance contained within this legislation. In the absence of such effective measures, it is inevitable that there would be greater resort to remedies available in other jurisdictions in order to gain adherence to Commission decisions. (Extension of time granted) In this Government's view, that would be a most undesirable development. It is clearly preferable that all remedies for industrial misconduct be prescribed within the industrial legislation and that reliance be placed upon such measures in order to obtain compliance. The Government believes that the tribunals established by this Bill should have complete authority to ensure adherence by the parties within the Federal industrial relations system to the standards applying under that system. It is considered that the availability of other forms of legal remedies from State courts or under State laws could well be damaging to the Federal Commission's charter to prevent and settle industrial disputes and could interfere with its ability to perform this function, to the ultimate detriment of the parties. Thus, the Government recognises the need to introduce meaningful measures-within the overall context of industrial regulation-to ensure that industrial misbehaviour, which refuses to adhere to the rules of our industrial relations system, can be dealt with swiftly and effectively. It is, however, totally opposed to any extremist approaches such as that adopted by the Queensland Government, which has chosen to address the issue of compliance by introducing the most draconian, undemocratic legislation, the ultimate effect of which, if fully applied, would be to outlaw virtually all legitimate industrial activity by Queensland unions and their members. The measures which the Government proposes to introduce will draw upon the benefits of the new institutional arrangements to provide effective, graduated and equitable means of ensuring compliance. The principal initiative is that the present bans clause provisions, which have long since fallen into disrepute and are now substantially moribund, will be replaced by a new direction and injunction process. This will mean that each member of the Commission will be empowered to issue a direction prohibiting the instigation or continuation of industrial action in a primary dispute or conduct obstructing the observance of, or work under, a Federal award. Where, in the face of such a direction, industrial action occurs or continues and a Full Bench considers that the avenues available to the Commission for the prompt resolution of the dispute have been exhausted, then the Full Bench is required to issue a certificate. Once a certificate has been issued the matter can be taken to the Labour Court. The Court will be able to issue an injunction enforcing the Commission's direction and to impose penalties where its injunction is flouted. The range of penalties available to the Court includes fines, alterations to an organisation's eligibility rules to exclude specified groups from membership, and the imposition of conditions as to future industrial conduct. A serious continuing breach of a direction by an organisation or its members can lead to deregistration. This system of directions and injunctions for the stopping of industrial action by employers or unions in relation to industrial disputes will be exclusive of other remedies under State or Territory legislation, such as the recently introduced Queensland anti-strike laws, or in tort in relation to such conduct. However, certain actions will not be excluded, such as action for compensatory damages and action relating to harm to persons or property, or prosecution for criminal offences. The elimination of access to common law injunctions relating to industrial action should not be seen as limiting employer responses towards unions engaged in industrial disputes. Experience demonstrates that employers have shown an overwhelming reluctance to resort to such extreme measures. This is hardly surprising, given that punitive common law sanctions delay the achievement of a final settlement, are costly and are inappropriate to resolving industrial disputes and preserving long term harmonious relations. Moreover, where an injunction is necessary, the Labour Court will be able to grant equivalent injunctory relief, which will be accompanied by meaningful penalties for non-adherence. There is simply no need for employers to be able to pursue injunctive relief in two different courts for the one action. Nor, indeed, is it at all appropriate that unions or their members should be subject to such double jeopardy for the one action. In relation to secondary boycott disputes, jurisdiction to deal with contraventions by trade unions of sections 45d and 45e of the Trade Practices Act 1974 will be vested in the Labour Court but there will be no changes made to the remedies available under that Act. However, it will now be necessary for persons wishing to take actions for contraventions of sections 45d and 45e under the Trade Practices Act involving trade unions to refer the dispute initially to the Commission in an effort to achieve a settlement before access to the Labour Court is available. Once the Commission has satisfied itself that it cannot bring about a speedy resolution of the dispute or the cessation of the boycott, then a person will be entitled to proceed with Trade Practices Act actions for injunctions or damages without impediment. The remedies contained within the Trade Practices Act for contraventions of sections 45d and 45e are also to be exclusive of remedies under State or Territory laws or in tort, other than for an offence under the ordinary criminal law, or proceedings for a contravention of an award, order or direction of a State industrial tribunal. It is the intention of this legislation to ensure that, where other remedies are available under any State or Territory legislation or in tort that are inconsistent with the relevant Federal remedies, the Federal remedies are to be paramount. Thus, the provocative and confrontationist Queensland legislation, which makes no useful contribution to bringing about the end of industrial conduct that is harming other persons, will be overridden. The operation of the Federal legislation can be effectively illustrated by referring to the examples of the recent Queensland industrial legislation. Relying upon the paramountcy given by section 109 of the Constitution to Federal laws, the Queensland Industrial (Commercial Practices) Act will have no application for federally registered unions or their members where their conduct comes within the scope of the Trade Practices Act. In the case of Queensland State registered unions, proceedings in relation to secondary boycotts, primary boycotts affecting interstate or overseas trade and commerce and agreements having the effect of boycotts will not be actionable under the Queensland Act. Whilst the State registered unions will not be covered by the compulsory pre-litigation conciliation before the Industrial Relations Commission which will be a requirement where Federal unions are involved, actions against State unions under the Trade Practices Act will be dealt with by the Labour Court and the Queensland Minister will not be able to seek the imposition of penalties of up to $250,000 as provided for in the Industrial (Commercial Practices) Act. Thus, the unions will continue to be subject to the penalties under the Trade Practices Act but will not experience the double jeopardy which the Queensland Government is intent upon trying to inflict. It is the Government's view that early Commission involvement in disputes will ensure that every endeavour is made to settle the matters as quickly as possible, without those efforts being undermined by potentially inflammatory proceedings being instituted simultaneously outside the industrial relations system. Further, it will afford a party the opportunity to seek the relief provided within the Industrial Relations Bill before having to consider the need for recourse to Trade Practices Act remedies. Indeed, the Labour Court will be required to have regard to what action has been, or could be, taken by an employer under the Industrial Relations Act in relation to a boycott dispute before exercising its powers under the Trade Practices Act. In the area of secondary boycotts the role proposed for the Commission will not obstruct ready access to the Court to the detriment of the employer. If the Commission considers that it cannot promptly settle the dispute or bring about the cessation of the boycott it will immediately issue a certificate. Where the consequences of any delay would be so serious that it would cause substantial injustice to defer granting a certificate to enable the Commission to ascertain whether a prompt settlement was likely, it will be able to issue a certificate immediately. Once a certificate has been issued, the Court will be able to grant an interlocutory injunction. It should be recognised that presently employers do not rush off to the Federal Court with undue haste to obtain injunctions. Instead experience demonstrates that employers almost invariably prefer to try to resolve the dispute before instigating Trade Practices Act procee-dings. Thus, the pre-litigation conciliation now being proposed merely formalises this reality. In the case of a dispute of a political nature or where the boycott dispute is over a matter outside the Commission's jurisdiction, the Commission will issue a certificate immediately but will, nevertheless, be able to conciliate, if required. Contraventions of sections 45d and 45e which do not involve trade unions, or their members, will continue to be dealt with by the Federal Court. In addition to the range of penalties which the Labour Court will be empowered to impose, there will be a provision which enables the Commission to refuse to deal with a dispute where a party to that dispute is hindering the settlement of any other dispute. Most of the other workable sanctions within the present Act will also be retained. All monetary penalties available under the new Act have been set at levels which are appropriate to the nature of the breach involved. Conclusion In conclusion, the Industrial Relations Bill will enable considerable improvements to be achieved in our industrial relations system. Its passage, and the associated repeal of the Conciliation and Arbitration Act, which has been on the statute book for 83 years, will represent a clear res-ponse by this Parliament to the widespread view in the community that our industrial relations system is in need of reform. This legislation responsibly fulfils that requirement by building on the proven foundation of conciliation and arbitration. In so doing, it revises its institutions, improves its processes, rectifies some blatant deficiencies, and ensures its contemporary relevance. I am confident that the approach the Government has taken will have widespread community support. Whilst neither employer organisations nor unions will be pleased with all aspects of the legislation, I believe that, when viewed as a total package, they should accept it as fair and balanced. I commend the Bill to the House. I present the explanatory memorandum to this Bill. Debate (on motion by Mr Carlton) adjourned. Bill presented by Mr Willis, and read a first time. Mr WILLIS(Gellibrand-Minister for Employment and Industrial Relations)(11.02) —I move: That the Bill be now read a second time. The Industrial Relations (Consequential Provisions) Bill 1987 has three main purposes. The first is to repeal the Conciliation and Arbitration Act 1904 which will be superseded by the Industrial Relations Bill 1987. As a result of the repeal of the Conciliation and Arbitration Act, a number of other Acts will require amendment. The second purpose of the Consequential Provisions Bill is to amend these acts. The consequential amendments made to other Acts are generally of a technical nature and deal primarily with the substitution of references to the Conciliation and Arbitration Act with references to the Industrial Relations Bill. Other consequential amendments deal with the repeal of provisions of Acts which will become redundant on the enactment of the Industrial Relations Bill. For example, those provisions of the Remuneration Tribunals Act 1973 which establish the Academic Salaries Tribunal are to be repealed, as are the provisions of the Australian Federal Police Act 1979 which establish the Federal Police Arbitral Tribunal. Both tribunals are to be dispensed with as a result of the rationalisation of industrial tribunals achieved under the new Industrial Relations Bill. Some other amendments have greater significance, including the amendments made to the Coal Industry Act 1946 and the Trade Practices Act 1974. I discussed these in the second reading speech for the Industrial Relations Bill. The third purpose of the Consequential Provisions Bill is to ensure that the transition from the system established under the previous Act to the system established by the Industrial Relations Bill is as smooth as possible. Most of the provisions contained in this Bill are designed to bring that about. For example, provision is made for the transfer of part heard proceedings before the Conciliation and Arbitration Commission to the new Industrial Relations Commission on the commencement of the new Act. Awards in force under the previous legislation will, of course, continue and by operation of this Bill are deemed to be awards of the new Commission. Similarly, organisations registered under the previous Act will be deemed to be registered under the proposed Industrial Relations Act. In addition, some matters which are part heard before the Federal Court will continue to be dealt with by that court. Other matters which have not yet proceeded to trial will, by operation of the Bill, be transferred to the new Labour Court. Some proceedings which were instituted before the commencement of the Industrial Relations Act will be completed under the provisions of the old Act, as if that Act had not been repealed. In other cases, where the provisions of the new Act are easily adaptable, the new Act will apply. This Bill describes in detail how each matter before the Federal Court, or the Conciliation and Arbitration Commission, will be continued after the commencement of the new Act. The repeal of the Conciliation and Arbitration Act will not result in any disadvantage to parties in the federal system. Two general provisions are included in this Bill to deal with any difficulties which might arise as a result of the transition from the previous system to the new regime. The President of the Industrial Relations Commission is to have the power to give directions and the new Labour Court is to be able to make orders to resolve any problems which might occur as a result of the transition. I present the explanatory memorandum to this Bill and I commend the Bill to the House. Debate (on motion by Mr Carlton) adjourned. Debate resumed from 2 April, on motion by Mr Keating: That the Bill be now read a second time. Madam DEPUTY SPEAKER(Mrs Darling) -I believe that there is to be a cognate debate if there is no objection. The Taxation Laws Amendment (Company Distributions) Bill 1987 will be debated with the Income Tax (Franking Deficit) Bill, the Income Tax Rates Amendment Bill, the Taxation Laws Amendment Bill (No. 2), and the Bank Account Debits Tax Amendment Bill. There being no objection, the Chair will allow that course to be followed. Mr CARLTON(Mackellar)(11.07) —Well, here we are talking about tax again, and this is another instalment of the great Keating tax reforms. At the completion of the reforms as at 1 July this year the average family will be paying $37 a week more tax than it paid under the Fraser Government. It will pay $37 a week more tax now, and when the reforms are complete on 1 July it will continue to pay $102 a week in tax. So much for the impact on families of these reforms. The package being considered today adds another 100 pages to taxation law. I remind honourable members, as I have on each previous occasion when one of these immense packages of tax changes has come in, just where we stand on the table. Since 19 September 1985, when the Treasurer (Mr Keating) produced his reform of the Australian taxation system-otherwise well known as RATS-an additional 831 complicated pages of taxation legislation has been produced, since 19 September 1985, an increase of nearly 70 per cent on what we had before. The general burden of all that has fallen on the community, in particular on the business community. On behalf of the Opposition I move the following amendment to the Taxation Laws Amendment (Company Distributions) Bill: That all the words after `That' be omitted with a view to substituting the following words: `whilst not declining to give the Bill a second reading, the House- (1) condemns the Hawke Labor Government for raising the company tax rate from 46 per cent to 49 per cent at a time when company tax rates around the world are being lowered; (2) notes that the Government's so called `tax reform' proposals have imposed an additional tax burden on business in excess of $2,000 million; (3) notes that these new business taxes have been imposed at a time when the level of business investment in this country has fallen to an appallingly low level and there is a rising tide of bankruptcies; (4) notes with concern that the interaction of the proposals in the Bill with the foreign tax credit system and the new capital gains tax imposes a tax disadvantage on companies and on their shareholders; (5) notes that the Bill also contains unnecessarily complex administrative and compliance procedures for companies, and therefore (6) calls upon the Government to restore the incentive to invest by pursuing a more balanced economic policy and reducing the taxation and administrative burden on business'. This amendment will be seconded at the appropriate time by my colleague the honourable member for Parkes (Mr Cobb). I will deal first with the Taxation Laws Amendment (Company Distributions) Bill 1987, which is better known as the imputation legislation. We note from the whole package of measures brought in on 19 September 1985 that the overall additional burden to business is about $2 billion. Mr Slipper —Shocking! Mr CARLTON —As the honourable member for Fisher correctly says, it is shocking-absolutely shocking at a time when we are looking for business to invest in new productive enterprises. It is little wonder that there is a lot of takeover activity, a lot of investment off shore and tremendous concern about the lack of investment in new productive enterprises. It is only through investment in new productive enterprises that we will create jobs and wealth. Of course, without the creation of wealth we cannot distribute wealth to families and we cannot levy the taxes that we need to look after the disadvantaged, the pensioners and welfare beneficia-ries. Investment in Australia is, therefore, critical to Australia's prosperity. In the whole of the package in 1985 there were only two measures which could remotely be said to promote investment or to help the taxpayer. The first of those measures was the reduction in marginal rates of tax which, although insufficient, was still welcome, although I must say parenthetically that the impact of it on the family receiving average weekly earnings, will be zero on 1 July. It will be nil, absolutely nothing. Nevertheless, it is welcome. The other measure which is welcome in the sense that it brings taxation relief to shareholders is the imputation system, which is the measure contained in this Bill. Therefore, on behalf of the Opposition, I say that we welcome the tax relief to shareholders of private and public companies who pay tax. Of course, in this case those shareholders who are not liable to pay tax get no benefit; but we welcome the benefit from this Bill for those who are liable to pay tax. However, there are some implications of the package to which I must draw attention. We are told by the Treasurer (Mr Keating) that the total cost to revenue of the imputation system and related measures is $775m but that will be offset by increasing the company tax rate from 46 per cent to 49 per cent so that the net cost is expected to be $50m in 1987-88 and $300m thereafter. In other words, whilst shareholders will get some benefit, there will be a consider-able additional burden on companies. I shall refer to that and to the effect it will have on our international competitiveness in more detail later in my speech. There are some aspects of the imputation provisions that do not help companies and their shareholders. I would like to draw attention to those. The first one relates to the interaction of the foreign tax credits system, already introduced by the Government, with imputation. It will prejudice those companies with substantial earnings from overseas operations. These companies will not be able to pay fully tax free dividends from this off-shore income, thus ma-king off-shore direct investment less desirable at a time when the Government is supposedly encouraging such investment. I am talking about the Australian multinational companies, those companies that are sufficiently energetic and innovative to be establishing companies overseas, earning income overseas and repatriating the profits to Australia for the good of Australia. They are the companies that we are talking about. We should encourage them. But this interaction between imputation and foreign tax credits does not help them; indeed the foreign tax credits system itself does not help them. For example, if a company pays 35 per cent tax in the United Kingdom, the foreign tax credits system will require an additional 14 per cent tax to be paid in Australia on profits repatriated to Australia. It is only this 14 per cent Australian tax paid amount, grossed up by 51 over 49, that can be paid as a franked-that is, a tax free-dividend to resident Australian shareholders. The 35 per cent-that is, the United Kingdom tax-grossed up by 51 over 49 would be fully taxable in the hands of individual shareholders if paid as a dividend. So, clearly, the interaction of another one of the Treasurer's impositions with this benefit has an adverse effect on companies based in Australia and operating overseas. There is also a problem with the interaction with our old friend the capital gains tax. The benefit of the indexation of capital gains under the new capital gains tax will largely be lost as it is not possible to pay a tax free dividend out of the indexed portion of a capital gain. For example, if an asset were purchased for $100,000 and sold subsequently for $150,000 and the consumer price index had risen 20 percentage points over that period, the sale proceeds would be $150,000 and the indexed cost on that would be $120,000, leaving a taxable gain of $30,000. If we apply tax at 49 per cent to that, the company would pay $14,700 in tax. The company then credits to its franking account-to be available to be paid out to shareholders as a tax free dividend-that amount of tax, that is, $14,700 multiplied by 51 over 49, leaving $15,300 in that franking account. Of course under law the company is able to distribute dividends based on this capital sale unrelated to the indexation provisions of the capital gains tax. In that case, the proceeds in cash are $150,000 and the cost of the asset is $100,000, which leaves $50,000 profit less the tax paid of $14,700 so $35,300 is available for distribution. If this full $35,300 were paid out as a dividend, only $15,300 would be tax free and the entire indexed portion of $20,000 would be fully taxed in the hands of individual shareholders. So there we have an interaction between the capital gains tax and the new imputation proposals which disadvantages companies and shareholders where there is a capital gain subject to indexation. Mr Cleeland —Stop your whinging and give us your policy. Mr CARLTON —I know that is a little complicated for the honourable member for McEwen but I had to get it into Hansard so that, hopefully, it will be understood when he reads it tomorrow, although I have very grave doubts about that. If the honourable member for McEwen wishes to keep interjecting, as he always does during these tax speeches, I give him notice that I will ignore him totally for the rest of my speech. A third problem is that, whilst the benefit of imputation rebates will pass through companies, trusts and partnerships that are shareholders to the ultimate individuals, this will not occur for trusts that are in a loss for the year situation. In other words, if a company or partnership is experiencing a loss, the benefit of the imputation rebates on dividends paid by the company in which shares are held will still be available whilst for a trust shareholder in a loss position the imputation rebate will be entirely lost. To my mind there is no logic to this distinction. Other aspects of this Bill, including the removal of branch profits tax and dividend withholding tax, follow on automatically and sensibly from the imputation system. There are also changes to the taxation of liquidations, with which we have no objection. The next Bill is the Income Tax (Franking Deficit) Bill which formally imposes the franking deficit tax contained within the imputation legislation. Again, we have no objection to that. The Income Tax Rates Amendment Bill 1987 is the killer. This is the Bill that increases the company tax rate from 46 per cent to 49 per cent. This puts Australia way down the league in terms of international competitiveness. Albert Smith wrote a thoughtful article which appeared in the Australian Financial Review on Wednesday, 29 April, under the heading `The land of the Ned Kelly taxes'. Mr Smith thoughtfully provided a comparison of corporate tax systems. People might ask: `Why must we worry about the company tax rate?' After all, why should not a family that is struggling to pay the present Treasurer's enormously high income taxes say: `I would rather companies paid a lot more tax and I paid less'. On the face of it, that seems a reasonable argument. However, when those people look at it more closely, as the socialists never do but we on this side of the House have to do-I must say that the Minister for Sport, Recreation and Tourism (Mr John Brown), who is at the table, has looked at it more closely because he was a businessman in his former incarnation-they realise that if Australia has company tax rates which are too high, companies will not operate here. They will not be formed. People will not bother to set up a company or start up a business. They will not bother to employ people, earn profits and pay tax, and the whole country will become impoverished. Mr Cobb —That is what is happening. Mr CARLTON —As the honourable member for Parkes so correctly says, that is happening now. The world is a very difficult and competitive place. It is important that Australia attract as much investment as it can, not only from foreign companies but also from its own citizens, in the hope that they will invest more here rather than overseas and that they will set up new enterprises. People who wish to invest money, be they a group of shareholders-that is, a company board acting on behalf of shareholders-or individuals wanting to set up a company, sensibly will look around the world to see where their money might best be invested or, alternatively, they might decide, if it is not worth investing domestically but they do not want to go overseas, to put their money into ordinary investments which give an interest payment with virtually no risk and no effort on their part. They can just sit back and get the dividends, but they do not engage in productive investment and job creation directly-which is precisely what we want people to do. That is why it is important to examine a comparison between Australia's company tax rate and those of other countries. So I am not arguing for lower company tax rates just because I want to see rich people get more profits. I argue for lower rates because it is sensible in the interests of all Australians to promote more investment so that we can get more wealth, more prosperity and more jobs for ordinary people. According to Mr Albert Smith's comparison, Australia's corporate tax rate is 49 per cent. The tax rate in the United Kingdom has been lowered by Mrs Thatcher to 35 per cent. On 11 June we will see whether the citizens of the United Kingdom approve of Mrs Thatcher's moves in attracting more investment in the United Kingdom. I think that she will be given a resounding victory. In the United States of America, the corporate tax rate is 34c in the dollar. New Zealand's Labor Government has just increased the rate to 48 per cent. Mr Cobb —It is still lower than ours. Mr CARLTON —That is correct; it is one point lower than our rate. In Japan, it is 42 per cent; Hong Kong, 18 per cent; and Singapore, 43 per cent. One rate which beats ours is that of the Federal Republic of Germany, which is 56 per cent. France has a similar rate to ours; its rate is 50 per cent. In Canada it is 46 per cent, which is the rate we had before this Labor Government increased it by three per cent. That is a sample of the rates that apply in other countries. Honourable members will see that, in most cases, the company tax rate is lower than ours. In the interpretation of that table, Mr Smith quoted comments made by Mr Peter Knox, director of taxes for Arthur Young and company of Sydney: . . . a valid comparison of relative tax advantages had been provided by the work his firm did for offshore companies considering investing in Australia and for domestic companies investing outside Australia. So this is right in the middle of the problem about which we are talking. Arthur Young and company is a very big, professional accounting firm and it knows its stuff. It has been asked to do the very thing I have been talking about; that is, to look around on behalf of foreign investors and Australians wanting to invest in Australia to see what the competitive position is in terms of tax. Mr Knox continued: From that perspective, Australia is not a favourable place for offshore investment . . . A US company investing in Australia can look to keeping only 51 per cent of its earnings as against approximately 66 per cent in the US, perhaps a little less after allowing a little for regional taxes. When companies in America keep 66 per cent of their earnings and those in Australia keep only 51 per cent, why would they want to invest here? Similarly, an Australian company, which might pay 34 per cent on its United States earnings under the foreign tax credit system, has to top up its United States taxes with an additional 15 per cent to bring them up to Australian domestic tax rates. However, in franking dividends under imputation, the company would only be allowed to frank dividends to the extent of the Australian tax and would not be given any credit for United States tax already paid. Mr Knox continued: . . . the foreign tax credit and imputation were hurting smaller, high-technology private companies which had promising markets in overseas countries. Mr Cobb —Sunrise industries. Mr CARLTON —The sunrise industries which we are trying to promote. Mr Knox said something that is quite telling: This amounts to a tax on ingenuity. It would take all the genius of the honourable member for Blaxland, our present Treasurer, to devise a tax against ingenuity, but he has managed to do so. Having dealt with the international comparison on tax, let me turn to where we stand overall in terms of the tax burden. Earlier I mentioned that an additional $2,000m had been levied on the business community in taxes. Again, a person might say: `I am an ordinary taxpayer. I am struggling to pay my weekly tax bill. Why should I worry if business is taxed by an additional $2 billion? I would rather businesses were taxed to that additional extent so that I can pay less tax'. Again, the present Treasurer has the extraordinary distinction of taxing businesses an extra $2 billion as well as adding taxes to ordinary families. For a family on average weekly earnings with dependent children, under this Government the average tax rate has gone up from 17 1/2 per cent to 20 1/2 per cent. Even after all the tax reforms, the top marginal rate of tax for a family on average weekly earnings has gone up from 30c in the dollar to 40c in the dollar. It is not a question of businesses being taxed more so that people can pay less; it is a case of both businesses and people being taxed more to fund the extraordinary extravagance of this Government. That is the fact. The other reason people should query whether it is a good idea to add $2 billion to business taxes is that it is not only the company tax rate that inhibits investment; it is the total burden of tax in all its forms. If we look at the whole range of so-called tax reforms which were announced by the Treasurer in his statement on 19 September 1985, we find the fringe benefits tax, which amounted to 139 pages of immense complication and an extra $575m, and the capital gains tax, which amounted to 103 pages of legislation, said to raise only $25m after five years, but which we now find will raise between $125m and $160m next year. That will be a major imposition. Then 55 pages of legislation relate to the non-deductibility of entertainment expenses, and that will raise $330m. For the negative gearing provisions, which have absolutely destroyed the rental housing market and added tens of thousands of people to the housing commission lists, there are 47 pages of complicated legislation. This will produce revenue of $100m, increasing to $195m by 1990-91. For quarterly provisional tax payments, 28 pages of legislation are provided, and this measure will raise $90m in additional tax. Substantiation requirements will produce $105m, raising to $200m after four years. The 49 per cent company tax will raise $475m, but actually only two pages of legislation apply to that. Thus, some of the biggest taxes, the biggest hits on the business community, are covered by the fewest number of pages of legislation. The annual total of those so-called reforms comes to over $2 billion, and that is apart from the company tax rate, in addition to the table put forward by Mr Smith. The Australian Financial Review headline `The land of Ned Kelly taxes' applies with double effect when one reads the rest of those impositions. This package of Bills also includes the Taxation Laws Amendment Bill (No. 2), which does several things, a couple of which I will refer to in my limited time. The Bill relates to the substantiation of car expenses. This reminds us of our old friend, the fringe benefits tax, under which there were horrendous provisions requiring people to keep log books, and so on. There was a great outcry about this, and the Treasurer said that log books need be kept for only three months. However, if a person changed his car and had a different vehicle, he had to do it all again. We now find that the Treasurer has overlooked self-employed people and employees using their own cars for income producing purposes. No statutory formula is available to such people. One method they can use to make their contribution is to have a log book, and this measure brings the new log book provisions of the fringe benefits tax to the self-employed and employees using their cars for income producing purposes. We have no objection to that; it is merely a reminder of the fringe benefits tax and large numbers of people, particularly in small business, are continuing to be concerned about that tax. The abolition of Division 7 is a necessary follow-on from the imputation system. We agree with the technical amendment to section 40 relating to rebate changes. There are changes to the taxation of bonus shares of corporate unit trusts and public trading trusts, and also a change relating to Australian films. Under the existing provisions, a 120 per cent tax deduction is available for capital contributed to an Australian film, where the Minister issues a certificate that it is a qualifying Australian film. To qualify, it must have a significant Australian content. Although a film may have significant Australian content it may also have significant non-Australian content. This amendment provides that the Minister may treat a film as not qualifying where it has significant non-Australian content, notwithstanding that it also has significant Australian content. This provision is included to try to get the Minister for Arts, Heritage and Environment (Mr Cohen) off the hook for some dreadful decisions he has made, in particular relating to a film called The Return of Captain Invincible. In this terrible saga, the film was sent overseas to the United States of America for cutting to make it suitable for the American audience. That was said to be a foreign content, and therefore the Minister denied the tax deduction. In the court, the judge severely criticised the Minister's action. It is clearly sensible for Australian films to be cut in the country in which they are shown-countries such as Japan or the United States-to make them suitable for local showing. We want an assurance-probably from the Minister for Arts, Heritage and Environment rather than the Treasurer in this case-that this provision will not be used in a way that harms film investors where there is a significant cost of cutting the film to make it suitable for distribution in export countries. I have not had time to deal with the matter of added powers to the Commissioner of Taxation to require assistance from taxpayers when investigations are in progress. We believe that in this case the Commissioner already has an entitlement to inspect documents and so on, but this provision requires the taxpayer to assist the Commissioner. I have moved a second reading amendment that will ask the Government to reimburse the taxpayer for costs. We considered the possibility of voting against this provision, but on balance we have decided to ask that the cost be reimbursed. My colleagues will deal with this matter in greater detail. To summarise, we have before us another 100 pages of complicated legislation from the Treasurer that will be an additional burden on business and another death blow to investment in Australia. Madam DEPUTY SPEAKER(Mrs Darling) -Order! The honourable member's time has expired. Is the amendment seconded? Mr Cobb —I second the amendment and reserve my right to speak. Mr MOUNTFORD(Banks)(11.37) —I am pleased to enter this cognate debate on the introduction of the Australian Labor Party's tax imputation reforms-reforms in the very truest sense of the word, in that it has long been recognised by all political parties in this country that too many lurks and inequities existed in the system, and that these needed to be changed. Whereas Labor has addressed itself to total reform, designed to broaden the tax base, ensure that all sectors of the community pay their fair share of tax, and cut the incidence of avoidance and fraud, our opponents on the other side of the House have only one policy in mind, and that is to reduce the amount paid overall by their wealthy supporters. This is the only linking thread that runs through their multitude of tax promises, whether it be the 25 per cent flat tax or the consumption tax. The ultimate beneficiaries are the wealthy, and the ones who make up the shortfall are lower and middle income earners. Yet these same people would claim that Labor's reforms are just as much directed against business as their own are directed to helping the high and mighty. The legislation before us today is stark testimony that Labor stands for real reform which will benefit all Australians, and ensure that all Australian taxpayers are treated fairly. The difficulty which imputation seeks to redress is the long-standing problem of double payment on taxation of company dividend income. This is effectively taxed twice, once in the hands of the company and again in the hands of the shareholder. It should be noted, especially by honourable members opposite, that the full imputation system which will eliminate this unfair anomaly will be a world first. No other nation has attempted this very necessary reform. Britain and France have only partial imputation, while Germany's split rate system does not relieve completely the personal tax burden. The benefits, not only to shareholders who will receive the preliminary advantages, but to the Australian economy as a whole, are many. Small business people especially will be better off, in that their tax will be reduced from as much as 78c in the dollar to no more than 49c. Effectively, imputation abolishes company tax for closely held private companies. Shareholders can ensure that they pay only personal income tax on company income simply by distributing all of the company's after tax income as dividends. The tax paid by the company is then fully creditable against the personal tax liabilities of the shareholders through the imputation credit. The income will effectively bear only personal tax. The legislation will redress the imbalance of the present system which favours debt over equity. We now tax interest income once, and dividends twice. By eliminating the relatively favourable tax treatment of debt, this Government has put competition back into financial institutions, thus restoring to the sharemarket the role of determining economic activity, and reinstituting it as a source of both borrowing and lending. This is completely in tune with our policy of financial deregulation, and our wish on this side of the House to see real, effective competition reintroduced. The pre-imputation system had a built in incentive for private companies to not distribute profits, due to the fact that they would only increase the recipient's tax liability. In an attempt to curtail this retention, Division 7 was introduced imposing a minimum proportion distribution on taxable income. This tendency to hold on to earnings rather than distribute was a direct result of the double taxation of equity. The object of the exercise was to save the earnings for an eventual distribution as untaxed capital. Such companies were therefore ripe takeover targets, with big potential earnings for the raiding company. Imputation eliminates the advantages of retaining earnings, and so effectively dissuades companies from operating in such as way as to make themselves attractive targets. In the longer term we can expect fewer takeovers, and a higher proportion of takeovers which improve productivity. The changes proposed by imputation remove this opportunity for tax minimisation, and allow private company retention policies to be decided more on economic grounds. Division 7 is thus to be abolished creating a much simpler tax system. Simplicity is the keynote of the imputation legislation. Not only does the Taxation Laws Amendment (Company Distributors) Bill before us eliminate a serious distortion in our tax regimen, but it does so neatly and clearly, with a minimum of fuss. A qualifying dividend account-QDA-is established on each company's profits to be distributed. Tax already paid at the company level is calculated and QDA distributed dividends will be franked to indicate the tax has been paid on them. The franked amount can be written off against personal income. Unfranked dividends paid out of remaining profits will have no such credit attached, and will attract both the effective company rate and marginal rate of the shareholder. The beauty of the systems is that no matter what the effective company rate, the shareholder always pays his own marginal rate, while the Government knows that credits are matched exactly to tax already paid. The Income Tax (Franking Deficit) Bill 1987 before us today introduces penalties for companies which frank dividends in excess of their credit. I would now like to say a word on the increase in company tax rates from 46 to 49 per cent, a move necessitated by the potential income losses which the imputation tax will involve. Our opponents have attempted to portray the new 49 per cent company tax as an insufferable burden to business. Yet when we do a quick comparison between Australia and other Western nations, the reality is in fact quite different. As recently as last Saturday in the Sydney Morning Herald Ross Gittens stated: When you take account of all these factors, Australia's effective level of company tax is quite comparable with those in other OECD countries-which is hardly surprising, when you think about it, since the public sectors they have to finance are roughly the same size as ours, if not bigger. Why is there a difference between countries of as much as 15 per cent? The short answer is that 35 per cent tax rates which exist in places such as Britain, Canada and the United States of America, at the moment can only be sustained because of their broadening of the corporate tax base and by abolishing several other tax concessions. Thus, the recent United States cut in company tax from 46 per cent to 34 per cent is only possible because of an abolition of the investment tax credit and a complete re-evaluation of depreciation provisions; the closure of tax shelters; a statutory minimum tax of 20 per cent on company profits; and, most notable of all, a higher capital gains tax. Let me digress at that point for a moment. The honourable member for Bennelong (Mr Howard) has promised us that if he were to be Prime Minister, there would be no capital gains tax. That must sit well with his traditional constituents, but it is hardly in the forefront of contemporary taxation thinking. The United States is not the greatest exponent of socialist economic theory, and one might expect that when the honourable member for Bennelong seeks inspiration for his tax policy, he might care to look at a nation such as America and its taxation policy in toto; in fact, on many issues he does. The validity of the capital gains tax is accepted by the United States and most of the Organisation for Co-operation and Development nations. But when it comes to presenting tax policy, members of the Opposition have no problem with making concessions to all sorts of different groups, negotiating the integrity out of their plan through short term political pandering. Capital gains tax might be a responsible and sensible move, but it goes against the wishes of their masters in the New Right, and some sections of the business community, and thus for those who sit opposite the capital gains tax goes by the board. So clearly the rhetoric that Australia's company tax rates are too high is just that-rhetoric. The facts are that we remain in the same category as our OECD colleagues. I would like now to address the complaint that the imputation measures are aiding the wealthy at a time when the Government is attempting to urge restraint on all Australians. I note Max Walsh's article in the Sydney Morning Herald of 27 April where he questions the wisdom of taxation trail blazing for the benefits of the rich. Yet if we look at the recipients themselves, and the long term effects of the system, we get a different picture. The fact is that imputation benefits directly not so much the companies, but the shareholders. Private investment accounts for only about 15 per cent on all dividends paid during 1984-85. Many areas will not receive imputation credits, such as shareholders in gold mining companies which are exempt anyway; certain companies drawing overseas profits; companies with profits from capital gains; operations with substantial tax deductions from research and development or accelerated depreciation, and shareholders in companies with losses. Of those shareholders who will benefit, some are on lower marginal rates. Imputation will have the advantage of helping keep their personal tax down, as franked dividends can be offset against income from other sources. I am informed that already retirement investment advisers are recommending share dividends to their clients as a long term investment. In many cases imputation will be of great benefit. The biggest winners of all, however, will be the small business people, those in small incorporated firms. The double taxing of the former system led to rates in the order of 78c in the dollar; now they will come back to 49c. In all their promises, none of the non-labor parties have ever been able to present a reform to the small business sector which gives them an advantage. But note, it is not an advantage bought at the expense of anyone else in the community; rather it is an advantage which has been given by making the system more just. That is real tax reform. That is making the system fair. At present, share ownership is identified with higher income earners. But full imputation will change that in the long term. The advantages of imputation will be advantages to all Australians who wish to take them up. An article in the Economist of 7 March stated: This is the fairest imputation system in the world. If applied to Britain, it would probably do more to promote small shareholding than the flotation of British Telecom and British Gas put together. This then is the imputation system. At heart, its objective is the same as all the other Hawke Government reforms-the establishment of a fair tax system. The particular wrong it addresses is the double taxation of share dividends. It does it neatly and simply, without additional paperwork and without undue bureaucratic intervention. In so doing it returns $775m to Australian taxpayers, and benefits especially small businesses and small investors. It fits well with the reforms which have already guaranteed $4.5 billion in tax cuts to all Australians. This is our achievement-a fair system which produces results. What does the Opposition present? So far, only vague promises of a flat tax, which in reality would disadvantage 80 per cent of Australians, or a consumption tax which would make each one of us worse off. It also makes promises concerning the need for less tax through a program of expenditure cuts, mainly in welfare, education, health and social security. It is no fight, really-substantial tax cuts and a fairer system versus the economics of despair. If honourable members really want to see the type of leadership our opponents could potentially provide, they should look no further than Mr John Elliott of Elders IXL Ltd. Mr Elliott does not like our tax reforms. Mr Elliott is one of the greatest beneficiaries of an unfair system, as Max Walsh said in the same article I cited before. He said: John Elliott has been one of the shrewdest minimisers of corporate tax. His ability to exploit the tax system is part of the reason for his success as a corporate raider. Mr Elliott realises that the laxness in the system which previously existed will not be tolerated by us, so he has threatened to pack up his company and leave, taking the jobs, the investment and the money with him. The country where he made his start, from which he based his success, is no longer the easily plucked goose it once was, so he may be leaving. Mr Elliott, as is well known, would like to be the Liberal Prime Minister of Australia; many others in his Party would like him to try for it as well. His commitment to the Australian economy, and the nation's future, goes no further than what he can get out of it. Make no mistake that his commitment to Australia's people would be any greater. Fortunately, the Opposition's chances of ever rising to government are quickly diminishing. In the foreseeable future, Labor will be setting the agenda, with just legislation like the imputation laws before us. I commend the Bills to the House. Mr COBB(Parkes)(11.52) —This morning we are dealing with a mass of five Bills relating to taxation-the Taxation Laws Amendment (Company Distributions) Bill, the Income Tax (Franking Deficit) Bill, the Income Tax Rates Amendment Bill, the Taxation Laws Amendment Bill (No. 2) and the Bank Account Debits Tax Amendment Bill. As the National Party of Australia spokesman responsible for Treasury matters, I want especially to deal with the imputation aspects that my colleague the honourable member for Mackellar (Mr Carlton) dealt with this morning, the car log book substantiation requirements for employers and the extension of powers for the tax gatherers, which the National Party will be opposing. In the Committee stage, I will move an amendment to omit sub-section 263 (3) dealing with the draconian increase in tax gathering powers. That sub-section is a horrible piece of legislation with enormous detrimental practical effects, and it should be omitted from the Bill. I wish first to deal with the imputation aspects of the legislation. Currently, company dividends distributed to shareholders are taxed twice, firstly at the company level of 46c in the dollar. Therefore, if a dollar dividend is distributed to a shareholder, 46c is taken out of it and the shareholder receives 54c in his hot little hand. Secondly, the shareholder has to pay tax on the dividend. If he happens to be in the top marginal bracket of 60c in the dollar, as it has been in the past, another 60 per cent will be knocked off the 54c company tax paid dividend, thus reducing it to 21.6c. Therefore, the original dollar has come down to 21.6c, which gives an effective tax rate of 78.4 per cent. I think that honourable members on both sides of the chamber would agree that that is an unreasonable burden. After imputation, the original dollar will have 49c taken off it, so the shareholder will receive 51c in his hot little hand. As he will not have to pay any further tax, instead of having 21.6c he will have 51c. His tax rate will then have fallen from 78.4 per cent to 49 per cent. Mr Martin —Is that good arithmetic? Mr COBB —Yes. The mechanism used will be that the tax paid by the company will be imputed to the dividends it pays. That simply means that each dividend will have a tax credit either allocated to it, attached to it, attributed to it, ascribed to it or credited to it, and it will be called a franked dividend. For example, as we have franked letters on which postage has been paid, dividends will be franked, which means that the tax will have been paid on them. When the shareholder finally receives his dividend, if it is fully franked the tax will already have been paid at the top rate of 49c in the dollar. Therefore, no further tax will be payable because the 49c will be equivalent to the highest personal rate of tax payable after 1 July 1987. The extent of the franking must be fully declared by the company, and it must be done the day before the dividend is distributed. At first blush, the whole scheme appears quite marvellous, eminently sensible, simple, fair and so on. We are probably all wondering why we did not introduce the imputation scheme years ago. However, it is from here onwards that I believe I can explain why the imputation package that the Government is giving us, even though it has many desirable points, is in many ways a fraud, a con and certainly not what it is cracked up to be. In short, imputation Keating style is very much a let down. The first thing to note is that the company tax rate will rise from 46c in the dollar to 49c in the dollar. The rest of the world is going the other way and reducing company tax levels, but we are raising ours, and that is something about which we should be concerned. The rise from 46c to 49c alone will cost businesses $475m, and so cause them to have less profit to distribute to shareholders in the first place. Mr Millar —That is a contradiction. Mr COBB —As the honourable members said, it is a contradiction. The next thing to note about the legislation is that it will benefit only a small minority of shareholders. Most people in the community will probably think that imputation on dividends will benefit 100 per cent of shareholders, but that is not so. For example, the top 20 shareholders in any reputable public company are almost all tax free institutions or other corporations. They will gain no benefit from imputation as they do not pay tax anyway. The tax credits franked to the dividends they receive are useless. No doubt, at some stage further down the track, a growth industry will emerge with those companies trying to convert that potential asset into some tangible form, such as convertible notes. In effect, on average only 15 per cent of shareholders are private individuals, which means that 85 per cent of shareholders are disadvantaged by the legislation because the company tax has risen from 46 per cent to 49 per cent. Let us think of the minority 15 per cent, and work out just how much they will benefit. Even here, I do not think that we can be fully satisfied. If those shareholders are paying less than 49c in the dollar-that is, earning less than $35,000 a year after 1 July-the imputation credits they receive with their dividends will exceed the tax they would need to pay on the franked amounts of the dividends. That means that they will have excess rebates, but they can now be offset against other income, including capital gains income-which is as it should be. However, if, for some reason, the shareholder does not have enough other income against which to offset his excess rebate, he must forfeit it. He cannot write to the Treasurer and get a refund, nor can he offset it against, for example, his Medicare levy. I think that that is an anomaly. In other words, this is not 100 per cent fair dinkum imputation legislation. It may well be a step in the right direction, but it is not 100 per cent fair dinkum. Businesses that suffer a loss will also lose the advantage of dividend income. Quite obviously, low income earners will be the most adversely affected by having to forfeit the benefit of the excess rebate. Surely the Government did not have that intention in mind when it introduced the system. If there is excess rebate that cannot be used, I do not necessarily think that there should be a refund from the Government but at least the shareholders should be allowed to carry over the unused portion of the franked rebate to the next year. The big gainers from the imputation legislation will be the individuals who depend on dividend income as a large portion of their total income. The group which immediately comes to mind is the retirees. They will benefit substantially from this legislation. It is not hard to see a growth industry springing up in this area. For example, if a shareholder gets a dividend income of $5,000, because tax has already been paid on it, the shareholder can earn another $12,200 in round figures before he has to start paying tax at all. In other words, he can earn a total income of $17,200 which will be totally tax free. Before this imputation legislation was brought in such a person would have had to pay tax at the level of $3,134. So, obviously these people will benefit. Retirement income planners will love this legislation. However, there are quite a few anomalies. I have said that one cannot offset any excess rebate one has against the Medicare levy. An outrageous aspect of this legislation is that the Medicare levy must be paid on the value of what is called the `grossed up' dividend. Let me explain. If one gets, say, $51 of dividend in one's hand, one has to add the $49 tax portion to it in the calculations and pay the Medicare levy on the final grossed up value of $100. Mr Conquest —It's a con job. Mr COBB —It is. In other words, one has received $51 in one's hand and one has to pay the Medicare levy on $100. In effect, this means a de facto doubling of the Medicare levy from 1 1/4 per cent to 2 1/2 per cent because $100 is close to double $51. Mr Millar —Surely that's not correct. Mr COBB —It is correct, although it is hard to believe. Another anomaly is that the indexed portion of a capital gain is taxable if it is distributed to shareholders. For example, if a company bought an asset for $100,000 and, five years later, sold it for $150,000 and there was inflation over that period, the consumer price index having risen by 20 per cent, normally $20,000 of the $50,000 capital gain would be exempt from income tax. However, if it is distributed to shareholders such as if the company were winding up or if it just wanted to distribute it to shareholders, the company would have to pay a capital gains tax, in effect, on the full $50,000. So shareholders, who will get the dividend, must pay tax on the indexed portion of the capital gain. This is quite clearly contrary to the spirit of the capital gains tax legislation, which is that income tax should be levied only on real gains. Forty-nine cents in the dollar on $20,000 adds up to a considerable amount of money in this example-namely, $9,800. Another anomaly which has been mentioned this morning is that companies with overseas interests are badly treated. The example of Elders IXL Ltd comes to mind. I do not expect people in this chamber or around Australia to pull out their handkerchiefs and shed tears for Elders. I use its name because it has been bandied around in the Press a lot lately. Elders, for example, earns 50 per cent of its income off-shore. If it earned profit in England and wanted to bring back that profit to Australia, it would pay tax in England at 35c in the dollar; it would then bring it back here and, before Elders could distribute it, it would have to be topped up to 49c in the dollar by paying an extra 14c in the dollar. There is nothing wrong with that. But when Elders distributed it to its Australian shareholders it could pass on only the franking credits on the 14c in the dollar portion. Obviously, that is a disadvantage to Australian shareholders. The Government uses the tax haven argument, saying that Australian companies will go off-shore to tax havens. I do not think that argument stands up to the full extent the Government has in mind. It is not so easy to go into tax havens. The point to be made about tax havens is that normal business countries, such as England and the United States of America, et cetera, have, in effect, become tax havens relative to Australia because their company tax rate is much lower than ours. To be consistent, foreign tax paid should give rise to a credit to a company's franking account. If not, these companies will do one or more of a number of things. For example, Australian companies with a substantial portion of their operations overseas will tend to move off-shore totally. If this happens, less overseas income will eventually come back into Australia. Overseas investors will tend to invest only in Australian companies which make most of their income in Australia. Another consequence could be that Australian companies which want to maintain high, fully franked pay-outs to their shareholders will be discouraged from investing overseas. So the consequences will be that we will lose the opportunity for new markets and forfeit the chance for an economy of scale because Australia is only a small market. For overseas residents receiving dividends the franked amount will be exempt from dividend withholding tax. This will cost Australian revenue $280m. The anomaly is that, if franked dividends are paid to the non-resident trust-in other words, a trust in off-shore Australia-which then distributes them back to an Australian resident beneficiary, that Australian resident will not get the benefit. I believe that some sort of tracing mechanism should be put in this legislation so that imputation credit is carried with the dividend overseas and back to the Australian citizen. At present the credit is lost as soon as it goes overseas. Another bad part of this legislation-I admit that it is unavoidable-is that companies will now have to keep a franking account record. No forms are out yet. It will cost a considerable amount, especially for small business. Many small businesses have accounting bills of as low as $1,000 or so. This legislation will double those bills because penalties for under-franking and for over-franking the account will mean that accounting records will have to be absolutely spot on. So considerable work will need to be done. Because the 49c maximum rate operating for personal income tax will now operate for company tax, there will be no reason to operate as a sole proprietor a partnership or a trust, which is not necessarily a bad thing. But let us consider companies with low tax payments. They will have little franked dividend to provide to their shareholders. As a result, they will tend to look to taking over companies which have more franking dividend income than they can use. Such companies can accumulate franking credits and so will become takeover targets. I am not saying that is a bad thing but it will be a consequence of the legislation, and something to watch. So a Bond Corporation, and Elders or a gold mining company, with little franking credit, could take over one of these institutions or a Phillip Morris type company, turn the excess franking credits into a tangible asset if it can find the mechanism to do so, such as by issuing preference shares, and effectively distribute it to their shareholders. Clearly, the ramifications of this imputation legislation will be anything but simple. What of companies which pay low dividends? For example, mining companies would seem to be disadvantaged by this legislation. That will not necessarily prove to be a big disadvantage because shareholders who buy shares in these companies tend to do so not for dividend income but with the intention of getting capital appreciation. One thing that concerns me, though, is that the value of tax benefits and incentives given to companies will be eroded under imputation because they reduce the taxable income a company pays. These companies will earn less taxable income and, therefore, may not have enough franking credits to distribute with their dividends to their shareholders. In practice, if companies start distributing dividends to shareholders with less than the full franking amount paid, it will make shareholders pretty unhappy. It will work especially against sunrise companies and smallish, entrepreneurial companies, such as those in high technology areas, which have high research and development outlays which are now tax deductible. Some of our most successful computer software houses have set up successful sales operations overseas. Shareholders in Australia who have taken a risk and supported these companies will now have to pay tax on at least part of their dividends. To sum up, the National Party's thoughts on this imputation legislation are that it has many good points and is a step forward in an attempt to eliminate double taxation, which is commendable. However, the legislation is very much a Clayton's imputation package. Despite popular belief, it will benefit only a minority. It is only half-hearted in its attempt to restore tax equity in the shareholder dividend area. It is riddled with anomalies, some of them quite blatantly wrong in their impact. A mass of changes and refinements will undoubtedly be necessary to this legislation in the future. In short, imputation Keating-style is like a shiny red apple that when bitten open reveals inside not a grub but half a grub. We are left lamenting as to what could have been. In the short time I have left, I will talk briefly about the substantiation of log-books. There are some benefits in the legislation regarding this dreadful keeping of log-book records. The Government has quite rightly taken up many of the Opposition's suggestions. Mr Peter Fisher —It took a long time. Mr COBB —I admit that it did, but at least it has done so. I give the Government credit for that. Rather than having to keep receipts to verify fuel and oil expenses, the recording can be done by using odometer readings. People can switch from one method of deduction to another from one year to another. That is a commendable step forward. Instead of having to keep logbooks all the time, they will have to be kept for only a 12-week period. That can carry on forever, provided the claims do not vary up or down by more than 10 per cent. If one's business costs increase by more than 10 per cent one has to establish a new 12-week logbook period if one wishes to claim. If there is an increase in the number of cars in one's fleet, one has to establish a new 12-week logbook period for each car. Records have to be kept for between 3 1/2 years and seven years, depending on what is being claimed. One good thing for the farming community is the provision for unregistered cars. This is something for which we pushed very hard. If one has an unregistered old car, such as a jeep or a utility, on a farm and it is used substantially for business purposes, one does not have to keep a logbook record for it, and that is good. Tax concessions for Australian films are another provision in this legislation. If films have a significant Australian content, they have generous tax concessions. If they have a significant non-Australian content, that is also taken into account. I hope that that is not following the line of Actors Equity in trying to stop top actors who have audience appeal coming out here. At the Committee stage I want to talk particularly about the information gathering and access powers that are given to the Commissioner of Taxation. I think these are quite wrong. Overall, the imputation package is quite extensive. There are some good things in it and there are some bad things in it. It is a pity that the Government could not have spent a little more time on it and got it correct in the first place- Mr DEPUTY SPEAKER(Mr Cowan) —Order! The honourable member's time has expired. Mr MARTIN(Macarthur)(12.12) —The Taxation Laws Amendment (Company Distributions) Bill, the Income Tax (Franking Deficit) Bill, the Income Tax Rates Amendment Bill, the Taxation Laws Amendment Bill (No. 2) and the Bank Account Debits Tax Amendment Bill represent the continuation of this Government's determination to reform the taxation system in Australia. I believe that they are most timely. They have arisen from the Government's commitment, which was given after the National Taxation Summit some 18 months or so ago, to look at all aspects of the taxation system and to bring about a fairer and more just taxation system. The Bills represent a very real attempt by this Government to approach the difficulties that have been faced by the business community with respect to the imputation of dividends. I am afraid that I cannot share some of the comments which have been made by the honourable member for Parkes (Mr Cobb) and others in this debate so far that whilst there are commendable things in this legislation there are many anomalies. I do not accept that. This Government has approached this matter in a very realistic and very fine fashion in an endeavour to come to terms with what has been a very poor situation with respect to company dividends, profits and so on over a number of years. Before making some specific comments on this legislation we need to look again at why there is the need for taxation reform. We often tend to lose sight of why that is necessary. Quite clearly, there is a need to ensure that the government-any government-has the necessary financial capability to pay for all those necessary services in the community. Those services, of course, refer to health commitments, defence commitments, transportation commitments, social service commitments, and so on. Money is just not able to be produced by the printing presses here in Canberra at whim. Rather, there has to be a recognition of the responsibility of all taxpayers to contribute their fair share to the coffers of any government so that those services can be provided. A real attempt is being made by this Government to redistribute wealth. That is well in keeping with the platform of this Government and the policies that this Government has endeavoured to pursue in the more than four years it has been in power. We want to stop the rorts that have grown in the taxation system. We went to collect a fair share of tax from all people. We do not want to allow people to get away with paying a minimal amount of tax or, indeed, not paying any tax at all. Everyone who lives in Australia benefits from the services that the Federal Government provides. Therefore, any working person and any shareholder should be expected to contribute to the maintenance of those services. Quite frankly, I am sick to death-as, I know, are many of my constituents who talk to me about this issue-of hearing the whinges that come from those opposite who do not have a policy to put in place of ours. The honourable member for Parkes in his contribution said that the legislation is fairly good as far as it goes but that there are some anomalies. But nothing was offered to be put in its place. At least the National Party of Australia, now that it is no longer in coalition, is prepared to recognise that the Government makes a significant contribution in these debates on economic and taxation issues, which is more than I can say for the Liberal Party of Australia. The people of Australia are asking: `When are we going to get the taxation policy of the Liberals? Will it, for example, pick up on company distribution and the amendments to the tax laws affecting shares? Will it touch those very issues which affect the business community?' After all, it used to be the business community of this country that the Liberal Party purported to support. We all realise that that support has gone out the window because of the lack-lustre performance of Liberal Party members opposite, particularly the poor performance of its leadership. Now, as usual, the business community turns to the Labor Party for guidance and support. In introducing this imputation legislation, the Treasurer (Mr Keating) said that we were developing a system which is a world first. I certainly agree with that observation. The honourable member for Parkes said that that, in fact, was not the case and that there were many anomalies associated with it. What will this legislation do? As I have indicated, it will put Australians at the forefront of business taxation reform. It will give us one of the most advanced and efficient tax regimes in the world. It will restore the position of the stock market as a mobiliser of investment funds. It will reduce the previous bias in favour of corporate debt finance over equity. One only has to see what has happened in recent months in the share markets here in Australia to realise the effect this Government's policies have had in pushing share markets to record levels. We have seen the dollar go up once again. It is all because of the economic thrust of the policies that have been embraced by this Government. This imputation legislation will ensure that that continues. It will also mean that entrepreneurs who are trying to get new businesses off the ground will find it easier to raise equity finance. It will improve the climate for productive investment and enhance economic growth in Australia. It will provide an increased incentive for all Australians to participate in the ownership of Australian companies by significantly reducing taxes on dividend incomes. That is one of the most important things. This Government has embarked upon campaigns such as the Buy Australian campaign and so on. We should also embark upon an `invest in Australia' campaign. We have said time and again that the economics are right for investment in Australian industry to get off the ground, for it to pick up, and for it to take advantage of the devaluation. The signs are there that that is happening, but I believe that we should be doing more to encourage the business community to do just that. It is through legislation such as this that it will happen. The Minister for Sport, Recreation and Tourism (Mr John Brown) raised with me over the last couple of days a very interesting point about business taxation. It is well known that he has been a very successful businessman in his own right. He indicated quite clearly that the removal of Division 7 under this imputation legislation will enable small companies, in particular, to retain capital within the company, and therefore avoid being takeover targets. In the past, Australian businesses, particularly small businesses, have not had the equity to be able to retain the capital in the businesses themselves. Naturally enough, the big boys come along and swoop, and another company disappears. What we are going to see is that small businesses-and we have been told on many occasions that they are the backbone of Australia-will have that opportunity to survive because they will be able to retain capital in the companies, and that is a very significant part of this whole legislation. In conjunction with this legislation we have introduced substantial personal income tax cuts, and they are going to be delivered with the second successive round coming on 1 July of this year. Imputation in relation to those cuts will result in a reduction of something like 40 per cent in the overall tax burden for shareholders and small businesses. I would have thought that small businesses would have leapt at that. The people in my electorate who are in small businesses and medium sized companies have indicated they believe this is on the right track and in fact is, as the Treasurer rightly pointed out, a world first in bringing in a very viable imputation system. To put that another way, what we are saying is that imputation will substantially increase the after-tax returns to shareholders. That is a very important point, because we are talking about shareholders. The honourable member for Parkes (Mr Cobb) said that a lot of low income earners are going to be disadvantaged by this legislation. I do not know too many low income earners who play the stock market or have shareholdings, so I would dismiss that as a comedy, but what I believe he was really trying to say is that shareholders should not be disadvantaged by the legislation. No-one forces people on any level of income to go and purchase shares. No one says `You have got to go and do it', so I think that point that the honourable member raised was absolute nonsense. The Bill is going to give effect, as I have indicated, to the most significant business taxation reform in this country in the post-war years because it will eliminate the double taxation of company dividends, and that is a very important part of this whole legislation package. The fact that by amending these laws we are going to eliminate the double taxation so that, as I have said, small companies can survive, and there is going to be a greater return-in fact a doubling-to the shareholders after imputation comes in place is very significant. The honourable member for Parkes actually commended the Government for doing that. He used the figures that I think were illustrative of this point, suggesting that prior to this point under the existing system and before personal tax cuts-which were already put in place-a dividend paid to a shareholder in the top tax bracket was effectively taxed at something like 78.4c in the dollar. The return to the shareholder was a meagre 21.6c in the dollar. Under what we are doing here, under the imputation-and the honourable member for Parkes pointed this out-and the maximum personal tax rate and company tax rate, which is to operate from 1 July on being aligned, the maximum tax that will be paid on any dividends will be only 49c in the dollar, so the return will be 51c in the dollar to those shareholders, which is a more than doubling of their return. I should have thought that that is good economic and good business sense in anyone's language, and therefore I cannot see where criticism can be levelled at the Government for this legislation. I believe, and I come back to the point where I started in my contribution today, that what we are talking about here is a further example of the commitment of this Government to bringing about a very radical and a very rational and real change in the tax system that has operated in this country for many years. This legislation is going to be a boon to small business. We are going to see the removal of the double taxation as far as the business community and shareholders are concerned, and we are going to see a very real contribution to the continued well-being of this country. We will see the ability of small businesses to survive without being worried about the takeover merchants coming along to try to knock them off. We are going to see their having the ability to retain capital within the business, and obviously we are going to see a greater return to shareholders. I, like all honourable members on this side of the House, congratulate the Treasurer for taking our tax reform proposals that one step further and making this a very attractive package indeed. Mr McARTHUR(Corangamite)(12.24) —After a long gestation the Treasurer (Mr Keating) has finally presented further tax measures to the Parliament. After considerable public discussion and offers of tax reform in September, 1985, the Treasurer and the Government have done nothing to cut the tax burdens of hard-working Australians. In fact, they have added to the complex tax Act during their period in government. Taxpayers will be paying more tax to the treasury coffers partly on account of inflation and partly because of the camouflaged moves by the Treasurer to extract more taxes from the unsuspecting taxpaying public. The tax Act, prior to 1983, consisted of 1,180 pages. In four short years, the Government has managed to add about another 600 pages of detailed legislation which has been designed to increase taxes and make the taxpayer's life more difficult, not easier. At a time when the Treasurer is claiming that the Government is acting responsibly and with commendable restraint in the area of new taxes the figures indicate just how dramatically the Government is ripping off the taxpayer. The myth that the present Government is a low-taxing government is exploded when the figures of its new and additional taxes are examined. For instance, yesterday in Question Time the Treasurer did not deny that the capital gains tax which was estimated to raise $5m in the first year and $25m in the second year has already raised in the vicinity of $120m to $160m in its first year of operation. The unintended consequences of this vicious, insidious tax are now making their way into every sector of Australian life. Businessmen, investors, and hard-working Australians are unaware of the strange machinations and workings of this new tax. The Government has indexed the gains upward for inflation but has failed to index the losses. Consequently, any losses of a capital nature incurred during the normal course of business are not a true reflection of the correct and accurate position because of the Government's sleight of hand in not indexing losses in a similar fashion to the way that capital profits are indexed. All Australians need to be aware of the effects of this tax upon a change of ownership. Even now the interpretation of this Act is vague. However, over time, obviously, changes take place and unsuspecting Australians will be lumbered with massive capital gains taxes of 49 per cent. Not only is this the highest rate in the world but the procedures and administration of the tax are very unclear and untested at this moment. The controversial fringe benefits tax is estimated to bring in $575m in a full tax year. The Taxation Office has already admitted that, in the first year, fringe benefits tax receipts are well above target in the first three-quarters. The fundamental flaw in this tax is that, for the first time, a Federal Government has moved away from the basic principle that taxes should be levied upon those who earn the income. The Treasurer has not been game to face the electoral backlash of taxing employers at their correct rate if they enjoy so-called fringe benefits. Whilst the debate about fringe benefits tax has subsided somewhat, let the Parliament be assured that there will be some ferocious arguments between the Commissioner of Taxation and individuals who have attempted to comply with the law but have been unable to understand the legislation and who will be taken to task over fine points of administrative detail. The tax in relation to entertainment expenses is expected to generate $330m which is a tax upon individuals undertaking legitimate income-producing activities. Again, the Government is attempting to extract the last tax dollar from those people in the community with little political clout. In the area of housing the Government has created its own poverty trap and reduced standards of living by removing the negative gearing part of the investment. Investors have shied away from housing construction and investment on two grounds: Firstly, the taxation aspect; and secondly, the high interest rate that is necessary to sustain an investment in housing accommodation. The obvious result is Australians are now seeking more public housing and rents in metropolitan areas are reaching astronomical rates, causing great hardship to families and individuals seeking normal accommodation. Provisional taxation requirements have assisted the Government in obtaining its money earlier with no great gain to revenue but merely increasing the burden upon individual taxpayers who have to meet their everyday cash requirements, let alone provisional tax commitments, at an earlier date. I turn to the company tax rates and imputation of dividends, of which the Treasurer has made a political point in claiming that he has reduced tax as far as shareholders are concerned. The Opposition concedes that imputation is a step in the right direction. However, in achieving this objective, the Treasurer has ensured that Government coffers will not suffer. The total cost of the imputation system will be $775m, but will be offset by increasing company tax from 46c to 49c. Therefore the net cost is expected to be $50m in 1987-88 and $300m thereafter. The legislation before the House where dividends are paid from specially franked accounts within the various business structures has led to considerable confusion and anxiety. The accounting profession is having difficulty interpreting the legislation to ensure that there are no over- or underpayments of franked dividends to individuals. The Opposition will not vote against the proposal and agrees that imputation has been the first step to remove double tax on dividends from companies paying profits. The down side is the move to increase company tax to one of the highest rates in the world. In this internationally competitive environment in which Australia is desperately seeking international investment the movement upward of company tax rates is a retrograde step and one which the future Howard government will redress. The 49c in the dollar tax rate for companies compares very unfavourably with company tax rates in the United Kingdom of 35c in the dollar, and in United States of America of 34c in the dollar. At a time when mobility of companies at the international level is no longer a great problem Australia will be at a considerable disadvantage with this discrepancy between company tax rates. There is every chance that corporations such as Elders IXL Ltd could move their operations off-shore and deprive the Australian economy of their wealth creating capacities purely because of the punitive tax rates imposed by this Government. Whilst big companies have a reduced political capacity to influence votes, they are the basis for creating jobs, profits, and the wealth in Australia. If, because of the policies of this high taxing Government companies are forced to leave Australia or close down, it will be a sad day for Australia. Inflation works hand in hand with the Federal Treasurer and the Commissioner of Taxation to generate further revenue for the Federal Government. Because of the way the tax structure is organised in Australia, persons on pay as you earn arrangements who achieve increases in salaries find themselves paying more tax. This subtle, almost imperceivable process goes on year by year, so the Federal Government takes a larger chunk of the taxpayer's funds without any legislative requirement and no real awareness on the part of the taxpaying community. This stark reality is clearly demonstrated in the 1986-87 Budget Papers where the Treasurer estimated that income tax would grow by 12.2 per cent in the 1986-87 Budget, whereas inflation was predicted to run at 8 per cent. From these figures the Parliament can observe that the Government is achieving considerable revenue increases well outside legitimate inflation indexed increases. Of course, the Medicare levy is a further form of tax under another name. Within this tax framework hard-working Australians are becoming increasingly frustrated by their heavy tax burden as they move into a higher tax bracket. The effect of this movement is clearly stated in an article in the `National Australia Bank Monthly Summary' of November 1985, as follows: In the early 1950s you needed to earn 15 times average weekly earnings to reach the top tax scale, but 20 years later it had fallen to five times earnings. Today it is only around one-and-a-half times earnings as inflation pushes more and more people into high income tax brackets. What really is most frustrating to those Australians who work overtime or achieve a higher rate of pay during any particular working week is their marginal rate of tax. Whilst I concede that the overall tax position for a full financial year is not as bad as they perceive it on a week by week or hour by hour basis, working Australians fully understand the disincentive effect of high tax rates. For instance, a truck driver travelling on the interstate runs between Melbourne, Sydney and Brisbane, who undertakes long hours of arduous and difficult work with heavy responsibility, becomes angry and frustrated when the extra money earned on these trips is confiscated by the Tax Commissioner, often at the rate of 46c in the dollar. Because of these insidious effects on the tax system, there is a superficial appeal for the flat tax rate argument, as in that case a taxpayer knows exactly where he or she stands during the income earning process. It is well known that one's final tax bill will not be reduced by a flat rate tax of 25c in the dollar unless a person is earning more than $27,000. However, the principle of a flatter rate of tax is correct in that the moving of taxpayers into higher tax brackets would be removed for all time. I am sure that the current debate on tax and the frustration felt by all Australians will, over time, bring about a change in the tax structure. However, the essence of this big spending Labor Government is that the total expenditure of the State governments, local government and the Federal Government is 43.6 per cent of gross domestic product. Put in another way, this means that governments in Australia are now directing, allocating, and deciding what individual Australians will do with their own wealth. We now have the strange situation of politicians, bureaucrats and public servants all making decisions on how individual Australians should utilise 43 per cent of all goods and services generated in Australia. In this great tax debate, the insidious problem that has crept over the total Australian political landscape is this fundamental problem that nearly half of Australia's wealth is being redirected by political forces. At the bottom of the pile is the hardworking taxpayer, trying to make ends meet with very little redress to capital gains tax, fringe benefits tax, substantiation requirements and contending with increasing rates of income tax, the Medicare levy, land tax, council rates, excise duties, company taxes and licence charges-and just about any other tax that one can dream up. This Parliament needs a champion of the individual taxpayer, not simply the advocates of minority group causes, such as those evident in relation to the education protest outside Parliament House at the moment. The reverse will take place only when the taxpayers of Australia can speak of their anguish and frustration with one clear voice. The present Australian taxation system is punitive; it creates a lack of incentive to work; it ensures that the rich get richer and the poor get poorer, and that vested interests continue to develop in their unhindered way. Australians are joining the tax revolution, crying out for less government expenditure and more personal liberty to spend their own money in their own way. Mr STAPLES(Jagajaga)(12.37) —The timing of the debate on the Taxation Laws Amendment (Company Distributions) Bill and cognate Bills is indeed ironic in the light of the statement delivered by the Treasurer (Mr Keating) last night. These Bills in fact provide a most powerful counterpoint to that statement. The introduction of these Bills and the debate on them provides a new dimension to that statement. Last night details were given of the cutback in expenditure, directed mainly at the poor in this country and the ordinary Australian. This cut in expenditure was made in the name of the free market. These Bills being debated today will cost taxpayers $300m. It will not cost shareholders $300m; that cost will be incurred by the ordinary pay as you earn taxpayer. It will not be the shareholder but the wage earner, the pensioner and the social security beneficiary who will pay that cost. They are the people who were affected by last night's proposals. This $300m of PAYE taxpayers' money is a direct transfer from the PAYE base to the corporate sector. It goes right to the private sector. These changes will provide massive advantages to shareholders, reducing the effective rate of taxation of taxpayers on the top marginal rate from 78c in the dollar to 49c. The honourable member for Mackellar (Mr Carlton) referred to an article published in the Australian Financial Review of 29 April headed `Land of Ned Kelly taxes'. The article pointed out that Australia is the only Organisation for Economic Co-operation and Development country, apart from West Germany, to introduce such a full imputation system. The honourable member complained about the fact that the corporate tax rate in Australia was so high. The article in the Financial Review and the honourable member for Mackellar have maintained that, in relation to corporate tax rates in Australia, companies in Australia capable of off-shoring, such as Elders IXL Limited, actually do pay 49c in the dollar company tax. However, that is not the case, as I tried to point out in a letter that I wrote to the Financial Review. I was completely flabbergasted by that article. It is not the case-one might as well say that one's Falcon is a Rolls Royce, just because it has four wheels. They do not pay anywhere near 49c in the dollar. Any really honest and enlightened comparison of international corporate tax rates should involve a comparison of the average rates of tax actually paid and not the notional amount as was cited. Any reader of the Financial Review and any member in this place should know that in 1986 the top 150 companies in Australia paid an average tax rate of not 49c in the dollar but 28c in the dollar. In 1980 those same companies paid 37.12c in the dollar. Elders IXL paid 10.35c in the dollar in 1985-86 and that was not the lowest figure by any long stretch of the imagination. Honourable members should also know that tax as a percentage of gross operating surplus fell for all Australian companies from 25.5 per cent in 1981-82 to 18 per cent in 1985-86. The difference is mainly because approximately 65 per cent of all Australian registered public companies are not taxed at all because they do not show a taxable income. In 1983-84, 58.5 per cent of companies were taxed on incomes of less than $10,000. Let us cut the rubbish! We all know what the game is. It is simply to shift the tax base from business to the pay as you earn taxpayer. The proportion of tax receipts from the corporate sector has fallen from 17 per cent in the 1970s to an estimated 9.9 per cent this financial year. The editorial in the Australian Financial Review of 28 April, the day before that article appeared, talked about the welfare slime. The welfare slime, for goodness sake! What is this country coming to when the people on the lowest incomes in the community are referred to as welfare slime. This editorial referred to them as the greedy. But the real greedy-those with their snouts in the public trough-are quite clearly the big Australians. If Opposition members and a respected journal such as the Australian Financial Review want to take part in a debate about corporate tax, they should at least make sure that it is an informed and accurate debate. There has been talk of profits. Let us look at some of the profits in 1984-85 and 1985-86 for some of the big Australian companies. The profits for the Bell Group Ltd increased by 129.3 per cent, the Adelaide Steamship Co. Ltd by 106 per cent, and FAI by 155.8 per cent. They are the levels of profit with which we are dealing in this country today. These Bills really help the corporate sector to provided more jobs-which it will have to do-and more wealth for all Australians. This massive benefit to business and shareholders has been accompanied by a range of other reforms from this Government, including the abolition of branch profits tax, the removal of the former Government's dividend withholding tax, and the removal of the excess profits retention tax on private companies. Frankly, it is quite dishonest of members of the Opposition and companies to complain about this Government's business tax record without mentioning the tremendous benefits that have been achieved from this Government. I understand, as the Treasurer does, why the business managers have not been as praise worthy as might have been expected about the changes that have been made. I refer to people such as Mr John Elliott. The reason is that these changes affect the owners of the companies, the shareholders whose immediate interests do not in all cases accord with those of the managers who run the companies on their behalf. In some cases now we will see not just paper profits-not just the building of empires-but production and jobs. This will help to shift the emphasis of successful management, real management, innovative management and productive management, away from the generation of capital gains and the acquisition of tax losses and back towards the generation of profit making trading activities. Mr Deputy Speaker, I seek leave to incorporate in Hansard some tables which show the points that I have just been making. Leave granted. The tables read as follows- COMPANY TAXATION AND PROFITABILITY, 1979-80 to 1985-86 Income Tax Gross operating surplus Tax as % of G.O.S. $m $m % 1979-80... 2,776 14,604 19.0 1980-81... 4,003 16,515 24.2 1981-82... 4,322 16,926 25.5 1982-83... 4,079 17,663 23.1 1983-84... 3,641 23,724 15.3 1984-85... 4,477 26,122 17.1 1985-86... 5,400 30,033 18.0 Source: The Round-up, June 1986, The Treasury AGPS, Canberra 1986. Company group Company leader % tax paid 1985-86 % Industrial Equity... Ron Brierley 4.66 Southern Farmers... Ron Brierley 5.06 Elders IXL... John Elliott 10.35 David Jones... John Spalvins 10.75 Queensland Press... 7.13 Bond Corp.... Alan Bond 13.95 Hooker Corp.... George Herscu 16.8 Westfield Holdings... Frank Lowy 13.12 Sunshine Group... Lee Ming Tee 5.95 Source: Sydney Morning Herald 29th October, 1986 from Statex Survey DEDUCTIONS ON ACCOUNT OF INTEREST PAID ON BORROWINGS OUT OF GROSS OPERATING PROFIT BY CORPORATE TRADING (NON-FINANCIAL) ENTERPRISES Year Proportioned to net Taxable Income per cent 1966-67... 22.41 1972-73... 47.3 1975-76... 67.1 1982-83... 162.4 1983-84... 110.2 1984-85... 124.6 Source: National Income and Expenditure-Australian National Accounts (A.B.S.5204.0: Table 7) TABLE SHOWING PROPORTION RELATIVE TO INCOME TAXED OF INCOME WHICH WAS NOT TAXED ON ACCOUNT OF LOSSES ALLOWED UNDER S. 80. Year per cent 1966-67... 12.5 1972-73... 9.0 1975-76... 12.7 1982-83... 33.1 1983-84... 24.5 Source: Australian National Accounts-National Income and Expenditure. Mr STAPLES —I thank the House. We have had talk here about shareholders. Who are the shareholders? Let us face it; there are not too many people out there who are shareholders. The ordinary Australian is not usually a shareholder. The most recent survey I could find was commissioned by a stock exchange and was based on a sample survey of the adult population. It was done in 1986 by the McNair Anderson organisation. This study estimated there were a little over one million share owners in Australia-about 9 per cent of the adult population. About half of that 9 per cent had bought or sold shares during the previous year. Incidentally, there are about three million union members in Australia. In 1968, at the peak of the mining share boom, a Morgan gallup poll included a question on share ownership in one of its national surveys. It was estimated that 8 per cent of electors had bought shares that year and about 15 per cent of electors had bought or sold shares at some time in their lives. That situation has not changed much; the Australian economy is not democratising itself by spreading share ownership widely. Yet it is shareholders who will be gaining the maximum benefit from this legislation. So we are going to be looking for some real benefits back from them-putting it back into the Australian economy, putting it back into wealth for all Australians, putting it back into jobs and changing our balance of payments situation. Some of the biggest shareholders are superannuation funds. In the last couple of years huge increases have been made in the share markets. The average individual portfolio in the superannuation share market area increased by about $5,000 in the last six months alone. Despite significant efforts by the Government to address the most outrageous and blatant abuses of the taxation system that were there before-the fringe benefits, deductibility of entertainment expenses, and the lack of withholding tax and an assets test have changed and brought fairness into the taxation system-we are still faced with the public emergence of very dark and powerful forces of greed and anti-social capitalism. They are the most powerful forces this country has ever seen. They had been there, but now they are out in the open. Those opposite, who are bereft of policies themselves, are being run from outside this Parliament by the forces of the New Right. Opposition members stumble around in their own internecine warfare while the barons of the New Right are out there telling them what to do. Today Australia is making a transition from a rural mining and low level service and industry based economy to a new economy and society based on a regenerated and efficient government sector. This transition is based on industrial growth, a developing service sector and the education system developing to suit the needs of our economy and our society. I am proud of the efforts of this Government in building up employment, industrial development, defence self-reliance, social security and community services, economic growth and general management of this economy. But that is not good enough. Where is the private sector? We are giving it a $300m free kick today. Last night it got another free kick. What is it going to do? The onus is right on it. The effort has to be now in its court. It has to produce the jobs now and the wealth. The poor people of this country-the ordinary Australian, the ordinary pay as you earn taxpayer-have paid enough. What is the private sector going to do? Where are the great entrepreneurs? What are they doing with their wealth-the wealth of Australia? Now, 1.5 million of them own $600,000,000 or 60 per cent of the nation's wealth. Ten per cent of the people in this country own 60 per cent of the nation's wealth. What are they doing? Buying paintings for $60m? That is a year's wage for 3,000 ordinary Australians. Some of the wealthiest are going to the races and betting $20m in a weekend. The wages of 1,000 workers for one year is played with in one weekend at the races. The Elders jet, the Fosters jet, is worth $10m. That sum is the annual wage of 5,000 workers. The taxpayer pays for that jet; the shareholder pays for that jet. A cost of a return flight across this continent is as much as the annual wage of the ordinary Australian; just to fly one man across this continent and back costs the annual wage of one Australian family, of $20,000. What are our entrepreneurs doing? It is a sad, sad day. I would like to incorporate in Hansard another table which shows how the Japanese are doing things. It shows their interest in developing new products and new technologies, as distinct from the corporate barons who are just interested in takeover profits. Leave granted. The document read as follows- PRIORITIES OF MANAGEMENT STRATEGY FOR 1990 FOR JAPANESE COMPANIES (per cent answering yes to questions by Japan Committee for Economic Development) 1980 1985 % % Cost Cutting ... 11.9 5.9 Emphasis on profitable areas ... 6.5 6.1 Increase Market Share ... 8.3 11.1 New Markets ... 4.2 13.1 New Product Development ... 6.6 24.2 Source: A Long Term Outlook for the Japanese Economy (1984-1995) Nomura Research Institute, Japan, 1985. Mr STAPLES —I thank the House. After last night's statement and after this legislation today there can be no excuses from the private sector. There can be no excuses from those opposite who will come in here at Question Time and bludgeon the poor and those on social security payments. There can be no objections and no more excuses from the New Right after the statement delivered in this House last night and the legislation we are dealing with today. There can be no more talk of dole bludgers, no more talk of excessive government spending, no more talk of bloated welfare budgets or unjustifiable welfare or job programs. Last night's statement and this legislation give the private sector, the Opposition and the New Right no more scapegoats for their pathetic response to the favourable economic situations and taxation conditions created under this Labor Government. They have simply to put up or shut up. There is no scope for the ordinary Australian, the middle Australian, the wage earner, the pensioner and the poor to bear more of the brunt of the burden of development of this country. The New Right has got everything it could want out of this Government short of bankrupting government. Ordinary Australians have paid enough; more than their fair share of the burden. They have suffered the real cost of our balance of payments problem. They suffered under Fraser and Howard, who got rid of 300,000 people in the work force in their last year of office. But enough is enough. This Bill is costing the taxpayer, the ordinary worker, the ordinary person in Australia $300m, on top of the measures announced last night. Now is the acid test for the private sector, the big shareholder, the corporate barons. As the honourable member for Corangamite (Mr McArthur) said, they produce the wealth, the jobs and the profit. After last night and today let us see them produce not only wealth and profits for themselves, but wealth and jobs for all Australians. Dr WATSON(Forde)(12.51) —I rise to speak on the Taxation Laws Amendment (Company Distributions) Bill 1987 and the associated Bills. Perhaps I should begin by saying that I hope to put a more rational approach to the House rather than the arrant nonsense we just heard from the honourable member for Jagajaga (Mr Staples), a person who has benefited and who continues to benefit substantially from the capitalist system which he seems to want to tear down at every opportunity. I begin by congratulating the Government, of which the member is a part-but one would hardly know-on moving in the right direction in attempting to reduce the taxation burden in Australia, at least in the area of removing the double tax on dividends. Many honourable members today, particularly on the Government side, will talk about the positive aspects of that move. Whilst I generally support it, I think it is the right of the Opposition-and I will take that right-to point out some of the potential defects. Mr Deputy Speaker, in the last 18 months we have seen added to the taxation legislation in Australia about 831 pages; it has gone from about 1,200 pages to about 2,000. The amount is significant, but even more significant is the complexity which has been added to taxation legislation in Australia. My colleagues, both in universities and in public accounting, have difficulty following the recent legislation. The average person in Australia simply has no hope. For example, taking the capital gains legislation, most people who are caught by the capital gains legislation will not know until quite a number of years after the event. Most proprietors of private companies will not be able to follow or understand the imputation legislation before the House. I refer for example to the franking account, which is going to be absolutely critical to the ability of any company to pass on the maximum benefits to its shareholders. How do franking credits arise? Let me enumerate the different ways. A franking credit arises on the day a company tax instalment is paid in respect of 1986-87 or any subsequent year. It arises when a company is served with a notice of an original or amended company tax assessment for 1986-87 or a subsequent year. It arises when it is served with a notice of determination reducing an offset of franking deficit tax against corporate tax, or a determination reducing foreign tax credit allowable. It arises when a franked dividend is received by a resident company shareholder or an event giving rise to a claim for an estimated debit terminates. A franking credit may also arise at the beginning of a franking year where at the end of the previous year a company has a franking surplus, or at the end of an income year of a trust or partnership where a company receives a distribution including franked dividends from that trust or partnership. On the other hand are franking debits. In general, a franking debit arises on the day a company is served with a notice amending a company tax assessment for 1986-87 or a subsequent year, reducing the company tax payable; specifying that a foreign tax credit is allowable to the company or increasing such a credit; stating that all or part of a company tax instalment has been applied to reduce certain other tax payable by the company; specifying an entitlement to offset franking deficit tax against company tax assessed; or advising of a determination concerning a claim for an estimated debit. A franking debit also arises when a franked dividend is paid, or an underfranked dividend is paid. Companies have to keep track of all those possibilities in one account, so that they can determine the appropriate franked dividend. I do not believe that most private company shareholders, most private company directors, would be able to follow all of that. But, more importantly, one has to realise that what has happened over the last 18 months has been a shift of responsibility from the Australian Taxation Office to the individual shareholder. Sometimes one has quite horrendous penalties if one gets it wrong. I refer again to the franking account. An additional tax is payable if one gets that complicated set of arrangements wrong. Additional tax by way of penalty is payable in certain circumstances where a company has, during a particular year, overfranked dividend payments made during that year. Where the franking deficit of a company at the end of a year is more than 10 per cent of the total franking credits of that year and an overfranked dividend was paid during that year, the company is liable to pay additional tax equal to 30 per cent of the company's franking deficit tax. So a 10 per cent error on one side can lead to a 30 per cent penalty. One will not know that for some time after because of the self-assessment process. The changes to tax legislation over the last 18 months have added significant administrative costs to Australian companies. The Treasurer (Mr Keating) is fond of saying that Australia's terms of trade have gone against us to the tune of some $6 billion and the Australian economy has to react to that change. He is not so proud of revealing that in many cases our costs have gone up because of significant government actions. We are all familiar with interest rates; we are familiar with the wage rate issues in Australia; but just as important are government imposts, government taxes on the Australian community. The changes in this legislation, and in the tax legislation over the last 18 months, have added significantly to the administrative costs of individuals and companies in Australia-the fringe benefits tax, the capital gains tax, and now the imputation tax. Those costs impairs our ability to compete. They raise our costs of production, they raise the costs of our goods and services and they reduce our competitiveness on a world front. I turn to the effect of this imputation legislation on an investor. The benefit, of course, goes to the Australian resident personal shareholder, the individual shareholder. The extent of the benefit depends upon the dividend policy of the company concerned. If a company pays out all of its assessable after-tax income as dividends what we really have is an integrated tax. The company tax in this case is merely a personal withholding tax at the company level. The companies that are going to benefit, and the people who are going to benefit, are companies with mostly Australian resident personal shareholders. As the honourable member for Jagajaga said, this represents around 15 per cent of the Australian electorate. It is going to benefit public companies, and shareholders of public companies-about 15 per cent of the Australian electorate. The greatest benefit will, of course, come with private companies, where the majority of shareholders are Australian resident personal shareholders. It should be noted that the benefits that will flow in many ways have already been paid for: They are paid for by the increase in the taxation level, from 46 to 49 per cent, as well as being paid for by the fringe benefits tax and the capital gains tax, which will fall disproportionately on private companies. Having said that the benefits will reside with Australian resident personal shareholders, let me also point out some of the potential problems. In order for personal shareholders to get the maximum benefit companies will have to pay out the maximum franked dividends possible. This raises the potential of their running short of working and investment capital. Companies are going to have to take some action to ensure that they do not lose working capital. They are going to have to create, for example, a dividend reinvestment policy. They are going to have to have rights issues or regular share placements. Each of those alternatives is not costless. The transaction costs associated with those alternatives are significantly greater than the costs associated with simply retaining earnings. So while there is a benefit again to the personal shareholders, it does raise the costs to Australian companies of getting capital. If a company wishes to retain earnings this raises the cost to the shareholders. Retained earnings will typically be reinvested in the company and these will then be reflected in real increases in the company's share price. We already know that when one has a real increase in a share price that real increase is going to be subject to capital gains tax. So this legislation, as has been suggested before, has shifted the double tax from dividends to retained earnings. We will have double taxation in Australia but rather than dividends being subjected to double taxation we are going to have retained earnings subjected to double taxation. The capital gains tax on the increase in the real price of shares is only one way in which the capital gains tax will interact with the imputation tax. In fact, when companies sell assets and the sale price is above the indexed cost base they will pay capital gains tax on that difference between the indexed cost base and the sale price. They will not be paying any tax on the difference between the original cost and the indexed cost. So, when these amounts are distributed to shareholders again shareholders will be subject to personal tax. This seems to be against the spirit of the original capital gains legislation in which the Treasurer said the Government would tax only real gains. In this case, the real gains are going to get taxed in the hands of the company but the nominal gains are going to be taxed in the hands of the shareholders. That question raises a more general issue. Not all dividends received by shareholders will be non-taxable in their hands. The honourable member for Parkes (Mr Cobb) and the honourable member for Mackellar (Mr Carlton) have already referred to the case of foreign earnings being repatriated to Australia. In general, dividends are related to accounting profits and to the company's dividend policy. However, tax is related to assessable income or taxable income. Over a period of time, in general, accounting income differs from assessable income. In general, therefore, we can expect that the dividend which will be given will be different from the amount which is tax free or, if you like, which has been franked. This is going to put companies in an interesting position. As assessable income fluctuates from year to year, they can also move their dividend policy to reflect the changes in the franked amounts available or they can keep their dividend policy constant and allow the difference to be absorbed by the shareholder. What companies will do, of course, no one knows at this time. But if they adopt the latter course, which I believe a lot of them will simply because dividends reflect long run cash flows and earnings, shareholders-particularly low income shareholders, persons such as retired people, or persons with fluctuations in other assessable income and whose income is not subject to any averaging provisions-could see their taxation position being changed quite dramatically from one year to another. I realise that our speaking time is restricted, so I will briefly close on a technical or perhaps even speculative issue. I was interested that in the second reading speech of the Treasurer he said the following: The Australian imputation system is a world first. It will put Australia at the forefront of business reform, and give us one of the most advanced and efficient tax regimes in the world. I would have thought therefore that somewhere in the speech he might have referred to our taxation agreements, our international taxation obligations. There was no such mention and I wondered what the position was going to be for shareholders resident in overseas countries. For example, I think the United Kingdom Government gives some credit for its part imputation system to Australian resident personal shareholders. Is the same facility going to be given to United Kingdom resident personal shareholders? The United States has a taxation agreement with Australia in which there is a non-discrimination article, article 23. In that article it is fairly obvious that corporations cannot be discriminated between by the contracting states, yet it is fairly easy to come up with scenarios on where we could have branch offices of United States corporations being treated significantly different from a similar Australian company. One would have wondered whether the United States was going to extract something from Australia. After all, it extracted some things from the United Kingdom and France when the part imputation system was introduced. I raise these issues because, invariably, when we look at this Government's taxation legislation we find that it is sloppily put together. We see unintended consequences in capital gains taxation and in the fringe benefits tax and I am sure that when we look at the imputation tax in some detail we are going to see some unintended consequences of it. One of the things that seems obvious to me is that some thought should be given to our international agreements. I thank the House. Mr MILDREN(Ballarat)(1.08) —Throughout the length and breadth of Australia I do not suppose there is any issue which is of more major concern to citizens than taxation because everybody, directly or indirectly, is affected by taxation. Over the years some people have been affected unfairly and other people have been able to gain far greater benefit than they should have been able to in an equitably managed nation. The honourable member for Forde (Dr Watson) has probably given us the most useful of the speeches that the Opposition has given us today, although I must say there are parts of it which I did not agree with. Unfortunately, his speech was in great contrast to those of some of his colleagues, which indicated just how barren the Opposition parties are in the area of taxation reform-in fact, in the whole area of taxation. Representatives of the Liberal Party are running around the country proclaiming that they have policies that will help Australia to a more prosperous future. They spend much of their time talking about interest rates, Budget deficits and union power. I guess even in my electorate of Ballarat the same noises are made. When Opposition members are pressed to say what their policies are they either paraphrase the Queensland Premier by telling us not to worry too much about that or they say that if we wait long enough they will release the policies for public inspection. They either have the policies, or they do not. They either are capable of actually forming the policies, or they are not. On taxation policy I think we have to put a negative to both of those possibilities. Yet this is an area of enormous interest to all Australians. I might say that it is even of interest to a number of Liberals. Take for instance the comments of the major challenger of the Leader of the Opposition (Mr Howard)-that is, in this House-the honourable member for Kooyong (Mr Peacock). In the Australian Financial Review of Monday, 11 May 1987, he said, among a number of his usual modest comments about his suitability as Opposition Leader, that he would have had a taxation policy announced a year ago had he been Liberal leader. He said: I can hardly move away from the position that I put when I was leader and that was that all policies would have been finished and released by the middle of 1986. In fact, what do we now have? We have a Leader of the Opposition who asks the Australian people to have patience; he promises to release the Liberal Party's tax policy within the next two or three months. Of course, this is hardly the stuff that confidence is made of. Even the honourable member for Mayo (Mr Downer) will be aged before we see a satisfactory Opposition tax policy. Lest we become too excited by the prospect of seeing an Opposition policy the Leader of the Opposition has cautioned us not to expect too much in the tax policy, whenever it is released-it will not contain much detail. Of course it will not. It will not contain much detail because there are just too many members of his Party, both inside and outside this Parliament, who are heading off in different directions. There are too many of them who want a different range of policies from other members. Also, they do not want much detail so that they can continue to try to fool people into thinking there is such a thing as a Liberal Party tax policy. What people need to know is that there is confusion within the ranks of the Liberal Party regarding all areas of taxation, including of course consumption tax. The Leader of the Liberals wants a consumption tax which would seriously affect all low and middle income earners, while the stated 40 per cent top tax rate which they suggest would mean cuts in welfare; the destruction of the health system as we know it, leaving millions of Australians without health cover as was the case when they were in power; the sale of low rental public housing; and the crippling of public education. I would not want to be an age pensioner or a war veteran under a Liberal government. When the Liberals stop indexing pensions-in the unlikely event they ever come to power-our pensioners will sink once again into the depths of poverty they were in when the current Leader of the Opposition was Treasurer in the Fraser Government. We are talking today about a specific range of taxation measures in the entire tax reform package and the changes to company tax. As I have indicated, this is the only Government that has brought equity and reason into company taxation. Just in case people think I have been a little strident in my criticism of the Liberals, let me say that the way they would reform company tax is not through imputation but rather through going back to a period of not adequately taxing fringe benefits or non-cash payments and capital gains, and allowing negative gearing. That is, for them, company tax reform. This is totally unacceptable from the standpoint of taxation equity and sound business management. It never ceases to amaze me to hear the voices of the New Right such as John Elliott, the Treasurer of the Liberal Party, Andrew Hay and such like call for businessmen such as themselves to be appointed to the Parliament as though they deserve it by some kind of right of birth. What they do not say is that carpetbaggers such as themselves have provided no evidence at all to justify their claims to be responsible managers of this nation. They are not in any way the repositories of statesmanship that are needed to ensure that this country has a sound and just future. In fact, John Elliott, the Treasurer of the Liberal Party, in his other role as chief of Carlton and United Breweries Ltd and Elders IXL Ltd, says that if he does not get his own way he will pack up his bags and take his company off-shore. So much for the Prime Ministerial pretentions of one of the spoilt brats of the Liberal Party's New Right! I was present at a function at which the Treasurer announced the legislation that we are dealing with today. Also present was a wide range of business representatives from both large and small business. These were responsible people who recognised how important was the need to continue tax reform to incorporate the range of businesses. They were uniformly enthusiastic about these changes. They also saw clearly that the Government was concerned to move the direction of investment towards growth. The honourable member for Jagajaga (Mr Staples) indicated that there is a $300m lost to revenue from this legislation and that those people should recognise that they have a responsibility to ensure that the nation gains a benefit from that loss of revenue. One of the most welcome provisions of this legislation to business is the abolition of Division 7 undistributed profits tax. From the time I was first elected this was one of the major complaints I received from businessmen. It was especially frustrating for small industries with growth potential. They complained of the lack of incentive that existed for those businesses that wished to invest rather than to distribute profits. In other words, it was anti-growth, anti-business and anti-employment. In fact, this entire package that we are dealing with is specifically directed towards enhancing business growth and it should be particularly welcomed by those building up manufacturing industries, in particular in the area of exports, which we require most. It has to be admitted by those opposing this measure that the socially irresponsible activity of corporate debt financing over equity has been one of those devices that has led to market inefficiency in our economy. It has contributed at a time when we are receiving so much less for our non-value added farm and mining products to our decline in the balance of trade. The spectacular takeovers of recent times have certainly increased capital values and might even have built in some efficiencies but they have also been used to increase corporate debt at the expense of more useful investment. They can also result in economic distortions because of the investment in areas of rapid return but with little lasting value to the nation. Some people got rich and, as the honourable member for Jagajaga pointed out, are squandering their wealth on self-indulgence. The new system will encourage firms to aim at increased dividends as a result of improved services and production. This is because dividends will be taxed only once rather than twice as at present. Here is a Labor Government doing this when for decades conservative governments, which proclaim themselves to be the representatives of business, allowed this sort of thing to continue. As the Treasurer said, the alignment of personal income tax rates with company tax at the top marginal rate of 49c will return to the shareholder 51c in the dollar-a rate that is twice that under the system that we inherited from the conservatives. Hopefully, it will encourage more and more Australians to invest in the future of their own country. As the Treasurer said, there is now incentive for people on modest incomes to invest because any rebate or franked dividends will be available to reduce tax on other income, including capital gains. So this measure is not ad hoc, it is not devised as a sop to a few wealthy friends or a populist response to a noisy lobby group, as would be the case with the Opposition. It is part of a most significant body of taxation reform legislation that has as its goals, tax equity for ordinary Australian taxpayers, incentive for industry and business to invest dividends productively, and overall to get this country's economy growing. No wonder it has been received well by most. Also, no wonder it has drawn complaint from the likes of John Elliott, Andrew Hay and so many of the representatives opposite. How typical of the Liberals is the comment of John Elliott, their National Treasurer, that he has threatened to move his business off-shore should the legislation be passed by this Parliament. He obviously believes that he should be able to continue along this path of accumulating vast capital gains and palming off responsibility to the pay as you earn taxpayers of this country and to those businesses that are more concerned and that have a sense of social responsibility. Mr Deputy Speaker, for so long we have been subjected to cries for tax reform from those who believed the high rates of tax reduced incentive, and they did. Well, here it is: The Australian Labor Government has done what our supposed experts in business opposite could not or would not do for decades. Not only did they preside over the distortion of the tax system and undermine it, but also their regime distorted business investment in this country, and we are paying for it. By our legislative actions we have put our position firmly on the line and now it is up to the Opposition, if it wishes to salvage any credibility, to do the same. I congratulate the Treasurer for his courage in pursuing the comprehensive tax reform package and, in particular, this legislation we are debating today. I commend the Bills to the House. Mr ADERMANN(Fairfax)(1.20) —Today we are discussing no less than five fairly complex taxation amendment Bills and, as the shadow Treasurer, the honourable member for Mackellar (Mr Carlton), has already mentioned, adding another 100 pages to an already lengthy and complex Act. It would seem that already something like 800 pages of additions have been the epitaph of this Government. It would seem that the aim of the Treasurer (Mr Keating) is to see whether he can double an already lengthy and complex Act. Since my election to this Parliament in 1972 I have had two very strong criticisms about iniquities in our taxation system. I am pleased, therefore, that this legislation goes some way to redress both of those criticisms. The first was directed at the operation of Division 7 of the Income Tax Assessment Act, and I will have something to say about that later on. The other target of criticism has been the double taxation of dividends and the imputation package goes some way to redressing that. This legislation, of course, is mark 4 of the proposed imputation system. The mark 1 version was that outlined in the Treasurer's statement on the Reform of the Australian taxation system on 19 September 1985. A principal feature of that system, as was outlined at the time, was the proposed compensatory tax to be paid at the same time as the payment of the dividends. Then we had mark 2. That arose as a result of an additional statement made by the Treasurer, and that was released with the 1986 Budget Papers. That statement was principally concerned with the timing of the then proposed compensatory tax proposals. Then, on 10 December 1986, we had mark 3, which served two purposes: It indicated that the Government had decided to abandon the compensatory tax collection process and it provided for the first time an attempt to provide a comprehensive description of the new system, which was to operate in respect of dividends paid after 30 June 1987. So with this legislation we now have mark 4. The imputation system as now proposed has this rationale: Dividends which are paid out of profits which have borne tax at the 49 per cent rate will be called franked or qualifying dividends. Australian resident individuals who receive franked dividends will obtain a taxation credit for the company tax paid on the profits out of which the dividend is paid, and that is called the imputation credit. The credit can be applied against tax levied on both ordinary income and capital gains. The amount of the franked dividend, plus the imputation credit, is included in an individual's assessable income. That process is referred to as the grossing up of a dividend, and already we have seen the unfair incidence of that grossing up when it is applied to the calculation of the Medicare levy. I repeat that concern and I repeat that criticism without repeating at length the argument that has already been given. The expenses incurred in relation to the derivation of franked dividends such as interest on funds borrowed to acquire the shares should, and I believe under the legislation will, be allowed as deductions and will not reduce the imputation credit. It is interesting that this system will mean that no longer will shares need to be the subject of income splitting arrangements within the family in order to reduce tax payable in regard to them. Rather, so long as family arrangements are involved, the emphasis will be switched to ensuring that the maximum advantage is taken of the imputation system. For example if one spouse, not being subject to the maximum marginal tax rate, were in receipt of non-dividend income, it would be advantageous to divert dividend income from the other spouse so as to shelter that other income from tax. In fact, as has already been pointed out in the debate today, given the new marginal tax rates, it will be possible for a taxpayer to receive, combined, $12,200 in non-dividend income and $5,000 in dividend income tax free, although of course the individual still being subject to payment of the Medicare levy. The compensatory tax which was first floated would have, of course, affected three classes of company. As far as loss companies are concerned, it was more likely that a compensatory tax liability would have arisen as a result of having to service preference share funding, rather than as a result of paying ordinary dividends. Mining companies would also have suffered-gold companies, because they derive exempt income; others because of the tax deductions for exploration and development expenditure available to the mining industry. The third class of companies were those which derived substantial foreign-sourced income, because they would not have had sufficient Australian tax liabilities to offset compensatory tax liabilities. That, of course, would very much discourage aggressive tax planning or overseas ventures by companies which were effectively committed to providing a regular dividend flow to individual shareholders. The heart of the revised system, the imputation system, is the concept of a qualifying dividend account. That has already been discussed in this debate. Only dividends that are paid out of company income which has borne company tax at the 49 per cent rate-which would include 1986-87 income-would be relieved by way of imputation credit, of the payment of further tax. The Treasurer's statement and the legislation relevant thereto, except insofar as bonus shares are concerned, leave me a little confused. I must admit that there is so much legislation that it has been difficult fully to assess and digest every aspect. Thus, I am not sure of the answers to certain questions. I pose them to the Treasurer accordingly, I hope that he will answer them in his reply to the debate. I ask: What are to be regarded as dividends for the purposes of the imputation system? It would seem that this would extend to all amounts deemed to be dividends for the purposes of section 6, which includes amounts distributed or credited by a company to its shareholders as shareholders. However, will the system extend to those payments deemed to be dividends by section 108, that is, loans to shareholders, and section 109, payments to shareholders and directors? I was interested in the remarks of the honourable member for Ballarat (Mr Mildren), who preceded me in this debate. He made such statements as `The Government's tax reform proposals are moving investment towards growth' and `They are enhancing business growth'. That seems to be to be quite peculiar. I think the answer to that is picked up in one of the points in the amendment that has been moved by the shadow Treasurer, who notes that the Government's so-called tax reform proposals have imposed an additional tax burden on business of in excess of $2,000m and as well, the ordinary taxpayer and family have had to pay more tax. I simply ask: Is that moving investment towards growth? I cannot comprehend how it could. Is it enhancing business growth? I cannot comprehend how it could do that either. I am very pleased that division 7 of the Act is to disappear, because it imposes additional tax, at a 50 per cent rate, on those private companies which fail to make within a prescribed period a sufficient distribution for the purposes of the Act. Sufficient distribution is calculated by deducting from a company's distributable income-broadly assessable income less primary tax-a retention allowance. Currently, that aggregates the following amounts: Private company dividend income, none of which is allowed to be retained in the calculation; other property income, only 10 per cent of which can be retained; and other trading or business income, only 80 per cent of which can be retained. I have always maintained that the operation of division 7 was unfair to private companies. It prevented them from providing, out of profits, for purchases for capital expansion. It also prevented them from providing against possible adversity without facing the threat of a very savage-as it was when I first entered this Parliament-undistributed profits surcharge tax. Over the years we have nibbled away at that. We have gradually taken out some of its teeth but at last it is to be, subject to transitional rules, eliminated. When we look at the imputation legislation, we notice that the Government has attacked the matter in exactly the same way as it has attacked other so-called tax reforms. It has followed its usual procedure. We have witnessed time after time the spectacle of announcements being made, with flair and fanfare, that there will be tax cuts, only to find that a cut in one area has been more than nullified, or compensated for, by increases in others or the introduction of savage new taxes. For instance, we are being told about the tax cuts that we are going to get on 1 July. Of course, the cost is going to be recouped from taxes that have already been put into operation-taxes such as capital gains, fringe benefits and substantiation. Of course before these came the assets test. So the long promised imputation legislation carries in it a barb-that company tax is to be increased from 46 per cent to 49 per cent. That is a very savage rate of taxation. Taxation, and the incidence of heavy taxation, have already killed investment capability and perhaps have been the trigger for many takeovers in this country. We are told that the cost to revenue of this legislation will be $775m, and that it will be offset by an increase in the yield from company tax of $475m. Theoretically, we should be $300m better off, but the company tax rate of 46 per cent is a savage rate indeed. We have to attract as much investment as we can. We have to attract it from Australians; we have to attract it from overseas. Therefore, comparative rates of company tax are definitely important. Investments will not be made in Australia while our company tax is higher than that of other countries. In the United Kingdom, for instance, the company tax rate is 35 per cent. In the United States of America, it is 34 per cent. In Singapore the percentage is, I believe, in the twenties. In Hong Kong it is 18 per cent. In Japan it is a little closer to our rate at 42 per cent. I repeat, investments will not be made in Australia while our company tax rate is high compared to that of other Western countries. Certainly, a high company tax rate inhibits profitability significantly and hits growth and capacity to employ. It also reduces competitiveness. It kills incentive. Taxation is a very heavy element in the cost of production. It is a very heavy cost to overcome in striving to make a profit. If the already heavy load of taxation is to be made even heavier, it will not only kill incentive. It will also contribute to price increases as businesses struggle against a daunting cost structure. Also, the truth of the comment by the Government that we will be $300m better off depends on the accuracy of its arithmetic, which in times past has been very suspect indeed. We were also given an estimate of the revenue to be derived from the capital gains tax and the fringe benefits tax but, lo and behold, the amount that will be reaped from those pernicious taxes is hundreds of per cent greater than was ever indicated to this Parliament. I hope that the Government's mathematics this time will at least prove more reliable than they have in the past. I wish to comment again on the Medicare levy, the National Party's attitude to which is well known. Mr Rocher —The Government claims that it is not an income tax! Mr ADERMANN —That is right. Medicare is an albatross around the neck of every decent Australian and, in most cases, is looked upon as a small issue but the levy is to be imposed on the grossed up figure, not the cash dividends received. To add insult to injury, excess imputation credits may not be offset against the Medicare levy. I believe that that is totally unjust, totally unfair and wrong in principle. Mr Millar —And illogical. Mr ADERMANN —And illogical, as the honourable member for Wide Bay says. I would like to say much more but I notice that there is a long list of speakers and I do not want to cover in any depth or detail arguments that have already been put to this House. However, I do wish to make a brief reference to one section of the Bill, that which relates to the Commissioner of Taxation's gathering and access powers. It seems fairly innocuous, I suppose, to require that persons shall provide reasonable facilities and assistance to the Commissioner when he is exercising his powers of access. The words look all right. Already, of course, and quite understandably documents and records have to be made available. But unfortunately there is a very wide gulf between what the Commissioner regards as reasonable powers of access and facilities and what the taxpayer might consider them to be. What is reasonable? Is it reasonable to require that an office be made available to the auditors, at their convenience, while they are interviewing the taxpayer and looking at his affairs? Is it reasonable that business phones should have to be made available? Is it reasonable that pro- prietors should have to tie up half their staff, so that their business comes to a standstill? Mr Braithwaite —And not be paid anything for it. Mr ADERMANN —That is so. I notice that our colleagues of the Liberal Party have suggested as an amendment that those costs be recouped. The National Party intends to oppose completely the insertion of the provision to which I have referred. Additionally, the taxpayer under audit must be given the right to insist on the presence and assistance of his accountant or tax agent. I suppose theoretically that can happen now but in actual practice it is very much discouraged by the Taxation Office and the auditors. Even the tax form that we fill in invites people to insert a private phone number-so that the tax accountant or tax agent will be kept out of the picture. I believe, mainly because of the record and attitude of the Australian Taxation Office, that such provisions as I have described ought not be a part of the legislation. I have said in the House many times that the attitudes of the Taxation Office are distressing, often arbitrary and even threatening. I suppose that many of the representations that come to me-and probably a few more come to me than to other honourable members who have not a history of accounting-- Mr Rocher —I get a few. Mr ADERMANN —Yes, I am sure that the honourable member would. Every member would, but I seem to get a sack full of them. Very many of the representations that come to me make such allegations about the Taxation Office. The people who come to me are not those that we hear about in this House-the rorters, the big fellows, the fellows that are ripping off the system. They are good, old, honest but confused taxpayers who get a missive from the Taxation Office that is couched in threatening language and as a result, suffer considerable and very unnecessary distress. Therefore, I ask honourable members to please excuse my cynicism when I see in this legislation a requirement that persons provide for the Commissioner reasonable facilities and assistance. I want to know what that means, what it requires. Mr Braithwaite —What about a piece of rope to hang themselves with? Mr ADERMANN —That is the next thing. Might I repeat, as I said at the beginning, Mr Deputy Speaker, that I am glad of at least of two things: That the double taxation of dividends has been addressed and that division 7 will be given a decent and dignified burial. Mr SIMMONS(Calare)(1.40) —The introduction of the dividend imputation system as from 1 July will complete another and most historic step in the Government's drive to refurbish the Australian economy. As the Treasurer (Mr Keating) indicated in his second reading speech to the House, the Taxation Laws Amendment (Company Distributions) Bill will give effect to the most significant business taxation reform in this country in the post-war years. It will do that by amending the income tax law to introduce, with effect from 1 July 1987, the full imputation system. Under this system, as most honourable members would be aware, dividends paid by Australian companies will be relieved of tax in the hands of resident individual shareholders by a rebate to the extent to which tax has been paid at the corporate level. It will be, as I have said, one of the final reforms in a package of changes that have been implemented by this Government over the last couple years in an attempt to restore fairness and equity to the taxation system and to enhance Australia's longer term economic growth prospects. It is interesting to look at the amendment that has been moved on behalf of the Liberal Party by the honourable member for MacKellar (Mr Carlton). That amendment indicates that while the Liberal Party is certainly not going to deny the Bill a second reading, it raises a number of objections to the imputation legislation. Amongst other things, it condemns the Government for raising the company tax rate from 46 per cent to 49 per cent at a time when, it says, company tax rates around the world are being lowered. That rather glib statement is made from time to time. Often we hear cited in this House examples of varying tax rates around the world. Honourable members may recall that recently, when the United States of America changed a number of its business taxation laws, we saw eliminated a tremendous number of business concessions and deductions that had been built into the system from time to time. I notice that in this chamber National Party members, in particular, are fond of suggesting that in the United States there is somehow or other a much better capital gains tax than we have in this country. Also the myth is spread by, amongst other people, Senator Messner, that this Government's capital gains tax is the highest and most difficult of its kind in the world. That sounds impressive, but once again it is one of those glib statements that, when examined as to truth, do not stand up. The real situation is revealed as something quite different. Australia's capital gains tax will be levied at a maximum rate of 49 per cent, but only the real gain-that which is left after the effects of inflation have been deducted-will be taxed. Most other developed countries tax both real and inflationary gains, so in most cases their capital gains taxes are much more severe than is Australia's. The Reagan administration's reform of the United States tax system has produced a tougher capital gains tax. Americans will now pay tax on 100 per cent of total gain, including inflationary gain, at a maximum rate of 33 per cent. So I think we should examine very seriously some of the objections that are made from time to time by people in this House who speak glibly in the hope that everyone will accept what they say on the basis that they speak for the Opposition in a particular field. During the debate, Mr Deputy Speaker, reference has been made to a number of other changes that have been made by this Government in the general area of taxation reform. We certainly see it as reform. Objections have also been raised by many speakers in regard to the fringe benefits tax, substantiation changes and the assets test. The usual litany of complaints offered by them from time to time in this chamber has been heard, but if I may refer to a couple of those points in the context of my remarks, I would refer first, as an example of the real tax changes that have been made by the Government, to a change that affects many individual taxpayers, the cuts in personal income taxes. The Leader of the Opposition (Mr Howard) has complained of the level of personal income tax under this Government, yet he was the Treasurer in the Fraser Government that put into effect a maximum tax rate of 60 per cent. The Government has been able to get that rate down to 49 per cent through a package of tax reform and the restoration of fairness and equity in the system. Yet the honourable member's colleagues of the New Right, the people that we heard so much about this morning during this debate-the John Elliotts and Andrew Hays of this world-want to go further and lower those rates to a considerably greater degree. That is all very nice, but it ignores the reality of the need to be able to fund such proposals. I had the Parliamentary Library conduct some research in order to find out exactly what the levels of personal income taxation were in certain areas of Australia. I notice that in my own electorate of Calare in 1984-85 the 42,545 taxpayers paid an average tax of $3,881, which represented an average tax rate of 23 per cent. Yet the spokespeople for the New Right go around the countryside in the jets with gold seat belt buckles, or the expensive jets paid for by the taxpayers of Queensland, and suggest that somehow or other if we have a 25 per cent flat rate of taxation we are all going to be so much better off. Certainly a lot of people would be better off under that system. Perhaps the most obvious beneficiary of 25 per cent flat rate taxation would be, in fact, the Queensland Premier who, given his combined incomes, would be likely to receive a taxation reduction of about $30,000 a year. Why would he not support taxation at a level of 25 per cent. But the reality is that about 70 or 80 per cent of Australian taxpayers pay considerably less than an average rate of 25 per cent. I was pleased to see, from some of the remarks that emanated recently from Liberal Party caucus meetings, that even some of those who attended questioned very seriously the taxation concepts that are being pushed forward around the countryside by the Queensland Premier. Quite clearly those concepts are nonsensical and would certainly work to the disadvantage of a large number of Australian taxpayers. On the question of fringe benefits taxation and the changes that are incorporated in this package of Bills, there has again been the usual criticism. Yet who are the major beneficiaries of fringe benefits taxation? They are not really the vast majority of individual taxpayers, who do pay their fair share of tax under the PAYE system. They are the sorts of people that the New Right is appealing to with some of its policies. Why should taxpayers generally subsidise the free lunches, free education fees, free cars and all of the other benefits that have been in force for so many years, simply as a means of reducing taxation? They embarked upon those measures because beyond a level of $35,000 in personal income there was a great deal of incentive to get into all sorts of fringe benefits areas in order to reduce the incidence of tax. The fact that the Government has reduced the maximum taxation rate for individuals and companies to a common level of 49 per cent is certainly going to lessen the incidence of that kind of thing. People have a clear choice. The Opposition complains that it is wrong for the employer to have to pay the tax on behalf of the employees who receive the fringe benefits. Quite obviously they do not have to pay it if they do not provide those sorts of fringe benefits. They can cash the benefits out and pay tax just as do most other average taxpayers in this country. If I can return to some of the other elements of business taxation reform that are part of this important package, the important point that needs to be stressed is that this series of changes should be seen in the context of a number of other significant changes that have been made by the Government to macroeconomic policy. We have tried to create an environment for business to become much more dynamic and outward looking. In this context I congratulate the Treasurer upon his very responsible May economic statement of last night, one which in my view fairly distributes the burden of economic recovery but at the same time targets for assistance those who are most in need. It will create confidence in the financial markets, it will encourage investment and it will, most importantly, set the conditions for an easing of interest rates, a matter about which in the course of my contact with constituents and other groups that I have been associated with as a member of the country task force of the Prime Minister (Mr Hawke), people have quite rightly expressed concern. But as the Prime Minister has also indicated in this chamber on many occasions, no government has a vested interest in keeping interest rates at an inappropriately high level. There is a reason for them and most thinking people know it. I believe that the climate is right for a downward trend in interest rates. We have seen that fact emerge in recent months. As far as business is concerned, the Government has also done something about the restoration of the traditional levels of wages and profit share levels, which have been eroded because of a combination of a number of factors, including an overvalued exchange rate and high tariff walls that represented an attempt by the Liberal Party and the National Party when last in government to compensate for the fact that they did not have any real incomes policy. We have embarked progressively on a program of reducing protection levels but have done this in a very sensitive way. The recent changes in protection levels for the textile, clothing and footwear industries provide a most significant example in that regard. Some of the other specific measures that have been adopted by the Government to enhance business activity and growth paint a very significant picture of achievement. The Liberal Party uses glib catchcries, such as incentivation but this Government has not merely talked about providing incentive. It has actually done something about it-and no more so than in regard to the taxation system. Other measures, of course, complement that reform. I have mentioned the restructuring of the textiles, clothing and footwear industries. We have also changed significantly the structure of the steel industry, the motor care industry and the heavy engineering industry. There have been major reforms in the financial system through deregulation and the opening up of Australia to international competition because for many years we have adopted the approach that somehow or other if we stick a fence along the boundaries of Australia everything will be right; if we have a problem we just grow a bit more wheat or dig another hole in the ground and export a bit of coal. We have seen in recent years that the world does not necessarily owe Australia a favour, that we have to get out there and be internationally competitive. We need to see some of these changes in business taxation as part of that total process. The imputation system will, in my view, give people a much wider choice of investments for retirement. It will cut the bias that currently exists amongst companies in favour of debt rather than equity. It will certainly cut the level of tax-driven take-over activity that we have seen in recent years and give a very big tax break to small business. That should not be forgotten in the context of this legislation because small business in particular will be a substantial beneficiary of this package of legislation and will welcome it greatly. This is not just talk about taxation reform. This is genuine taxation reform. Mr ROCHER(Curtin)(1.54) —With the ready and almost fawning compliance of a media which is largely well and truly managed by the Prime Minister (Mr Hawke) and his office, we hear repeated calls for the Liberal Party to publish its tax policy. These inanities are repeated parrot fashion by the Government and the more naive on its back bench. I compliment the honourable member for Calare (Mr Simmons), who has just resumed his seat, because he did not do as previous speakers have done in this connection. Madam Speaker, I remind the House that when the present Prime Minister called the premature 1984 general election and subsequently announced his party's election policies, not one word was mentioned about taxation-not one word. We all know that there is one rule for the Prime Minister and another for the rest of us, but even the conveniently short memories of the media and the Labor Party's acolytes should be given an occasional jog. The simple fact is that we will announce our policies at a time to suit ourselves and, in so doing, will distinguish the Liberal Party from government supporters in that we will have a published policy whereas in 1984 they did not but seek now conveniently to forget that very simple and straightforward truth. In fact, if we are to discuss policies, we can go back to the days of the accord. Honourable members will recall that the Labor Party, whose members now form the Government, could not announce its agreement with the trade union movement until a deal had been done to knife the then leader of the Party, chop him off at the legs, and install the present Prime Minister in his stead. Some of the practical effects of these Bills will give new life to that old gag which lampoons the role of democratic government. Most of us remember it and have been known laughingly to repeat it on different occasions: `I am from the Government; I am here to help'. The claim is made by the Treasurer (Mr Keating), with some justification, that the dividend imputation system which he seeks to entrench by way of the legislation now before the House will be in several ways helpful but that is not all that there is to it. The first strong impression to be gained about the dividend imputation provisions is that the requirements are enormously complex. Experience of complex tax laws has taught us one clear lesson. It is that tax minimisation schemes have a direct relationship to the number of relevant words in the Act. This legislation seems to have all the potential for providing a repetition of the history of the tax minimisation schemes. Although the Government made its decision to adopt dividend imputation for tax purposes as long ago as September 1985, only now, some 19 months later, has the legislative backing for it been given the light of day. Even this extraordinary gestation period has not facilitated the birth of simple, straightforward legislation, the understanding of which has been complicated by interim statements on the part of the Treasurer modifying his originally stated intention. The practice of legislating tax changes by Press statement is a well entrenched technique under this Treasurer, one that has deplorable effect on commercial endeavour. The Treasurer's procrastination has not produced the desirable degree of precision. In that regard we see shades of capital gains and fringe benefits laws which, as recent history has shown, will need amendment because of so-called `unintended consequences'. While the big winners under this legislation should be corporate investors, some improvement will accrue to individual shareholders. The receipt by individuals of dividend income which is almost tax free in their hands will give them psychological satisfaction if nothing else. In cases where individual taxpayers endure the top marginal rate of 49 per cent after 1 July, the imputation tax rebate could mean that further tax will not be payable on the licitly franked amount of dividends received. In the event that other individuals may be assessable at marginal rates of less than 49 per cent, an excess tax rate is created and this may be offset against tax otherwise payable on other income. If we take the case of an individual whose only dividend income is a fully franked $5,000, the accompanying imputation credits could enable that person to receive an additional tax free income of as much as $12,200. Madam SPEAKER —Order! It being 2 p.m., the debate is interrupted in accordance with sessional order 101a. The debate may be resumed at a later hour. The honourable member for Curtin will have leave to continue his speech when the debate is resumed. Mr HAWKE(Wills-Prime Minister) —by leave-The Government has been deeply distressed and disturbed to learn that a few minutes after 10 o'clock this morning Fiji time-8 a.m. Canberra time-a group of soldiers from the Royal Fiji Military Forces moved into the Parliament building in Suva. The soldiers informed parliamentarians there that the armed forces were taking over the Government and they escorted from the building a number of Ministers, including the Prime Minister, Dr Bavadra. There are reports that troops involved in the coup have taken control of some major Government offices and utilities. The Government is monitoring the situation very closely and remains in communication with our High Commission in Suva. Obviously not all of the facts have yet emerged. In particular we do not yet know whether the armed forces takeover is supported by all of the armed forces. We understand that the coup is led by Lieutenant Colonel Rabuka, number three in the Royal Fiji Military Forces. The Commander of those Forces, Brigadier Epeli Nailatikau, is in Australia at the moment for the ceremony this weekend marking the handing over of the first of the Pacific patrol boats, a program in which Fiji is participating. Two Royal Australian naval vessels happen to be on a routine visit to Fiji at the moment but have been instructed to stay clear of the situation other than to facilitate communication between Australia and the High Commission in Suva. The Australian Government, and I am sure the Australian Parliament and people, condemn this attack on a government in the South Pacific and the Commonwealth, elected through the proper constitutional and democratic process. Since its independence in 1970, Fiji has achieved a proud tradition of parliamentary democracy. This form of government has been a major factor in harmonising the interests of the different racial groups which make up the Fiji community. We were impressed at the way in which Fiji was managing the transition following last month's general elections in the normal way of parliamentary democracies. Australia has had close and friendly relations with Fiji, which is a highly valued member of the South Pacific community of nations. For many years, successive Australian governments maintained close relations with governments led by Ratu Mara. We had looked forward to having the same good relations with the Government of Dr Bavadra and constructive dialogue had begun. Instability in the South Pacific is a direct concern to Australia, as I have several times made clear in recent weeks in condemning the intrusion into the region of Libyan destabilising activities which have played such havoc in other parts of the world. Today's events are particularly deplorable as the first military coup against an elected government in the South Pacific. I call on all elements of the Fiji community, including all the parties who contested the last elections, to work for a speedy return to parliamentary democracy in Fiji. I am pleased to learn that, so far at least, there has not been any sign of breakdown of law and order in Fiji and no reports of imminent danger to Australian residents or visitors, among them a number of Opposition representatives from this Parliament, including the Deputy Leader, Mr N. A. Brown, who are attending a conference outside Suva. The Department of Foreign Affairs has convened its emergency task force and the Government will continue to keep the situation under close review, particularly from the point of view of caring for the safety and welfare of Australian citizens. Mr HOWARD(Bennelong-Leader of the Opposition) —by leave-The Opposition condemns unreservedly this apparent overturn of the democratic process in Fiji. Fiji is a country that has very close links with Australia, its being a fellow member of the Commonwealth and a tourist destination for many Australians. Indeed many Fijian citizens have been educated in this country, particularly on the eastern seaboard. Therefore, it is rather different from a military coup in Latin America or other parts of the world. It brings the overthrow of the democratic process rather closer to home and reminds us of just how few countries in the world there are which hold the democratic process completely and invulnerably dear. I share the hope expressed by the Prime Minister (Mr Hawke) that the democratic process in Fiji will be restored as soon as possible. I had hoped that the change of government, although unexpected and although bringing an untried group of people into government in Fiji, might have been achieved without any interruption of the democratic process. I know that all honourable members on this side of the House will want to see democracy restored in Fiji. Naturally we will support and co-operate with any efforts the Government wishes to take to ensure the safety and security of Australian citizens. I am very pleased, both on the basis of what the Prime Minister has said and from separate information from people who have been in contact with my colleague the Deputy Leader of the Opposition, the honourable member for Menzies (Mr N.A. Brown), that there is certainly no suggestion at this stage of any breakdown in law and order. The only other point that I would make is the rather obvious and salutary one, and that is, this development underlines the supreme insecurity and instability of this part of the world. It underlines the simplicity of some doctrines that were contained in the report of the Dibb Review of Australia's Defence Capabilities. Mr Hawke —Oh, come on. Keep the politics out of it. Mr HOWARD —The Prime Minister says: `Keep the politics out of it'. I repeat what I said and that is that it does underline that. As to all matters of direct concern to our country and the citizens of our country arising out of this incident, whilst the Opposition shares in everything that the Prime Minister has said, nonetheless the incident does underline to this House the very great inherent instability in our part of the world and is, therefore, a cause of considerable concern and ought to be a cause of considerable concern to honourable members on both sides of the House. Mr SINCLAIR(New England-Leader of the National Party of Australia) —by leave-I share in the concern expressed by the Prime Minister (Mr Hawke) and the Leader of the Opposition (Mr Howard) at this morning's quite extraordinary news from a fellow Commonwealth country. Those of us who know Fiji and Fijians well understand the particular association between that country and Australia. Since white settlement, Australia has had a unique relationship with the islands of the Pacific, a relationship which it shares with New Zealand. That is not peculiarly because we are fellow members of the Commonwealth; it is also because we have inherited a concern for stability and peace in this part of the world. There is little doubt that the news comes most unexpectedly from a country which has adhered to the processes of British democracy and the processes of British law. I share totally the concern that has been expressed by both the Prime Minister and the Leader of the Opposition that there should be no further deterioration in the situation in Fiji. I wish to urge from this forum, and I am sure all members of the Parliament would join with me, those who are participants in this military event to ensure that no retaliatory action is taken against anyone, particularly those of the Government whom they have apparently apprehended. From this side of the House, we look towards an early restoration of parliamentary democracy and the recognition of the democratic processes through which the Government of Prime Minister Dr Bavadra was elected. All of us understand the racial friction which has occurred and which is apparent in any society in which there are people of different ethnic origins. In Fiji those differences have largely been contained to date, and one would hope that common sense and integrity can prevail. Particularly in a climate where the nature of this military takeover seems quite extraordinary, with the No. 3 figure in the military hierarchy having apparently been responsible, the very character of the history and antecedents of Fiji are uppermost in our minds, as I am sure they would be in the mind of the former Prime Minister, Ratu Sir Kamisese Mara. We have all held him in high regard and I have little doubt that Australia, under whichever government, will maintain the same good relations with his successor. We therefore look forward to the early restoration of parliamentary democracy in Fiji. I note that there are two Australian warships in Fiji and I also note the advice that they will not be in any way involved in the situation in Fiji. However, I suggest to the Prime Minister that it would not be inappropriate, while the conditions of uncertainty prevail, that they remain in Fijian waters so that at least communications of an independent and totally integral nature can be maintained between Australian interests there and this country. Above all, I share the request in the penultimate paragraph of the Prime Minister's statement, that all elements of the Fijian community, including all the parties that contested the last election, work speedily for the return to parliamentary democracy in Fiji. Mr SINCLAIR —In the light of the Treasurer's fairly bullish forecast of the outcome of his mini-Budget presented last night, can he say when housing interest rates will fall and by how much? Mr Young —How come the National Party got the first question? Have the Liberals gone to sleep again? Mr KEATING —They can't think of a question. In the last month or six weeks we have seen substantial falls in market interest rates, in the general structure of rates, particularly in commercial bill rates, and we saw even further falls yesterday. Last week we also saw declines in the lending rates of some housing institutions. Obviously, the general interest rate market is starting now to have an impact on the attractiveness of the instruments of the deposit taking institutions. I am not in a position to forecast when that should happen at a sufficient rate to make a very broad change in the structure of housing interest rates. However, I can say that what the Government did last night should promote a better interest rate climate, and that the scope for further genuine falls in interest rates has been provided by the Government. As the market digests and assimilates the May statement material it will take-as it has indicated so far-an optimistic view of the economy from those points that the Government has made. There is only one way to lower interest rates and that is the proper way: We want quality falls not falls coming off any over-runs in the money supply. The Government has been determined to maintain a firm monetary policy. I believe that what we have done in the May statement, in removing that call on $4 billion from Australian savings in the forthcoming budgetary year, will generate the kind of optimism that the markets have been expecting for some time. Ms McHUGH —Can the Prime Minister inform the House of the reasons behind the Government's decision to apply an assets test to unemployment, sickness and special benefit recipients aged 25 years and over? Mr HAWKE —I thank the honourable member for her question. The decision to apply an assets test to adult recipients of unemployment benefit and other benefits will ensure that those with the resources to provide for themselves will be required to do so. I am pleased that there is apparently bipartisan support for this measure. When asked at a Press conference following the May statement last night `What about the assets test on unemployment benefits? Do you support that?', the Leader of the Opposition replied: Generally speaking, I think the changes that the Government has made in that area are going in the right direction. I am not going to criticise them. The expenditure reductions from this decision are estimated at $12.5m in 1987-88 and $24m in 1988-89. I am sure that it will not have escaped the attention of the honourable member for Phillip that there is another assets test which saves more than six times that amount and which the Leader of the Opposition promises to repeal, and that is the assets test on pensions. The Leader of the Opposition believes it is all right for a person aged 60 and receiving unemployment benefit to be subject to an assets test, but a millionaire pensioner aged 65 should escape an assets test. Where, by any stretch of the imagination, is there the semblance of any consistency in that position? The Leader of the Opposition supports an assets test on adult unemployment beneficiaries but promises to hand the age pension back-- Mr Spender —Madam Speaker, I raise a point of order on the question of relevance. The Prime Minister has been asked by an honourable member on his side of the House why the Government has made a decision which was announced last night in the mini-Budget and which concerns those who are 25 years old and over and their entitlement to certain benefits. That has nothing whatsoever to do with the matter that the Prime Minister is now addressing, and we must, if this Question Time is to operate properly, come back to the question. Madam SPEAKER —Order! The honourable member has a point of order, but I am not upholding it. I find the Prime Minister in order. Mr HAWKE —I ask again: Where is the consistency in the Leader's position? He supports an assets test on adult unemployment beneficiaries but promises to hand the age pension back to millionaires by repealing an assets test that saves the Australian community $160m. In applying these double standards, the Leader of the Opposition has lost any remaining shred of credibility and has cast aside any remnant of principle. That $16 billion credibility gap is set to become a yawning chasm unless the Leader of the Opposition starts telling us where the money is coming from to fund his extravagant promises to the rich and privileged. As the Treasurer has said, tonight is his test. Mr MOORE —I refer the Prime Minister to the mini-Budget announcement last night of the $465m increase in postal, Telecom and health care charges and the higher projected inflation rate of 7.25 per cent for 1987-88. Is it a fact that in the period from March 1983 until the end of the next financial year there will have been a real decline in the dependent spouse rebate and family allowances of 35 per cent on people of modest income? If that is so, why has the Government again targeted single income families to carry the additional cost of this mini-Budget? Where is the equity, of which the Prime Minister speaks so much, in that? Mr HAWKE —I have to say this for this collection of people opposite who are becoming an increasingly sick and irrelevant joke as far as an opposition is concerned-they are tigers for punishment. Let me first pick up that part of the question by the honourable gentleman that purports to deal with the inflationary impact of the decisions taken. This Government approached the overall task it had to meet the challenge facing Australia of producing an outcome which would reduce the deficit by about $4 billion. Inevitably making those decisions means it is the case that people in the Australian community will suffer some loss of standards. That could come either from the lowering of some services, or in a situation where there could be some increase in charges that they have to pay for services. What we have tried to do is get an appropriate mix. All I can say is that the overwhelming reaction of the Australian community, from what we were able to judge last night and today, has been one of approbation of the decisions of this Government. The honourable gentleman, for reasons which I am sure escape most people in this House, has come back to this question of the impact of government policies upon Australian families. Members of the Opposition have been dealt with on this subject fairly ruthlessly and continually when they have been stupid enough to raise it. I will go back, too, to the question of the impact of Government policies on families. Those opposite may want to find out what will happen to Australian families in this country as a result of decisions by governments, and the people of this country as well as the members of this Parliament are entitled to look at the impact upon families of the decisions that we have taken and of the sorts of proposals that they are putting. Let us, first of all, ask this question: What would be the impact upon Australian families of the wages policies of members of the Opposition? I will tell the House what the impact of their policies in the wages area would be upon families. They would immediately impose upon families a savage reduction in their standards because in every national wage case but two-18 out of the last 20-they have gone in and opposed any increase in wages. That is their policy. If honourable members want to think of one single action which would ensure a reduction in the living standards of Australian families, it is the Opposition's wages policy. Secondly, what is the Opposition's policy in regard to prices? Its policy in regard to wages and prices combined produced a situation by the time we had come to office where there was an inflation rate of 11 1/2 per cent. Those opposite did not believe in anything remotely resembling some constraint or restraint upon those who fix prices in this country. What we have done, within the limited constitutional framework and powers that we have, is seek the co-operation of the Australian community, which has been very fulsomely forthcoming from the pensioners and the consumer organisations of this country. What is the response of those opposite to that? They want to abuse the pensioners and the consumers, and say: `That is all window dressing. The pensioner organisations of this country are party to a hoax'. That is what those opposite say about the pensioners; that is what they say about the consumer organisations. I will tell the House that the pensioners and the consumers of this country do not believe that it is a hoax to try to assemble the power of Australian consumers to do what possibly can be done to restrain prices. No; those opposite, with their mouthing of concern for Australian families, would let prices go through the roof. They would cut wages and let prices go up. That is what they would do to Australian families. What would they do in regard to interest rates? With their $16 billion credibility gap they would have interest rates going through the roof. Who would be hurt by that? Interest rates under this Government have not reached the peak that they did under the previous Government. What would those opposite do in regard to taxes? I will tell the House what they would do in regard to taxes-they would make sure that they gave the revenue back to the paper shufflers. They would abolish the capital gains tax. The paper shufflers make their profit and their income by the massive effort of ringing up the broker and saying `buy' or `sell', so the income and capital gains made out of that are given back to the wealthy, privileged few. Those opposite would give back the fringe benefits to their company directors. The Mercedes and the private education fees would all be given back to the few. Who would be paying for that return of privilege to the rich? I will tell the House who would be paying for it-the ordinary, average Australian family. Those opposite should not get up in this place with their mealy-mouthed hypocrisy about Australian families. It is no wonder that they are increasingly coming to be regarded as a sick apology for an Opposition and a sick, irrelevant apology for an alternative government. They are hopeless. Mr HAND —As the Minister for Employment and Industrial Relations would be aware, there are many young school leavers in my electorate who will be affected by the changes to assistance provided for the young unemployed, as announced by the Treasurer last night. Can the Minister provide further details on how this new training program will operate? Can the Minister also say how soon the infrastructure necessary to make this proposal a real alternative for young people will be set in place? Further, I ask the Minister to explain what initiatives the Government is taking to ensure that appropriate jobs will be available for these young people at the conclusion of their training, given the lack of job opportunities which currently exist for this group. Mr WILLIS —During the Government's period in office it has become increasingly evident that the prospects of young people obtaining employment when they leave school is very much related to the level of their educational skills and the vocational skills that they go on to obtain. Realising that, we have increasingly moved to ensure that young people are given the chance to obtain higher levels of qualifications, when they leave school, or vocational skills. On the education front there has been an enormous increase in the retention rate of young people through to the Year 12 level of schooling. That has been a major achievement of this Government. The increases in the Austudy allowance have greatly assisted and will assist even more in the future. We have also been concerned to reduce the disincentive for young people to drop out of school into unemployment simply by going out to look for a job and picking up the unemployment benefit. The increase in Austudy has been one aspect, but also the introduction of a job search allowance, as announced by the Treasurer last night is another substantial step in the direction of putting the balance very much in favour of remaining at school rather than going out to work. Those who leave school will not receive any unemployment benefit but will get the job search allowance after some time at a level, unless parental income is low, substantially less than the present unemployment benefit. It is also part of the strategy that the Government is pursuing to ensure that there are greater training opportunities available for young people. Given that employment prospects are related to vocational skills, it is important that young people who do leave school at a relatively early age do have an opportunity to get training. Therefore the Government has been moving, over the last couple of years, to increase expenditure on training for young people. In last night's statement the Treasurer announced an additional $32m for training for the forthcoming financial year, much of which will be spent on young people. This adds to what was already proposed in respect of other vocational training programs for young people, including trade training programs, the traineeship program and assistance for disadvantaged young people. Altogether, next year, in 1987-88, we will be spending an additional $100m-it is a 50 per cent increase-on training, over half of which will go to young people. So there will be greatly increased opportunities for young people to obtain training in 1987-88. In addition, there are two other elements which I would like to mention: Firstly, we are expanding the youth access centres which were piloted in Commonwealth Employment Service offices. There are 37 around Australia at present, and they have been very well received. We will be expanding the number of these centres to 100. They will provide a national information, counselling and referral service for young people, which I believe will greatly assist them by providing the kind of advice they need, not only in relation to training and labour market matters but also in the broader spectrum of issues such as education, social security matters and other related issues. The job search allowance which was announced last night by the Treasurer, is not just a matter of abolishing the unemployment benefit and introducing a job search allowance; it is also a matter of changing the assistance programs for young people. All young unemployed people who have been out of work for six months or more will be subject to intensive assessing and counselling by the CES. There will also be development of new opportunities for structured job search training. Many young people simply are deficient in the skills of even going about finding a job. Evidence here and overseas indicates strongly that they would benefit greatly from structured job search training. We will be instituting that training, probably in various forums, in a way that will assist many young people who have been out of work for some time to improve their job prospects. Therefore, we will be taking a range of opportunities to assist young people. The Government's strategy for young people has been very successful in improving the education retention rate. It has also increased training opportunities. With the job search allowance and its associated measures, I am sure that in future young people will receive much more assistance in finding a job than they have received in the past. Mr PORTER —My question is directed to the Minister for Health. Is the Minister aware that 65 per cent of all families with children carry private health insurance? In view of the fact that over the past four years families with children, of all people, have suffered the most significant reduction in the level of disposable income, why did the Government decide to target those families by further increasing their health costs? Dr BLEWETT —I am glad that the honourable member for Barker has not completely forgotten his old shadow portfolio, although during the three years that he occupied that position he did not produce one creative idea for health policy in this country. Indeed, his disappearance from that portfolio has gone unnoticed among health organisations. In response to his question, I suggest that the first thing he does is to read the Economic Planning Advisory Council document on the social wage, which shows that the greatest beneficiaries of Medicare are families, and especially the less well off families, who directly benefit from it. That is why, in the decisions that we have made, the broad Medicare benefits have remained unchanged and underwritten by a fair levy. It is true that the health portfolio, like every other portfolio, had to contribute to the economic challenge facing this country. We believe that we did that in a fair and quite undiscriminatory way. I noted that the shadow Minister in the other place referred to our having made discriminatory changes to health insurance. What we did was to transfer $100m from Medicare to the private insurance industry, yet the Opposition has criticised that as discriminatory. But what does the Opposition plan to transfer from Medicare to the private health industry? It is about $3 billion, which is 30 times the amount, and that is why-- Mr Howard —Do you say $3 billion can be cut off health? Dr BLEWETT —I shall deal in a moment with the Leader of the Opposition's interjection, which was as foolish as most of his other comments about health. The Opposition's argument is that it will cut Medicare by $3 billion, which is 30 times the discriminatory amount about which they were protesting last night. Mr Porter —We are going to reduce tax and you are putting it up. Madam SPEAKER —Order! The honourable member for Barker has asked his question. He will cease interjecting. Dr BLEWETT —The Opposition's proposal would mean basic insurance rates of about $27 a week. But of course, like all of its arguments, that $3 billion is a false figure. It cannot cut Medicare by that amount and properly protect pensioners. In calculating those cuts, it has neglected the fact that it will lose money from the Medicare levy. If it tries to soften the $27 per week, it will have to introduce a tax rebate, and that will completely dissipate its savings. Of course, the Leader of the Opposition has his chance tonight to explain to the Australian people how he intends to carry through those absurdities. Ms MAYER —My question is directed to the Minister for Housing and Construction. What is the current level of lending for housing, and what impact will the economic statement have on the housing industry? Mr WEST —Lending for housing was very strong during the month of March. Figures out today show that all significant lenders lent more than $1,000m. The component from the savings banks was $817m, giving an annualised rate of $9.8 billion. I think that the House, even the Opposition, would agree that that was a very strong performance. I am also pleased to say that the proportion of loans going to purchase new housing has shown a moderate increase during March. That strong lending activity has been underpinned by very strong growth in savings banks deposits, and during March, the seasonally adjusted gross figure was $866m, and that means that savings banks deposits were up 16.5 per cent for the year to March. All that activity, plus the measures that we announced in the March housing package-the guarantees for public housing funding and the increased income limits for the first home owners scheme-will, I am fairly certain, increase housing activity during the rest of the year. For instance, we predict that 4,500 extra starts-a conservative estimate-will result from the first home owners scheme changes. The second part of the honourable member's question related to the economic statement made by the Treasurer last night. I believe that it constitutes very good news indeed for the housing industry. It creates the economic environment for general interest rates to continue to trend down, and I believe that, in due course-and as I will show in a moment, this view is shared by key figures in the housing industry-that will be reflected in reduced housing interest rates. I shall quote from Mr Alan Cullen-- Honourable members interjecting- Mr WEST —The Opposition does not like to hear it, but this is what the leaders of industry and the banks are saying about the Government's economic statement. Mr Alan Cullen from the Australian Bankers Association said: The Government is therefore to be commended for the initiatives it has taken. The adoption of this strong fiscal approach to our economic difficulties should act to moderate interest rate . . . pressures. An even stronger endorsement comes from Mr Ron Silberberg, the executive director of the Housing Industry Association. He said: The mini-Budget brightened the hope for lower interest rates . . . There is now the real prospect of the recent falls in commercial interest rates spreading to the home mortgage sector . . . The Government is to be commended for making the largest package of Budget savings in the last 30 years. I can only add that what I have said to the House is reflected today in the bank bill rates, which at 14.1 per cent are at their lowest level for the past three years. Mr PETER FISHER —My question is directed to the Minister for Social Security. It refers to the Hawke Government's decision in the mini-Budget to apply an asset test on unemployment benefit payments to people aged 25 and over from December 1987. Does that action mean that farmers' wives registered for but unable to find employment to supplement low or nil family incomes will lose their benefits if the asset value of a property is above $108,000? As a hardship provision applies to the assets test on pensions, will that same provision apply to unemployment benefit assessment? Mr HOWE —With respect to the honourable member's question, I think that it is only right to remind the House of a question earlier this afternoon, which puts the matter in some kind of context. In the introduction of an assets test for unemployment benefit, the Government has simply applied a principle for unemployment and sickness benefits that already applies across the social security system. As the Prime Minister said earlier, the Leader of the Opposition-the Leader of the Opposition for the Liberal Party-clearly indicated his support for that principle when applied to unemployment benefit, but I understand that it is a policy that he strongly opposes for pensions. The Liberal Party shadow Minister for Social Security put out a statement this morning in which he said he supported the assets test in relation to unemployment beneficiaries but that it did not go far enough. He said that it should cover the under 25-year-olds, many of whom would have assets to the extent that they would be knocked off the unemployment benefit and would fail to appear in the golden surf of north Queensland. Let me turn to the honourable member's question. I understand the concern that has been expressed about the assets test within farming communities. However, let me make the point that the Government's approach is that we have either equity or we do not have equity. We have responded to numerous calls from the Liberal Party and from the National Party, whose leader wanted $4 billion in cuts. He has got them. Presumably, he also wanted some equity. In terms of achieving equity, when one is trying to achieve a certain target one needs to apply measures such as the assets test. That has been conceded on the other side of the House but in a way that seems somewhat inconsistent with earlier positions. The asset levels will be the same as those which apply to the pensions assets test. There will be no hardship provision simply on the grounds of equity. Unemployment benefit is not available to people who are effectively involved in a business and who are going through a very difficult period. If we make those kinds of exceptions we need to make them across the board. Because of the nature of unemployment benefit, while the asset levels will be similar to those which apply to the pensions assets test there will be no provision for hardship. Mr TICKNER —I address my question to the Minister for Defence. I ask my question in my capacity as a local member but also as one of the co-conveners of the Government members Defence Force action committee. I ask the Minister whether the Government's commitment to improve the quality of defence housing, so badly neglected under previous governments, will be affected by the Treasurer's statement last night as it relates to defence cuts? Mr BEAZLEY —I thank the honourable member for his question and for the work he has done on his committee. On behalf of his constituents, who include a very large number of Defence Force personnel, he has put forward their case to me most forcefully. In answering the question I also take the opportunity to explain again to the House some features of the defence budget which, in the Commonwealth's system of budgeting, are unique. Fundamentally, the defence budget is treated as a global amount. The Department of Defence is sent away within that global amount to make adjustments as it sees fit. So in a situation, such as the situation we have this year, of negative growth of one per cent we are invited to assign priorities in the defence budget in the areas that are taking cuts. Being treated on this global basis, we also become the recipients of whatever savings we can make. As I have pointed out previously, for example, in the defence factories there has been a $360m subsidy, which in itself is equivalent to about 4 per cent real growth if it were eliminated. The fact that substantial amounts of that have already been eliminated by decisions we have taken also gives us greater flexibility. Therefore, essential programs, including housing, are capable of being protected even in situations where we are looking for cuts in other aspects of the defence function. So there will be some quite substantial cuts in minor capital works and minor equipment features that are not related to the White Paper in the defence vote. There will also be some cuts in operating activities, including some substantial cuts in the civilian personnel side of the Defence Department. However, major projects will remain. Evidence of that was provided by the decision I announced yesterday, for example, to provide an additional 25 Black Hawk helicopters to improve the airlift of the ground forces. Even though cuts in the operating areas will be substantial during next year, also protected will be the initiatives I announced in relation to the South Pacific earlier in the year. In the housing area, to which we assign high priority at this stage, in outcome terms we spent, apparently, about $61m last year. Our intention next year is to spend $75m. So we will be taking some cuts, more substantial cuts perhaps, in other areas of the defence vote in order to protect that very substantial increase. As the honourable member and other honourable members who have an interest in this area have pointed out to me frequently, this area was sadly neglected for many years under our opponents. We must do whatever we can to protect the basic conditions of those who serve this country so well. Mr CARLTON —My question is addressed to the Treasurer. Is it not a fact that Telecom's proposed 17 per cent increase in charges announced by its Chairman today is a direct result of the mini-Budget and will be yet another tax on families, farms and businesses? Mr KEATING —No, it is not. The extra charges which the Budget imposes across the board on Telecom's revenues are about $360m. In that sum there is a commitment to the Budget from Telecom in terms of capital repayment. That does not translate into that sort of sum, but on Telecom's part there has been a reluctance to increase charges for some time recently. Whatever adjustment Telecom has announced today, it is obvious that an element of that adjustment is other than the Budget charges, that is, it includes some of the charges which have not been levied, if you like, earlier. The Prices Surveillance Authority will go through the structure of those charges and look at them to see whether they are justified in terms of the cost burdens upon Telecom in general. The point of the question is to make again the phoney point made by those opposite about taxpayers and families. It comes from a Party which wants to deny taxpayers and families wage increases, which wants to destroy their medical health insurance, which will not face up to its fiscal responsibilities and most of all which could never hope to cope with the terms of trade decline this country and the Government have been wrestling with. The essential point is that either the Government adjusts Australia's internal economy to meet the decline in our external circumstances or the market does it for us. If the market did it for us it would do so by way of an inordinately high interest rate structure, an enforced recession, galloping unemployment and a much greater level of misery in the economy. If one asks the Australian people whether they think it is better that the Government should sympathetically manage this adjustment downwards across a range of items, including Telecom services, I am quite sure that they will reply in the affirmative. As a result Australia will make the adjustments. I record that in the last nine months since the last Budget this Government has cut $8 billion from the deficit of the Commonwealth. The last puny operation the Opposition mounted-the only one we ever knew about, the razor gang-involved cuts of $500m which dwindled to $200m and took 15 months. Mr Brumby —They are wimps Mr KEATING —The honourable member is right; honourable members opposite are wimps. The fact is that tonight our little mate here has a chance to put down some very hard numbers about Opposition policies, about how he would change fiscal policy, about the ambit of the tax changes he would make. Tonight he has a chance to indicate to the country what kind of fiscal and tax regime the Liberal Party would seek to have as a government. He has an opportunity, on television, for half an hour, to lay it all out. Mr Howard —We'll have an opportunity to talk about you, mate. You won't be neglected. Mr KEATING —He can come out of the shadows-- Mr Howard —I'll be talking about you. The more you carry on and show your irritation the more we'll talk about you, mate. Mr KEATING —Is the honourable member saying that I will not be neglected? I will not be neglecting him. I am right behind him. I have not got him yet, but I will soon. Dr THEOPHANOUS —I direct my question to the Treasurer. Given the big reduction in fiscal outlays outlined in the mini-Budget, what consequences does the Government envisage in terms of increased investment, especially in the export sector? Mr KEATING —The very essence of what the Government is doing, the very essence of the structure of the policy changes, has been to restore the profitability of the traded goods sector of the Australian economy. Those sectors which in the past have languished, which have been forgotten and which have been expendable by a succession of coalition governments-the manufacturing and traded goods sectors-are, with a major depreciation of the exchange rate, rewarded with higher levels of profitability and, hopefully, higher levels of investment. With the floating of the dollar, the large depreciation of the exchange rate and the increase in the profitability of this sector, the measures which the Government brought down last night diminish the call upon Australian savings so that more of those savings are free to be attracted to this more profitable sector, to replace imports and to lift exports, to change the balance of our current account and our resort to overseas savings and overseas debt. That is the very essence of the policy change. Of course, that policy change is the change which Australia was denied for all of those years when the Liberal Party and the National Party sought to maintain the Australian economy as an agrarian economy, essentially producing unprocessed minerals and agricultural products. In the course of this exercise not only have we lifted earnings, in Australian dollar terms, for farmers who were denied that by the National Party for years, but also, in doing so, we have lifted Australia's capacity in the traded goods sector to become a sophisticated, developed, modern economy once more, an economy which can face the world, which can trade profitably in the world as a truly industrialised state selling high value products with a lot of intellectual content and with a higher level of research and development, products of innovation which will find their own niches in the trading markets of the world. That is the future for Australia under Labor. That is the future which we are guaranteeing by changes such as we have seen, and of the magnitude which we have seen, both last night and in the Budget. The import of my colleague's question is entirely sound. These measures will, no doubt, lift confidence and lift investment in the traded goods sector of the economy. Returning confidence and investment in this sector is the only way Australia can trade out of its difficulties, it is the only way we can redress the imbalance of the current account and it is the only way our trade account can overcome the problems of the capital account with the higher debt servicing costs of the valuation effect of a higher stock of Australian denominated debt. Therefore, the task of policy, of which last night's statement is just another solid step, is to modernise the Australian economy into the great industrial country it once was and to restore its faith in itself and its pride of place in the world trading community of which it was robbed by sterile Liberal and National party governments. Mr WHITE —My question to the Minister for Defence relates to our defence capabilities, which seems pertinent in view of the cuts announced last night and the events in Fiji today. The question concerns the submarine project due for decision this week and the evaluation of that project. I quote from a minute dated 16 April 1987-one month ago-from the Director of the submarine project, Admiral Hughes, to the Chief of Naval Staff and the Chief of Capital Procurement. He says: . . . we have been offered a commercial design which does not reflect the performance or standards required by the German Navy. I think it will be agreed that that is a damning comment from the Director of the project. Yet, in the House on 11 May-last Monday-in answer to a question from me the Minister said: . . . we have presented for decision by government two good submarines . . . I am happy with the two submarines that have been offered us. Will the Minister explain why there is such a vast discrepancy between those two statements? Mr BEAZLEY —I was well aware of that particular memorandum when I made the comments that I made. The honourable member's initial question was based, I think, on that particular memorandum, which had some circulation in the Press. It is like any document that is leaked from the Department of Defence; such a document never presents a full picture either of the views of the author of the document or of the total evaluation process. It is impossible for it to do so. The evaluations of the actual designs of the submarines are set out in very thick documents, which circulate around the relevant committees. They contain a very detailed analysis of the performance features of the submarines and the suggestions about-if we go ahead with one or other submarine-what might be improved as it goes to the final contracting stage and all those sorts of issues. Mr White —That was a month ago. Mr BEAZLEY —That is fine. All those sorts of issues are considered by government. If we decide to go down one track-- Mr Spender —Is it a commercial design-- Madam SPEAKER —Order! I draw the attention of the honourable member for North Sydney to standing order 55. Mr BEAZLEY —If we decide to go down one particular track we have, of course, the option to go down that track accepting offered improvements or insisting on improvements. So, that particular document, or any single document, cannot present the last word on the evaluation process. The fact of the matter is that-this is not based just on my own assessment of the situation; it is also based on questions I have put to the Chief of Naval Staff and to the project team itself-my comments were based not on my own assessment but on the views that they presented to me. It is those views that I will be taking into the Cabinet. There is always a substantial danger, when looking at this process, as I said, in relying on single documents, or whatever, that fall out of the system. We are still a few days short of Cabinet consideration of this matter. It is not possible for me to go into all the detail. But I will be in a position to go into detail after the source selection process has been completed. It is very difficult for me to respond to individual comments or individual items that happen to fall off the back of a truck. Suffice it to say that on all the information that has been made available to me-well beyond that particular piece of correspondence-my initial judgment that we could accept either of those submarines is valid. That, however, is not necessarily the recommendation that I will be making to Cabinet. I will make a recommendation to Cabinet on what submarine we ought to purchase; but I am not going to walk into the Cabinet room and say: `You can purchase this one and not the other, because if you fail to purchase the one I am recommending you will purchase a submarine that we are incapable of using'. That is not the basis on which I approach my Cabinet colleagues, and it is not the basis on which the project definition study is being done. They could select either. I have a distinct preference, based on advice that comes to me, for one. Mr LANGMORE —My question is addressed to the Minister for Employment and Industrial Relations and relates to youth unemployment. Do the commonly publicised youth unemployment rates relate to the proportion of 15- to 19-year-olds who are in the labour force or to the proportion of the whole population of youth in that age group? If the former, does this give an inflated impression of the extent of youth unemployment, because over 60 per cent of 15- to 19-year-olds are attending an educational institution? What proportion of all 15- to 19-year-olds are now unemployed, and what has been the unemployment trend in that age group during the last four years? Mr WILLIS —It is the case, as the honourable member implies, that the unemployment figures for youth which are published are often misrepresented by those who see those figures as meaning that 23 per cent of teenagers are unemployed. In fact, of course, that is a total misrepresentation of the youth unemployment situation. In saying that, one is not in any way asserting that there is not a problem of youth unemployment, and it is a problem about which the Government is greatly concerned and which we have taken various steps to deal with, in the way I mentioned earlier in Question Time today. But it is the fact nevertheless that it is quite wrong to suggest that something like 23 per cent of teenagers are unemployed. If one looks at the total teenage population, as the honourable member for Fraser indicates, one finds that a lot of teenagers are in education and, more interestingly, some of those people-about 10,000 of them-who show up as unemployed are in fact in educaton full time but nevertheless are looking for a full time job. The reality of the situation is, therefore, that if one looked at the proportion of total teenagers who were unemployed, one would have a figure not of 23 per cent but, on the latest figures available to me, of 9.2 per cent. That is a fairer indication of the proportion of teenagers who are without jobs, but even then it must be borne in mind that of that 9.2 per cent some who are described as unemployed are in fact full time at school or in some other educational institution. So the picture of youth unemployment is often overblown. That is not to say there is not a problem of considerable dimensions, although the number of teenage unemployed is considerably less now than it was when this Government came to office. The declining trend in youth employment has been reversed. There has been an increase in youth employment since this Government has been in office. The youth unemployment rate has come down. There is still certainly a need for it to drop much further, and the steps that we have in train will help us in that regard and to continue to make substantial progress in this important area. Mr COWAN —I direct a question to the Minister for Employment and Industrial Relations. I refer to Tuesday's industrial disputes figures from the Australian Bureau of Statistics. Did working days lost in the coal industry rise by 55 per cent last year, and by 181 per cent over the last two years? Are nearly 1,000 working days lost every day, despite an undertaking unions gave in June-in return for a $60 pay rise-that there would be no disputes? Do not these figures clearly demonstrate the need for essential services legislation? Mr WILLIS —I cannot vouch for the figures given by the honourable member for Lyne, but it is certainly the case that there is a much higher level of industrial disputation in the coal industry than in any other industry group identified by the Australian Statistician in the industrial disputes figures which are published monthly. Indeed, it has been a matter of considerable concern to us that the level of that disputation, despite the fact that the average wage for a coal miner is around $800 a week, is very high. That is a matter of great concern to this Government, and a problem which we have taken steps to overcome. In the legislation which I announced in this House this morning there is provision for considerable change in the Coal Industry Tribunal in respect of the sanctions provision which, in line with the change in sanctions in the new Industrial Relations Commission, will involve a new process of ensuring compliance with awards of the Commission and of the Coal Industry Tribunal, with appropriate penalties if compliance is not achieved. That process is particularly important in the coal industry, but may I also say, as I announced this morning, it is the view of the Government that there should be further change in the operations of the Coal Industry Tribunal. That body, however, is jointly legislated for by this Parliament and the New South Wales Parliament and, under an agreement between the two governments made in the 1940s, changing the legislation requires the agreement of the New South Wales Government as well as of this Government. Therefore, it has not been possible for us to change at this time, in the way we would have liked, the operations of the Coal Industry Tribunal, but I hope to obtain some further agreement from the New South Wales Government in the near future to other changes in the operations of the Coal Industry Tribunal to help address the difficult industrial situation which exists in that industry. The change that is being made is indeed an important one and to resolve a problem in the coal industry we certainly do not need the kind of legislation which has been introduced in Queensland with a view, apparently, particularly to lining up the coal industry. Attempting to use that legislation would certainly, in our view, be massively counterproductive and involve a lengthy stoppage in the coal industry which would be devastating to this nation as it would lead to a loss of exports in our major export industry at a time when this nation cannot afford that kind of loss. We are as concerned as the honourable member is-indeed, more concerned, I suggest-at the need to improve industrial relations in the coal industry. We have taken substantial steps today to bring that about and we will in the near future take further steps if we can get the agreement of the New South Wales Government to do so. Madam SPEAKER —I present a report from the Joint Committee on the Broadcasting of Parliamentary Proceedings relating to the provision of sound and vision services in the new Parliament House. Mr PETER MORRIS(Shortland-Minister for Aviation) —For the information of honourable members, I present an information paper on the outlook of the aviation industry. Motion (by Mr Young) proposed: That the House take note of the paper. Debate (on motion of Mr Spender) adjourned. Mr BARRY JONES(Lalor-Minister for Science) —For the information of honourable members, I present the annual report of the Australian Marine Sciences and Technologies Advisory Committee for 1985-86. Mr SCHOLES(Corio-Minister for Territories) —For the information of honourable members, I present the Government's response to the inquiry into the hospitality industry by the Joint Committee on the Australian Capital Territory. I seek leave to have the response and recommendations incorporated in Hansard. Leave granted. The response and recommendations read as follows- GOVERNMENT RESPONSE TO THE INQUIRY INTO THE HOSPITALITY INDUSTRY For the information of Honourable Members, I report on the action taken by the Government to implement the recommendations arising from the Joint Committee on the Australian Capital Territory Inquiry into the ACT Hospitality Industry. The Committee was asked to inquire into the ACT hospitality industry because of its importance to the development of the local economy, and to identify problems affecting that development. The ACT economy is heavily reliant upon the public sector. The private sector is almost entirely dependent upon government expenditure and the demands for goods and services from the local community. It is therefore vulnerable to changes in the local level of economic activity. Development of the tourism and hospitality industry will provide an important diversification of the local economic base. This is particularly important as the local economy feels the effect of a slowdown in construction activities in 1988/89 and beyond. The Committee's terms of reference were to inquire into and report on the state of the hospitality industry, its capacity to meet demand, prospects for its future, and the desirability and extent of government regulation of and involvement in the industry. Particular emphasis was placed on employment awards and practices, training arrangements, the health of the industry, and measures that would enhance the growth of the industry in Canberra. The inquiry received strong industry support. The Committee received thirteen submissions from hospitality industry organisations, government departments, unions and other agencies. Forty-one witnesses appeared at three public hearings. In preparing the Government's response, wide consultation was undertaken between interested Departments and agencies and the unions. The Government has already taken action on a number of major recommendations, and these are described in detail in the attached Report. The establishment of the new Canberra Development Board recommended by the Committee was announced in April 1987. The Board will provide a strong forum to address not only hospitality industry issues but also broader economic development issues in the ACT. It subsumes the functions of the Canberra Tourist Bureau and the former Canberra Development Board. The Board will be provided with support services from the Department of Territories and is in a form which will enable it to act quickly and more flexibly in response to economic and industry circumstances. A National Institutions Program for the promotion of Canberra during 1988 will be developed before the end of 1987 under the guidance of a high-level Industry-Government committee. A Strategic Development Plan for the ACT is under preparation by the Canberra Development Board. The National Capital Development Commission has commenced preparation of a tourism plan as input into this broader strategy plan. The Government has also taken action on recommendations relating to employment and vocational training programs. I have asked my colleagues the Ministers for Education and Employment and Industrial Relations to accord a very high priority to those recommendations involving their portfolios. A number of programs addressing the needs of particular groups in the ACT, such as young people and the long-term unemployed, have been established by the Minister for Employment and Industrial Relations. Work placements in the hospitality industry will be the highest priority for the disbursement of funds under the Adult Training Program in the ACT during 1987. A model for group apprenticeship courses has been developed by the ACT Tourism Training Committee which will be implemented with industry support. Similarly, a program for pre-employment courses has been developed, and funding of industry-initiated courses is available from the Department of Employment and Industrial Relations. The possibility of developing a short course for restaurateurs is being addressed by the Minister for Education through the Office of ACT Further Education. The Industry Training Committee is adapting a New South Wales course model and my Department is assisting through the ACT Small Business Bureau. This Government supports the development of incentives to encourage employers to employ and train juniors, but in respect of Recommendation 20 (in relation to the waiving of payroll tax), believes that avenues other than payroll tax exemption for juniors should also be explored. The Government is reluctant to support a recommendation which would confer upon the ACT a taxation advantage not enjoyed elsewhere. Other industry reforms suggested by the Committee are commended. This Government regards the diversification of the ACT employment base as an important objective for the economic future of the Territory. The hospitality industry presents significant and positive development options for the ACT. The timely Report of the Joint Committee highlights issues of major concern within the industry and its recommendations represent a major step towards the recognition of the industry's employment potential. This Government is committed to the enhancement of career prospects for young people and the long-term unemployed, and the Committee's recommendations relating to vocational training for these groups are particularly encouraging. I am heartened by the action already in hand to implement the recommendations. In particular, the establishment of the Canberra Development Board will ensure that the needs of the industry are addressed in a systematic and comprehensive manner. I am confident that a co-ordinated approach to hospitality issues will facilitate a significant contribution to the ACT economy. I commend this paper to honourable members, and hereby table the attached report on the implementation status of the Joint Committee's recommendations. INQUIRY INTO THE HOSPITALITY INDUSTRY IMPLEMENTATION STATUS OF JPC RECOMMENDATIONS Following is a detailed accounting of the implementation status of each of the Committee's twenty-two applications: Recommendation 1 The Committee recommends that the Federal Government recognise the importance of Canberra as the National Capital and that with the opening of the new Parliament House as part of the Bicentennial celebrations take responsibility for developing early marketing strategies to promote Canberra's role in 1988. (a) A National Institutions Program should be developed before the end of 1987. I have written to the Ministers responsible for the relevant National Institutions to secure their support for the concept and for a National Institutions promotional program for the next three years. This will be an ongoing program which needs to be set in place during 1987/88 in order to have effect beyond the Bicentennial year. (b) Officers of the Department of Prime Minister and Cabinet are planning the opening ceremony for the New Parliament House. Steps are being taken to maximise the tourist opportunities provided by this event and to link them with the overall ACT tourism strategy. (c) The Bicentennial travelling exhibition will provide a Canberra focus for regional tourism. (d) Future uses for the provisional Parliament House are the subject of deliberations by an Inter-Departmental Committee. Tourism options are among those being canvassed. (e) The National Capital Development Commission is preparing a new promotional exhibition at the Regatta Point Planning Exhibition focusing on the Bicentennial theme and the future of Canberra. The exhibition will include a new audio-visual and display material. (f) Another proposal currently being considered is the staging of a high-quality photographic exhibition in 1988 which will tell the story of the evolution, present and future of the National Capital. There is potential scope for arranging that the exhibition be held in major Australian cities as part of Canberra's contribution to the Bicentennial celebrations. Recommendation 2 The Committee recommends that an ACT Development Board incorporating the present Canberra Tourist Bureau and the Canberra Development Board be established to promote, develop and provide economic assistance to tourism and hospitality in the ACT. This body should be established independently of the Department of Territories and have sufficient authority to react to changing needs and provide immediate assistance when required and have direct access to the Minister. (a) A new Canberra Development Board has been ministerially appointed. It represents a range of economic, community and educational interests, and comprises a Chairman (Mr Fulton Muir) and 10 other members. I have determined. (i) a charter for the new Board and its committees; (ii) the composition of membership of the new Board and committees; and (iii) the need to better co-ordinate tourism, commercial and industrial development activities in Canberra. Recommendation 3 The Committee recommends that the NCDC, in consultation with representatives of the tourist and hospitality industry, should prepare a tourist development plan for the ACT aimed at achieving positive development of the plan from 1988 onwards. (a) The Government supports this recommendation but the preparation of a Tourist Development Plan by the National Capital Development Commission needs to be considered as one component of a larger Strategic Development Plan for Canberra. Planning for tourism growth must be addressed within the context of an overall strategic development policy which combines all sectors of development activity and city management. This strategic overview will be co-ordinated by the Canberra Development Board with input from the National Capital Development Commission and the Department of Territories. (b) The National Capital Development Commission has engaged a consultant to analyse current and future trends in tourism, identify opportunities for the ACT and the actions required to realise these opportunities. The consultant's study due in June will provide the basis for industry discussion and the preparation of a Tourist Development Plan Report in August. (c) This Report to be prepared by the National Capital Development Commission will form the basis for discussion between representatives of the tourist and hospitality industries in order that some positive results be achieved before the end of the year. The Report will provide input into the broader Strategic Development Plan to be prepared by the Canberra Development Board. Recommendation 4 The Committee recommends the development of more low-cost visitor accommodation in the ACT by the immediate release of land for low-cost accommodation and the promotion of low-cost accommodation options by the ACT Development Board. The Committee further recommends that the National Capital Development Commission give greater encouragement to developers to provide more camping sites in the ACT. (a) Substantial progress has already been made in the provision of low-cost visitor accommodation in the ACT. Through the Strategic Plan outlined above the full range of accommodation plans for the ACT will be further addressed, particularly as they relate to the tourism infrastructure in Civic. (b) Beyond Central Canberra, a number of initiatives are being taken by the Department of Territories and the National Capital Development Commission during the next twelve months. Sites have been identified by NCDC at Gold Creek and North Watson. The Gold Creek site, which forms part of the Commission's planning proposals for the development of Gungahlin, will provide opportunities for motel and camping site developments. The Commission will be seeking public comment on the Gold Creek development as part of public consultation on the Gungahlin draft Policy and Development Plan to be released in a few months. (c) Opportunities for low-cost visitor accommodation have also been identified in the North Watson area incorporating several motel/caravan/camping sites. Sites are expected to be made available by mid-1987. (d) NCDC has also identified a number of sites for camping grounds within the rural National Capital Open Space System. The sites identified are at Woods Reserve (on the Corin Road), Riverview (on the Naas Road south of Cuppacumbalong), the Molonglo Gorge, Sherwood Forest (north-west of the Cotter) and at the Stromlo Pine Forest. (e) In identifying these sites the Commission recognises the need for a range of low cost accommodation to meet different demands including lightweight tenting, heavyweight camping, group camping, campervans, caravans and cabins. (f) NCDC is currently carrying out preliminary landscaping at Woods Reserve and Riverview camping sites. It is proposed that the other sites be released in stages with Woods Reserve and Sherwood Forest in about three years and Riverview in about five to eight years. Consideration is being given to the need for staging of a site at Stromlo Forest. Recommendation 5 The Committee recommends that a short course be made available to provide assistance to prospective restaurateurs. The Committee regards the Industry Training Committee (ITC) as the most likely authority to conduct such a course but acknowledges that once the nature and resources of the Hospitality Industry Management Committee become clear, that body may emerge as the most appropriate provider of such training. (a) Training for restaurateurs is considered a high priority task. I have written to my colleague the Minister for Education in order to secure an appropriate course through the Canberra College of TAFE. (b) In addition the ITC has access to an appropriate course for restaurateurs which has been developed in New South Wales in conjunction with the liquor licensing authority, and can be readily adapted for ACT purposes. (c) Further, the ACT Small Business Bureau is investigating the possibility of developing a training course for restaurateurs during 1987. Recommendation 6 The Committee recommends that public health ordinances in the ACT be amended to bring penalties for breaches of the ordinances into line with those in the comparable New South Wales legislation. (a) This recommendation is supported. Although the penalties in New South Wales are not necessarily appropriate for the ACT, legislation is being prepared which will significantly increase penalties in relation to the handling of food, so that parity with the States is maintained. (b) This has a high priority within the ACT Health Authority, and should be implemented in the first quarter of 1988. Recommendation 7 Further, it recommends that the Gaming and Liquor Authority be provided with the necessary resources to conduct adequate inspections of licensed premises. (a) The thrust underlying this recommendation is supported. The principle impediment to the conducting of adequate inspections has been identified and will shortly be resolved. The Liquor Ordinance 1975 is being amended to streamline the prosecution procedures in relation to underage drinking offences (present procedures are particularly time-consuming). This will enable ACT Gaming and Liquor Authority staff to divert more time and resources to the routine inspection of licensed premises. Recommendation 8 The Committee recommends that extensions to the School of Catering Studies at Canberra College of TAFE be built as a matter of urgency. To this end it will be necessary for TAFE to accord the highest priority to the project within its building program and also for the NCDC to allocate this the highest priority. (a) The NCDC on behalf of the Office of ACT Further Education is undertaking design work on the provision of accommodation for the School of Catering Studies and the Department of Meat and Allied Trades at the Canberra College of TAFE. The building is proposed to be located to the east of the existing College buildings. Design studies are currently being carried out and subject to funding in the budget context it is envisaged that tenders will be called in early 1988. (b) The total project incorporates two new kitchens, training bars and service areas, guest lounge, restaurant and liquor service areas, office and reception area, lecture facilities and student and support staff areas. Extensions proposed for the Butchery include new meat cutting areas, coolrooms, meat processing areas, classrooms, staff amenities and offices. Recommendation 9 The Committee supports any College initiative to extend the utilisation of available facilities and recommends that staff levels be increased and specifically allocated to the Food School to allow full utilisation of these facilities outside hours of present operation to include evening classes. (a) I have written to the Minister for Education to ensure that the provision of appropriate resources be accorded a high priority. (b) In addition, it may be possible to increase the capacity of existing facilities at Canberra College of TAFE in the short term through variation of the length and nature of the traditional period in which daily tuition is provided, or through variation to the academic year. (c) With the introduction of the new Associate Diploma in Business (Hospitality) the numbers of Dining Room Service, Liquor Service and Practice of Catering subjects have doubled between 1986 and 1987. (d) A new group of trainees (Waiting) commenced in February 1987, increasing numbers to twenty-five, and the implementation of traineeships for Front Office Reception (Hospitality) is expected to commence in the second semester 1987. Consonant staffing resources have been provided for these new training programs. Recommendation 10 The Committee recommends that the Canberra College of TAFE and the Industry Training Committee investigate the possibility of seconding institutional kitchens on a part-time, short-term basis to assist in staff training and that a comprehensive search for kitchen facilities suitable and available for short-term training be made. (a) The Industry Training Committee has and will continue to seek access to institutional and other industry kitchens/facilities for training purposes. Private sector facilities are used by the Industry Training Committee to conduct short training courses (on a contract basis) under the Department of Employment and Industrial Relations Adult Training Program and other industry-initiated training. However, commercial kitchens are generally unsuitable for training. For example, the commercial kitchen at Canberry Fair is available for five months of the year when the establishment is closed for the season, but the facilities are small and best suited to a teacher/student ratio of one to five. Recommendation 11 The Committee recommends that the Department of Territories and the ACT Schools Authority within existing resources promote awareness of the hospitality industry through the provision of information in secondary schools in the ACT, reporting back to the Committee about the means by which this will be achieved, and the inclusion in the Australian Traineeship Scheme of both occupation-specific courses to address immediate skill needs and courses offering broader-based training. (a) Action to address this need was initiated late in 1986. The Industry Training Committee organised an information session on the hospitality industry for all ACT and Queanbeyan Careers Co-ordinators in November 1986. This session was well attended by Schools Authority, Tourist Bureau and Departmental personnel. (b) Three classes in Dining Room Service are to be offered in 1987 to Hawker College students as an introduction to the hospitality industry. The ACT Schools Authority is to provide staff hours with other costs for technical staff, linen and foodstuffs costing $3,000 per annum. In addition the Canberra Tourist Bureau is sponsoring a Young Achievers Company through tourism education foci at Dickson and Copland Colleges. (c) The Aboriginal Trainee Tourist Officer Program has been piloted through the Canberra Tourist Bureau. The Program, which provides comprehensive training in all aspects of the tourist industry for young Aboriginal and Islander participants commenced on 3 November 1986. (d) The ACT has also contributed $20,000 towards a national tourism education campaign through the Tourist Ministers' Council. (e) The Department of Employment and Industrial Relations provides a number of resources for use by ACT schools. As part of national policy the Commonwealth Employment Service Schools Program utilises CES Youth Officers, the Careers Reference Centre, and industry-specific information resources including two videos covering Tourism and Careers In Food, and additional written and audio-visual information on fifteen to twenty hospitality careers. (f) The objectives of the Australian Traineeship System are to provide relevant and accredited training to young people which will extend their employment prospects within industry. A prerequisite to receive Commonwealth assistance is that a traineeship offer both occupationally-specific and broad-based industry training. (g) Two industry Working Groups cover the tourism/hospitality industry in the ACT. Both are tripartite sub-committees of the Industry Training Committee. The capacity of industry to develop and implement new traineeships is promoted and reviewed in an ongoing manner. Current relevant traineeships are Hospitality (Waiting) and Office Procedures (Front Office/Reception). Both comply with ATS objectives. The first intake into the Hospitality (Waiting) Traineeship occurred in 1986 and currently nineteen trainees are in place. Further intakes are planned for 1987 and thereafter. The first intake into Front Office/Reception took place in February 1987 with six trainees. (h) Further developments are expected in 1987 dependent upon industries' capacity to absorb trainees and deliver quality training. The Australian Traineeship System will remain the highest priority of the Department of Employment and Industrial Relations during 1987. Recommendation 12 The Committee recommends the provision of one-off funding by the Department of Employment and Industrial Relations for Industry Training Committee courses offered under the Adult Training Program in the ACT over the next 18 months. (a) This recommendation was implemented in 1986/87. The Department of Employment and Industrial Relations negotiated to contract the Industry Training Committee to develop and deliver a series of short training courses utilising Adult Training Program funding during 1986/87. Further negotiation to cover 1987/88 is being undertaken. (b) During 1986/87 the following courses were negotiated and funded: Housepersons* August/September 1986 Kitchenhand October 1986 Houseperson November 1986 Kitchenhand January 1987 Houseperson February 1987 Kitchenhand April 1987 Laundryworker/ Cleaner May 1987 Kitchenhand June 1987 (*separate agreement) (c) As a consequence of the Inquiry a package agreement for $76,055 was negotiated with the Industry Training Committee to conduct seven courses for a minimum of 75 trainees. Total cost to the Department of Employment and Industrial Relations excluding advertising and CES resources was $101,468 (including trainee allowances). (d) Current indications are that a similar agreement with the ITC for 1987/88 will include eight courses for 85 trainees at an estimated cost of $79,000. Resources are expected to be available from existing/projected budget allocations. (e) CES services are used to identify participants from the Adult Training Program target group and to place successful participants within industry. (f) Over 90% of those completing training have been placed. (g) The ACT Office of the Department of Employment and Industrial Relations rates this as its highest priority for utilising Adult Training Program Funds. ACT personnel have contacted new enterprises to offer the full range of CES services. These include input into advertising, pre-selection/interview scheduling, training packages in the Australian Traineeship System and the Adult Training Program, vacancy distribution and the provision of appropriate resources through the Hospitality Service. Recommendation 13 The Committee recommends the introduction of a group apprenticeship in cooking. (a) The Industry Training Committee has established a steering committee comprising industry representatives, Canberra TAFE, the Liquor Union and the Department of Employment and Industrial Relations, to investigate the potential for a group apprenticeship scheme for cooks. (b) Further development and progress towards a feasible group apprentice scheme must originate from the Industry. Once a proposal is developed, the funds which have been provided by the Government for this purpose can be used. Assistance is based on the number of apprentices to be taken on, and includes gradients for growth of a scheme. Assistance ranges from $38,000 for up to 25 apprentices, to $160,000 for 200 apprentices, effective from 1 April 1987. Recommendation 14 The Committee recommends the introduction of pre-employment courses by Canberra College of TAFE in 1987 as part of a revised course structure. (a) An assistant cooks course could be implemented by the second semester 1987 subject to the successful adaptation of existing interstate curricula to ACT requirements. A twelve-month development phase would be necessary in the development of a new curriculum. (b) Such a course could probably accommodate 24 students in two groups per year. (c) The Government would encourage the development of such an initiative by industry in response to its own needs. Recommendation 15 It further recommends that pre-employment courses not be restricted to the trade of cooking but offered for all hospitality industry trades. (a) Formal pre-employment courses within other trades will be supported if industry perceives the need. The Government would encourage the development of courses with recognised accreditation. Recommendation 16 The Committee recommends that existing arrangements for the use of revenue generated by commercial operations at Canberra College of TAFE be reviewed to determine whether greater flexibility could be achieved. (a) I have referred this matter to my colleague the Minister for Education. (b) The Office of ACT Further Education will undertake the recommended review in mid-1987 in consultation with the Department of Finance. (c) One possibility which the Review should consider is the establishment of a Canberra TAFE College Trust Account. This would provide the flexibility to channel any profits from leisure courses into vocational training, and thereby reduce the burden on the ACT territorial account. Recommendation 17 The Committee recommends that the Industry Training Committee continue to monitor the industry's longer term employment and training needs. (a) The Government rates the continuation of this monitoring service as extremely important. As part of its charter the Industry Training Committee provides relevant labour market information to the Government through the Department of Employment and Industrial Relations. Information is used to develop and implement Department of Employment and Industrial Relations programs and services as appropriate. (b) In addition, the ACT Development Board will monitor vocational training needs in the ACT and will work closely with the Industry Training Committee on this matter. Recommendation 18 The Committee recommends variation of awards covering apprentice cooks in the ACT to provide an apprentice/tradesperson ratio of 1:3 or part thereof (ie 1:1 or 1:2) and to give the ACT Apprenticeship Board the discretion to vary that ratio in cases where it sees fit, so that awards reflect current industry needs and practices. (a) Although both the Government and the Federated Liquor and Allied Industries Employees' Union support the variation of awards to modify apprentice/tradesperson ratios to more accurately reflect the needs of industry, early resolution of this matter is unlikely, due to the alignment of this issue with that of the introduction of a 38-hour week, which has yet to be resolved before the Conciliation and Arbitration Commission. (b) I have asked my colleague the Minister for Employment and Industrial Relations to address this recommendation as a matter of priority. Recommendation 19 The Committee recommends that junior rates of pay be applied only to permanent employees and that the nature of job training be specified in any arrangement for the introduction of a junior rate. (a) The Government shares the Committee's concern that juniors not be exploited as a source of cheap labour for employers. (b) I have asked the Minister for Employment and Industrial Relations to give his early consideration to this issue. Recommendation 20 The Committee also recommends the waiving of payroll tax on juniors, as a further incentive to employers to employ and train juniors. (a) Although the Government supports the development of incentives to employers to train and employ junior staff, the waiving of payroll tax on juniors is not supported. (b) The removal of payroll tax on juniors would presently provide an unfair bonus to the ACT employment sector and encourage other employee groups to seek similar exemptions. This would erode the ACT taxation base. Taxation exemption represents a `hidden subsidy', which is contrary to the Government's view that all forms of assistance to particular groups should be readily identifiable by the wider community. Recommendation 21 The Committee recommends the introduction of provisions for permanent part-time employment into ACT hospitality awards. It is anxious to ensure that such provisions facilitate the employment of permanent part-time employees and advocates that the relevant provisions of Public Service awards be examined as a possible model. (a) The Government supports this reform in the interests of a flexible industry, and I have asked the Minister for Employment and Industrial Relations to give his early consideration to this issue. The proposed reforms are consistent with those in the Australian Public Service which have the support of unions. Recommendation 22 The Committee recommends that the Department of Territories give urgent attention to the need to restructure the worker's compensation system in the ACT. (a) The Department of Territories is currently devoting resources to bring ACT support mechanisms into line with incentives available in other States and Territories by late 1987. (b) The Department has engaged a consultant to advise on policy options for changes to the ACT Workers Compensation Scheme. A report from the consultant is due by mid-1987. (c) In regard to all first-year apprentices and Australian Traineeship Scheme participants, the Department of Employment and Industrial Relations and the Department of Territories have jointly examined the creation of employer rebates (or exemptions) from workers compensation and payroll tax. Changes impacting on these groups will be implemented in the near future. The following Bills were returned from the Senate without amendment or requests. National Health Amendment Bill 1987 Sugar Cane Levy Bill 1987 Sugar Cane Levy Collection Bill 1987 Olympic Insignia Protection Bill 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 of Australia respectfully showeth: That we consider the 2% discounting of Commonwealth Occupational Superannuation Scheme pensions adjustments on 10 October 1986 to be a serious breach of trust by the Government. The Commonwealth has reneged on an established commitment as incorporated in Commonwealth legislation and benefit promise pensions are not being paid in full. In particular we resent the long-term effect of the discounting. The pension loss is compounded throughout the life of a pensioner and surviving dependants-into the 21st Century for many. We consider this Government-induced penalty to be out of all proportion to the short term ``extraordinary circumstances of the economy'' given as the reason of the discounting. Your petitioners therefore humbly pray that the Government. 1. limit the pension discounting effect of the Superannuation and Other Benefits Legislation Amendment Act 1986 to the period 10 October 1986 to 1 July 1987 so that pensions are restored to the 9 October 1986 level as a base for the 1987 pension adjustment; and 2. consult with organisations representing pensioners before changing the terms and conditions of Commonwealth Occupational Superannuation Schemes. And your petitioners, as in duty bound, will ever pray. by Mr Aldred,Mr Cobb,Mr Free,Mr Langmore,Mr Moore,Mr Peter Morris,Mr Peacock,Mr Reith and Mr Uren. 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 Ms Jakobsen,Mr Kent,Mr Milton and Mr Scott. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth that: Any proposals to abolish the Department of Veterans' Affairs gravely concern ex-servicemen, ex-servicewomen and their families because they renege on clear and unequivocal commitments from various Commonwealth Governments to properly care for Australia's veterans. Your petitioners humbly pray that the House of Representatives in Parliament assembled, urge the Parliament to: Ensure that the Department of Veterans' Affairs continues to exist as a separate and distinct Department of State servicing the needs of veterans and their families. And your petitioners as in duty bound will ever pray. by Mr Cadman,Mr Nehl and Mr Ruddock. 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 show restraint with equity. In particular, the decision to defer the November pension adjustments has resulted in a loss of $25.62 for a single pensioner and $21.36 for each married pensioner. The prospect of a further deferral of the May adjustment will result in the loss of another $35.10 for a single pensioner and $29.10 for each married pensioner. When your are scrimping to make ends meet, as is the case with many pensioners, you can't afford such a cut in living standards. Pensioners are looking for a new deal from politicians-more of the same is not good enough! Your petitioners request an immediate return to payment of May and November C.P.I. increases, and as is duty bound will ever pray the Government grant this request now. by Mr Ian Cameron,Mr Keogh and Mr Millar. To the Honourable the Speaker and Members of the House of Representatives assembled in Parliament. The petition of the undersigned citizens of Australia showeth: That many Australian wage and salary earners and self-employed persons do not enjoy secure retirement incomes provided by superannuation; and That the Government issued in December 1985 Guidelines for the implementation of the proposed productivity decision by the Conciliation and Arbitration Commission and draft Operational Standards for Superannuation schemes. Your petitioners therefore humbly pray that the Government: 1. Guarantees to every employee the right and freedom to select the superannuation scheme of his/her choice. 2. Protects the individual exercising that freedom of choice from any coercion, influence or other pressure which may be applied by any employer, association or trade union. 3. Will recognise only those schemes which provide genuine superannuation and reject those schemes which do not provide for- preservation of benefits to retirement vesting of employer contributions on a reasonable sliding scale equal employer and employee Trusteeship control to ensure security of investments. And your petitioners, as in duty bound, will ever pray. by Mr Cadman and Mr Rocher. To the Honourable the Speaker and Members of the House of Representatives assembled: The humble petition of the undersigned citizens of Australia respectfully showeth: That we strenuously object to the proposal that many Post Office agencies are to be closed. They provide a network of offices with postal and agency services to residential areas and small communities. They serve a community need and we would be seriously inconvenienced if forced to travel further to purchase postal items or collect parcels. It would be an unnecessary expense particularly for pensioners without their own transport. We maintain that the purpose of Post Offices should be to serve the public for the variety of services they offer. They are a community centre particularly in country areas and if necessary they should be subsidised to retain them. Your petitioners therefore humbly pray that the House should take all possible steps to prevent the closure of Post Office agencies and that the network should be extended, with the Agency services they offer expanded. And your petitioners, as in duty bound, will ever pray. by Mr Cadman and Mr Rocher. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble Petition of the undersigned citizens of Australia respectfully showeth that: Any proposal to establish memorials to peace, the so-called Aboriginal War and anti-war activists and other left wing causes at the Australian War Memorial at Canberra would desecrate the Memorial as a fitting and solemn monument to those who served in Australia's Armed Forces and to those who died in defence of their country. Your petitioners humbly pray that the House of Representatives acts to prevent anything which would desecrate the nation's memorial to Australia's former servicemen and women and war dead. And your petitioners, as in duty bound, will ever pray. by Mr Ewen Cameron and Mr Nehl. To the Honourable the Speaker and Members of the House of Representatives assembled, we the undersigned citizens call upon all Members to pay due respect to pensioners and concessional card holders and cease the constant erosion of our entitlements by the Hawke Government. The humble petition of the undersigned showeth: That we strenuously object to the Government's decision to delete 45 commonly prescribed drugs (including analgesics, anti-histamines, cough mixtures and expectorants) from the Pharmaceutical Benefits Scheme; That we strenuously object to the Health Minister's assertion that the health problems for which these medications are prescribed (e.g. arthritis and allergic rhinitis) are ``relatively minor, self-limiting illnesses''. That we beg the House to reconsider these deletions from the Pharmaceutical Benefits Scheme. And your petitioners, as in duty bound, will ever pray. by Dr Harry Edwards and Mr Wilson. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. This Petition of the undersigned citizens of Australia respectfully showeth that: 1. The introduction of an administrative charge for annual enrolment will restrict access to higher education for a range of disadvantaged groups, particularly women, rural dwellers and some low income earners. 2. Students will be deterred from study because of the probable escalation in the charge in future Budgets, prohibiting students' ability to plan the long term costs of their education. 3. The introduction of an administrative charge is contrary to the education provisions of the ALP/ACTU Accord and ALP policy which states that the party `will maintain the provision of free tertiary education'. Your petitioners therefore pray that the legislation providing for the annual administrative charge for higher education students be repealed. And your petitioners, as in duty bound, will ever pray. by Mr Baldwin. To the Honourable the Speaker and Members of the House of Representatives assembled in Parliament. We the undersigned small business people and supporters wish to draw attention to and protest against recent tax changes and the horrific administrative burdens which will be placed upon small businesses by these changes. We request that Fringe Benefits Tax, Capital Gains Tax, Dividend Imputation, Negative gearing, Foreign tax credits, and Substantiation legislation be immediately repealed. We also request that the proposed legislation yet to be tabled in Parliament in respect of self assessment be discontinued. To make up the shortfall in revenue as a result of these requests, the promised personal tax cuts should be deferred until such time as they can be funded by pruning government expenditure. Unless the above action is taken immediately the private sector of the economy will contract and Australia will be further down the road to becoming a banana republic. by Mr Beale. 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: 1. That over 67,000 men, women and students enjoy the pursuit of their sport and recreation every year at the Anzac Rifle Range at Malabar and have done so since 1967. 2. The people of Sydney through their membership of 41 clubs headquartered at the Anzac Rifle Range together with a number of other community, school and commercial groups, the police and armed forces will lose this community facility if the Federal Government proceeds to sell the Range to private developers. 3. The Australian Bicentenary Fullbore Rifle Championships are to be conducted at the Anzac Rifle Range in April 1988 as part of the celebration of Australia's Bicentenary. Your petitioners therefore urge the House of Representatives and the Government of the Commonwealth to retain the Anzac Rifle Range for the continued use and enjoyment of the people of Australia. And your petitioners, as in duty bound, will ever pray. by Mr Cadman. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia showeth: That Labor's capital gains tax, fringe benefits tax, tax on lump sum superannuation and assets test are an unwarranted burden on the people of Australia, have contributed to the national economic crisis and the anomalies in the legislation are causing confusion and anger amongst all sections of the Australian community. Your petitioners therefore humbly pray that the House of Representatives in Parliament assembled should immediately seek the repeal of Labor's Assets Test, Labor's Capital Gains Tax, Labor's Fringe Benefits Tax and Labor's tax on lump sum superannuation. And your petitioners, as in duty bound, will ever pray. by Mr Cadman. To the Speaker and the Members of the House of Representatives in the Parliament assembled. The petition of certain citizens respectfully showeth that: The Hawke Labor Government's ID Card proposal is the most far reaching and intrusive piece of Australian legislation yet introduced, and that on all the evidence available, it will not tackle in the most cost-efficient and effective manner tax and social security fraud. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, urge the Government to: Reject Labor's ID Card proposal to prevent a gross waste of taxpayer's money and a significant infringement of civil liberties. And your petitioners as in duty bound will ever pray. by Mr Cadman. To the Honourable the Speaker and Members of the House of Representatives. The petition of the undersigned respectfully showeth that the Fringe Benefits Tax is an iniquitous and unjust impost which will further damage the Australian economy and further increase costs to employers. The Tax will: (1) further increase the level of unemployment; (2) increase the administrative costs and overheads for business and Government; (3) particularly disadvantage small businesses and farmers; and (4) act as a disincentive to those who are the most productive and skilled; and we the undersigned call upon the Government to immediately repeal the Fringe Benefits Tax. And your petitioners, as in duty bound, will ever pray. by Mr Cadman. To the Honourable the Speaker and members of the House of Representatives in the Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth that: The fringe benefits tax will cause hardship to business throughout Australia, especially in the already severely-depressed rural sector and in the motor vehicle industry. The fringe benefits tax will be a disincentive to employment and worse, will result in additional unemployment. The economy of this country would best be served by policies that lightened the tax burden, not increased it, that encouraged enterprise, not stifled it and stimulated growth, development and jobs, not prevented it. Your petitioners therefore pray that the House will repeal this Legislation and your petitioners, as in duty bound, will ever pray. by Mr Rocher. To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. The humble petition of certain citizens of Australia respectfully showeth: That, as a consequence of the Hawke Government's decision to introduce a two dollar coin in 1988. Whereas the introduction of a one dollar coin was only a twofold increase in the maximum value of coinage, the elimination of the two dollar note represents a five-fold increase before a note can be used. It will have taken eighteen years from decimalisation to go from the fifty cent piece as the highest value coin to a one dollar coin, but only a further four years to replace the two dollar note with a coin. The lowest value paper note will be five dollars, forcing a dramatic increase in the weight of coinage carried and dislocation of the retail industry. Many people, particularly the elderly, will mistake the value of the coin for that of another lower value coin just as many now confuse a one dollar coin with the ten cent piece. That the addition of two new coins in four years creates the biggest number of coins in circulation at any time in Australia's history and will lead to the removal of the one cent and two cent coins; this will accelerate the cost of living, particularly the cost of food where numerous items are involved and future price rises would need to be five cent increases on every item on every occasion. Your petitioners therefore humbly pray that the proposed two dollar coin not be proceeded with by the Hawke Government, and no future Government proceed with this proposal for several years. And your petitioners, as in duty bound, will ever pray. by Mr Donald Cameron. To the Honourable the Speaker and the honourable members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia showeth that whereas: They are completely satisfied with the design of the existing Australian National Flag. Your petitioners therefore pray that your honourable House will: Give a speedy passage to the Flags Act Amendment Bill which provides that the Australian National Flag can only be changed by a Referendum. And your petitioners as in duty bound will ever pray. by Mr Ewen Cameron. To the Honourable Speaker and members of the House of Representatives in Parliament assembled. The petition of the undersigned showeth we the undersigned oppose the proposed closure of the Australian National Railways store at Parkston in Western Australia on the grounds that this would cause hardship to local residents. And your petitioners as in duty bound will ever pray. by Mr Campbell. To the Speaker and members of the House of Representatives. The petition of the undersigned do respectfully showeth that pornographic material relating to children is deleterious to the health and welfare of children and society as a whole. We respectfully urge the Government to ban all child pornography from entering or from being produced in Australia. And your petitioners in duty-bound will ever pray. by Ms Fatin. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That in the light of the Labor Government's failure to act to correct the many anomalies in the Assets Test on pensions brought to its notice, the Labor Government's legislation should be repealed before it has an unduly unfair impact on pensioners. Your petitioners therefore humbly pray that the House of Representatives in Parliament assembled should immediately seek the repeal of the Labor Government's iniquitous and unfair Assets Test. And your petitioners, as in duty bound, will ever pray. by Mr Hawker. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. This petition of the undersigned citizens of Australia respectfully showeth that we strongly oppose the introduction of the `Australia Card' or any other form of National Identification Numbering System. We believe that the introduction of a national Identification Numbering System is not only totally unnecessary but is a severe threat to our civil liberties and privacy. We condemn the Government's actions on this matter, particularly as no reasonable nor responsible justification for the proposal has been forthcoming from the Government. We humbly pray that the House of Representatives, in Parliament assembled, should reject any proposal for a National Identification Numbering System. by Mr Kent. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled: This Petition of the undersigned citizens of Australia respectfully showeth that- (1) A cessation of the testing of nuclear weapons would break the cycle of research, development and deployment of nuclear weapons and prevent the acquisition of new and ever more lethal weapons of mass destruction. It would thus be a major and significant step towards ending the arms race and beginning the disarmament process; and (2) The Soviet Union has extended its unilateral moratorium on nuclear weapons testing until August 6 this year and has again invited the United States to cease its nuclear testing program. Your petitioners therefore urge the Australian Government to put the strongest pressure on the United States Government to join the Soviet Union's nuclear test ban. And your petitioners, as in duty bound, will ever pray. by Mr Kent. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The 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 United States Government to impose economic or other sanctions on New Zealand in retaliation for their stand on nuclear vessels. We further urge the Australian Government to urgently implement its policy to promote the development of zones of peace and nuclear free zones in the Indian and Pacific Oceans. by Mr Kent. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of certain electors of Australia respectfully showeth: That the North Coast section of the Pacific Highway, from a point just south of Port Macquarie and just north of Woolgoolga, is in urgent need of major road improvement works in order to bring it up to road safety standards. Your petitioners therefore humbly pray that: The Federal Government immediately divert national highway funds or make available other funds towards the improvement of this section of the Pacific Highway. And your petitioners, as in duty bound, will humbly pray. by Mr Nehl. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia showeth. The costs of raising children are rising and the value of government provided economic assistance to families is declining. Families raising children are providing a vital function to society and are deserving of government provided economic assistance. Your petitioners therefore urge the House of Representatives and the Government of the Commonwealth of Australia to: 1. Restore family allowance payments to their 1976 real money value. 2. Provide for the regular and automatic indexation of family allowance payments. 3. Increase the value of the Dependent Spouse Rebate to $1851 per annum, and convert it to a cash payment given directly to the non-income earning spouse. 4. Amend the Family Income Supplement Scheme so that its value is increased, its eligibility provisions widened and its withdrawal provisions eased. And your petitioners, as in duty bound, will ever pray. by Mr Rocher. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Richmond electorate respectfully showeth that: 1. We the undersigned are totally opposed to the introduction of a $2.00 fee on prescription drugs for pensioners; 2. 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 humbly pray that the House of Representatives, in Parliament assembled, urge the Government 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 Blunt. 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: Labor's Capital Gains Tax is standing in the way of economic development on the Far North Coast, a region with great potential for further growth and renowned for the enterprise and initiative of its local community. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, urge the Government to: Repeal its anti-business anti-farming and anti-individual Capital Gains Tax. And your petitioners as in duty bound will ever pray. by Mr Blunt. 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 Cadman. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of Mortlake showeth concern for current and future funding for road construction in south west Victoria. Your petitioners therefore pray that- The Commonwealth Government increase the moneys allocated to the Victorian State Government for road funding, so as to allow adequate funding for the construction and maintenance of roads within south west Victoria. And your petitioners, as in duty bound, will ever pray. by Mr Hawker. Petitions received. Mr DEPUTY SPEAKER(Mr Leo McLeay) -Madam Speaker has received a letter from the honourable member for Fadden (Mr Jull) proposing that a definite matter of public importance be submitted to the House for discussion, namely: The failure of the Hawke Government to address the real concerns of families in Australia. 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 JULL(Fadden)(3.15) —The family unit has always been regarded as being the very basis of Australian society. Indeed we on this side of the House have always regarded the family unit as being the most important part of any policy package that we have ever put together. Australia is all about families, and I think that it is appropriate that today we bring on this matter of public importance, following the performance of this Government not only in this House during the past week but indeed over the last 12 months. Most honourable members on this side of the House have been horrified at the attitude that has been taken this week by the Prime Minister (Mr Hawke) and a number of his Ministers in terms of questions that the Opposition has raised about the situation of Australian families. That has been added to by last night's economic statement by the Treasurer (Mr Keating). It provided absolutely nothing at all to support families in Australia. I refer to some of the measures announced in the statement. Dole payments for 16- and 17-year-olds has been ditched; it has been replaced with a job search allowance, of $25 per week. Assets tests for unemployment and sickness benefits have been brought in. Income testing has been brought in on family allowances. There has been an abolition of Commonwealth employment programs. Hospital service benefits available to private patients have been cut from 85 per cent to 75 per cent. Further, already we are hearing about higher postal and Telecom charges as a result of the sales tax and Customs exemption tax. In one case those charges have been announced already today. While many of us on this side of the House applaud some of those moves, no counter whatsoever has been provided in terms of making life a little more palatable for ordinary Australians. In fact, throughout the economic statement there was no positive discrimination in favour of families whatsoever. However, the Government did manage to put together $5m to ensure that it could get the landscaping of the new Parliament House in order. But there was not one mention of families at all. During Question Time today we heard quite brazen responses from the Prime Minister in terms of what this side of the House would do to support families. He did not acknowledge once that Australian families are so much worse off now under his Administration than they have ever been in the past. I suppose that one of the highlights of Question Time today concerns the whole situation pertaining to interest rates, and I want to dedicate part of my speech today to that topic. Despite all the posturing that we have heard from honourable members opposite, it is interesting to read the comments made by the financial commentators who have been analysing last night's economic statement. The economic commentators are saying that, at the very best, we can expect to look forward to a one per cent-at the very most, 1 1/2 per cent-reduction in interest rates. Unfortunately, this move is far too late for many Australian families who have been suffering now for so many years. For weeks and weeks the Prime Minister and his Ministers have refused to answer questions concerning the real needs of Australian families. This was particularly so last Monday when time after time the Prime Minister launched into tirades against us when we questioned his Government's so-called economic achievements, and we heard dorothy dix questions that achieved absolutely nothing. But the human factor involved was not mentioned once, especially in relation to home ownership. One good thing that came out of the proceedings of this House last Monday was that at least a couple of the major Australian newspapers started to pick up the plight of the ordinary Australian who is trying to buy his own home. It is certainly appropriate for me to refer in particular to an editorial in one of the newspapers, as that editorial really hits the nail on the head. While the Prime Minister does not like the criticism, I think that he should hear this once again, as indeed should every member of this House and everyone around Australia who is listening. This is really what the situation is all about. I refer to the editorial in the Daily Telegraph, from Sydney, on Tuesday 12 May 1987. Headed `Hawke ignores the burden of interest rates', it states: Prime Minister Bob Hawke appears to have forgotten that there are two sides to the economy. There is the technical side: the world of figures, theories and policies. And there is the human side: the real world, where people have to cope with-among other things-the conditions imposed by those who control the technicalities. Mr Hawke ignored the real world yesterday when he defended the Government's record on interest rates. Indeed, he went further by saying he would not apologise for his Government's high interest rates policy. Mr Hawke's defence was provoked by a survey showing that average home loan repayments last year were $124 a month higher than in 1985. The survey figures probably overstate the present situation. Banks are no longer rationing housing funds so tightly and new buyers are less likely to have to top up loans with costly second mortgages. But the facts remain that housing interest rates are very high, that homes are expensive and that paying for the basic requirement of housing is heartbreaking for all but the rich. Mr Hawke ignored this and concentrated on the technicalities. He referred to `the economic crisis imposed from outside on this country'-and, in fact, some of the blame can be placed there. But his statement in Parliament had the hallmarks of a knee-jerk reaction to what he saw as criticism. Mr Hawke may merely have been parading his tough-guy credentials before tomorrow's mini-budget. But perhaps he has simply forgotten what it's like outside Canberra. It has been a long time since Mr Hawke had to worry about paying off a mortgage. And it's showing. That must be the most truthful editorial that could be written and I am sure that honourable members on this side of the House congratulate the Daily Telegraph for at last telling it like it really is. Today the Minister for Housing and Construction (Mr West) came into the House and told us all the good news about the amount of money that will be lent out for housing. But the point is that there are thousands and thousands of Australians out in the real world who will have no benefit from that and who are really suffering. We have to look at what the real story is for families trying to get into or even to maintain a home. Frankly, the answer is hopeless. As we have heard time and again, the interest rate situation is out of control. We have the lowest number of rental vacancies ever. The latest figures show that in Sydney only six in every 1,000 rental properties are now available. This will get worse because more and more people are just walking out and leaving their homes. I believe that my electorate of Fadden is fairly typical of dozens of electorates around Australia. It is known as one of those sandbelt areas where young people are trying to establish their families and set up their first home. The tragedy is that in my area people are walking out. They are just closing the doors of their homes, never to return, because they cannot maintain the repayments which have increased as a result of the high interest rate regime of this Government. The sad thing is that those people will never again own their own home. That situation is reflected right around Australia. What happens to those people? They go to government and ask for support. What is happening in the public housing sector? There are problems with waiting lists. In June 1986 there were 157,000 people waiting for public housing. Government members may say that it is all the fault of the previous Liberal Government. But what was the position when we went out of office? The answer is that only 124,000 people were on the waiting list. What is the situation with private dwellings? In just 12 months rents have increased by 10.2 per cent. We have heard all these great things about negative gearing and the capital gains tax. The plain fact is that nobody is building homes for those people to rent. This week I did a survey of builders in my electorate. The situation is very sad. The project builders have certainly been the hardest hit; they have virtually gone out of business. The provision of low cost homes for people to buy has come to a screaming halt. It is the lower end of the market that has been hit. Housing start approvals in south-east Queensland in the last 12 months are down by 25 per cent. On top of this, and in spite of the fact that we hear that Government members are the greatest economic managers in the world, the cost of building materials in Australia has gone up by about 9 per cent in the last 12 months. In my electorate, as in so many electorates right across Australia, the real estate industry tells me that land sales have come to a virtual halt. Neither existing nor new houses are selling. The only sales being reported are those in the upper price bracket-homes of $100,000 or more. This has been the case for the last 12 months. The builders say that to stay in business they have to cut their costs to an absolute minimum. They say that, yes, plenty of people are coming and asking for quotes but that these days nobody seems to have the capacity to be able to get up and go ahead with a quote. The staff of so many of these building companies are taking compulsory leave. At Sunnybank in my electorate there is a Housing Industry Association display-home village. Twelve months ago 18 builders were represented in that display-home village. Now there are seven; 11 of those builders have gone out of business; they were small businessmen. Let us turn to the money situation. We heard again today about how so much money is to be made available for housing. I took the opportunity to ring bank managers and building society managers in my electorate. They all agree that there is plenty of money available. But today they have said that even the latest government initiatives are not inspiring too much confidence. Very few inquiries for loans are being made. Single income earners who are earning less than $50,000 per year have very little hope of being able to afford a loan, especially if a wife and two children are involved. Both partners must be working; the two jobs are definitely needed if couples want the prospect of being able to buy a home. In many cases the managers report that wives have to take a second job so that there are in fact three incomes coming into a family. One bank manager made the point that the Tupperware organisation has never had it so good because so many wives are forced to go into direct door to door selling in order to try to get together enough money to make ends meet. Perhaps I should not tell honourable members this, but that same bank manager said that one woman was in such a desperate situation that she was going from door to door selling lingerie and sex aids in order to make enough money to meet her family's housing repayments. That is a sad reflection on the current situation. The managers also report that even a small increase of about half a per cent in the interest rate means that more and more people are in trouble. The bank managers in my electorate cannot remember when things were so bad. Indeed, one bank manager said he really cannot remember when he last granted a housing loan to a newly married couple. But we must never forget that at the last election the home mortgage rate was 11.5 per cent and that now it is sitting at 15.5 per cent. We must never forget that on a loan of $50,000 over 25 years the repayments have increased by $152 per month since the last election. This shows the compassion being shown by this Labor Government. What has the Government done in terms of family assistance? In dollar terms, the answer is nothing. The family allowance remains unchanged despite the fact that consumer prices have risen by 35 per cent. In real terms the family allowance has now declined by 25 per cent. The dependent spouse rebate is unchanged at $1,030. There was no mention of that in last night's economic statement. At least when the Liberals were in government, they doubled that dependent spouse rebate. In money terms a single income family with two children now needs $11 a week more just to get back to the situation they were in in March 1983. In terms of tax reform, the fact is that single income families will be paying more tax after 1 July than they were under the previous Liberal Government. Families on average weekly earnings-now at $495 a week-will be $15 worse off than they were on average weekly earnings in March 1983. Even the low income earners are being hit. Those earning 75 per cent of average weekly earnings are paying $3 per week more. Someone earning as little as $185 per week will still be $4 a week worse off under Mr Keating's tax reform. The average tax rate for people on average weekly earnings or less now sits at 24.5 per cent whereas in March 1983 it was 17.5 per cent. Today we have heard about the fringe benefits tax. The real point about the fringe benefits tax is that it is probably the little man who has been hit harder than the wealthy people in our community as a result of the fringe benefits tax. The unemployment position is still bad. What has been happening? In 1984 and 1985 many small businessmen went to the wall. So many of the average families of Australia were headed by small businessmen. Last year we had the highest level of bankruptcy. The figure was 6,408 and it will be higher this year as there have been 6,187 in the first nine months of the year. The plain facts are that this Labor Government has forgotten the average Australian and has forgotten the need to support the family unit. It has brought about a situation in which families are breaking up in every electorate in Australia and yet it shows no compassion. There is no real financial help. People are worse off and there is only one solution: At the next election, whenever it may be-we hear it may be sooner rather than later-the families of Australia will unite to scrub this Government out of existence and to bring back the sound economic policies of the Liberals which will discriminate in favour of the Australian family, the most important unit, the very foundation of Australian society. Mr DEPUTY SPEAKER(Mr Rocher) —Order! The honourable member's time has expired. Mr TICKNER(Hughes)(3.30) —When this matter of public importance was called on today, 36 members of the Liberal and National parties stood in unity in a call for it to be discussed. That is as close as those honourable members will ever come to unity on important political questions before this Parliament. If we put them to the test to debate this issue we would find not an Opposition speaking with one voice but an Opposition speaking with three, four or more voices. Not only is the Opposition bitterly divided between the parties; the most bitter divisions are within the Opposition parties themselves. It is Liberal member against Liberal member and National Party member pitted against National Party member in a struggle for supremacy of ideas. It is an Opposition which is brutally factionalised and one which the Australian people will not trust with government in this country. Above all else, the concern of Australian families is for stability and leadership in government. That is something they can never get from an Opposition whose members are so deeply divided among themselves. It is a tragedy that some of the more compassionate and caring members of the Liberal Party have been relegated to the back bench and replaced by members who are, by their own acknowledgment, little more than spokesmen for extremist groups outside the Parliament. They are literally the voice of the New Right in the Australian Parliament. The tragedy is that the political agenda in this country and in the conservative parties is not being shaped by Liberal Party ideology, it is being shaped by forces outside the Parliament and outside the Liberal Party. Mr Deputy Speaker, if you doubt my views on the subject, there are many examples of prominent Liberals who are ready to speak publicly about this takeover of the Liberal Party and its threat to Australian families because they are concerned about what is happening to their own party. When the honourable member for Goldstein (Mr Macphee) was interviewed on Four Corners, he made a very forthright statement of concern when he was asked about the New Right and its representation on the Opposition front bench. He said: They're well represented, yes, with sympathetic people at least on the front bench and some quite dogmatic people. But outside the party they are now well organised and are exerting considerable influence on the agenda within the party. It's the very situation that Menzies fought many years ago. He was determined, in fact, to stop that happening . . . Mr Reith —What has this got to do with the matter of public importance? Mr TICKNER —The honourable member for Flinders asks what that has to do with the concerns of Australian families. It has everything to do with the quality of government and the future direction of our country which, first and foremost, is the concern of Australian families. The divided Opposition is unable to meet those concerns. Mr Reith —Tell us about interest rates. Mr TICKNER —The honourable member continues to interject. He has raised a question which I will deal with in the course of my remarks. It seems to me that when we are discussing the concerns of Australian families, we are focusing on two important questions: Firstly, we must look to the standard of living of Australian families and, secondly, we must consider the quality of life of Australians. That issue was totally neglected in the contribution of the honourable member for Fadden (Mr Jull). New South Wales has a Labor Government whose political philosophy and strategy is a return to basics-the basic concerns of families. The Hawke Labor Government also shares those concerns. The concerns are about employment, housing, education, health and social welfare-the basic things that go to make up the quality of life and the standard of living of Australian families. The Opposition is remarkably silent on the issue of employment. When Labor came to office, the dole queues had swollen to 254,000 in a single year and the unemployment rate had hit 10 per cent. Under Labor, in the four years since April 1983, some 780,000 new jobs have been created-roughly twice the number that were created during the seven years of the previous Government. Importantly, the opportunity for women to participate in the work force, and more fully in the community at large, has been greatly enhanced by Labor's child care policies. Those policies and commitments were reaffirmed in the statement made by the Treasurer (Mr Keating) last night. The honourable member for Fadden raised the issue of housing. The Opposition is on rather difficult ground because every single group in the community that is concerned about housing lines up on our side of politics, supporting the re-election of the Hawke Labor Government and opposing the Opposition's policies. The honourable member for Fadden had the audacity to express his concern about public housing. The brutal reality is that the public housing queues were caused by the cutbacks of the Fraser Government. Under this Government there has been a 42 per cent increase in funds available for public housing. One would think that the Opposition would have some support from the housing industry itself. However, the Prime Minister (Mr Hawke) has put on the record on a number of occasions in recent weeks the fact that the National Executive Director of the Housing Industry Association, speaking for the industry and its 16,000 members, wrote personally to him congratulating the Government on its housing assistance package. The letter states: Not only will the new housing assistance package help to revitalise housing prospects, but of no less importance it will enable the States to alleviate housing-related poverty within our country. On the issue of housing the Opposition, once again, is able to beat the drum of rhetoric, but all the experts and all those who are concerned to do something about housing are convinced that this Government's policies are setting Australia on the right track. A further basic issue that should be addressed is that of education. Under this Government, 46 per cent of children are staying at school until Year 12 compared with just 36 per cent when we came to office. Funding for government and non-government schools increased by an average of 4.5 per cent in real terms during Labor's first three years in office. Further real increases for schools have been guaranteed for an eight-year period from 1985. That is an example of this Government's forward planning in the education area. Also, the Government has created 36,800 extra places in universities and colleges of advanced education since its election and has contributed almost $300m a year to State-run colleges of technical and further education. Health is another basic issue for Australian families. Before this Government came to office, nearly 2 million Australians and their families who previously had no health insurance cover have received coverage under Medicare. In these very difficult times, the Government has a commendable record on social security. The Opposition and the honourable member for Fadden talk about compassion. The problem is that the honourable member for Fadden does not speak for the Opposition. Those who do speak for the Opposition are the ones who are acknowledged by their own prominent party members to have abandoned compassion, which was once the hallmark of the Liberal Party. Mr Reith —Ha! Mr TICKNER —The honourable member snickers. Perhaps he should read the statements made by Senator Puplick on the Four Corners program on 4 May when he and other prominent small `1' Liberals made their coming-out debut. In that interview Senator Puplick was asked this question by Mr Olle: Is there a single word, if you had to, that sums up what's lacking in the current approach in the Liberal Party? I mean, is it courage? Is it compassion? Is it sophistication? Senator Puplick replied, without a moment's hesitation, `I think it's compassion'. He is right, and I have great respect for his integrity. Of course, the tragedy is that the hard line extremists on the front bench do not share the concern and compassion that that tiny minority of small `1' Liberals do share, but that group has been exiled to the back bench and has no effective say in Liberal Party policy, which is now dictated by those extreme forces of the New Right outside the Liberal Party and the Parliament itself. On the issue of pensions, again this Government has a commendable record. When the Whitlam Government left office, the pension was 24.7 per cent of average weekly earnings. Under the conservatives the pension fell to 22.7 per cent. Under this Government this pension stood at 24 per cent of average weekly earnings in the December quarter of 1986. Labor has addressed the situation by increasing pensions in real terms by 5.7 per cent. A number of us in the Government are well known for our absolute dedication to defending the interests of pensioners. My colleague the honourable member for Bendigo (Mr Brumby) is one of those members who, as I do, go to the barricades to look after the pensioners. I have received a letter from the Prime Minister only today which acknowledges the contribution that I and others, such as the member for Bendigo, have made in protecting pensioners. The Prime Minister, in his letter, says that he wants particularly to commend me for my persistent and uncompromising representations on behalf of the pensioners in Hughes. The senior citizens in the community know that this Government will not desert them. They have no confidence in the policies of the Opposition, and that fact will be reflected at the next election. Another important issue concerning pensioners, Australian families and, in fact, all Australians, is the question of prices. In this area, a deep chasm separates government policy from opposition policy, because the Opposition is on record as being committed to dismantling the only effective means that the Commonwealth has to try to control prices-the Prices Surveillance Authority. The Opposition wants to leave it to the open market-place, to have open slather. Australian families will be forced to bear the brunt of the massive price increases that will affect them at the same time as they suffer the wage freeze proposed by the Leader of the Opposition (Mr Howard). In the area of taxation reform, the Opposition stands condemned. If there is one area in which the Government has really intervened to protect Australian families, it has been the area of taxation, where we have tried to stamp out the rorts, which were tolerated, fostered and encouraged by the Opposition in government, and we have introduced for the first time in Australia a fair and just taxation system. There are other areas which are not commonly thought of as basic but which go to make up the quality of life of Australian families and Australians generally. We do not hear much from the Opposition about its policy on issues affecting quality of life. We hear a lot from the members of the Waste Watch Committee, who attack many areas of government expenditure, such as funding for the arts and funding for scientific research, but we do not see any Opposition policy on such issues, because it does not have a credible policy in this area. We hear little from the Opposition about environment policy. The former spokesman for the Opposition on the environment, Senator Collard, has the same policy as the current spokesman for the environment, the honourable member for Mayo (Mr Downer), and their policy is to leave the matter to the State-leave it to Joh. They say that land use decisions are a matter for the States. That policy is simply to turn back the clock and to abandon the Fraser Government's commitment to protect Fraser Island; to flood the Franklin River; and to leave the Barrier Reef to Sir Joh Bjelke-Petersen. Another issue of concern to Australian families and Australians generally is what will happen to government departments under the Liberals, who are committed to smashing and destroying a range of departments. The Department of Veterans' Affairs is on the chopping block. When the Leader of the Opposition met the National President of the Returned Services League, the Leader refused even to give a commitment that the Liberals would not abolish that vital portfolio. Let there be no mistake: At the next election there will be a clear choice, and I believe people will support the Australian Labor Party. Mr DEPUTY SPEAKER(Mr Millar) —Order! The honourable member's time has expired. The discussion is concluded. Mr BRUMBY(Bendigo) —I present the eighteenth report of the Publications Committee, sitting in conference with the Publications Committee of the Senate. I understand that copies of the report have been circulated to honourable members in the chamber. Report-by leave-adopted. Mr BLANCHARD(Moore) —On behalf of the Standing Committee on Aboriginal Affairs, I present the report of the Committee entitled `Return to Country: The Aboriginal Homelands Movement in Australia', together with the minutes of proceedings and evidence received by the Committee. Ordered that the report be printed. Mr BLANCHARD —by leave-This report is about one of the most significant features of Aboriginal affairs in the last 15 years, the movement of Aboriginal people to homeland centres or outstations. In my tabling speech I will not attempt to summarise the report but instead highlight the most important aspects of the movement, the approaches which governments should take in relation to the movement and some of the wider implications of the movement for policy in Aboriginal affairs. The Committee found a strong desire on the part of many Aboriginal people living in remote Australia to return to areas of spiritual and economic significance to them and settle on a relatively permanent basis in their homeland areas. The movement is very much an Aboriginal initiative, as Aboriginal people seek to establish more autonomous and satisfying lives for themselves in their homeland areas. The movement also reflects the tremendous dissatisfaction with life in the former settlements, reserves and missions into which Aboriginal people were encouraged to move from early in the twentieth century to as recently as the mid-1960s. These artificially created communities had great social problems which Aboriginal people have sought to overcome by moving to homeland centres. As a result of the strong Aboriginal desire to return to homeland centres which the Committee has identified, the Committee sees a long term future for the homelands movement. In some areas, homeland centres have now been established for as long as 15 years and show a great degree of permanency. In other areas, however, the homelands movement is just getting under way and it can be expected that in the next 10 to 15 years homeland centres in some of these areas will develop. In the Committee's view, homeland centres, with their associated resource centres, will form the most important residential pattern for Aboriginal people in remote areas and will provide Aboriginal people generally with a more satisfactory life than was available in the central communities. To date government at all levels has not responded in a sufficiently positive way to support the homelands movement. There are a number of reasons for this. The funding of the homelands movement has been seen by governments to be very costly. Governments have also tended to see other areas of Aboriginal funding as being of greater priority. In particular, the Committee would point to the continuing priority which many governments accord to funding the central communities despite the continuing social problems which exist in these communities. The lack of funding to the homelands movement has also been a result of the desire of governments not to be overly intrusive in their support for the homelands movement in recognition of the degree of autonomy which Aboriginal people have sought in moving to homeland centres. The Committee considers that a more positive response from governments to the homelands movement is required. The Committee considers that the funding of the movement should not be enormously expensive and when the tremendous social and other benefits which will flow from the movement are taken into account the funding of homeland centres should be seen as a valuable long term investment. The Committee considers that the funding of homeland centres should be seen as a priority area because of the extent to which the movement reflects Aboriginal initiative. The Committee is concerned that the allocation of priority to other areas, particularly the funding of major communities, may tend to reflect policies which in some senses are outdated and discredited. It is also the Committee's view that the provision of facilities and services to homeland centres, if done in a way which accords with the needs of homelands people, will not be intrusive. Inevitably, the Committee considers that support for the homelands movement is going to mean increased expenditure for both Commonwealth and State and Northern Territory governments. The Committee considers that an appropriate division of responsibility for the funding of the homelands movement is for the Commonwealth Government to assume largely a seeding role in relation to the movement while State and Northern Territory governments should be responsible for the basic facilities and services which they provide to all their citizens. The role of the Commonwealth Government, then, should include initial establishment funding for new homeland centres, the funding of out-station resource organisations and the funding of special programs which will provide greater economic independence for homeland communities. Special Commonwealth funding could also be provided in particularly expensive areas of service provision in education and health areas. The Committee is strongly of the view that State and Northern Territory governments should be funding the provision of water supply and reticulation, roads and airstrips, housing and shelter and education and health services in homeland centres. These are basic responsibilities of the State and Northern Territory governments. The Committee sees no reason why Aboriginal people living in homeland centres should not receive an equitable share of State funding for these basic facilities and services. Within this overall approach which governments should be taking in the policy and funding support of homeland centres the Committee has identified the following priority areas: There are a number of homeland groups without secure tenure over the land on which they are living or on which they wish to live, and priority must be given to obtaining secure tenure for these groups. This is a particular concern in relation to a number of groups seeking excisions from non-Aboriginal owned pastoral properties in Western Australia and the Northern Territory. The Committee considers that the motivations for these groups wishing to establish themselves on pastoral properties are similar to the motivations of other Aboriginal people returning to their homeland areas and that these groups should be considered as part of the homeland movement. Security of tenure over land is essential if facilities and services are to be provided to excision communities. The Committee has also given emphasis to measures which will improve the environmental health conditions on homeland centres. These include the provision of adequate quantities of good quality water to all homeland centres, the provision of housing and shelter which meets the needs of homeland communities, and the provision of ablution facilities and sewerage disposal systems. These are areas which should largely be funded by the State and Northern Territory governments. The movement of people to homeland centres also offers the opportunity for them to achieve a greater degree of economic independence and self-reliance which is not available to people in the major communities. The extensive land base which is available to many homeland communities has enabled homelands people to tap traditional subsistence resources and engage in a range of other projects which contribute to their well-being. The autonomy of homeland communities has also placed them in a position to make decisions about their future economic situation and to assert a substantial degree of economic independence. The Committee considers that this economic independence and self-reliance needs to be encouraged and supported and has made a number of recommendations to provide this support. The Commonwealth Government has an important role in this area. Education and health services also need to be extended to homeland communities to a much greater extent than is currently the case, but it is essential that these services accord with the desires of homeland communities and are largely controlled by the communities. They should not become imposed services unrelated to Aboriginal needs. The experience of this inquiry has been a gratifying one for Committee members. The homelands movement is a demonstration of the desire of Aboriginal people to take control of their future and an indication to governments of Aboriginal priorities. The Committee sees it as essential for governments to respond to the priorities which Aboriginal people have shown by providing strong support for the homelands movement. Finally, I would like to thank my fellow Committee members, the Deputy Chairman- the honourable member for Bradfield, (Mr Connolly)-the honourable member for Maranoa (Mr Ian Cameron), the honourable member for Kalgoorlie (Mr Campbell), the honourable member for Leichhardt (Mr Gayler), the honourable member for Melbourne (Mr Hand) and the honourable member for Lowe (Mr Maher), for their co-operation and assistance and support during the inquiry. I would also like to express my thanks to the staff of the Committee who assisted during the inquiry. I am glad to see them in the chamber. I thank the Secretary of the Committee, Mr David Elder, whose enthusiasm and dedication greatly assisted the Committee in its work. The Research Officer, Mr Bert Penders, and the Steno-secretary, Mrs Mollie Cranswick, also deserve our thanks. I make particular reference to the Committee's first Aboriginal secondee, Ms Andrea Collins, who worked with the Committee on this reference. Ms Collins's personal attributes ensured that her appointment was a great success and the Committee will be seeking to appoint Aboriginal secondees to work on its future inquiries. The Committee also thanks Mr Ron Morony of the Department of Aboriginal Affairs, who was attached to the Committee for a three-month period. It gives me great pleasure to commend the report to the House. Mr CONNOLLY(Bradfield) —by leave-I join with the Chairman of the Standing Committee on Aboriginal Affairs and thank him for his kind remarks about members of the Committee and the staff, with which I totally concur. I also support the observations that he has made. This is a very important report. It is the first time that this Parliament, to the best of my knowledge, has recognised, in a report form, the significance of the homelands movement among what are principally Central Australian Aboriginal communities. One must remember that we are talking not about urban Aborigines, or even fringe dwelling Aborigines, but Aboriginal communities which are, to a very large degree, either remaining in what can best be described as their traditional environments and following their own traditional lifestyle, or communities which, through no fault of their own, as a result of decisions taken by governments in the past, have been moved from their traditional lands-allegedly to provide ser- vices, by State and Federal governments. The need to move relatively small communities out of a desert-type environment so that they could be better administered and controlled was in accordance with policies which were based on the belief that Aborigines had to be assimilated at all costs. The majority of Australians now accept the fact that assimilation was not a successful program. Whereas the long-term objective should be to integrate, insofar as that is possible, Aboriginal Australians into the mainstream-if I may use that term-of the Australian community, nevertheless they have the right to determine the lifestyle that they wish to follow. The majority of Australians living in the metropolitan suburbs of Sydney, Melbourne and other cities, find it difficult to understand and appreciate the lifestyle, traditions, culture and the very physical environment in which other members of the Australian community live. That is something absolutely alien to the experience of most people, and it is often difficult to explain the difficulties and the expectations of the Aboriginal community living in that environment. We hoped that our report would analyse, in a systematic manner, the major issues facing those people, in the hope that it would become a resource document that could be used by other Australians, wherever they may be, to understand better the implications and the difficulties that we all face in coming to terms with what can only be described as a fundamental conflict of perception. We are not talking about the noble savage; we are not talking about black English men or black Australians-in the sense that the nineteenth century colonist would have referred to many indians, for example-we are talking about a great and noble culture that has survived over many thousands of years, despite the extraordinary activities of some of our forebears to wipe it out. Mr Hand —Forty thousand years, actually. Mr CONNOLLY —Yes, 40,000 years, as my colleague on the Committee, the honourable member for Melbourne (Mr Hand), points out. The significant point is that whereas in the areas of major white settlement in Australia there are no longer any traditional Aboriginal communities in the accepted sense of the term, that is not the position in Cape York, most of the Northern Territory, the north western tip of Western Australia and the desert areas of South Australia. Those communities were allowed to remain more or less intact for the very simple reason that they had no economic resources that anybody else wanted. Whether people want to admit that or not, that happens to be the message of history that I think we all need to understand. It is, therefore, in that environment that those communities could have been allowed to remain indefinitely, had it not been for the decisions of previous governments not to allow them to do so. For better or worse, they had to be brought together and into contact with the superior culture of the European race and they had to be assimilated. Now, perhaps, we have learned the lack of wisdom of our earlier decisions and are trying to develop programs under which Aboriginal Australians, especially those within a traditional or semi-traditional environment, are to be given at least the right, insofar as it is possible in a multicultural society, to self-determination and to achieve a degree of autonomy. Mistakes were made but people and governments were trying to do the right thing, while not necessarily succeeding in that objective. We tried to give them autonomy, without properly appreciating what that should mean. What is worse, we tended to try to force upon their cultural systems our sense of values and what we regard as the normal impedimenta of a modern society. When we visit the parts of Australia where those people still live, we find a whole generation of people of an age probably equivalent to most members of this Parliament, and it is difficult to understand that very few of them can read or write English. They can understand their own dialect, and many can understand three or four dialects, but they were never taught to read or write English. Yet we are attempting to introduce cultural systems in the form of health services, local government services and the whole range of government programs, which are fundamentally in conflict with the traditions and the understanding of that very ancient society. I make that point because, with all the good will in the world, we will not be able successfully to overcome the very serious problems that many of those communities face, in that the level of education, by our standards, is deplorable, that the housing conditions in which many of them live is equally deplorable, and that the standards of health are a disgrace to Australia-as they are. If we compare them with any fourth world community in most parts of the world, the statistics for Aboriginal health are among the world's worst. Therefore, on the one hand we have a culture that regards itself as being civilised, as being among the world's leaders, with a standard of living that we regard-or did until relatively recently-as being among the world's best, and yet side by side with that we have this incredible combination of the first world and the fourth world. It appalls me how few Australians seem really to understand that these serious problems of deprivation are not in Bangladesh, the Sahelen parts of Africa, West Africa, but are here in our own country. Those who continually call for greater expenditure on foreign aid, for example, allegedly to overcome the problems of other peoples, would do themselves and this nation a greater favour if they put some of their resources into trying to understand better the genuine and real problems being faced by their fellow Australians not so far away. It is important to note that, as a result of lands right policies throughout Australia, 12 per cent of this nation is now Aboriginal land. In the Northern Territory, the figure is over 30 per cent, and if current claims are accepted it will be about 50 per cent in the foreseeable future. We are, therefore, dealing with a significant amount of land, although the percentage of our total population living there is very small indeed. Probably, between 60,000 and 80,000 people are the subject of this report. Nevertheless, those people are members of the Australian community in the wider sense of the term and are entitled to expect access to a standard of living and conditions at least comparable with those that most Australians simply take for granted. It is precisely because of that that the Liberal Party's Aboriginal policy is based on the fundamental premise of equality of opportunity for all Australians, insofar as it is possible to achieve that given geographic and other problems. The result is important in that it demonstrates the current shambles in the provision of basic services, where both Commonwealth and State governments are often trying to outdo each other in the same area. For example, in South Australia we met a senior officer of the Department of Aboriginal Affairs, whose responsibility is for the Pitjantjatjara homelands in the north of the State. For the benefit of the House, the Pitjantjatjara people were the first Aboriginal community to receive land rights in the modern context. In that community today, there is a range of social and health problems as bad as, if not worse than, anywhere else in the world. I am not suggesting that there is a connection between the two; what I am saying is that land rights by itself is not the answer to some of the fundamental problems that those people face. What that senior officer told us was that that small community, which I understand has about 1,800 to 2,000 people, has every month more than 2,000 visitors from various government agencies, both Federal and State-doctors, medical personnel technicians coming to fix things; name it and they get it-2,000 visitors a month for a community of about 1,800 people spread in small groups throughout that vast area. Many Aboriginals say to themselves, when they see the constant flow of visitors: `What are we getting for all of this? White Australians complain that too much money is being spent on our development. We know that the figure is some $5 billion. It is about $2,000 per head per annum, on a per capita basis. But it does not seem to help those most in need'. A conflict has been allowed to develop in our society over the allegation that 1.4 per cent of the population is getting more than what is perceived to be its fair share. That is a matter of the greatest concern to me and to the Opposition. The reality is that many Aboriginal people, the subject of this report are the most deprived Australians in this country. It is grotesque that they should be held responsible for the maladministration of programs by this Parliament and by State parliaments which have resulted in them being blamed and not us. We determine these policies, we apply these programs and we have to accept responsibility for their success or failure. Our report referred to about 588 homeland centres. They are growing at a substantial rate, as more tribal groups break away from the mixed communities in which generations have been forced to live because our policies so dictated in the past. They brought friction among tribes who are as different as the French and the Germans. Anyone who has studied European history would agree that for so long there were no more antagonistic and more different races than the French and the Germans. The old Australia, before we came here, was made up of thousands of tribes with different languages, subtle differences of culture and clearly defined land boundaries. With our superior knowledge we forced them to live together and wondered why the experiment was a disaster. The homeland movement today is the response. Aborigines are saying: `We now have a title to this land, given to us by the parliaments of the States or the Commonwealth, and we want to go and live on our traditional land'. That is a response which every Australian should be able to accept. The problem we are facing is: What level or services are these people entitled to have? This Parliament would appreciate, as the members of the Committee would appreciate, that if people live in the desert they will not have the same standard of services as those provided in a suburb of a main city of Australia. No one is disputing that. What we are saying in this report is that there are minimum standards of health, education, welfare et cetera which we must strive to attain, to meet reasonable expectations. At the same time, we must ensure that the outstation resource organisations, which are on the ground and under some control by these traditional communities, through their normal tribal elder systems and so forth, will be able to provide these services. However, we are concerned that the standard of, essentially, white people who are working in these communities leaves much to be desired. That is why one of our recommendations is that we should improve standards of education and training so that Aboriginal communities will have the opportunity to say: `We are taking people among us, to work with us; people we can trust and relate to, who at least understand the basis of anthropology, who have had some opportunities to learn the dialects which our people speak, people who have some empathy with what we are trying to achieve for ourselves in our own cultural environment.' Regrettably, because we have not had this standard in the past and because salary scales are remarkably low, considering the very real social and economic difficulties in which people have to live and the sheer problem of distance, we have not attracted the type of people we need for those essential services. We need to go further than we have. We need to re-examine what we did in Papua New Guinea, where we had excellent support services. Patrol officers were trained in Sydney. They had the same standards and were under the same basic discipline. They were able to go out and work with the tribal communities of Papua New Guinea. It amazes me that, having learned the lessons from Papua New Guinea, we did our best to ignore them when faced with similar problems in our own Aboriginal communities. Many things can be said about this report. We believe that its contents are important. It refers to the arts and crafts industry and the need to give Aboriginal communities greater economic self-sufficiency because, ultimately, economic development and financial independence are essential elements if we seriously seek greater autonomy and self-determination. Mr HAND(Melbourne) —by leave-I shall not take too much of the time of the House because I understand that the Whip and the Leader of the House (Mr Young) both have their monitors on and are likely to come into the chamber and suggest that I stop fairly quickly. I have been a member of the House of Representatives Standing Committee on Aboriginal Affairs since I have been a member of this place. It is one of the better jobs one gets to do. I say that because of the worthwhile work the Committee has been involved in in the time I have been a member. I pay special tribute to the new Chairman of the Committee, the honourable member for Moore (Mr Blanchard), and to the other Committee members, from all the political parties, who have worked so tirelessly to bring forward this report. The Minister for Aboriginal Affairs (Mr Holding) also needs to be commended for bringing foward this term of reference to the Committee because as the previous speaker, the shadow Minister for Aboriginal Affairs and honourable member for Bradfield (Mr Connolly), and the Chairman have said, Aborigines are probably one of the most deprived groups of people in the world. The shadow Minister referred to them as the `Fourth World'. I think he is probably right. He also talked about our understanding of the problems of Aborigines as a community. The fact is that the Australian community does not understand the problems these people currently face. The Committee identified 588 homeland centre communities throughout Australia with a total population of 9,500 people. That is not a lot of people, but they are spread over-Here comes the Leader of the House. I always get nervous when I see the Leader of the House, like the Opposition does. Mr Spender —He is a very kindly old fellow. Mr HAND —I am going to keep talking for a few moments, because I think it is my right, and defy even the Manager of Opposition Business, who is now interjecting. The point I am trying to make is that simple things white Australians take for granted, such as water, electricity, shelter, health and education-all the services-are not always available to these people. As one Committee member said to me recently when we were visiting one of these communities: `It would do well for every member, of both Houses, to serve on this Committee for a short period of their time in this place. They would then begin to have a better appreciation of the sorts of problems this Committee addresses in its work.' We visited a community at Nyirripi where we saw an example of mismanagement. A very expensive school was dumped on concrete bricks in the sand. The next night along came a dust storm. The whole school became unusable and was put out of action before anybody even got into it. We saw the children attending the school sitting in the sand. Of the 23 children belonging to the junior class at the school, 19 had chronic trachoma. The reason they had trachoma to that degree was that there was no water. The report talks in some detail about water. In the communities we visited where water was available, health had improved, living standards generally had improved and the people were able to provide the necessary services to ensure that their children's health improved greatly. It is interesting-I cannot understand why no one in the Department of Aboriginal Affairs has done so-to read about farming practices in a nation such as Israel, which has dry farming and water reticulation methods down to a fine art. We visited communities in the middle of the desert where people were growing oranges and vegetables effectively because somebody had provided water and a bore for them to do so. The health of those communities had improved dramatically. It became obvious to me that lack of water was the most important problem these people had to grapple with. I guarantee that not many people in our society appreciate the harshness of those areas and the problems these people face as they try to grapple with the society we are trying to inflict upon them and as they desperately try to hang on to their wonderful culture. They are caught between the two cultures. This Government currently is discussing the question of land tenure and excisions-in line with certain recommendations-with the pastoralists and the Northern Territory Government. I wish the Minister and the Government well in those deliberations. I look forward to an end to the conflict that has been raging on the question of excisions and stock routes and I hope that those matters are settled very quickly. The previous speaker spoke about the work of the Committee and how we all worked together to produce the report. Like the immigration issue, this is an issue on which we once had a bipartisan approach. I make the plea yet again that we return to a bipartisan approach, not for our good and not for the good of people in the broader community necessarily, but for the good of the Aboriginal people, particularly those who are living in these difficult situations, so that together we can explain to the community at large the sort of costs the honourable member for Bradfield talked about in his address and why they need to be met to maintain a very sparse existence, and how costly it is to provide those very minimal services. I plead with the Opposition to follow the lead of the Liberal Party members on the Committee in taking a bipartisan approach. In conclusion, I place on record my thanks to the members of the secretariat. In particular, I thank David Elder, who is the Secretary of the Committee, and his staff. I thank Bert, who is leaving us and going to greener pastures. I like to think that he has been demoted, because we consider this Committee to be pretty important. I also thank Andrea Collins, who was seconded from the Aboriginal Development Commission to the Committee. I accept the recommendation of the Chairman that she be seconded again. She contributed no end to the work of the Committee. I congratulate the Chairman. I again plead with the Opposition to support the Government in its attempts to implement the recommendations of this Committee in a bipartisan way. When the legislation is introduced here, I would like to think that the words uttered by the shadow Minister for Aboriginal Affairs-which I believe were sincere-will be supported by his Party when he supports the recommendations contained in this report. Mr IAN CAMERON(Maranoa) —by leave-I have very much pleasure in supporting the report of the Standing Committee on Aboriginal Affairs which has been tabled in the House today. I thank the Chairman of the Committee, the honourable member for Moore (Mr Blanchard), for his sterling efforts in continuing on with the enormous amount of work that has been involved in visiting so many Aboriginal communities. The House must understand that we have been not only to many communities but also to many of the outstations, which has involved even more and harder travel than one normally expects when visiting Aboriginal townships. We really have been to the outer edge of civilisation in this country. One place we visited was Yaga Yaga, which is about 30 miles south of Balgo and which was put well and truly on the map recently when, unfortunately, two boys perished. We were probably within 20 miles of the spot where those boys died. It is very sad for their families that that happened. We visited a group of Aborigines on the outstation of Yaga Yaga who seemed to be reasonably contented. Unfortunately, like all of us, they have not reached the point where they have everything they want or might need. Overall, there is more to be done in order to help these people. I support the remarks of the honourable member for Melbourne (Mr Hand) about the need for water supplies. We saw different types of experimental buildings which have been erected for Aborigines on outstations. I particularly remember buildings in the Kimberleys. There is still a great need for us to help these people to get some sort of shelter over their heads if they wish to live in these isolated spots. I do not necessarily believe that we should encourage everybody to leave the communities, because if they do we will have to set up similar facilities in the outstations as well as in the communities. I think that one of the worst problems the Aboriginal communities have is that of petrol sniffing. It is very bad in Central Australia. There are hundreds of young Aboriginal children who are not attending school and are wandering around their communities in some sort of stupor. Some of them are dying, and it is a very sad reflection on us and the part we are attempting to play in bringing these communities to some sort of settled understanding of the way in which they wish to live. We have an enormous task ahead of us in wiping out that problem. The Committee has received a brief from the Minister for Aboriginal Affairs (Mr Holding) to establish another inquiry into the problems that Aborigines have with the law in our more closely settled communities. Goondiwindi, in my electorate, has been notorious of late because of the happenings there. The social problems of these people obviously are much more exaggerated than our own. We have to continue to attempt to rectify these problems. We will never reach a perfect situation. Those of us on the Committee are genuine in our desire to bring about some change in order to help many of these people. I refer now to land tenure. Obviously, if permanent buildings are to be established on these places, the Aborigines themselves should have some understanding about the sort of land tenure they desire to have. We believe in straight-out freehold-the same as for anybody else. I imagine the same applies to the veto on mining. I believe that the Australian Labor Party has come to a better understanding, particularly in the Northern Territory, where this House controls mining. It is moving the veto from the point of mining to the point of exploration. That is an improvement. Mr Hand —In agreement with the Aborigines, too. Mr IAN CAMERON —That is true. It does not go far enough. I do not believe that they should have any veto. We will start to rectify some of the social problems of these communities when we start to treat them as Australians, as equals. Again, I thank the Committee staff and others who have helped. The honourable member for Melbourne mentioned those people. I would also like to thank very much the Hansard girls who travelled with us under very rugged conditions. I would particularly like to thank Bairbre, Marilyn and Julie, who spent many hours with us in the desert taking notes of our long-winded remarks and the many interviews-- Mr Hand —Your long-winded speeches. Mr IAN CAMERON —Yes, my long-winded remarks and questioning. Chats with Aborigines are not always easy to interpret, but they have done an excellent job in recording those discussions that took place in the desert and the inland and also here in Parliament House. Motion (by Mr Young) proposed: That the House, at its rising, adjourn until Tuesday, 26 May, 1987, at 2 p.m. unless Madam Speaker fixes an alternative day or hour of meeting. Mr SPENDER(North Sydney)(4.31) —Madam Deputy Speaker, we agree to the motion, but in agreeing to it I would like to go back to one issue of great importance in this House, and that is the conduct of Question Time. We have recently had a report by the House of Representatives Standing Committee on Procedure; the Leader of the House (Mr Young) will have read it and he will know what it is all about. That report points out that there is a clear trend over the years in the number of questions that are being answered, and that trend is downward, from 19.3 questions in 45 minutes in 1976 to 12 in 1985. When we come back here, of course, the central exercise in this Parliament will be the conduct of Question Time. We have said again and again that we wish Question Time to operate more effectively and more in accordance with Standing Orders. The Speaker has pointed out that she has difficulties in her view of Standing Orders in enforcing relevance on Ministers. Time and time again questions are asked here, as the Minister well knows, and answers are given which have nothing to do with the questions, even though the Standing Orders say that the answers shall be relevant. In Question Time in the Canadian Parliament they are able to get through about 38 to 42 questions without notice in a 45-minute Question Time. Yesterday we got through nine in just about one hour or so-- Mr Young —And 15 points of order. Mr SPENDER —And very few points of order. Mr Young —Five on one question. Mr SPENDER —And today we got through 13. The Minister has said before: `If you did not raise so many points of order, we would answer more questions'. He knows that is nonsense and he knows that the reason why points of order are raised is to try to bring members of the Government back to the question. Madam DEPUTY SPEAKER(Mrs Darling) -Order! I point out to the honourable member for North Sydney that I have given him some traditional flexibility, but we are not meant to be debating any particular question other than `That the House, at its rising, adjourn until Tuesday, 26 May'. Mr SPENDER —Yes, Madam Speaker, I entirely agree. What I say to the Minister is this: When he comes back here he could use his good offices, if he wishes to, to try to get the Ministers on the front bench to answer questions, because the Australian people would like to hear the answers. Madam DEPUTY SPEAKER —The honourable member for North Sydney is out of order. Mr SPENDER —Madam Deputy Speaker, the motion is that the House adjourn to a certain time. On the adjournment we will be debating many issues, and one of the things we are going to have to do here is to come back and ask questions. Therefore, on this motion that the House do now adjourn, which is a general motion, I am entitled to raise this kind of issue-and no objection has been taken by the Minister at the table to its being raised. Madam DEPUTY SPEAKER —No, I have just been drawing the attention of the honourable member for North Sydney to the factor of the motion we are debating and requiring him to speak to that motion and not to make it a wide-ranging debate on Question Time and other matters. Mr SPENDER —Very well, Madam Deputy Speaker, it will be brief, and I will just say it again. Question Time has been abused and debased. It happens day in and day out. The Minister has said-and I think that he genuinely means it-that he would like to see Question Time operate better. We will have to continue to raise points of order so long as Ministers deliberately flout not just the spirit of the Standing Orders but the Standing Orders themselves. Mr Hand —I raise a point of order, Madam Deputy Speaker. You have repeatedly asked the shadow spokesperson to get back to the point. He is wasting the time of the Parliament. We are waiting to pass legislation that will affect Australia, and he is going on about an issue that has nothing to do with the matter before the House. Madam DEPUTY SPEAKER —The honourable member for Melbourne has delivered his point of order. I uphold the fact that it was not relevant, but I call the honourable member for North Sydney and ask him to terminate his remarks. Mr SPENDER —The last thing that I would therefore say, Madam Deputy Speaker, is that I believe the Minister has a genuine interest in the way in which this House works. I believe he has a genuine feeling for parliament as an institution. He is a very experienced member of this House, and he is very experienced in the conduct of Question Time. Therefore, I would ask him when we come back here-because he intends when we come back, as part of the business, to bring back the Government's response to the recommendations of the House of Representatives Standing Committee on Procedure-to bring forward proposals which will make Question Time in this House work as it was intended to work and as it should work and not as it presently does, which is a debasement of parliamentary procedure. Mr YOUNG(Port Adelaide-Leader of the House)(4.36) —in reply-Madam Deputy Spea- ker, we have reached a unique precedent here that every time I move a simple motion about the conduct of the sittings, the honourable member for North Sydney (Mr Spender), who has been elevated to the position of Manager of Opposition Business, decides to make a speech. Every time he decides to make a speech, I am going to make one for a little longer, until he gets sick of doing it. Today he raises the matter of Question Time, how many questions are being asked and what has happened in the Parliament. This week I celebrate 13 years in this Parliament. I was here under the Whitlam Government; I was here under the Fraser Government; and I have been here as a member of the Hawke Government. This by far is the best government of those three, not only in its policies in dealing with the problems Australia has had, but in the conduct of this Parliament. For the seven years under the Fraser Government, when the honourable member for North Sydney did not have the opportunity of sitting here, it was run like a butcher's yard. Malcolm Fraser ran this Parliament like a butcher's yard. The honourable member for North Sydney talks about precedents and the number of questions. Let me tell him about a few other things that used to happen under the Fraser-Howard Government. The convention of two hours' notice for Ministers to make statements and to hand the statements over to the Opposition was not carried out under the Fraser Government. All the conventions of Parliament were just ripped up under the Fraser Government, and the honourable member for North Sydney says, `Forget about all that; what about Question Time?' Let me tell him about Question Time. Mr Spender —You know as well as I do that it is the most important part of the proceedings. Mr YOUNG —Let me tell my dear colleague from North Sydney about Question Time. Last night we had one of the most important statements ever brought into this Parliament-$4 billion worth of cuts right across the board. The State governments are affected, as is the sales of assets, and the welfare area. The whole thing was there for members of the Opposition at half-past seven last night. They could not sustain Question Time today on that statement. They had seven questions, and they could not get seven questions out of the mini-Budget. That gives some idea of the depth of intellect that sits opposite. What is the good of giving them Question Time? They could not get seven questions out of the mini-Budget. One could have brought a five-year-old kid in here from the electorate of the honourable member for Melbourne (Mr Hand) and he could have found seven questions to ask. We have this amalgam of the greatest talent, John Howard tells us, that he has available to him-22 of them sitting over there-and they could not get up seven questions to ask about the statement brought down by the Treasurer (Mr Keating) last night. Talk about brilliance! John Valder told us yesterday that someone said the front bench is not representative, and he said: `There are 22 people there; it has got to be representative'. I had never thought of that; the logic of that had escaped me, and I am sure it has escaped the honourable member for Goldstein (Mr Macphee), the honourable member for Higgins (Mr Shipton) and the honourable member for Kooyong (Mr Peacock), because they have had a few words to say about how representative the front bench is. But John Valder tells us that if there are 22 members, it has got to be representative. Next time we go on to our group meetings-Gerry's and ours and some of the others-we are going to say, `Listen, we have misunderstood how politics operates in this country. Instead of getting together to get some sort of collective view about what is best, we have only got to take one person's point of view'. John Howard has done that, backed up by Valder. But they could not do it, with all those brains, all this intellect! They sat there last night going through the papers, each of the shadow Ministers putting out his Press statement, and they could not think of seven questions to ask on the mini-Budget. What a display of brilliance-the most brilliant parliamentary Opposition we have seen for a long time! We had to ask the questions on our side to get the information out. The honourable member for North Sydney, who is a Queen's Counsel, and who costs $5,000 a day to go and see, sat there last night going through it, and he has been here all day, but we never saw him on his feet-although he keeps taking points of order, because someone has given him the book of the Standing Orders and he thinks it is terrific. For example, he points out to Madam Speaker that a certain standing order stipulates that one's comments must be relevant. The honourable member says that every day, so he has that up there in his head, but unfortunately he cannot put a question in there with it because there is not enough room. He is unable to concentrate on Standing Orders as well as think of a question to ask. Today we had the disgraceful exhibition of the Opposition, having been given all the ammunition, as they call it, and having had the opportunity to watch all the interviews, to listen to the Prime Minister (Mr Hawke) and the Treasurer, as well as other Ministers being put under the hammer last night, involving radio, television and newspapers, being unable to think of seven questions to ask about the mini-Budget. Opposition members had been through it all; all the journalists had put their views forward; and we even give them newspapers free of charge, so that they can think up some questions. The honourable member for North Sydney says that we are not being fair. Well, perhaps we should have a Question Time on football or volleyball, or something so that honourable members opposite can think of seven questions to ask. It certainly does not substantiate the Opposition's claims for a better go at Question Time when members opposite cannot even think up seven questions to ask on one of the most important statements ever brought into this House. The honourable member for North Sydney raised the matter of the Standing Committee on Procedure report. I have told the honourable member that before the House rises there will be a debate in the House on many of those matters involved. All these questions can be resolved. I have also told the honourable member that it is the intent of the Government that the Opposition should have the opportunity to ask no less than seven questions. That is, if the 45 minutes that is allocated for Question Time can proceed normally, or a little longer, we will have no less than seven questions from the Opposition. But members opposite are not content with that. The honourable member for North Sydney has to put himself on display every day. Yesterday he took five points of order on one question, and then he goes crook that the 20 busiest people in Australia-the Ministers of the Government-cannot sit here for another hour and listen to him take points of order. The honourable member for North Sydney has never been a Minister, and the way he is going he will never crack it, so he might be surprised to learn that immediately after Question Time there are people in our offices waiting to see us about matters pertaining to the running of the country, and they think that that takes priority over our listening to the honourable member take points of order in the House. We will have to continue with that sort of procedure but, notwithstanding, honourable members opposite will get a fair go during Question Time if the honourable member for North Sydney has sufficient patience to sit in his seat and listen to the information being given to the people. I find that people who listen to Parliament get the information from Question Time that they require. Madam DEPUTY SPEAKER(Mrs Darling) -I call the Minister to order. I point out that it is not acceptable to have people on both sides of the House calling out at each other. Mr Spender —On a point of order, Madam Speaker: I was called to order because I talked about Question Time, but Rin Tin Tin, the famous talking sheep dog, goes on about anything at all, and the Chair allows him to continue and to say anything. He should be pulled up. Madam DEPUTY SPEAKER —Order! The first point is that the honourable member for North Sydney is out of order in not referring to the Minister by his correct title. Mr Spender —I am sorry. He looks so much like Rin Tin Tin that it is an easy error to make. I withdraw. Madam DEPUTY SPEAKER —I ask the honourable member to withdraw. Mr Spender —I withdraw. Government members interjecting- Mr Spender —Calm down, fellows. I withdraw, Madam Deputy Speaker. I make the point of order that, if I am to be pulled up by the Chair-without any point of order having been taken by the Minister-because I am talking about parliamentary procedure, then when the Minister for Immigration and Ethnic Affairs engages in one of his exercises in buffoonery, which is amusing and which travels over everything that one could conceive of, it is your task to apply the same rule to him as is applied to us. That is the point. Madam DEPUTY SPEAKER —I call on the honourable member for North Sydney to sit down. He is out of order and that is the point. His point of order regarding relevancy is quite correct. The honourable member for North Sydney was given flexibility, and, because I gave him flexibility when he persisted in speaking about Question Time, I am watching very carefully, and I am extending the same flexibility to the Minister for Immigration and Ethnic Affairs in responding to the points that have been made by the honourable member for North Sydney. Mr YOUNG —It is up to the Chair to conduct the affairs of the House and I am happy to support the Chair. Madam DEPUTY SPEAKER —That is true and I call the Minister. Mr YOUNG —I do not reflect on the Chair, but the honourable member for North Sydney, in getting some parliamentary experience, will have to learn that when he says a few words and wants to be critical of the Government then the Government will defend its role and its stand. One of these days, perhaps before the honourable member is 100 years old, he might be on this side of the House and he will have all that experience behind him, and he will be able to thank me. He can get up in the House and say: `Look I want to thank Mick Young for having given me all this tutoring, free of charge, about how Parliament is conducted'. The honourable member cannot expect that I will sit here silently, like Rin Tin Tin or anyone else, and let him make his little speeches. I just want to reiterate for anyone out there in Australia who has just turned on their radio that the Liberal Party Opposition has complained about the opportunities provided for the asking of questions during Question Time but today it could not think of seven questions to ask about the mini-Budget that was brought down last night. What a terrific team of intellectuals! Why did they not ask Bruce to do it. He could have thought of seven questions. He told me last night that he had lots of questions to ask, but the front bench will not let him ask those questions. The wets cannot get a say. Mr Goodluck —On a point of order: I am not a wet. Mr YOUNG —The Leader of the Opposition says that he has this big team of dries, but when they get together, such as in the case of their policy on the television matter, there is a bit of wet in there. I reckon that if the Leader of the Opposition (Mr Howard) were an Indian they would probably call him Passing Shower or something, because he gets just a little bit damp when they talk about making decisions in there. So, the Government will continue to allocate, if there are no interruptions, a minimum of seven questions to the Opposition. Mr Spender —A minimum? Mr YOUNG —A minimum of seven questions. But if the firebrand from North Sydney, the poor man's Eddy Ward, continues to take points of order, well then, as the busy Ministers have to return to their offices to meet appointments 45 minutes after the start of Question Time or thereabouts-this applies especially to the Prime Minister-this will not be possible. If the honourable member for North Sydney co-operates with us, the Opposition will get its questions, and I hope and everyone in Australia hopes that in future there will be a lot more meat in the questions than has been the case over the past four years. Question resolved in the affirmative. Bill returned from the Senate with an amendment. Ordered that the amendment be taken into consideration in Committee of the Whole House at the next sitting. Consideration resumed from 11 May 1987. Mr YOUNG(Port Adelaide-Minister for Immigration and Ethnic Affairs)(4.49) —I move: That the Bill be now read a second time. On 1 April 1987 I presented the Government's reply to the report of the Joint Select Committee on Electoral Reform relating to the operation during the 1984 general election of the 1983-84 amendments to Commonwealth electoral legislation. The report was presented to the Speaker on 22 December 1986. The reply acknowledged the very useful report of the Committee which was so ably chaired by Senator Robert Ray. The review undertaken by the Committee followed the substantial reform measures recommended by its predecessor, which were largely implemented by this Government in 1983-84. Honourable members will recall that this Government, responding to the recommendations of the earlier Joint Select Committee on Electoral Reform, introduced the most substantial electoral reforms for many years. Those changes have generally worked well. Nevertheless the Committee's latest report has made further sound suggestions for improving our electoral system, and the report reflected a large measure of agreement among the representatives of the political parties on the Committee. The Government's response to the report indicated to honourable members the reasons for the non-acceptance of a small proportion of the recommendations. It is a measure of the Committee's work that the Government has seen fit to accept the great majority of the 156 recommendations in the report. The implementation of some of these recommendations will not require legislation. Due to the exigencies of the legislative program, legislation to give effect to the acceptable recommendations in the report will be introduced in two stages. The first stage comprises those recommendations for which legislation is essential for the effective conduct of the next general election and for improving the redistribution process. This Bill is concerned with this first package, and I will draw honourable members' attention to the key elements which amend the Electoral Act. They are intended to simplify and to speed up processes which, because of their emphasis on protection of the individual rights of electors and the integrity of elections, naturally tend to complexity and legalism. In the redistribution field they are intended to amplify the extensive opportunities already provided to the public by this and previous governments to participate in the drawing of electoral boundaries. In certain instances they are intended to close minor gaps which have been identified in the 1983 changes to the Act, while continuing to pursue the widely accepted objectives of those changes. Australia makes a considerable effort to ensure that electors who happen to be out of the country at election time still have the opportunity to vote. The Bill ensures that overseas polling officials are subject to the same penalties for neglect of duty as officials in Australia. It also extends from 10 to 13 days the period for the return of postal votes sent by electors directly to divisional returning officers. At present the Electoral Act does not bind the Crown in the right of the Commonwealth or the States. During the 1984 election distribution of material prepared by a Commonwealth department and advertisements by a State government pointed to deficiencies in the Act. Adoption of the proposed amendment will not prevent government advertising but will simply ensure that governments comply with the Act to the same extent as private citizens and corporations. In response to a number of recommendations of the Joint Select Committee in regard to the redistribution process, the Bill provides for more flexibility in the redistribution timetabling and for enhanced public participation in the redistribution process. Amendments are also proposed to remove the requirement for redistribution committees, and for subsequent augmented electoral commissions, to endeavour to achieve absolute equality of enrolment at the 3 1/2 year mark after a redistribution. In practice this has been difficult to achieve and led to what some regarded as less than ideal electoral boundaries in a few areas. The amendment will permit a 2 per cent plus or minus margin in seeking to achieve future equalities. The Bill proposes two amendments to ensure that as many eligible electors as possible may vote. The first one is to enable the divisional returning officers and the Australian Electoral Officer in each State to process claims for enrolment for any division in their respective States in the period between the public announcement of the election or the issue of the writs and the close of rolls. At present claim cards may be processed only by the divisional returning officer for the division concerned, which can cause delays in the period immediately prior to the close of the roll. There is also an amendment to repeal the requirement that enrolled voters live within the division in which they vote at some time during the three months prior to the poll. This requirement is unenforceable. With the simplification of procedures at the polling booth, the question of real place of living within three months of polling day is hardly ever likely to arise and, if it does, it will disenfranchise only the honest elector who admits to having moved from the division for which he is enrolled. The provisions of the Act relating to the registration of candidates are to be repealed. The requirement to register did not serve any useful purpose and in fact caused some confusion since it duplicated similar requirements in the nomination process. Furthermore, the nomination process is to be simplified. A key element in this Bill is the simplification of the scrutiny of votes in Senate elections. These measures include the distribution at a single count of all ballot papers received by a candidate at a particular transfer value, and the exclusion under certain circumstances of candidates in bulk. Without such amendments to the Electoral Act any substantial increase in the number of candidates for the Senate could unduly prolong the counting of votes, and could well mean that some candidates might be delayed in taking their places in the Senate. The Bill provides for a provisional scrutiny of preferences to be conducted as part of the fresh scrutiny of House of Representatives ballot papers in those divisions where a distribution of preferences will be required to determine the result. This will give an earlier indication as to the likely outcomes. Provision is made for the extension of time in the election timetable to provide greater flexibility to meet emergency situations, and to enable adjustments to be made on a divisional basis without affecting the rest of the State. Another amendment enables the Electoral Commission to extend by 48 hours the time in which acts must be completed in the event of a failure by any person to perform a statutory duty or function. A comprehensive definition of what may constitute election advertising is to be introduced. The definition is designed to enable all participants in the election process to determine more readily than at present whether particular advertisements are subject to the reporting requirements of the Act. Mr Tim Fischer —It doesn't cover the issue of writs though, such as in the Vardon v. O'Loghlin court case. Mr YOUNG —I will have to get an opinion from the honourable member. It is a fundamental right of the general public to know who is supporting political parties and candidates, and who might therefore be able to exercise influence. At present political parties and candidates who stood previously are required to disclose gifts received during the period between one election and the next, while `third parties' need only disclose gifts they make between the date of issue of writs and polling day. The Bill provides for removal of this anomaly by requiring that the disclosure period for `third parties' be also from one election to the next. For the next election, the disclosure period applicable to `third parties' would apply only from the date at which the Commonwealth Electoral Amendment Bill 1987 comes into effect. The Bill also provides for a common release date for all public funding claims and financial disclosure returns, in order to avoid any particular claim or return receiving unwarranted publicity by its earlier or later release. The amendment provides that copies of claims and returns are not available for public inspection or purchase until 24 weeks after polling day. The Bill also contains a number of other machinery provisions in keeping with the objectives I have already specified. The amendments to the Electoral Act are largely based on recommendations of the Joint Select Committee on Electoral Reform. I again congratulate that Committee on its work. I draw to the attention of this chamber that there was agreement in general terms, among all the parties' representatives on the Committee, regarding the amendments introduced by this Bill. I believe that these amendments, plus the implementation at a later stage of the other acceptable recommendations that I foreshadowed on 1 April will further enhance the Commonwealth Electoral Act. That legislation has already established, at our Federal level, one of the best electoral systems in the world, especially after the redistribution of 1984, but there is still room for further improvements. Mr Hodgman —Are you going to have another go at Denison? Mr YOUNG —We do not need to. The honourable member for Denison is down there campaigning for us. Today I have introduced several machinery amendments that are essential for the conduct of the next general election and for any subsequent redistributions. I commend the Bill to the House and present the explanatory memorandum to the Bill. Debate (on motion by Mr Shack) adjourned. Bill presented by Mr Barry Jones, and read a first time. Mr BARRY JONES(Lalor-Minister for Science)(4.58) —I move: That the Bill be now read a second time. In his Press releases of 11 June, 30 July and 22 December 1986, the Treasurer (Mr Keating) announced various operating standards which superannuation funds and approved deposit funds will be required to meet in order to be eligible for relevant taxation concessions. These standards were established following consultations with various interested groups and against the background of the Government's concern to ensure that superannuation arrangements are directed at meeting genuine retirement needs and that members' entitlements are protected. The Treasurer also referred in his June 1986 statement to the Government's decision to establish a new body called the Insurance and Superannuation Commission to be headed by a new statutory officer. The Commission would bring together the existing offices of Insurance Commissioner, Life Insurance Commissioner and Australian Government Actuary as well as the proposed office relating to occupational superannuation. Mr Jacobi —Long overdue. Mr BARRY JONES —I draw attention to the fact that this is one of a long series of reforms that have been advocated for many years by the honourable member for Hawker (Mr Jacobi). Mr Jacobi —Things have moved slowly. Mr BARRY JONES —I would have thought that, relatively speaking, eight years would represent lightening speed. I take this opportunity to commend the work of the honourable member for Hawker in this area. The three Bills now before the House namely-The Occupational Superannuation Standards Bill 1987, the Insurance and Superannuation Commissioner Bill 1987, and the Insurance and Superannuation Commissioner (Consequential Provisions) Bill 1987-give effect to these announcements. The Occupational Superannuation Standards Bill 1987 is the principal of the current Bills. Its purpose is to establish the conditions and the supervisory requirements which superannuation funds and ADFs must meet in order to be eligible for concessional taxation treatment under the Income Tax Assessment Act. The Bill provides that these supervisory functions are to be performed by a newly created office-the Insurance and Superannuation Commissioner. The purpose of the Insurance and Superannuation Commissioner Bill 1987 is to create the position of Insurance and Superannuation Commissioner-ISC-and thereby establish an Insurance and Superannuation Commission. The basic objective of the Government's decision to establish such a commission was to achieve improved efficiency and co-ordination through the integration of the Commonwealth's various insurance, superannuation and actuarial functions. It was also seen as better reflecting the growing importance of the insurance and superannuation industries in the national economy. Further detailed examination of the proposal has confirmed that the benefits to be gained from such integration are substantial but has also made it clear that the maximum benefits will flow more quickly and efficiently if the formal responsibilities of statutory office were concentrated in the one position of Insurance and Superannuation Commissioner. This approach is reflected in the Bills before us, which rather than adding, as originally envisaged, two additional statutory positions to those already existing, establish the new senior statutory position of Insurance and Superannuation Commissioner and removes the statutory positions of Life Insurance Commissioner and Insurance Commissioner. The proposed statutory office of Occupational Superannuation Commissioner is also not being established. The purpose of the Insurance and Superannuation Commissioner (Consequential Provisions) Bill 1987 is therefore to amend the Life Insurance Act 1945, the Insurance Act 1973 and other insurance legislation to remove the statutory positions of Life Insurance Commissioner and Insurance Commissioner and place their statutory responsibilities in the hands of the new Insurance and Superannuation Commission-which I seem to have said several times before. Mr Shack —Sounds like musical chairs. Mr BARRY JONES —But only one can sit at any time. The new arrangements will not remove the legislative and institutional distinctions embodied in the Insurance Act 1973 and the Life Insurance Act 1945. These Acts will remain in force and the specialist nature of the two industries will also be reflected in the management structure of the new Commission. Thus, occupants of the former positions of Insurance Commissioner and Life Insurance Commissioner-I do not know why it is not life `assurance', but there you are-will hold positions in the new Insurance and Superannuation Commission, with equivalent status under the Public Service Act, of Deputy Commissioner (General) and Deputy Commissioner (Life). The proposed legislation allows the Insurance and Superannuation Commissioner to delegate to these officers all the powers necessary for them to efficiently administer the specialist legislation. Similar arrangements will apply in the occupational superannuation area with the creation of the position of Deputy Commissioner (Occupational Superannuation). The existing statutory office-holders fully support and have encouraged the Government to adopt the change in approach. They have done so in recognition of the benefits to be derived from the greater integration of the various functions and the difficulties in achieving that objective which could arise from maintaining a number of specific statutory offices. The Government will, of course, ensure that the conditions on which the commissioners were appointed will be fully protected. The status and efficiency of the insurance and superannuation regulatory bodies will be significantly enhanced by the greater administrative and management autonomy, as well as the policy responsibilities, which it is intended will reside with the Insurance and Superannuation Commission. The integration of policy responsibilities with the regulatory and industry liaison functions of the Commission will also provide the insurance and superannuation industries with a focal point for discussing matters of concern and should ensure that industry issues are given specialist and co-ordinated attention. The Office of the Australian Government Actuary will form part of the Insurance and Superannuation Commission but there will be no change in the position of Australian Government Actuary and the professional independence of the actuarial advice provided by that office will, of course, be fully maintained. I would now like to outline the particular provisions of the Occupational Superannuation Standards Bill 1987. This Bill incorporates provisions to give effect to the handover to the Insurance and Superannuation Commissioner of the supervision of those non-revenue superannuation requirements currently supervised by the Commissioner of Taxation. In essence the Bill provides that, where the trustee of a superannuation fund or approved deposit fund provide to the ISC certain information on the operations of the fund together with certificates as prescribed, the ISC will notify the trustees of the fund as to whether or not the ISC is satisfied that the fund has met the relevant standards and requirements for the purpose of establishing eligibility for concessional taxation treatment. Particulars of the ISC's notification are to be forwarded to the Commissioner of Taxation. In brief, these standards, which are to be prescribed in regulations under the Bill, provide for improved vesting of benefits arising from both employee and employer contributions, improved preservation requirements and measures to ensure greater member involvement in the control of superannuation funds and improved security of members' benefits. Funds will also need to comply with the existing requirements of the Income Tax Assessment Act pending the passage of legislation expected to be introduced in the Budget sittings to amend that Act and to relocate those provisions as requirements imposed under the Occupational Superannuation Standards Bill. Implementation of the new standards, most of which commenced to operate from 1 July 1986, represents an important step in ensuring that taxation concessions made available to superannuation funds are directed towards the provision of genuine retirement benefits. To this end, the Occupational Superannuation Standards Bill is an important element in the Government's overall retirement incomes policy. In developing the legislation, the Government has been anxious to establish a regulatory system incorporating the principle of self-assessment. The arrangements which I have outlined place the onus on trustees to ensure that funds satisfy the operating standards and minimise the degree of interference in the operations of those funds. This minimal supervisory approach is supported by the measures already outlined to provide greater member representation on the boards of trustees and for a greater degree of audit and disclosure of information to members on the operation of the funds. At the same time it is necessary, in the public interest, to provide the Commissioner with powers to enable more detailed checking of the operations of a fund to test its compliance with the standards. Accordingly, the Bill provides that the Commissioner may from time to time require a fund to produce documents for purposes of undertaking routine checks and for initiating appropriate inquiries where there is reason to suspect that there may be non-compliance with the operating standards. The Commissioner is also to be given the power to revise any notification as to compliance or non-compliance that may have been provided if, on the examination of further material, the Commissioner is satisfied that the notification should be revised. As well, discretionary powers are provided to the Commissioner to treat funds as complying with the requirements in special circumstances where the standards have not been satisfied. The Bill also requires that a statement of reasons be included in any notice of non-compliance the ISC might provide and that decisions to notify non-compliance be reviewable. The Bill takes account of recent consultations with industry representatives. These consultations will be continuing in relation to regulations under the Bill which are currently being drafted. As previously foreshadowed, the Bill provides for the levying on superannuation funds and approved deposit funds of a prescribed annual fee which will be aimed at recovering the normal costs of supervisory operations. It is intended to set such fee at $30 for the 1986-87 financial year. Although the Bill is generally to come into operation on a date to be fixed by proclamation, earlier dates have been provided for in relation to two matters. First, regulations made for the purpose of relocating some of the existing provisions in the Tax Act applicable to ADFs in this Act are to come into operation on 1 July 1986. Second, the Bill provides that regulations to give effect to the standards announced in the Treasurer's Press statements of 11 June, 30 July and 22 December 1986 may be made with dates of effect foreshadowed in those announcements. Finally it should be noted that this legislation is not intended to set aside the recourse that members of a fund have by way of normal trustee law avenues. The legislation will also not apply to public sector schemes. However, it remains the Government's intention that public sector schemes comply with similar standards to those applying to funds in the private sector. To that end the Government will be undertaking an examination of funds covering its own employees and, where necessary, appropriate adjustments will be made. Discussion will also be sought with the governments of the States and the Northern Territory to seek their co-operation in adopting similar standards in respect of funds covering their own employees. I commend the Bill to the House and table the explanatory memorandum. Debate (on motion by Mr Downer) adjourned. Bill presented by Mr Barry Jones, and read a first time. Mr BARRY JONES(Lalor-Minister for Science)(5.12) —I move: That the Bill be now read a second time. The purpose of this Bill is to create the office of Insurance and Superannuation Commissioner. As I have already outlined, this Bill, together with the Occupational Superannuation Standards Bill 1987, and the Insurance and Superannuation Commissioner (Consequential Provisions) Bill 1987 are designed to establish an Insurance and Superannuation Commission which would bring together in one organisation the Commonwealth's Regulatory and other functions in the insurance, superannuation and actuarial areas. The statutory responsibilities of the Commission would be centred in the new single statutory office of Insurance and Superannuation Commissioner. The Bill provides for the appointment by the Governor-General of a person as Insurance and Superannuation Commissioner for a period not exceeding seven years. The person appointed is not to hold office beyond the age of 65 and is to be paid remuneration as determined by the Remuneration Tribunal. The Bill contains provisions to guard against conflict of interest. It proscribes the appointment of a person who is a trustee of a superannuation fund or approved deposit fund, and of a person who is a director or employee of a body that carries on insurance of life insurance business or is itself a trustee of a superannuation fund or approved deposit fund. The Bill also requires the Commissioner to disclose in writing to the Minister any pecuniary interest he may have in insurance business or life insurance business, a superannuation fund or approved deposit fund, as well as any other business. The Bill also provides for termination of the appointment of the Commissioner by the Governor-General under certain conditions and for the appointment of a person as Acting Commissioner for up to 12 months during a vacancy in the office or when the Commissioner is absent or cannot perform his duties. Finally, the Bill provides for the appointment of staff under the Public Service Act to assist the Commissioner to perform the functions of the position and confers on the Commissioner the powers of the secretary to a department as provided under the Public Service Act 1922. I commend the Bill to the House and present the explanatory memorandum. Debate (on motion by Mr Downer) adjourned. Bill presented by Mr Barry Jones, and read a first time. Mr BARRY JONES(Lalor-Minister for Science)(5.15) —I move: That the Bill be now read a second time. This Bill is one of the three Bills which are designed to integrate the Commonwealth's various regulatory and other functions in the insurance, superannuation and actuarial areas and bring them under the responsibility of a new single statutory officer-the Insurance and Superannuation Commissioner. The Insurance and Superannuation Commissioner Bill 1987 establishes that position. The purpose of this Bill is to remove the statutory offices of Insurance Commissioner and Life Insurance Commissioner and to effect amendments to relevant provisions in the Insurance Act 1973, the Life Insurance Act 1945, the Insurance (Agents and Brokers) Act 1984, the Companies Act 1981, and the Public Service Act 1922, consequent upon the assumption by the Insurance and Superannuation Commissioner of the existing statutory responsibilities of those offices. I commend the Bill to the House and present the relevant explanatory memorandum. Debate (on motion by Mr Downer) adjourned. Bill presented by Mr Barry Jones, and read a first time. Mr BARRY JONES(Lalor-Minister for Science)(5.17) —I move: That the Bill be now read a second time. This Bill will amend the Sales Tax Assessment Acts and the Sales Tax (Exemptions and classifications) Act to give effect to two decisions announced by the Treasurer (Mr Keating) as part of the Government's May economic statement. The Bill will withdraw an entitlement to exemption from sales tax of certain Commonwealth authorities specified in the Bill that carry on commercial functions, and deny exemption for Commonwealth authorities that may be established from today unless they belong to certain categories that continue to be exempt. Commonwealth public transport authorities and Commonwealth authorities carrying out local government functions will continue to enjoy sales tax exemption, as do their State counterparts. Not all of the authorities specified in the Bill are entitled to sales tax exemption under the existing law. Some have been listed in the Bill to make their liability to sales tax a matter of record. The previously exempt authorities that now cease to be exempt from sales tax are: Australia Post, Telecom Australia, the Army and Air Force Canteen Service, the Australian Capital Territory Gaming and Liquor Authority, the Superannuation Fund Investment Trust and the Housing Loans Insurance Corporation. Any Commonwealth authorities that are established from now on will not be entitled to a general sales tax exemption for government authorities. Exemption will apply only where expressly conferred by legislation or where an authority qualifies for exemption under another provision. The Bill will also implement the Government's decision to vary the special sales tax concessions available to passengers arriving from overseas. Changes are being made today to the customs tariffs bylaws, to make corresponding changes to the customs duty passenger concessions. The broad effect of the amendments to be made by this Bill, and the amendments to the customs tariff bylaws I have just mentioned, will be to allow passengers arriving in Australia a sales tax exemption and duty free entry for goods having a value of $400, in the case of passengers aged 18 years or over, and $200 for those under 18. Where the value of the goods exceeds those limits, the proportion of the value within the limits will be free from duty and tax. Duty and tax will not be payable on clothing, other than furs, that is for the personal use of passengers. The existing free limits on tobacco and alcohol will remain but the special concession for migrants' motor vehicles-which are currently free of both sales tax and customs duty-will be removed. The revised passenger concession arrangements are to be effective from 1 July 1987. Removal of the exemption for migrants' motor vehicles applies from 14 May 1987, except where vehicles were purchased or firm contracts to purchase were entered into before that date. It is estimated that the amendments to place the specified Commonwealth authorities on the same sales tax footing as private sector commercial authorities will result in a gain to revenue of $310m in 1987-88 and $395m in 1988-89. Special arrangements will apply in 1987-88 to the removal of the sales tax exemption from Telecom Australia. Where Telecom's total payment of sales tax and customs duty in 1987-88 exceeds $360m, the amount of the excess will be refunded to Telecom subject to a refund ceiling of $100m. The new passenger concessions arrangements, including the sales tax measures facilitated by the Bill, will result in a net saving of $20m in 1987-88 and $21m in 1988-89. I commend the Bill to honourable members. In doing so, I present the explanatory memorandum on this Bill. Debate (on motion by Mr Downer) adjourned. Bill presented by Mr Barry Jones, and read a first time. Mr BARRY JONES(Lalor-Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(5.21) —I move: That the Bill be now read a second time. This Bill proposes amendments to the Customs Act and Excise Act to implement three of the measures announced by the Treasurer (Mr Keating) in the Government's May statement. They are: (i) The payment of customs duty by Commonwealth authorities; (ii) The imposition of a $200 fee on applications for a refund of customs duty; and (iii) New arrangements to strengthen the diesel fuel duty rebate system. I propose now to outline only briefly the salient features of the Bill. Full details are contained in the explanatory memorandum which is about to be circulated and the Australian Customs Service will be issuing administrative detail in the next few days. It might serve the needs of calming a frenzied House if I provide the explanatory memorandum straight away. The proposal to require Commonwealth authorities to pay customs duty in clause 6 stems from the Government's acceptance of the recommendation of the Committee of Review on Government High Technology Purchasing Arrangements. The Committee concluded that the concession of duty free entry of imports granted to most Commonwealth agencies leads to economic distortions and promotes a loss of allocative efficiency for the whole economy. Commonwealth authorities currently exempt from payment of customs duty will be required to pay duty on all imports from 1 July 1987. The $200 fee for refund applications in clause 7 is proposed to recover the costs involved in processing refund applications after 13 May 1987. The Australian Customs Service receives thousands of such applications yearly many of which are time consuming as they involve a complicated assessment and examination of goods. The Government expects, however, that persons will be able to avoid the charge by making sure that the correct duty is paid when entering their goods for home consumption. The question of a refund application will then not arise. Provision is made for the regulations to specify the circumstances in which the fee will not be charged. Such circumstances will only relate to those beyond the control of the importer. In relation to the changes to the diesel fuel rebate arrangements as set out in Parts II and III of the Bill I should mention that most of these were recommended in an efficiency scrutiny review. The scrutiny is the first major review of the administration of the scheme since it was introduced in 1982. The Government has accepted the scrutiny conclusion that a greater onus should be placed on rebate claimants to substantiate their claims. The rebate scheme relies heavily upon the self-assessment of eligible usage of diesel fuel by claimants. The measures proposed in the Bill are designed to effect a greater degree of certainty to the estimation process. Additionally as outlays under the scheme in 1987-88 will be in a vicinity of $500m we believe it not unreasonable to require persons who are receiving this benefit from the public purse to provide sufficient information to substantiate their claims. Consistent with the requirement for person to substantiate their claims we will now require more information to be provided about claimants operation and the methodology used to calculate eligible usage of diesel fuel. The regulations proposed under clause 8 of the Bill will include such requirements. Other important changes to the diesel fuel rebate arrangements involve: (a) A provision to permit a reduction in the amount of rebate claimed if satisfactory details are not produced; (b) The averaging of the rate of rebate because of continual fluctuations in the duty rates as a result of import parity price changes; and (c) The introduction of an `on the spot' penalty system providing, as an alternative to prosecution, a penalty of three times the amount of rebate wrongfully obtained. The new rebate arrangements will come into force by proclamation. this is to allow time for the necessary administrative arrangements and regulations to be put in place. Financial Impact The changes relating to the rebate on diesel fuel will enable savings to be achieved in two ways. In direct costs associated with administration and in rebate outlays it is estimated that savings in the order of $6m will accrue in a full year. The imposition of duties of customs on Commonwealth authorities is expected to result in an increase in revenue of $75m per annum or about $225m in the next three years. The processing fee of $200 for refund applications is estimated to raise about $6m in a full year. This figure is based on an estimate of the number of refund applications that will be lodged per annum even though a fee is to be charged. Additionally it is estimated that applications for refunds of duty that will now not be made because of the imposition of the $200 fee will involve about $1.1m in refunds of duty forgone by applicants. I commend the Bill to the House. Debate (on motion by Mr Downer) adjourned. Bill presented by Mr Barry Jones, and read a first time. Mr BARRY JONES(Lalor-Minister for Science and Minister Assisting the Minister for Industry, Technology and Commerce)(5.25) —I move: That the Bill be now read a second time. I do not know what it is about the Customs Bills, they always seem to empty the chamber, but I am satisfied with the quality of the people in the chamber. Mr Rocher —I am here, Barry. Mr BARRY JONES —Absolutely. This Bill is the companion to the Customs and Excise Legislation Amendment Bill 1987 insofar as it relates to the decision announced in the economic statement of 13 May 1987 that all Commonwealth agencies other than departments are to be required to pay Customs Duty from 1 July 1987. The Bill provides for both changes to the Customs Tariff Act 1982 and the Customs Tariff Act 1987 to: (a) Omit the existing provision for duty free entry of imported goods owned by a Commonwealth body or authority prescribed; and (b) Provide for continued duty free entry of imported goods owned by the Commonwealth and for use by specified departments or any specified unincorporated Commonwealth body. The specification of departments and any unincorporated Commonwealth body will be under the customs by-laws. Their specification is a matter directly related to the internal administration of government and therefore prescription by by-law is considered to be appropriate. It is to be noted that the requirement that the respective goods be owned by the Commonwealth excludes statutory bodies able to own goods in their own right from the ambit of specification under the customs by-laws. The Government's decision that all Commonwealth agencies other than departments be required to pay customs duty is in accord with the February 1987 report of the Committee of Review on Government High Technology Purchasing Arrangements. The Committee found that the concession of duty free entry of imports granted to most Commonwealth agencies leads to economic distortions and promotes a loss of allocative efficiency for the whole economy. Financial Impact The imposition of customs duty on Commonwealth agencies other than departments is expected to result in an increase in revenue of $75m per annum or about $225m in the next three years. I commend the Bill to the House and table the explanatory memorandum. Debate (on motion by Mr Downer) adjourned. Debate resumed. Mr ROCHER(Curtin)(5.30) —Before the debate was interrupted, I gave an example of how a tax free dividend may be obtained under the tax imputation legislation, and I sought almost immediately to qualify that by saying: `Well, almost tax free'. It was necessary to do so because although the Medicare impost is not really a tax on income-but only, of course, if we believe this Government-nevertheless the levy must be paid on all dividends, whether they be franked or unfranked. If an excess rebate cannot be offset against other income in the tax year in which it is received, that benefit will be lost forever. Excess rebates cannot be refunded, nor can they be carried forward into consequent years. In summary, any unutilised imputation tax rebate will be lost if it is not offset against other income in the tax year during which a franked dividend is received. These Bills-the Taxation Laws Amendment (Company Distributions) Bill, the Income Tax (Franking Deficit) Bill, the Income Tax Rates Amendment Bill, the Taxation Laws Amendment Bill (No. 2) and the Bank Account Debits Tax Amendment Bill-also stipulate that individual and corporate shareholders in non-resident companies will not receive tax free dividends, even if the profits enabling the dividend were earned all or in part within Australia. In addition, foreign tax credit laws come into play and will interact in a peculiar and complex way with dividend imputation provisions, something that has been discussed by previous speakers. All that I wish to say is that it should be clearly understood that there will be an added imposition because foreign earnings, even by an Australian-owned company or a company based in Australia, cannot be credited for imputation, thereby reducing the profits available for distribution as franked or tax free dividend. That will occur despite the fact that such companies' tax will be levied on the new and increased rate of 49c in the dollar. Mr Braithwaite —The highest possible rate. Mr ROCHER —Yes, indeed. I have given just a few examples of the traps for the unwary. Those most likely to be uninformed are not the corporate investors, nor are they even individual investors of substance; they are individuals who, sooner or later, come to believe that any dividend income is to be tax free in future. No one would be wise to buy shares if he had the expectation of obtaining tax free dividend income without first getting hitherto unnecessary information about the source of profits of the company in which he intended to invest. Even then, if the company at some time wants to share the bounty from, for example, a share premium reserve and issue bonus shares, a tax obligation may well exist. There are other reasons why shareholders can dip out, in circumstances about which a less than professional investor could not reasonably be expected to know. Any potential investor with an expectation or perception that all company dividends are tax free when these Bills become law, runs the risk of disappointment. In addition, those who are psychologically attracted by the prospect of tax free dividends should also remember that a better return on invested funds might still be available from more mundane opportunities, even after paying income taxes, capital gains taxes and the whole raft of taxes introduced by this Government. After all, shares bought in companies with a dividend yield of 4 or 5 per cent or less may not be all that attractive, even if the dividends are tax free. Nevertheless, it must be said that there are some attractions, especially for the corporate sector. That might come as something of a surprise to those gullible enough to listen to and believe the rhetoric of the Treasurer (Mr Keating). In this Parliament, we have all had to endure the sort of codswallop which, with the fervour of a born-again Christian in the United States, the Treasurer espouses the cause of the not-so-fortunate in our society, while actually practising the delivery of riches to the corporate giants in Australia. How many times have we heard the Treasurer say, in his frustration, how the Opposition parties will favour the rich at the expense of the poor? Even those who like to hear that sort of nonsense could not number the times that he has actually indulged himself in that way. Yet with this dividend imputation legislation, as with other government legislation, we can give the lie to the assertions peddled by the Treasurer in his attempts to exploit latent envy in the community. One reason for that assertion is that buyers of shares may claim a full tax deduction of interest expenses on funds raised to buy shares attracting imputed, tax free dividends-and thereby, another consideration is introduced into the corporate takeover scene. A company making handsome profits and, therefore, with an under-utilised franking account, will have an asset of value previously not available, and able to be exploited along with other assets in takeover targets. We do not need statistics to convince us that, despite the Treasurer's rhetoric, under his stewardship the very rich get richer and the rest become poorer. Mr Cowan —That is what is happening at the moment. Mr ROCHER —That is precisely what is happening at the moment. For those who think that this imputation legislation ushers in a brave new world, it is sobering to reflect on the fact that only an estimated 15 per cent of Australian shareholders will derive any benefit from it. On top of that, its complexity defies description by all but the most specialist of professionals in the tax field. It is not immediately clear why the Government did not opt for a much simpler alternative, and allow dividends received to be tax free, full stop. The franking nonsense, confused as it is to the point of absurdity, would be hardly necessary if the objective were simply to put an end to double taxation of company profits. That brings me to the point that simple legislation, along such lines, was introduced by the present Leader of the Opposition, the honourable member for Bennelong (Mr Howard), and passed by the Parliament prior to the election of the present Government in March 1983. Admittedly it was a modest enough start along the road to ending double taxation of company profits, in that there was to be a limit of $1,000 of tax free dividend income. One of the first acts of this socialist Government was to repeal that legislation. So, when the Treasurer mouths his completely misleading nonsense about this trail-blazing initiative, it should not be overlooked that between March 1983 and very recent times, the Government has had ample opportunity to legislate on what it now seeks to describe as a new and desirable reform. Law was already in place before it come to office, yet that self same Hawke Government repealed it. While, with all the complexity and imperfections, these imputation Bills are different, the underlying philosophy is identical to actual law put into the statute books by the previous coalition Government. Another aspect of the legislation on which I wish to touch is a matter that I have raised previously. It is my genuine and very real concern about the extent and increasing incidence of discretionary power being given to or exercised by-or both-the Commissioner of Taxation and, therefore and importantly, to his delegates in the Australian Taxation Office. Examples of more discretionary power are to be found in at least two of the Bills being debated cognately. One concerns company tax imputation, and it is stipulated that the Commissioner may, at his discretion, remit the whole or part of the penalty additional tax where a company errs if it gives an incorrect dividend statement to a shareholder; fails to furnish a return in respect of a franking year; or makes a false or misleading statement resulting in a reduction of the franking deficit tax properly payable. At first reaction it might seem that the exercise of the Commissioner's discretion to remit penalties, in fact, confers a benefit and, therefore, is unobjectionable. To those who may be tempted to adopt that viewpoint it should be said that total discretion to remit penalties confers yet another instrument on officers of the Australian Taxation Office to wield ruthlessly in what has become a horse-trading approach to settling differences between the ATO and taxpayers in general. The power to bestow a benefit offers the opportunity to follow that course in return for a concession from the taxpayer or taxpayers. That is unwise in the extreme. If tax law is so inadequate or imprecise, it should be changed. Granting power to hector or otherwise depart from normal standards of decent and preferably exemplary behaviour by public servants is an unwarranted cop-out by government. Another type of discretion is also to be afforded to the Commissioner and, through him, to officers of the Australian Taxation Office by provisions in the legislation to amend the Taxation Administration Act 1953. Over recent times officers of the ATO have increasingly abused formal and informal powers in dealing with taxpayers. The need to exercise greater formal power when making inquiries about group tax deductions from the remuneration of employees has simply not been demonstrated. In conclusion, and in the absence of a demonstrated need, extending power beyond the present requirement that tax inspectors be allowed access without obstruction to premises and records is simply not warranted. Because of the speaking arrangements, I conclude on that note. I support the amendments moved by my colleague the honourable member for Mackellar (Mr Carlton). Mr PUNCH —(Barton) (5.42)-I rise tonight to support the Taxation Laws Amendment (Company Distributions) Bill, the Income Tax (Franking Deficit) Bill, the Income Rates Amendment Bill, the Taxation Laws Amendment Bill (No. 2), and the Bank Account Debits Tax Amendment Bill. In particular, I support the imputation objective. To the people of my electorate, especially small income retirees and small business people, this legislation is a boon. On re-election in 1984, the Hawke Government took on the massive task of correcting the Australian taxation system. This task involved three basic objectives: To broaden the tax base, to smash social security fraud and tax evasion, and to introduce a system of full imputation for company tax. The first of these objectives has been achieved through the introduction of measures such as the fringe benefits tax, the capital gains tax, the abolition of deductions for entertainment expenses, and the removal of negative gearing. The widening of the tax base has allowed the Hawke Government to provide the largest personal income tax cuts on record, costing at least $4.5 billion in 1987-88. The second of these objectives, the smashing of social security fraud and taxation evasion, is largely an ongoing commitment, evidenced by a number of new initiatives last night in the May economic statement and by the Govern- ment's continued support for the Australia Card proposal. The last of the Government's tax reform objectives, a full imputation system for company tax, is a reform that is now some 35 years overdue. It must never be forgotten that this measure, before the House tonight, is being introduced not by the political parties opposite which have in the past claimed to represent the free enterprise spirit, but by the Australian Labor Party which those opposite would seek to convince the small business community is the enemy of business. It must be remembered that the conservatives had 30 years in government to establish such a system. The Hawke-Keating combination has done so in its fourth year in government. The winners are companies, incorporated small businesses, small investors and retired investors seeking added income. But the biggest winner of all is the economy and all of us who have a stake in its future. The new imputation system of company tax replaces the classic company tax system. No longer will dividend income in the hands of individual shareholders be taxed twice. The cost of this major and exciting tax reform will be $300m in a full year. The key benefit of this Government's business tax reform package is that it will promote efficiency in resources allocation by ensuring that, in future, investment decisions are made on the basis of economic fundamentals rather than on the basis of some short term advantage. Additionally the new company tax system will provide more incentive for entrepreneurs to develop and market new ideas. Both of these are vital for this country's economic future, a future where Australia must export more and import less. Australia's imputation system is widely regarded by overseas commentators and domestic experts alike to be the most pure in the world. For example, I quote the following excerpt from the internationally renowned magazine the Economist of 7 March 1987: The whingers would do better instead to rejoice at another change brought in by Australia's `socialist' government, one that will, in the words of Bain and Company's Dr Don Stammer, do more to make Australians into mini-capitalists than anything since the introduction of the quarter-acre suburban plot. That change is the new system of dividend taxation. It is designed to end the double taxation that occurs when the taxman takes his bite first from company income and then from shareholder's income. Under the new system, due to come into force on July 1st, the tax paid by the company will be imputed to the shareholder as a credit and this, combined with the dividend, will then be taxed at the shareholder's marginal rate. For an individual paying the top marginal rate this will mean, in effect, a tax-free dividend; for anyone paying less than the top rate, (so long as he is a domestic investor), it will mean a credit to set against any other tax. This is the purest imputation system in the world. If applied to Britain, it would probably do more to promote small shareholdings than the flotation of British Telecom and British Gas put together. It is fair to comment, however, that the substantial benefits of imputation are still not understood in this country. In addition to other benefits, imputation will lead to the diversification of investment portfolios held by both large and small investors, particularly retired persons earning income additional to their pension in areas of Sydney such as my electorate. Traditionally, retirement advisers have until now steered people clear of the share market. Imputation has changed all that. Why? Because imputation will mean that there will usually be no tax to pay on dividend income. In fact, with the imputation credits that go with the dividends, it could mean a cut in the tax on the income of people on low incomes, such as the pensioners I referred to. Let us take the case of a pensioner who earns $530 in dividends and $1,130 from his other investments on top of his $5,540 a year pension, giving him a total income of $7,200. Before imputation, such a pensioner would have paid a total of $385.93 in tax, which would include a tax bill on his dividend of $127.20. After imputation, no tax will be paid at all. The new imputation system will mean that the pensioner in this case will pay not tax on his dividend income. The imputation credit will also allow tax on other income to be reduced by $253.73. This tax cut is equivalent to lifting the maximum pensioner rebate from $250 a year to $504 a year. In that vein I seek leave, Mr Deputy Speaker, to incorporate in Hansard a table, sourced from the Department of the Treasury. Leave granted. The table read as follows- Pre- Imputation Post- Imputation $ $ Pension... 5,540.00 5,540.00 Other Investment Income... 1,130.00 1,130.00 Dividend Income- Cash ... 530.00 530.00 Gross... n.a. 1,039.22 Taxable Income ... 7,200.00 7,709.22 Tax payable- Gross Tax ... 503.76 625.97 Pen. Rebate... 117.83 117.83 Imput. Credit ... none 509.22 Net Tax... 385.93 0.00 After-tax Income... 5,684.07 6,070.00 Mr PUNCH —I thank you, Mr Deputy Speaker, and the Opposition. Imputation has, in effect, revolutionised the retirement planning industry, restoring equities to a position they have not enjoyed for nearly 50 years. This new deal for retirees comes on top of the Hawke Government's already good record for the retired, including a real increase in the age pension of 5.9 per cent over the time the Hawke Government has been in office. The imputation system will also assist small businesses by providing them with their largest tax cut ever. Those small businesses, many of which are in my electorate, should bear in mind that the rhetoric offered by the New Right-policy by cliche by the Opposition-pales into insignificance when compared with this major tax reform by this Labor Government. The introduction of the imputation system, the capital gains tax, and the alignment of the company tax rate and the top personal marginal tax rate at 49 per cent will, in combination, remove many of the distortions caused by the present company taxation system. For instance, under the present system shareholders in private companies have an incentive to retain income in the company in order to minimise their total tax bill. Special provisions, known as Division 7, have been designed to limit this activity by penalising high rates of retention. In fact, imputation effectively abolishes company tax for closely held private companies. The proposed changes remove this opportunity for tax minimisation and will allow private company retention policies to be decided on economic grounds. Division 7 will, therefore, be abolished, representing a significant simplification of the system. That can be seen as nothing other than a major bonanza for small business people. There is, of course, another benefit to the economy as a whole, and that is in the area of takeovers, which has been much discussed this year and last. The double taxation of dividends has encouraged companies to withhold earnings from dividend distribution for eventual distribution as untaxed capital. Such companies make high priority takeover targets; that is common sense. The imputation system, therefore, will discourage the creating of such targets for a takeover frenzy by ending one of the causes-the double taxation of dividends. As I said earlier, the magnitude of this reform cannot be overstated. It is perhaps the greatest single thing that any Federal government can do to provide incentive in the small and medium size business community as well as to restore properly thought out growth to major Australian public companies. That leads me to say, on the basis of common sense-and it has to be said-that Labor is not, as those opposite would suggest, the enemy of private enterprise. Rather, Labor sees the role of government as making private enterprise function fairly and properly, much in the same vein as the Roosevelt New Deal in the United States in the 1930s. The Labor Government is not obsessed with policy by cliche, like those opposite; nor is it obsessed with an ideological obsession in one form or another. It is simply about making the system work so that we here in Australia can bring forward new companies in the business of import replacement and new export development industries. I conclude by noting once again the quote from Don Stammer that this legislation will `do more to make Australians into mini-capitalists than anything since the introduction of the quarter-acre suburban plot'. Debate (on motion by Mr Downer) adjourned. Mr DEPUTY SPEAKER(Mr Millar) —Order! I understand that it would suit the convenience of the House for the sitting to be suspended for dinner earlier than usual. Sitting suspended from 5.55 to 7.30 p.m. Debate resumed from 13 May, on the following paper presented by Mr Keating: 1987-88 Budget-Initial Measures-Ministerial Statement, 13 May 1987 and on motion by Mr Young: That the House take note of the paper. Mr HOWARD(Bennelong-Leader of the Opposition)(7.30) —The Hawke Government has given Australia the biggest fall in living standards for over 30 years. No alibi, no excuse and no attempt to blame others can alter that single unpleasant fact. Last night's statement offered not a glimmer of hope that the fall in living standards would be reversed. It offered not a glimmer of hope that the Government's vision is of an Australian economy moving in a modern and competitive way into the twenty-first century. Indeed by far the most important feature of last night's statement is that the Government now expects the economy to be weaker, growth lower and inflation higher than it believed only five months ago. In March 1983 an average Australian family needed to spend 19c in every dollar of its weekly income to pay off the house in which it lived. By December last year that figure had soared to almost 27 cents in every dollar. That is a staggering increase of $281 a month on an average home mortgage. There can be no starker example of the Labor squeeze put on average Australian families than that comparison. Families throughout Australia have been hit in almost every direction by the policies of this Government. A family with just one income and two young children is at least $31 a week worse off now than it was when Labor was first elected. Housing interest rates and bankcard interest rates are at record levels and high interest rates have devastated thousands of farmers whose cash incomes are at appallingly low levels. Tax has gone up. Prices paid in supermarkets have risen sharply. Our inflation rate is now four times that of countries such as Japan and the United States and our national debt has gone over $100 billion. There are now 2.6 million Australians below the poverty line which is a rise of 700,000 since March 1983, and unemployment, particularly amongst the young, remains very high. The Hawke Government's response to all of this is, Pontius Pilate like, to wash its hands and say that it is all the fault of the foreigners or of some former government. After four years of Government with seven Budgets or mini-Budgets, those alibis are no longer believed by the Australian public. Australia's terms of trade have declined but this has happened before. Three times in the 1970s the downturn was just as bad as it has been in recent times. Yet the Government blames all our problems on our bad terms of trade. The Prime Minister (Mr Hawke) and Treasurer (Mr Keating) behave as though no other government in Australia's history has ever had to grapple with a bad international economic climate which has caused our national income to fall. I remind the Government and the Australian people that in the early 1980s the combined effect of the worst international recession in 50 years and the worst Australian drought this century, did equally as much if not more damage to our income as a nation. Yet the living standards of Australian families in March 1983 were much higher than they are now. No one denies that a relatively small trading nation such as Australia can be buffed if the world economy turns against us. The enduring challenge for any Australian government is to manage domestic economic policy so as to properly adjust and respond to adverse world developments. The truth is that this Government has made matters much worse by the policies it has followed and its failure in many areas to act quickly and decisively in response to changed circumstances. If, as the Treasurer claims, our bad terms of trade are the sole reason for our problems, why did he ignore the warnings of his own Budget in August 1985 that our terms of trade would decline? Why did he negligently allow his Government to tell the Australian Conciliation and Arbitration Commission in March 1986 that Australia could afford the 2 per cent superannuation deal when demonstrably we could not? Why has he taken 21 months to begin to come to grips with the problem? Why did his Budget last year do nothing to substantially reduce government spending? The Treasurer cannot have it both ways. He cannot now say it is all due to our bad terms of trade, yet explain away his inaction for so long. If the Hawke Government had acted differently in four areas our living standards would not have fallen so sharply and our economy would be stronger. Firstly, spending in the first two Keating Budgets was irresponsibly high. In 1983 and 1984 it rose by over $15 billion in two years. The great alibi of the Treasurer about an inherited deficit is a palpable untruth. The last deficit of the Fraser Government was $4.4 billion. This Government deliberately increased that figure in its first year to over $8 billion. Secondly, the Government failed to respond quickly enough and appropriately enough through adjusting wages and monetary policy when the Australian dollar first began to fall in 1985. If the right response had then been adopted many of the subsequent currency crises could have been avoided. Thirdly, the Government has significantly increased the tax burden of all sectors of the Australian community. It has introduced the anti-incentive fringe benefits tax and capital gains tax. It has reduced the incentive to invest. As well, the tax squeeze on a single income families on average earnings has been particularly severe. Such a family now pays $37 per week more tax than it did in March 1983. Fourthly, the Government has completely failed to match the freeing of the exchange rate and deregulation of the financial system with similar action in Australia's labour market. The Government has gone in the opposite direction. It has ignored the fundamental reality that a free exchange rate cries aloud for a freer labour market. It is against that background that I respond to last night's economic statement. By far the most important feature of the statement is the far gloomier outlook for economic growth revealed by the Government. This much weaker economic outlook casts enormous doubt on the Government's capacity to hold unemployment even at the present unacceptable level. It has long been acknowledged that a growth rate of at least 3 per cent is needed to stop unemployment rising. Yet last night's statement told us that growth will fall well below this figure both this year and next year. Moreover, the higher inflation forecast is based on the quite spurious assumption that all wage increases under the new second tier arrangement will be fully offset by efficiency gains. That is complete economic fairyland stuff. The Government hails last night's statement as the greatest exercise in expenditure restraint for 30 years. Nothing has altered the fact that this is still the biggest spending, biggest taxing Government in Australia's peacetime history. Even if all the Government's predictions are realised and asset sales are included, spending next year will be 27.4 per cent of gross domestic product which is still higher than the average of just over 27 per cent of GDP achieved during the seven years of the former Liberal-National Party Government. The Government claims to have saved $3.6 billion. Of this only about $1.6 billion represents a saving from the Government's own spending, and about one third of that $1.6 billion is merely a deferral of expenditure. The figure of $1 billion for asset sales is extremely rubbery. There is no guarantee that these assets will be sold in the coming financial year, and there is no guarantee that having cut spending from the forward Estimates in May the Government will not put some of it back in August in new areas of expenditure. That is what the Government has done on previous occasions with May economic statements. I agree with the Government that all the Australian States must play a full part in expenditure restraint, but it is a great pity that the Government has not set a better example. Over the past four years State spending has risen by 2.9 per cent per year in real terms, yet Federal spending has gone up by 5.5 per cent. I support a number of the specific measures announced last night. One of them in particular, the abolition of the unemployment benefit for under 18-year-olds and the removal of the incentive for young people to leave school, has been the policy of the Opposition for some time. We are concerned, as all Australians will be, about the cut in defence spending. This must always be a top priority of any government irrespective of economic circumstances. The means testing of family allowances, although I acknowledge it is applied at a high level of income, still represents a tax rise on families with children. The family allowance is not, in my view, a welfare payment. It is simply a recognition of a fundamental fact that it costs money to have and to raise children. There will be many Australian families who might well see last night's announcement as the thin end of the wedge for the removal of any remaining bias in the tax/welfare system for families with dependent children. Last night the Government should have taken a knife to the expensive, failed Medicare system. Medicare has added between $3 billion and $4 billion to the Federal Budget. Enormous savings can be achieved by radical changes in this area which restore the right of choice and incentive for health provision. Medicare is one of the great failures of the Hawke Government. Not only has the Prime Minister dishonoured his promise that Medicare would provide cheaper and better health care for nine out of 10 Australians, but there are now more than 100,000 Australians on the hospital queues of the nation. The Treasurer has finally embraced a policy of privatisation which his Government so stridently denounced only 18 months ago. But the process should go further. The Government ought to sell Australian Airlines; it ought to sell a 49 per cent interest in Qantas Airways Ltd. It should sell the Housing Loans Insurance Corporation and the Australian Industry Development Corporation, and many other government services should be privatised. Last night's statement abolished no departments, no government authorities and no areas of duplication and waste between the Federal Government and the State governments. We still have a Human Rights Commission, a Constitutional Commission, a Prices Surveillance Authority and so on. Madam Speaker, no section of the Australian community comes to our current economic debate with completely clean hands, and the Prime Minister, as much as anyone else, through his years as head of the Australian Council of Trade Unions cannot escape blame for many of the economic problems that Australia now faces. It is a national disgrace that it costs more to carry cargo from Launceston to Newcastle than it does from Newcastle to Los Angeles. Until problems of that kind have been tackled, we have not even begun to scratch the surface of our enduring economic problems. Yet by its response today to the Hancock recommendations and by its determination to emasculate the secondary boycott provisions of the Trade Practices Act the Government is demonstrating that it is prepared to put the trade union movement above the ordinary processes of the courts of this country. Those proposals of the Government will be totally opposed by both the Liberal and National parties in this Parliament. Last night's statement failed completely to even touch upon the greatest single challenge facing the Australian economy, namely, the need to lift our national productivity. We have no hope of closing the gap between exports and imports unless all Australian enterprises become more productive and thereby more competitive on domestic and world markets. Every single aspect of economic policy must be directed to that end. That is why our industrial relations approach contains incentives for employees to buy shares in the companies that employ them. That is why we will change Australia's tax laws to encourage firms to have profit sharing schemes based on improved productivity and output. The key to greater productivity is greater incentive. The greatest blight on incentive in Australia is our present taxation system. The Treasurer bungled tax reform in 1985, and he is living in cloud cuckoo land if he believes the task of tax reform in Australia has been completed. We need, and a Liberal Government will deliver, a taxation system based on the following principles: Firstly, a reduction in the overall taxation burden; secondly, a flatter and less progressive income tax scale; thirdly, a bias in our taxation system towards families with dependent children; and, finally, the abolition of Labor's anti-incentive taxes, such as the capital gains tax and the fringe benefits tax. Those reforms will be paid for by substantial reductions in government spending. The principles that I have outlined will guarantee that our policies will particularly assist average families with children and will provide far greater incentive, which is so vital to lifting our national productivity. Today is the first anniversary of the Treasurer's infamous `banana republic' statement. Even on the most charitable interpretation of his statement last night, it has taken this Government a full year to respond to the crisis that he declared a year ago today existed for our country. Last year's Budget did not address the problem. Today's announcement of a balance of payments deficit of $1 billion is a reminder that the problem still persists. If this Government had not thrown away the opportunities given it in 1983 by the breaking of the drought and the end of the world recession we would now be in a stronger position. If this Government had not spent so recklessly in 1983 and 1984 we would now be in a stronger position. Although the Government has been pathetically slow to respond to our problem, many millions of Australians have known for a long time that we have had a deep and enduring problem. That problem has been felt in falling living standards, higher interest rates and higher taxation. At the start of this address I said the Hawke Government had given Australia the biggest fall in living standards for over 40 years. Last night's statement offered no real hope that the Government understood that major and fundamental changes to the way our economy is run will be needed to reverse our declining living standards. It offered no hope of a fairer and more incentive driven taxation system. It offered no hope of choice and better quality in our health care system. It offered no hope that families on modest incomes with children could look for real relief. It offered no hope that all Australians, including trade union leaders, would be treated equally before the law. And, above all, it offered no hope that the Government had learned from the mistakes it has made over the past four years. There are three basic actions which must be taken to turn our country around and to stop the slide in the living standards of all Australians under Labor's present policies: We must make our nation, our industries and our enterprises more competitive and more productive; the whole taxation structure must be changed so that incentive is returned to the system; and, finally, the size of government must be further reduced with duplication and waste completely eliminated. Only a new government will deliver those changes and only then can we all truly say that Australia is winning. Madam SPEAKER —I call the Leader of the House. Mr Beale —Don't you know what's going on, Mick? Mr YOUNG(Port Adelaide-Leader of the House)(7.51) —The honourable member for Deakin wants to know whether I know what is going on. I was leaving the dining room and some Liberals were going in. I said: `I am going round to hear your Leader'. They said: `He's not our leader'. That is what happened tonight. Madam SPEAKER —Order! The Leader of the House will move the motion to adjourn the debate. Debate (on motion by Mr Young) adjourned. Debate resumed. Madam SPEAKER —Before the debate is resumed on this Bill, I remind the House that it has been agreed that a general debate be allowed covering this Bill, the Taxation Laws Amendment (Company Distribution) Bill 1987, and the Income Tax (Franking Deficit) Bill 1987, the Income Tax Rates Amendment Bill 1987, the Taxation Laws Amendment Bill (No. 2) 1987 and the Bank Account Debits Tax Amendment Bill 1987. Mr DOWNER(Mayo)(7.52) —This debate is about a series of taxation Bills that the Government has recently introduced into the House. These Bills should present a very clear objective for our taxation policy. The aim of these Bills should be to regenerate investment in Australia. We need Bills that will revitalise entrepreneurship in our economy-- Mr Price —I take a point of order, Madam Speaker. Will the television lights be turned off now? Madam SPEAKER —They will be turned off very shortly; please have a bit of patience. Mr DOWNER —The other thing that the Government's taxation policy should do is to try to rebuild the wealth creating capacity of our economy. The simple fact is that the Labor Government's policies simply will not do that. That Australian Labor Party is a party committed only to wealth redistribution and imposing a heavier and heavier tax burden on all Australians. We can see that in these taxation Bills that have been brought before the House. There has been an increase in corporation tax. During the period of this Government there has been an increase in personal income tax from $65 per week for the average family with two children to $102 per week. These Bills are at least better than some others because what they fundamentally do is to introduce the ending of the concept of double taxation of dividends. This proposal is a vastly complicated way of achieving that and it compares quite unfavourably in its degree of complexity with the proposal of the Fraser Government which provided a $2,000 tax free allowance for those people who earned income from dividends. Indeed, it is true to say that this proposal is barely understood by the accounting profession. But at least it does end the policy of double taxation of dividends. That is very good initiative, and I congratulate the Government at least on pursuing that. This measure is good for two reasons. In the first place it encourages greater public participation in the share market, which is a very important objective. In the second place, it will reduce incentives for companies to finance investment through debt rather than equity. As far as greater participation in the share market is concerned, it is well remembered by all members nowadays we live in the age of takeovers. There has been an increase in concentration of market power. It may be inevitable, in a economy such as ours, that there will be some greater concentration of market power. We need to achieve greater economies of scale in many of our industries than we have achieved to date. But one of the problems of this has been the decline in public participation in the market. Harold Macmillan, when he was Prime Minister of Britain, talked about the importance of having what he described as a property owning democracy. The concept of the property owning democracy should not be narrowly defined as housing and land. The definition should be taken much more broadly to include shares in the share market-in other words, to extend the principle of so-called people's capitalism. In Australia the trend has been for institutions to control the major companies in our community. That is a trend which has also taken place in countries such as the United States of America and Britain. For example, in the United States only 13 per cent of shares in American companies are held by individuals. In Australia only four per cent of Australians actually own shares. In 1979, 32 per cent of all shareholdings were owned by individuals-a reduction from some 73 per cent in 1953. So that shows a very sorry decline, a very sad decline, in the degree of community participation in the ownership of shares in Australia. What we are really doing is moving towards some kind of pension fund socialism in Australia because, increasingly, shares are being held by the superannuation funds and not by individuals. This legislation provides an opportunity, an incentive, for more people to become involved in the ownership of shares. Of course, that gives people a much greater stake in Australia. There are other ways that this can also be achieved and encouraged. I do not expect that the Government is interested in those other initiatives. For example, we could expand the employee participation schemes and give tax incentives for those schemes. Of course, that has been part of the industrial relations policy of the Liberal Party of Australia, but it has not been supported by the Labor Party. We also need to look at the idea of the banks and other financial institutions providing greater community education in the share market and in participation in that market. If we can do those things, we will increase the participation of ordinary Australians in the Australian share markets. We will increase the ownership of our national corporations by ordinary Australians, and we will increase the overall reputation of capitalism in this country, because capitalism will then be not pension fund capitalism but genuine people's capitalism. That is what we on this side of the House want to achieve. We want to put power into the hands of ordinary people, not into the hands of major interest groups. I mentioned earlier that the second advantage of this legislation is that it reduces the incentive for companies to finance investment through debt rather than equity. It is appropriate that this should happen at a time when Australia has the highest foreign debt in its history-a foreign debt that has grown under this Government from around $35 billion to $105 billion. The very recent change in attitude by this Government towards debt contrasts dramatically with its election program in 1983. It is worth remembering that back in 1983 the Labor Party stated in its platform that it had a desire to `increase the portion of capital inflow on the basis of loan capital rather than equity capital'. Australians should never forget that that was one of the objectives of the Labor Party. They should never forget that that was one of the objectives which the Labor Party successfully and sadly fulfilled. The cost to Australia has been a foreign debt of $105 billion-a debt for every baby born today of an additional $6,000-and this country losing, for the first time, its AAA credit rating. The Government admits that it has made a mistake. It admits that it has gone in the wrong direction. This legislation will help to cope with that. It is important to point out that the Government, when introducing such schemes, should not do so in isolation. It should not lose sight of the greater objectives of building Australia. This scheme should be part of tax reductions generally. The Government should be lowering company taxes and personal income tax rates. In reality, it is not doing that. What this Government does in this legislation, to the astonishment of most Australians, is to increase the company tax rate from 46c in the dollar to 49c in the dollar. As the honourable member for Mackellar (Mr Carlton) pointed out, that compares unfavourably with countries such as Britain, the United States of America, Hong Kong and those in our own region. The Government also introduced its pernicious fringe benefits tax, capital gains tax, foreign tax credits system and so on. The upshot is that if we compare Australia's cost of capital with that of comparable countries, we can see that over the past five years our position has weakened. Five years ago, we had something like the eighth highest cost of capital out of the 15 major industrialised countries. Once the investment allowance was taken away and nothing was put in its place, Australia went to No. 4 in terms of the highest cost of capital. With the new taxes which I have mentioned-that is, the fringe benefits tax and the capital gains tax, the increase in company tax and the foreign tax credits system and so on-we will surely climb higher still on that scale. If one wants to build up a country and create a greater country, one does not push up the cost of capital to make it uncompetitive. We need investment in Australia. To get that investment we must compete with the United States, Canada, the Asian countries-particularly the newly industrialised countries-Japan and Western Europe. We cannot do so if the cost of capital in Australia is too high. The imputation scheme which the legislation introduces is welcomed. However, it is regrettable that the Government has done nothing to make our country and our economy more competitive. I refer to one other specific aspect of this package of legislation; that is, clauses 32 to 34 of the Taxation Laws Amendment Bill (No. 2). The clauses relate to the administration of what is called the 10ba tax concessions to the film industry. The clauses provide that the Minister for Arts, Heritage and Environment may deny the issuing of a certification of a film for eligibility for 10ba on the grounds that the film has some non-Australian content. This amendment has been introduced as a result of the fiasco that took place on the film the Return of Captain Invincible. The film which, admittedly, was not a box office success, was sent overseas. It was sent overseas only for the purpose of cutting. The film was made in Australia; it was simply cut in the United States so it could be sold more readily into a rather different market in that country. The Minister for Arts, Heritage and Environment (Mr Cohen) tried to deny the certification of the film for eligibility for 10ba on the grounds that it had some non-Australian content. I think that anyone could see that that was a pretty absurd decision. However, that was his decision. The result was that the producers of the film challenged the decision in the Federal Court and won that challenge. It would be interesting to know how much the Government's defence in the Federal Court cost the Hawke Labor Government. We do not know. I would like to know how much the taxpayer had to fork out for that defence. I ask the Minister to provide, when he replies to the debate, the figures so that all Australians who had to pay for that defence in the Federal Court, because of the Minister's decision, may know precisely how much was actually expended. The upshot was that the producers, not the Government, won the case in the Federal Court. This legislation has been found necessary to enable the Minister not to issue a certification for eligibility for 10ba if the film has some non-Australian content. We on this side of the House do not object to such an extension of ministerial discretion. However, we want a cast iron assurance from the Minister for the Arts, Heritage and Environment that, in using that discretion, he will act intelligently and with common sense-something which he was seen to lack in the case of the film the Return of Captain Invincible. I would like an assurance from the Government, when the Minister replies to the debate, that it will use this discretion intelligently and that, if it is necessary to make changes to a film overseas to make it more marketable in an overseas market, it will ensure that it is still eligible for the 10ba tax concession for as long as that tax concession applies. It is an absolute nonsense to say that no film with any foreign content can have any tax advantages, simply because a foreigner has had something to do with the film. If that is the case, our film industry will simply roll over and die. We would like that assurance from the Minister at the conclusion of the debate. In conclusion, let me return to what I said at the beginning. We want a taxation system in Australia that will encourage incentive, investment and development. We are not being given one. I congratulate the Government on its initiatives on the imputation system, although it is vastly complicated and will no doubt result in a mass of litigation. However, we would like to see a reduction in company and personal income taxes. We would like to see this Government showing some commitment to the building of a greater Australia, not to reducing this nation, as it has done over the past four years, to economic rubble. Dr THEOPHANOUS(Calwell)(8.07) —A few minutes ago the Leader of the Opposition (Mr Howard) attempted to present to this House his response to the statement by the Treasurer (Mr Keating). That response contained a mish-mash of intellectually incoherent statements, contradictory assertions, and no solutions to this nation's economic problems. That is relevant to this legislation because, earlier today, that process had commenced in the debate on this legislation. Earlier today we had the absurd picture of the shadow Treasurer, the honourable member for Mackellar (Mr Carlton), pretending that the legislation would be a burden on the business community. This legislation is the biggest handout to the business community by any government for many years. And what do we have? We have honourable members opposite coming into this House and saying: `We will go along with it, but what about all the other burdens on business?'. The fact of the matter is that this is the single most important reform in support of the business sector that one could conceivably imagine. Earlier, the honourable member for Mayo (Mr Downer) referred to the Fraser Government's pathetic attempts to reform the imputation system. The Fraser Government failed totally in that respect. So we have in this House the spectre of the Opposition, rather than applauding the legislation and seeing it for what it is-namely, an important handout to the business community, a handout which is supposed and intended to stimulate incentive and investment, which the Opposition is constantly calling on us to do, without giving any ideas as to how we are supposed to do it-- Mr Beale —Didn't you listen to Mr Howard tonight? Dr THEOPHANOUS —I listened to the Leader of the Opposition tonight and I did not hear a single new idea to promote investment. If the honourable member for Deakin (Mr Beale) thinks that the nation will be fooled into thinking that there is a single answer in the speech of the Leader of the Opposition to the problems affecting investment in this country, he is fooling only one person-himself. This will be proved when we win back the seat of Deakin at the next election. If I were honourable member for Deakin then, after the Leader of the Opposition's speech this evening, I would not worry about being a Minister: I would be worried about whether I would get back to this House. The fact is that the Opposition is totally intellectually incoherent. Not only is it divided between the wets and the dries, but it is intellectually incoherent when it comes to offering a single solution to the problems of the nation or a solution to fundamental problems such as how we will get increased investment in industrial development in this country. Earlier in the debate honourable members opposite complained about the capital gains tax and the fringe benefits tax. They do not consider all the benefits that will flow from this package of legislation. The fact is that the wealthy income group in this country will benefit dramatically from the imputation package. However, members opposite do not consider that. What do they care about? It is not enough for them that the wealthier people will get the benefits of the imputation package; they want to take away the capital gains tax and the fringe benefits tax so that in fact that sector of the economy will have no burdens on it at all; it will not even pay its share of taxation. That is what the Opposition advocates. The fact is that the Government proceeds on a different basis-the basis of a scientific analysis of what is needed to stimulate investment in this country. We do not proceed on the basis of airy fairy ideological New Right formulas which, if implemented in this country, would devastate the nation. As the Treasurer said, the Leader of the Opposition had a test to pass tonight and he failed it totally. Mr Hand —No solutions at all. Dr THEOPHANOUS —As the honourable member for Melbourne says, not only did he offer no solutions, but he did not in any way dissociate himself from the formulas, philosophies and solutions of the New Right. On the contrary, what he did assert was more of the same garbage that we have had from the New Right. If the Leader of the Opposition thinks that by offering those sorts of solutions he will unite his own Party he is dreaming. After tonight, his Party will be more divided than ever. If he thinks that by offering in this House solutions and ideas that come from extremists outside the House, such as the Monash so-called think-tank of Professor Porter and other representatives of the New Right, he is dreaming. Mr Blunt —I rise on a point of order, Mr Deputy Speaker. I understand that the House is debating tax legislation in a cognate debate. I fail to see the relevance of the rantings of the honourable member for Calwell about political philosophy. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Order! The honourable member for Calwell has been dealing with a number of matters that come within the ambit of the Bill, but he has strayed off it a little. He might come back to the Bill. Dr THEOPHANOUS —I shall be happy to come back to the Bill, Mr Deputy Speaker, and to point out its benefits in terms of increasing investment. Let us be honest and straight about this matter. It is being suggested that this Bill is some kind of burden on business rather than a huge benefit to business-a $300m gift to business-and that it is not enough, that we have to take away the capital gains tax and the fringe benefits tax, too. It is suggested that people in the top echelon, who will benefit dramatically from this legislation, ought to have extra benefits and not pay any tax at all. If the honourable member for Deakin had his way, I suppose that anyone who earned more than $50,000 would not pay tax at all, and everyone under $50,000 would pay it. That will probably be the next demand from the New Right to be brought before this House. The imputation package is designed to transfer the burden and to ensure that there is greater investment where it is needed-in manufacturing industry in particular and in export orientated industries. My time is limited, so in conclusion I want to make it perfectly clear that the imputation package represents a huge gift to the business community, and we expect it to use it sensibly, to take advantage of this situation and to invest in new industries-- Mr Hand —Job creation. Dr THEOPHANOUS —And job creation, as the honourable member for Melbourne says. That is the Government's expectation. If in fact this does not come about, we will be looking at further ways and means of ensuring that that investment takes place, because, as the Treasurer has said, we are determined to turn round the situation in this country and recreate the industrialisation that was destroyed in the years of the Fraser Government and under the leadership, especially in relation to the Treasury, of the current Leader of the Opposition, who, today, tried to pretend that he had had nothing to do with that. He tried to pretend today that he had nothing to do with that period and the wholesale destruction of jobs that ensure. We support this legislation from a scientific point of view because we believe it will help to increase investment. If investment is not increased, we will look at other ways and means of ensuring that the benefits- Mr Beale —How? Dr THEOPHANOUS —The honourable member asks: `How?'. We have a hundred different means. Each member on this side of the House has more ideas than the totality of honourable members opposite. Today, the Opposition in Question Time could not even come up with seven questions-- Mr Blunt —I raise a point of order. I fail to see how the conduct of the House at Question Time today has any relevance to any of these tax Bills. Mr DEPUTY SPEAKER —I think that the honourable member for Calwell might come back to the matter before the House and that the honourable member for Deakin might cease provoking him. Dr THEOPHANOUS —Mr Deputy Speaker, I was responding to an interjection from the honourable member for Deakin. The Opposition today could not come up with seven questions in relation to the May economic statement, one of the most important statements to be made in the House. In the end, members on this side had to ask questions. This legislation is important. It will be judged by the business community and people generally as important in ensuring investment. We look forward to that investment taking place. We will monitor the situation to ensure it does take place, and we will consider introducing further measures should they become necessary. This Government is managing the economy scientifically in an endeavour to achieve this turnaround, rather than working on the basis of the ideological claptrap of the New Right, as supported by honourable members opposite on the front bench. Mr BLUNT(Richmond)(8.18) —It is a great pity to have to speak after the honourable member for Calwell (Dr Theophanous), because all we ever get from him is the claptrap of the old Left and its discredited ideas. Mr DEPUTY SPEAKER —The honourable member for Richmond was assiduous in drawing my attention to the fact that the honourable member for Calwell was not addressing the legislation. I hope that the honourable member for Richmond will not progress down that track himself. Mr BLUNT —I assure you, Mr Deputy Speaker, that everything I say here tonight will be directly relevant to the legislation before the House. Unfortunately, part of my remarks will now have to be directed to correcting the impression created in the mind of anyone listening to the honourable member for Calwell because, frankly, the honourable member does not know what dividend imputation is about. He maintains that this is a gift, a benefit, to the corporate sector. It has nothing to do with the corporate sector. It is a benefit to shareholders-not corporate directors, but shareholders. Let me explain to the honourable member for Calwell how dividend imputation works. Prior to the Government's decision to introduce a dividend imputation system in Australia, we actually had double taxation of corporate profits. Maybe the honourable member for Calwell and the honourable member for Melbourne (Mr Hand), being members of the Left, approve of double taxation but I do not and obviously the Treasurer (Mr Keating) does not. The Treasurer obviously has the numbers in Caucus to overcome the ideology of the Left. The effect of dividend imputation is that when a company pays a dividend the person who receives the dividend-that is, the shareholder-gets a credit for the tax paid by the company. The shareholder-not the directors of the company-or the executives of the company, but the shareholder. That is what we are talking about. We are talking about the elimination of double taxation of company profits distributed to shareholders. That is what this legislation is about. It is about encouraging investment in Australia's stock exchanges; about encouraging capital formation; about encouraging capital investment in productive assets; and about encouraging capitalism by people and not pension funds, which is a direct contrast with the Labor Party's policy on, for example, the lump sum taxation of superannuation fund payments. Let me explain the contrast. We have, under this Government, a lump sum tax on superannuation payouts except if a person invests his lump sum with a large insurance company to buy an annuity. That concentrates the control of capital in Australia in the hands of a relatively small number of people-the large institutional investors. This has probably escaped the attention of the honourable member for Calwell, because I am quite sure he would be totally opposed to the concentration of the control of capital in the hands of relatively few people, some of whom are even overseas controlled. That, of course, would be anathema to anyone who had true left wing principles and did not sell them out at the change of the wind every time a little bit of heat was applied to him in Caucus. The Labor Party is running a tax policy on lump sum superannuation which encourages the concentration of capital in the hands of the pension funds, so that we do not have a situation where people who have worked for 40 years in Australia and contributed to their superannuation schemes get their lump sum-maybe $100,000 cash in the hand-and have the opportunity to pay off their mortgage, maybe buy a new car, take a trip around the world, invest the residue and live off the interest for the rest of their lives and maybe have some security in their old age. What they have to do is buy an annuity. Who do they pay the money to when they buy the annuity? It is paid to one of the large institutional investors, which further concentrates the control of Australia's capital markets. As I said, some of them are overseas owned. Contrasting that position of the Labor Party-that tax was introduced by the very same Treasurer and obviously supported by members of the Left-we now have a bit of economic enlightenment. I support dividend imputation. It is something that is long overdue in Australia. The previous Liberal-National Party Government was moving in that direction and had provided an exemption for $1,000 worth of dividends in the hands of individual shareholders. We would have moved for a full, proper, equitable and efficient system of imputation. But the real problem with the scheme that the Government has introduced is that its imputation- Dr Theophanous —You had seven years. Why didn't you do anything? Mr DEPUTY SPEAKER(Mr Leo McLeay) —Order! The honourable member for Calwell will cease interjecting. Mr BLUNT —Thank you, Mr Deputy Speaker. I really do not need your protection. I find his interjections quite stimulating, even amusing. Mr Beale —And irrelevant. Mr BLUNT —And irrelevant. What we have is imputation on the cheap. It is not an effective system of imputation; it is a system of imputation which is riddled with anomalies and inefficiencies. It was introduced this way because the Government could not afford to do it properly. In fact, the price paid by the corporate sector for dividend imputation has been an increase in the corporate tax rate. While the rest of the world is decreasing corporate tax rates and personal tax rates also-the United Kingdom is down to 35 per cent-the Treasurer and the Labor Party generally in this country are moving taxes up. So we have dividend imputation, which is of benefit to shareholders, and companies pay for it by having an increased corporate tax rate, from 46c to 49c. The rest of the world is going down and Australia is going up. The rest of the world's inflation is down, but ours is up. The rest of the world's interest rates are down, but our interest rates are up. Dr Theophanous —Mr Deputy Speaker, I raise a point of order. I fail to see what this has to do with imputation. Mr DEPUTY SPEAKER —Order! There is no point of order. Mr BLUNT —Mr Deputy Speaker, I ask you to rule that that was a frivolous point of order. Mr DEPUTY SPEAKER —Order! In this debate there have been a number of people attempting to raise points of order and interjections. We might now cease all that and get on to the legislation. Mr BLUNT —As I said, the Labor Party in its tax policy is totally out of step with the rest of the world, and Australia's potential to get back into step with the rest of the world is significantly-- Mr Hand —What rate would you give? Mr DEPUTY SPEAKER —Order! The honourable member for Melbourne will cease interjecting. Mr BLUNT —As I was saying, the Labor Party is significantly out of step with the rest of the world. It cannot even introduce an effective system of dividend imputation. The present scheme just will not work. In fact, it is a great con. Let me point out some of the anomalies that exist within the present scheme. What happens is that a person gets a credit for the tax paid on the dividends he receives. Unfortunately, he cannot get that credit paid back to him unless he has additional taxable income to offset his tax liability against the credit for the tax paid on the dividend. Mr Cobb —It hurts the poor. Mr BLUNT —It hurts the poor, as the honourable member for Parkes says. If a person has a small shareholding, is paid a dividend on which tax has been paid and has no other taxable income-and many widows and orphans living in the electorate of the honourable member for Melbourne would be in that situation; it is about time he raised it with the Minister for Social Security (Mr Howe)-that person has a tax credit. But if he has no tax liability to offset that tax credit against, he cannot get it refunded to him. That is inequitable. The second thing that is significantly inequitable about what this Government is proposing is that the Medicare levy at 1 1/4 per cent is calculated on the gross value of the dividends. So if the total dividend is $100 and the tax payable on it by the company is 49 per cent, the Medicare levy is calculated in the hands of the shareholder on the $100. Since the person gets in his hands only 51c in the dollar, that is a doubling of the Medicare levy from 1 1/4 per cent to 2 1/2 per cent. One cannot offset the tax paid on the dividend against one's Medicare levy. That is really an underhand way of doubling the Medicare levy for a certain section of our community. This dividend imputation scheme that the Government has introduced starts to rationalise corporate tax in Australia. We need to reduce the tax rate. We need to do away with the anomalies. We need to make sure not only that the anomalies that I have mentioned are eliminated, but also that the credit for tax paid can be carried forward. What of the situation of a person who is engaged in a business and also has a number of investments in public companies that are eligible for dividend imputation? The person, in a given trading year, may incur a loss. The loss, under Australia's tax law, can be carried forward for up to seven years, but the credit on the dividend paid on his investments in the corporate sector cannot be carried forward. That tax paid in that year is lost. There is no justification for that. If we had a fair dinkum attempt to introduce an equitable system of imputation in this country, we would give tax paid on dividends the same status as other tax credits that are available in Australia, including the capacity to carry forward losses. This Government is not fair dinkum. It is, as usual, trying to create an impression that it is moving in the correct direction, and it is to some extent but, as usual, it has not done so properly. The price paid by the corporate sector in increasing the tax rate from 46c to 49c in the dollar is far too high. Our time tonight is limited. I would like to speak at greater length about dividend imputation. Unfortunately, I had to correct the false impressions created in many people's minds by the totally inaccurate comments made by the honourable member for Calwell. However, I would like to address two other aspects of the legislation that is being considered by the House tonight. One relates to an amendment which proposes to give the Commissioner of Taxation power to require reasonable access to records and facilities. At present, under section 264 of the Income Tax Assessment Act, the Commissioner has a right to require the provision of information relating to a taxpayer's returns. The amendment that is contained within the legislation that the House is considering tonight allows the Commissioner to require access to records-reasonable access; I concede that the word `reasonable' is there-and facilities. It does not require the giving of notice. What it really means is that the Commissioner can arrive at the taxpayer's door, ask for access and reasonable access must be granted. I consider that that is not an appropriate position for this Government to advocate on behalf of the Taxation Office. It is, in many cases, an attempt to separate the taxpayer from his tax agent. The Government should recognise that when a taxpayer uses the services of a tax agent all questions and queries relating to the tax return should, in the first instance, go to the tax agent. There should be no attempt to separate the taxpayer from his agent. I note advisers in the gallery shaking their heads. If they sat in an honourable member's electorate office, they would understand how field audits operate. Mr Cobb —The real world. Mr BLUNT —Yes, we are talking about the real world tonight; we are talking about the attitude of officers of the Australian Taxation Office who go out into the field and do nothing short of harass taxpayers. To give them power to arrive without notice, without reference to the tax agent, and to require reasonable access to facilities, is wholly unnecessary. Section 264 is adequate. `Reasonable access' requires definition. I have constituents who tell me that they have been called at 9 p.m. by officers of the Tax Office saying that they will require access to records the next morning. I do not think that calling at 9 p.m. to require access at 9 a.m. is reasonable. What are `facilities' in this modern day and age? Are they a desk and chair, a photocopier or access to the company computer? We need some qualifications and limitations on this very broad-ranging power. Over the past few years there has been a considerable increase in power of the Australian Taxation Office to collect tax in Australia. The Government will argue that it is appropriate to crack down on the tax cheats and dodgers, and I could not agree more. However, it is not appropriate to harass small businesses that compensate for the administrative inefficiency of the Australian Taxation Office. Unfortunately, there is not an honourable member of this House who is not aware of the inefficiencies of the ATO. They have been documented by everybody, from the Auditor-General to parliamentary committees of inquiry. The solution to the problems of the ATO is not more and more power, not more and more weapons to use against taxpayers, but a good hard look at the way that the office operates, some decent internal management, some control, a simplification of the tax system, a reduction in the tax rates, and a more realistic approach to the collection of tax in Australia. Rather than using the heavy hand, what we need is a simple tax system. In the other aspects of the legislation on which I wish to comment tonight, there is a classic example of overkill by the Government, and the ATO that advises it. There are changes in the requirement for motor vehicle log-books-and about time too! On 19 September, the Treasurer waltzed into this place and announced the Government's tax package-14 or 16 measures, most of which have been dramatically changed, altered, rearranged or not implemented. Part of the original proposal was nothing short of a draconian requirement to keep a log-book on vehicles used for business. The requirements to maintain that log-book were incredibly onerous. After massive community protest, they were changed-like so many other parts of this Government's incoherent and often incomprehensible tax policy-so that there was a requirement only to maintain a log-book for 12 weeks. However, as part and parcel of that original proposal, one had to decide how one was going to claim the deduction for motor vehicle expenses-whether it would be actual milage or percentage of usage. There would have been no opportunity to change from one system to another. The business community and members of the National Party of Australia told the Government that that was crazy, wholly inflexible and that there was a need for change. Tonight, the Government is backing down, recognising that what it was told by the business community, the National Party and the Opposition generally was true. I congratulate the Government for coming to its senses nine months after the event. Later tonight my colleague the honourable member for Parkes (Mr Cobb) will move amendments to sections of this legislation. The National Party believes that section 263 is wholly inappropriate in the context of the Australian tax laws. We believe that it is more appropriate to get off the backs of small businesses. It is wholly inappropriate to provide more and more power to the Australian Tax Office. Ms JAKOBSEN(Cowan)(8.35) —I am very pleased to speak on the Taxation Laws Amendment (Company Distributions) Bill, particularly as it relates to imputation. Mr Tim Fischer —With an early polling day this could be your swan-song. Ms JAKOBSEN —Oh, the honourable member thinks there will be an early polling day. Does he want an early election? Mr Beale —If there is one, you are gone, baby. Ms JAKOBSEN —If I am gone, the honourable member is gone-he does not need to worry about that. We are discussing tonight a most important aspect of the Government's company tax reform package-that is, the removal of the double taxation of dividends through the imputation of taxation already paid by a company on its profits. I recently wrote to a large number of small-business people in my electorate advising them of the proposed imputation legislation, and I am sure that they recognise its potential benefits to them. It has been estimated that imputation of dividends could reduce the tax bill of some small-business people by almost 40 per cent. Small business is probably, and should be, the biggest winner as a result of this reform. It is a reform that small businesses have wanted for 30 years. I can certainly remember when we were in opposition small business lobbying Australian Labor Party members of parliament for exactly this reform. The Liberal Party, despite all its protestations about what it was going to do, did not introduce imputation when it had the opportunity to do so. As the Treasurer (Mr Keating) has explained on previous occasions, the imputation system will cut the effective tax on profits from a top rate of 78.4c in the dollar to 49c. Therefore, if a company makes a pre-tax profit of $100,000, the total tax payable will be $49,000 compared with the $78,400 which would have previously been payable. Under this legislation, shareholders will not have to pay tax on those dividends where the profits have been taxed already in the hands of the company. Instead, they will get an imputation credit for the tax that has been paid by the company. Where a company has paid tax on the profits at 49 per cent, and an individual shareholder has a marginal rate of less than that, a credit will be available which can be offset against the shareholder's other tax liability on income. However, the tax credit gain can be offset only against current tax liability. It cannot be cashed in and it cannot be carried forward into another tax year. This is because we are interested in reducing double taxation. We are not advocating a policy of no taxation. I think that in some circumstances the Opposition is getting a little confused. I would like to commend my colleague the honourable member for Jagajaga (Mr Staples) on his contribution to this debate earlier today. I particularly commend his correction of the misrepresentations made by some honourable members opposite. For instance, the honourable member for Corangamite (Mr McArthur)-I am sorry that he is not here; I did not mean to speak about him in his absence-referred to the apparent differential between company tax rates in other countries and the rate in Australia. I noticed that the shadow Minister sitting at the table, the honourable member for Deakin (Mr Beale), also made that reference in his speech earlier. Mr Beale —I didn't make the speech on this. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Order! Ms JAKOBSEN —I am sorry, I heard the honourable member speaking about it. I apologise to the honourable member. If it was not him, it was certainly somebody who sounded like him. Honourable members on that side of the House all sound alike. As the honourable member for Jagajaga quite rightly points out, no such comparison can be made unless actual and average tax rates are being employed. Few, if any, companies are actually paying 49c in the dollar taxation. They are able to access significant and generous allowances, rebates and tax deductions which have the advantage of bringing their rate of tax down. I am not intimating for a moment that that is a bad thing, but it does render the comparison irrelevant. For instance, the top 150 companies in Australia paid 28c in the dollar in 1985-86, whereas the honourable member for Corangamite would have us all believe that every company pays 49c in the dollar. I would like to draw to the attention of the House an article in the Australian Financial Review of Tuesday, 24 March which dealt with dispelling the confusions on imputation. There is a reference in that article to the difficulty that people seem to have on the 49c company rate. Albert Smith writes: . . . . professional practitioners seem a little confused about what type of companies will be able to pay `franked' tax-free dividends. The confusion arises from an inability to grasp the main consideration in determining whether a company is able to pay franked dividends: This is simply that under the rules of imputation, dividends will be deemed by tax authorities to have been paid out of that portion of company profit on which tax has been paid. The plain and simple fact is that all companies pay 49 per cent tax on their taxable income- it is the effective rate of tax which causes the problem- and dividends paid from these taxed profits will be tax-free in the hands of the shareholders. One commentator last week made the breathtaking discovery that companies charge investment allowances, depreciation, and interest charges against their gross income and claim taxation rebates on dividends received from other public companies. The implication was that because companies reduce their effective rate of tax by making these quite proper and hardly novel claims against gross income their ability to pay `franked' dividends will be inhibited. This is a misunderstanding . . . It is worth reiterating: for imputation purposes, dividends are deemed to come from the tax-paid portion of income. This is shown in the formula for establishing a qualifying dividend account from which `franked' dividends must be paid. Mr Smith goes on to explain that. He continues: As long as the total dividend pay-out does not exceed the qualifying dividend account, the dividends may be totally `franked'. It is possible for people on low fixed incomes, such as superannuitants and pensioners, whom I have heard discussed in the House tonight, to benefit by putting their money into a very secure-I stress that-form of stock exchange investment on which a dividend would be paid by the company and which dividend would be deemed to have been taxed at 49c in the dollar. If their marginal income tax rate is less than 49c in the dollar, which in most instances it would be, they would make a certain amount of money because they could get the money imputed and credited against their other taxable income. It is important to emphasise that people who wish to pursue some sort of tax advantage through the imputation system ought not be encouraged to invest on the stock exchange in just any sort of company. People who have low, fixed incomes ought not to risk their money on the stock exchange. They ought to put it into very secure investments and, preferably, get some sort of advice before they do so. Mr Beale —What kind of advice? Ms JAKOBSEN —Perhaps they should go to some sort of stockbroker, Julian. I am not quite sure. Mr Steele Hall —This is all a bit chummy. Ms JAKOBSEN —It is a bit chummy, is it not? Excuse me, Mr Deputy Speaker. I wonder whether the honourable member for Corangamite has discussed his views on taxation with the Leader of the Liberal Party (Mr Howard). I wonder whether he knows what his Party's policy is on taxation because, if he does know, he is the only one who does. Even after the speech tonight by the Leader of the Liberal Party in response to the May economic statement we still do not know what the Liberal Party's taxation policy is. We certainly do not know what the National Party's taxation policy is, although we have a fair idea that Sir Joh Bjelke-Petersen might have something to do with determining it. Earlier in this debate the honourable member for Curtin criticised Government members for having the temerity to ask the opposition parties to release their tax policies and economic options. In his endeavours to discredit those members on this side who have sought that information he said that the Labor Party did not have a tax policy at the 1983 election. Mr Beale —Quite right. Ms JAKOBSEN —I remind the honourable member for Curtin (Mr Rocher), and also the honourable member for Deakin as he insists on interrupting me, and the people of Australia that at that time taxation was not on the political agenda in quite the same way as it is today. When confronted with this Government's excellent record on taxation and tax reform, it is essential that the Opposition parties disclose their own policies on taxation or fail the credibility test that will be set them by the electorate. They are irresponsible not to do so and that is how they will be judged by business and by the electorate at large. I am very confident of that and I think most honourable members on this side of the House would be also. I was also intrigued yesterday to hear the honourable member for Mackellar (Mr Carlton) in his speech on the Supply Bills refer to the rules of `handbag economics'. He was quoting Mrs Thatcher as his example, which bordered on sexism. He stressed the importance of balancing the budget, as one would with one's household expenditure. While I do not necessarily agree that the handbag or household budget analogy can be simplistically transferred to the national economy, I would point out to the honourable member for Mackellar that this Government has made the Australian population aware for the first time that our nation has been living beyond its means. By the same token, the honourable member for Mackellar and the Leader of the Liberal Party stand condemned by their own handbag Budget rationale. It was their economic incompetence and ill-advised squandering of our country's resources, both human and physical, which contributed to the difficulties our Government had to overcome on attaining office. I remind the honourable member for Mackellar of the legacy of a $9.6 billion deficit which his Party left the incoming Labor Government when it vacated the Treasury bench. This Government has struggled under that legacy for four years and has done more to decrease Australia's dependence on debt financing that it was ever able to dream of, let alone achieve. Many of the difficulties which we are now working our way through as a government were brought about by the inefficiencies and economic vandalism of previous governments-especially the Howard-Fraser team, which left Australia struggling under such an enormous deficit. We have reduced that deficit in every single Budget since attaining office. The May economic statement released by the Treasurer last night continues that course by cutting the deficit by a further $4 billion. The honourable member for Mackellar and many of his friends and colleagues opposite understand nothing about economics. That is patently obvious from his speech. However, no one on the other side seems to know that. Maybe the Leader of the Liberal Party, the honourable member for Bennelong, has a sneaking suspicion, but he is not game to say so because nobody listens to him any more. I commend the Treasurer for introducing these taxation Bills this evening, especially the imputation portion, and I commend the Bills to the House. Mr STEELE HALL(Boothby)(8.47) —The Taxation Laws Amendment (Company Distributions) Bill and four cognate Bills deal with the central piece of the approach of the Treasurer (Mr Keating) in softening the Government's attitude towards industry and those who invest in industry. I refer to removal of income tax from the payment of dividends in the hands of shareholders; in other words, the institution of a single tax instead of two. One would have thought that this was such a major matter of reform that it would dwarf all the other issues which are complex and dangerous to the economy at the moment. I notice tonight that no one on the Government side is willing to speak about Australia's disastrous international trade figures released today. Australians, as they contemplate their financial future this evening, know that as of today they are nearly $1,000m poorer than they were last month. One of the factors about the Government's and the Treasurer's dealing with this matter of imputation is that the Treasurer tends to spread this legislation's reputation across Australia as if most Australians will benefit by this measure. When we realise that only a small proportion of Australians are investors on the stock market and that only a very small proportion of those total investors will be subject to this remission of tax, we understand that while it may be a good move-and, in fact, is a good move as far as it goes-it is not something that will be enjoyed by most Australians. In fact, a figure has been put on this. Only about 15 per cent of the shareholding traded on Australian stock exchanges will be subject to tax remission in this way, because the large institutional investors hold most of the investment in companies on the stock markets of Australia. The subject itself highlights the frenzy that Australian stock markets have been through in recent times. That is highlighted in turn, of course, by that controversial move of recent times, the readjustment or re-appointment of ownership of television interests in Australia when the new owners of Channel 7 in Melbourne were reputedly not interested in the books, describing the financial aspects of their new venture as paying nearly $350m for a company which earned $6m last year. There could be no greater illustration of the frenzy which has pervaded Australian stock markets than that purchase. There will be one other positive effect, however, of the Government's initiative. One would expect there to be much greater incentive for company management to pay out dividends rather than to accumulate capital assets. Certainly investors in companies who can see themselves getting essentially tax-free dividends will be urging directors, who should act on their behalf, to pay their rewards in dividends rather than in longer term capital investment. The legislation should also have a depreciating effect on the mad run in some companies in Australia to substitute equity with debt which, of course, raises their risk in future recessions or depressions. Basically, one would have to say that these measures are to be supported, although they are overblown in the sense of the national exposure which the Treasurer and the Government have given them. Because all of these things have been said in previous debates there is little new that one can add to the subject now being discussed. I now refer to a fairly parochial matter concerning my district which was mentioned in passing in the debate on the Taxation Laws Amendment Bill (No. 2), when the Government's extension of payroll tax exemptions applying to first year apprentices and trainees employed under a training agreement was raised. It was stated that this measure is another Government initiative to give effect to its policy of encouraging youth employment. South Australia in recent days was shocked to hear about Federal Government policies in relation to apprenticeships and youth training. The South Australian Government has announced that it will close the Goodwood High School, saying that full consultation had been entered into with the school council and with parents. This, of course, is a false statement. There has been no prior consultation with those interested, and parents have expressed their concern in no small manner. I understand that tonight there is a public demonstration and march taking place in Adelaide about the closure of this very worthwhile, essential institution. The papers have been full of letters expressing parental concern. One letter states: Boys who attend Goodwood have very little difficulty in entering the work force on leaving school. Another reads: This school has developed a special expertise and environment that caters for students who find book learning difficult. Another parent writes: . . . for many it has been the foundation stone for many apprenticeships throughout the State . . . So, on it goes. To South Australians, this is a second chance school which has been taking boys, in particular, who have found the academic stream of education unsuited to their particular talents. It has an immense record of success. Over the last few years 28 students from private schools have been sent to Goodwood High. Over recent years senior officers of the Department of Education in South Australia have recommended that the school continue. The school itself has presented a formidable training base for apprenticeships in South Australia. It is the biggest in South Australia; it has major engineering, woodwork and welding training facilities. As of next week it is taking delivery of a brand new electrical workshop. Why is this a matter of Federal interest? I will quote an excerpt from a statement made last week by the Minister for Immigration and Ethnic Affairs (Mr Young) to illustrate why it is a matter of Federal interest. The Minister said: The current shortages in the metal, electrical and printing trades can be traced in large part to the dramatic decline in apprentice intakes during 1982 and early 1983 under the Fraser Government. He went on to say: Late last year the Government received a report on the occupational share system for skilled migration. He said further: The report, entitled `Meeting Australia's Skill Needs', recommended that up to 3,950 workers in 26 occupations be granted entry under the arrangements in 1986-87. This represents an increase of 450 over last year's level, but the continuing strong demand for high level skills in certain occupations justifies this increase. In the face of this the South Australian Government adopted this totally political appreciation of the needs of technical training in South Australia and announced the closure of a school that takes from 59 other South Australian schools students who do not suit the academic stream. Madam DEPUTY SPEAKER(Mrs Darling) —Order! I would just like to bring to the attention of the honourable member for Boothby the fact that we are debating the taxation Bills. I assume that the examples to which he is referring relate to those Bills. Mr STEELE HALL —Yes, Madam Deputy Speaker. I refer to Taxation Laws Amendment Bill (No. 2) which, as I said when I began my address, refers to the payments payable to first year apprentices and to trainees employed under a training agreement as part of the Australian traineeship system, and to the more general statement by the Minister that this measure is another of the Government's initiatives to give effect to its policy of encouraging youth employment. There can be no matter more important to youth employment-certainly in my State, Madam Deputy Speaker-than that of technical and apprenticeship training. Therefore, the projected closure of the Goodwood High School is a disastrous blow to my State, which at any one time has vacancies numbering from 800 to 1,000 in the technical area in industry in Adelaide. I have already quoted to the House the words of the Minister for Immigration and Ethnic Affairs when he illustrated last week in this chamber the necessity of bringing into this country over 4,000 people experienced in trades because of the shortage of such people in Australia. I said that Dr Shinkfield, the Principal of St Peters College, a noted private school in South Australia, has been not only vocal, but quite strongly critical of the prospective closure of this school. He has called it a folly. He has said that it should be the very last school in South Australia to close and that St Peters College has been sending students to that school for a considerable number of years. I know that my time has nearly expired, but I want to say this: The closure of this school is an illustration of how State governments do not follow a national program as outlined by the national Government. Despite the fact that this Federal Government is of the same colour and persuasion as the State Government in South Australia, both being Labor governments, they are on diametrically different paths in relation to apprenticeship training in this country. The matter smells entirely of politics. In South Australia the Bannon State Government is spending $6.5m on the redevelopment of the Brighton High School in the politically sensitive electorate of Heywood. It is moving to close the most pre-eminent apprenticeship training school in South Australia in the uncontentious political district of Unley. It is a disgrace that this Government in South Australia should repudiate the statements that the Minister made here on behalf of Labor last week. I do not intend to take up the time of my colleagues, but I could develop this matter into a far more detailed argument. I ask, however, that the Federal Minister and his colleague the Minister for Employment and Industrial Relations (Mr Willis) intervene in South Australia to ensure that, whatever petty jealousies exist within the South Australian Education Department and whatever political persuasions move the Bannon Labor Government, this decision is rescinded in the name of the future of the students who are enrolled, to consolidate their future vocation, and in the name of those operatives that the South Australian industry requires. Debate (on motion by Mr Lamb) adjourned. Bill presented by Dr Blewett, for Mr Howe, and read a first time. Dr BLEWETT(Bonython-Minister for Health)(9.01) —I move: That the Bill be now read a second time. The Social Security and Veterans' Entitlement Amendment Bill 1987 Bill contains amendments to the Social Security Act 1947, the Veterans' Entitlements Act 1986, and the Seamen's War Pensions and Allowances Act 1940 to implement decisions which are to come into effect before or shortly after October 1987. Other measures which were announced by the Treasurer (Mr Keating) in the May economic statement will be implemented in Budget legislation or, where legislation is not required, administratively. Amendments in this Bill will lead to some new directions for social security while producing considerable savings. There will be changes building on administrative measures aimed at reducing the risk of wrong payments and welfare fraud. Other changes will encourage people to obtain employment and thereby combat long term dependence on social security. The Government retains its deeply held commitment to disadvantaged people and children in poverty. In order to protect and improve their living standards we must ensure that social security payments are well targeted. In line with this objective, the Government has decided to income test family allowances for families where the parental taxable income exceeds $50,000 a year. This threshold will be indexed. To protect large families the threshold before the income test applies will be increased by $2,500 for each dependent child after the first child. Where the income test applies the family allowance payable will be reduced by 25 per cent of the income in excess of the threshold. In the area of unemployment benefits, amendments in this Bill will give effect to the following measures: the waiting period before benefit is payable will begin after registration with the Commonwealth Employment Service; an `education leaver' waiting period of 13 weeks will be introduced for most claimants under 21 years of age without work experience; and an increased postponement period will apply for successive occasions on which claimants leave their employment voluntarily, are dismissed for misconduct or fail the work test for unemployment benefit. New measures will facilitate obtaining written confirmation of the circumstances of termination of employment from previous employers of claimants for benefit. There will be some changes to eligibility for pension and benefit for sole parents and widows. Eligibility for supporting parents' benefit and class A widows' pension will be restricted to those with children aged under 16. Class B widows' pensions will be phased out. This will be done gradually and will generally not affect the future eligibility of women currently aged 45 or over with dependants or of other women currently aged 50 or over. Amendments to rationalise the social security system and produce considerable savings include: measures by which sickness benefits will become more closely aligned to unemployment benefit rates for unmarried people without dependants: the strengthening of residency requirements: changes to eligibility for invalid pension-medical impairment will have to constitute the major part of the incapacity for work; and the removal of the savings provision which currently enables those in government housing to receive rent assistance. Other amendments in this Bill enhance actions against welfare fraud and extend the powers of the Departments of Social Security and Veterans' Affairs to recover overpayments. The information gathering powers in the legislation will be extended to allow for greater access to external records. Amendments will enable the passing on of relevant information, subject to secrecy provisions, to other Commonwealth departments and authorities. Administrative arrangements between the Department of Social Security, the Australian Taxation Office and the Department of Education will produce immediate savings by facilitating the earlier detection of incorrect payments and fraud. The powers in the legislation to acquire information from ex-clients will be extended. There will be power to recover debts from a wider variety of sources. A penalty will be levied on persons who do not repay an overpayment within three months. Provisions relating to arrears of pension, benefit and allowances will be standardised and there will be limits on arrears payable following appeals. Amendments to the Veterans' Entitlements Act 1986 and the Seamen's War Pensions and Allowances Act 1940 made by this Bill will mirror amendments made to the Social Security Act 1947 in relation to debt recovery and information gathering powers, disclosure powers, and residence requirements. This Bill will result in estimated net savings of $236m in 1987-1988 and further net savings of $342m in 1988-1989. I present the explanatory memorandum to this Bill. This contains details of the amendments I have outlined. I commend this Bill to the House. Debate (on motion by Mr Shack) adjourned. Bill presented by Dr Blewett, and read a first time. Dr BLEWETT(Bonython-Minister for Health)(9.06) —I move: That the Bill be now read a second time. The Health Legislation Amendment Bill is an essential part of the Government's economic strategy. It gives effect to certain measures announced by the Treasurer (Mr Keating) in this place on Wednesday, 13 May 1987 that relate to the health portfolio. There are two changes covered by the Bill which are to come into effect from 1 August 1987. The first amends section 10 of the Health Insurance Act 1973 and the second amends section 4 of the National Health Act 1953. The first amendment-clause 4-is the more significant. It changes the level of Medicare benefits for professional services received by persons while private in-patients of a hospital or a day hospital facility and therefore increases the gap benefits payable, that is, the difference between Medicare benefit and schedule fee. Private health funds will be required to extend the coverage for gap benefits on the basic table so that all privately insured patients will continue to receive the full schedule fee for all in hospital services. To keep the administrative arrangements as simple as possible, doctors will be required to identify in hospital services on their accounts and health funds will only pay gap benefits on written advice from the Health Insurance Commission. The Government gave careful consideration to the Medicare arrangements and was most concerned to ensure that the main principles of Medicare were not changed. These are that all Australians should receive protection against the high cost of medical treatment on a fair and equitable basis. Accordingly, it was decided that there would be no changes to the level of Medicare rebate for professional services received outside a hospital or for such services provided as out-patient services by a hospital or day facility. The changes in respect of professional services rendered to an in-patient of a hospital or day hospital facility will reduce the Medicare benefits from the present 85 per cent of the schedule fee, with a maximum gap of $20, to a flat 75 per cent of the schedule fee. This will mean that the significant savings to the Commonwealth Budget of about $105m in a full year-$80m in 1987-88-can be achieved with a minimum effect on individual patients. People with private insurance may have to meet a small increase in contributions, depending on the capacity of individual health funds to absorb the increase. Significant increases in out-of-pocket expenses to individuals will be avoided. Clause 4 also contains provision for regulations that may allow for certain professional services to attract the 85 per cent rate of benefit. This will allow for flexibility in the arrangement, for example, in the event of changes in technology or treatment practices. The second amendment, which is contained in clause 6, has the effect that any professional service that is rendered to the patient either before the actual time of admission or after discharge will attract a Medicare benefit of 85 per cent with a maximum gap of $20 instead of the new private in-patient rate of benefit of 75 per cent of the schedule fee. This is a change from the existing arrangement where any professional service rendered to a patient on the day of admission or day of discharge, regardless of whether the patient was actually in hospital, attracted gap benefit. I present the explanatory memorandum to this Bill. I commend the Bill to the House. Debate (on motion by Mr Shack) adjourned. Debate resumed. Mr LAMB(Streeton)(9.10) —This clutch or group of taxation Bills is part of the very wide package of taxation reforms introduced with the Government's White Paper and carried out over time and into effect. It essentially ends double taxation on income from dividends. This reform was recommended by the reports of the Asprey Taxation Review Committee 1975 and by the Campbell Committee of Inquiry into the Australian Financial System some six years later, yet the Opposition, then the Government, decided not to do anything on the matter and did not take up the reforms. Not once since the Liberal Party became the Opposition have we heard of any action in this area; nor indeed have we heard any details of any taxation policy. If we were to wait any longer, I am sure that the males in this House would have long beards. The Bills will put an end to double taxation on dividend income. Honourable members know that dividend income is currently taxed twice-first as company profits and then as personal income. The reform will cost the Government some $300m in taxation forgone, and it complements the huge tax reforms, the tax reductions of $4,500m which this Government has brought into effect flowing from that White Paper. If I can explain it in one sentence or so, the imputation of dividends means that shareholders' dividends will be credited with the tax paid by the company on its profits before distribution. It is a very pure form of imputation; it is probably as pure as any in the world, matched only by West Germany. West Germany also has full imputation, but there the company rate of tax is 56c in the dollar, whereas in Australia it will be 7c less at 49c. Shareholders will receive imputation credit to the point where they will receive the benefit of substantial tax reductions. When the Liberal Party was in government, for every $1 distributed by way of dividends, shareholders received only 54c as the 46c, the rate of company tax, was deducted. At the top marginal rate of tax then in existence-60c in the dollar-they ended up with 21.6c; in other words, just over 20 per cent of the total distributed dividends. The effective tax rate then was 78.4c in the dollar; but under this Government, not only have we reduced the top marginal rate of tax to 49c, but we have also allowed for imputation of the new rate of tax by companies-49c-so that we can get almost a 40 per cent reduction in the tax paid on dividends distributed under the new taxation arrangements. But for those on lower marginal rates of tax-say, pensioners, retirees, and those few people who, even though on low incomes, have managed to put a small nest egg aside for shares-will almost have their tax bills wiped out. Some will even end up with a tax credit that they will be able to use to offset the tax they would otherwise have paid on other forms of income. Right now, pensioners are discouraged from investing their life savings to earn revenue from shares. Their financial advisers persuade them not to do it; but here the whole scene has been changed. They will be able to offset the tax credits through the imputation of dividends against other income, and I think we will find that a broader range of people will acquire shares and reap the benefits of this tax reform. It will give a much wider choice of investment to those in retirement. The honourable member for Richmond (Mr Blunt) was rather scathing on the fact that, if you offset the tax credits against other income and still had tax credits to go, you could not carry it forward. While the Government is not deliberately working against negative gearing in the acquisition of shares, the benefit of not being able to carry it forward from the tax equity point of view is that people will be somewhat discouraged from negative gearing their share acquisitions and being able to carry forward tax credits to minimise their income to the point where they have a negative income. That is undesirable from the tax equity point of view. The honourable member for Richmond, together with his mates who are very much into negative gearing, might find that it is undesirable but, as a reformist government which wants equity in tax, we find it very desirable that a person cannot carry on those tax credits ad infinitum. The honourable member for Parkes (Mr Cobb) made the point that the Government had increased company tax from 46c in the dollar to 49c and had thus paid for this reform. However, I think that tax reforms which redistribute the tax burden and which are revenue neutral are very desirable. Over the past decade or so we have seen the contribution by companies to total government tax revenue drop from some 13 per cent to 7 or 8 per cent. This measure will reverse that trend slightly so that we will get a more equitable contribution from companies, and thus they will bear their fair share of the tax burden. The increase in the rate of 46c to 49c is a desirable move. Moreover, instead of investors and companies concentrating on tax minimisation, because the two levels-a 49 per cent top marginal rate of tax for personal income tax and 49c for company tax-are the same, both investors and company managers will be able to concentrate on performance, on the allocation of resources, and on the way in which their companies are run. We can expect an improvement in managerial competence, instead of concentration being directed solely towards how to minimise tax. Australia will be the beneficiary of this; we will have extra growth and we will be able to concentrate on the desirable side of company production. It has also been said that through this measure we will assist the wealthy. It has been calculated-and I think the honourable member for Jagajaga (Mr Staples) pointed this out-that only very few in the community, some 9 per cent, hold shares, and that much of that shareholding is concentrated in very few hands, perhaps 5 per cent. In considering the portfolios that people hold, and when we consider that people have insurance policies and that many of them are thereby shareholders, one finds that shareholding is far more widespread. The surveys which indicated this small concentration of share ownership did not consider the area in relation to which people were unaware that they were actually benefiting from being shareholders and policy holders at the same time. The sort of charge that has come from the Opposition, that this Labor Government, this government of reform, is acting on behalf of the rich only, overlooks several important factors. Indeed, the people who will benefit most from these reforms will be those involved in small business. For those people who have incorporated a business-and businesses incorporate for many reasons, to limit their liability, and so on-those who have formed a limited company, and it may be that a person is a sole shareholder, will, through this tax reform, be able to slash their tax bills by some 40 per cent. They will be the big winners; they have been waiting for some 30 years for this reform. However, the Opposition, which was in government for some 24 or 25 of those 30 years, did nothing. Yet members of the Opposition argue that they are the champions of small business, that they are the only ones who have the interests of small business at heart. Yet it is this Government which has the runs on the board. Our record shows that we believe in fair and equitable tax, and we are the only government actually to give, not tax shelters and not improper incentives to business, but proper incentives developed on the profit motive, on reward for effort-not involving the sleazy way to profits, namely, through the back door of tax rorts. The low income earners, with small holdings, will actually get the biggest benefits from this reform. In other words, it is a progressive tax. I shall explain that. Someone on average weekly earnings, earning say $450 a week, or $23,500 a year, with, say, $1,000 of income from shares, will get a tax cut of almost $577-that is, a tax credit that he will be able to offset against his other income. The lower the marginal rate of tax-that is, the lower the income-the greater the benefit to a shareholder from the imputation on tax, or from the end to double taxation on dividends. Small business will also benefit from the allied provision of the change to Divison 7-that is, retained or non-distributed earnings will no longer be taxed. Small businesses will be able to build up their equity, their capital, without a tax disadvantage. They will be able to resist takeovers, they will no longer be highly geared and they will no longer be rich in their retained earnings and therefore ripe for takeovers. Small business, through this tax reform, will be able to compete on a more equal footing with bigger business. I do not think we should underestimate the value of this reform to small business. The imputation system will also cut the bias amongst companies in favour of debt over equity. Under the Liberals' form of taxation, when double taxation of dividends was in operation, expansion and takeovers were financed largely by borrowings. If one borrowed locally one forced up the rate of interest as one competed for available funds. If one borrowed overseas one forced up the foreign debt. I remind the House that 60 per cent of our foreign debt is sourced privately, not publicly, as the Opposition would like people to believe. This reform removes that bias and attracts equity borrowing. In other words, capital will be gathered through share distribution. No longer will we have a bias in favour of enlarging, expanding, through debt borrowing; it will be done through equity. These are very desirable consequences. The legislation will make it easier to raise venture capital. It will reward new ideas. It will reward initiative. There will be greater growth. There will be more to share with pensioners, low income people and so on. This reform will encourage Australians to invest in Australian companies. We will have `own Australian' as well as `buy Australian'. Management, as I said earlier, will be forced to concentrate on its efficiency and its performance rather than just minimising its tax. As the honourable member for Jagajaga said, we have given business a $300m drop kick to the forward line and business has marked it in the goal square, but we now want it to turn around and put it through the big sticks. We now want it to invest more in Australian companies. We want it to invest in production. We want it to turn on the engine of Australia's production. We now expect business to respond, investment to increase, employment to increase and unemployment to decrease, so Australia will become a wealthier nation as a result. Our value added exports will increase. Our products will be able to compete with imports. Our balance of payments will improve and our foreign debt will decrease. These are very desirable reforms. I compliment the Treasurer (Mr Keating) on them. They form part of a most comprehensive package of tax reform, and I commend the Bills to the House. Mr BRAITHWAITE(Dawson)(9.24) —The honourable member for Streeton (Mr Lamb) not only used the wrong arguments in his contribution but also referred in his analogy to the wrong football code, so he stands doubly condemned. We have heard so much tonight about tax reform, equity and everything else. This great debate started at the National Taxation Summit, where decisions were made and propositions were put by the Treasurer (Mr Keating) and others. What came out of that tax reform summit is hotch potch. Band-aid remedies have been applied. That Tax Summit was a lost battle for the Treasurer for two basic reasons. Firstly, the Tax Summit denied that tax expenditures were a vital part of tax reform. The Government still does not understand that argument. Secondly, the union power in the long run determined the tax package that we were to have. What happened there was an absolute failure by the Treasurer. Mention has been made of what effect this raft of legislation will have on business. Before we talk of tax rates, let me say that compliance with this whole tax package has put a mammoth cost on business. If honourable members do not believe me, they should just look at the increase in the size of the Income Tax Assessment Act from the time of the Tax Summit until now and they will realise that it is more complicated, it is inequitable and it is a nightmare. The only persons who have profited from this arrangement have been the public accountants throughout Australia, who have been given an unlimited amount of work for the rest of the time they will practise. I will deal with that aspect later. How can the Government say that there is equity when tax rates are being increased from 46 per cent to 49 per cent and when businessmen are affected by that increase, in addition to the fringe benefits tax? I know that the argument has been used here and everywhere else-to the extent that the Treasurer now firmly believes it-that what the Treasurer did was equitable. But people should refer back to the time when he first made the announcement about a fringe benefits tax, when he said that the fringe benefits tax would be paid by employees. I remember his making that statement in January 1985. Within a day the unions had told him that that would not be the case and the following day the Treasurer turned around to say that the fringe benefits tax would be imposed on employers. Nobody in this House can tell me that we can upset common law, the canons of tax practice which have been in existence in British law for hundreds of years, by making one person pay tax on another person's earnings. That is what the fringe benefits tax does. Where is the equity of a capital gains tax at 49c in the dollar? Because of the abolition of negative gearing, a proper business cost is not allowed. There is nothing fair in this legislation. The cost of compliance with it is absolutely astronomical, which is something the Australian Taxation Office and the Government do not take into account. A lot has been said tonight about imputation. I just want to mention a few things. I acknowledge that the provisions of Division 7 will go out of the back door. It is something that the previous Government worked on, although I must say probably not fast enough. Mr Robert Brown —And did nothing. Mr BRAITHWAITE —I did something. I am sorry, but that interjection is quite ill-informed. Mr Shack —And totally wrong. Mr BRAITHWAITE —It is totally wrong. The limit in respect of Division 7 taxation was raised from 50 per cent to 80 per cent. Why we did not take the other 20 per cent off, I am not quite sure. But something was done. I also add that the previous Government worked on the double taxation of dividends by allowing a $1,000 dividend income credit for tax purposes. What was the first thing that this Government did when it came to office? It wiped that; it removed it. So Government members should not come in here and tell me what was done, what was not done, what is fair and what is not fair. What they say is not quite true. I am glad for the intervention that was made by the honourable member for Charlton (Mr Robert Brown). I thank him very much. He should stay there-he might learn a bit more. I do not want to mention much more about imputation, but it is a fact that as a result of imputation and the franking credits there will be a windfall to the Government from the institutional investors who do not pay tax on their dividends at the moment. I understand that they represent 20 per cent of investment throughout Australia in companies. There are other occasions when those credits will be forgone to the taxpayer and the windfall will again be to the Government. Perhaps the Government may care to quantify that amount before it starts making its rash argument that the system costs the Government so much, that the Government is giving away so much and getting only so much back in return. I just remind everybody that a taxpayer's dollar is a consumer dollar. It is a consumer dollar that will be forfeited to the Government, which will keep spending more and more and demanding more and more in tax revenue. Let us not hear about what the Government is forfeiting; let us think for a moment about what the taxpayer is forfeiting in return. I just want to mention log-books because, after many months of turmoil within private enterprise, it has now come to the attention of the Government that the substantiation effort that was to be put into keeping log-books by the self-employed just will not work. Advice was not taken initially and, at long last, because of pressure that was evident right from the beginning, the Government caved in. One had to consider the practicality of a log-book having to be kept in the car, with the owner having to record various items. I have had to do these things myself. It is not something that comes naturally; it involves effort that costs both money and time. Mr Cobb —Nine entries each time. Mr BRAITHWAITE —Yes, nine entries each time, and that certainly applied to the record I kept. It is not easy, when one's wife attends to electorate duties on one's behalf and uses the car, to prevail upon her and to ask her to keep a record in the log-book, too. Therefore, the cost of compliance has not been taken into account. In regard to substantiation, one has to consider the fringe benefit aspect in respect to the use of a car. In my own case the effect of the fringe benefits tax has meant that many privileges given in the normal course of work to employees have now been withdrawn. The fringe benefit tax is paid irrespective of whether a company makes profits. Some companies I know have no profit, yet they are asked to pay fringe benefits tax. Therefore, they have had to reduce the benefits they make available to employees and consequently the employees are out of pocket. Let me turn to the subject of audit, a matter that is close to my heart. It is a pity that the Treasurer is not here to listen to my criticisms, but I presume that those who are advising him in this House will take note of my remarks. Section 263 of the Act relates to the reasonable use of an office. I understand that the Full High Court held on one occasion that the Australian Taxation Office did not have unlimited entry to property. Therefore, the Government has sought to ensure that the legislation allows the authorities access to an office. I do not believe that the Government will not apply the same draconian penalties in pursuit of the Taxation Office's normal activities in this regard, too. I ask what is the meaning of the provision in the legislation which reads: The occupier of a building or place entered or proposed to be entered by the Commissioner, or by an officer, under subsection (1) shall provide the Commissioner or the officer with all reasonable facilities and assistance for the effective exercise of powers under this section. I have never yet heard of a man condemned to an audit having to pay for the cost of his execution. This is basically what the Taxation Office is implying in this provision. Mr Cobb —Criminals do better than taxpayers. Mr BRAITHWAITE —Yes, criminals will do better than taxpayers in this regard. The Taxation Office has long lost sight of the fact that those whom it is persecuting in this regard are not criminals, not those who provide the underground economy, but they are basically honest taxpayers, the people who are paying the salaries of officials in the Taxation Office. As a matter of public relations, I feel that section 263 of the Act should be repealed. This would allow the Taxation Office to deal with the ordinary taxpayer on a decent basis. If I may go a step further, I believe that the first point of contact in an audit should not be with the taxpayer at 7 or 9 o'clock at night or with the taxpayer's wife under threat, but with the tax agent at the address to which notices should be sent. Mr Cobb —The professional end of it. Mr BRAITHWAITE —At the professional end, yes. How many times has a tax inspector-many of them do not know the practicalities of what they are doing-arrived at a taxpayer's office and, under threats or bluff, extracted information, with the result that the taxpayer has probably paid sums he or she should not have paid? I believe that personal or even legal representation should be available in the case of audits. It is time that the Taxation Office gave more consideration to taxpayers and also to public accountants. I mention public accountants as that was my previous profession. At the time I practised I was under a lot of pressure because of demands by the Taxation Office. Eleven years later, the type of pressure being used can only be described as Gestapo tactics. Tax agents in this country have had a double work load forced upon them. In my city of Mackay one person has left the profession by taking early retirement and another has left the profession to go and lecture university graduates who may go on to become tax inspectors. That is a high fatality rate in a city such as Mackay but it has occurred because of the pressure being exerted on public accountants at this stage. They are being harassed by nothing short of Gestapo tactics. As far as they are concerned, it is not a matter of crashing or crashing through, it is a matter of trying to get public relations into a little more order, instead of using the present bloody-mindedness. I say that with all sincerity. Until the Taxation Office starts treating the taxpayer as a client and not as a criminal, this type of reaction will continue. I will outline a case which was brought to my attention by a tax agent recently. A series of audits were being conducted, not through the tax agent's office but directly with the tax agent. It was suggested to me that the agents picked a very nice part of the north coast in the winter time and were prepared to pay for the accommodation of the tax inspectors who were able to enjoy a leisurely holiday on the coast while they were supposed to be engaged in a tax audit. I could mention many other matters. As far as I am concerned, it is not a question of `do as I say'; it is a question of `do as I do'. If the Taxation Office does not want this type of reaction from taxpayers to continue, it is time that it started to respond to the requirements of tax agents and taxpayers. I remind the Treasurer and the Commissioner of Taxation of a letter I wrote asking for particulars of the travel allowance for members of Parliament which, after five months, has not been answered. I believe that that is a gross inefficiency in an office that is practising reverse tactics. How could the Commissioner penalise a taxpayer, who was in credit, for the late lodgment of his tax return, when he allowed the Treasurer, who did a similar thing, to get off scot free? The Treasurer has a lot to explain. How can he say that the taxation system that is practised in Australia today is fair and equitable and that Australians are treated equally? Mr ROBERT BROWN(Charlton)(9.38) —We are considering five items of taxation legislation. As a result of an agreement between the Government and the Opposition, our speaking time has been restricted to about 10 minutes. I am not complaining about that. I just suggest that, in terms of the amount of time that is available to us, there is probably some limitation on the extent to which we are able to pursue the concerns we might have about this legislation or the ways in which the legislation might interrelate. The honourable member for Dawson (Mr Braithwaite), among some of his observations, referred to taxes increasing from 46c in the dollar to 49c in the dollar. He was referring to the corporate taxation rate. However, the point that has been made by the Government, the Treasurer (Mr Keating) and Government spokesmen in connection with these taxation provisions is that what we need to do is to examine all those provisions as a total package. It is absurd for anyone to suggest that the critical element of all of these taxation provisions is an increase in the corporate tax rate from 46c to 49c in the dollar when what we have done both last year and from 1 July this year is to haul back the marginal rates of personal income tax in Australia to an extent which has never occurred before and which has never been possible before. No government in the history of this Commonwealth has taken the sort of taxation initiatives that the Hawke Government has taken. A typical example of that is that the top marginal personal tax rate has been hauled back from 60c in the dollar to 49c in the dollar. Who was at the helm when the 60c top marginal rate applied? Of course, it was none other than the National Party-to which the honourable member for Dawson belongs-and the Liberal Party. They presided over Australia when the most draconian level of marginal tax rates on personal income tax payers that could possibly be imagined was imposed. There are five items of taxation legislation before us but most speakers have concentrated their attention on the question of imputation. I will now explain, for those listening, what imputation means. The previous system of taxing company profits was referred to as the classical system. A company would pay tax on its pre-tax profit at the company tax rate, which was 46c in every dollar; out of every $100 profit that the company made $46 went to the Government, if the remaining company profits were distributed, $54 went to the shareholders as dividends. Out of that $54 that the shareholders received from the post-tax profits of the company they were required to pay an additional tax at their own marginal tax rate. What this meant was that in the case of a person paying a marginal tax rate of 60c in the dollar, after the profits had been taxed at the company level and then at that person's marginal level the final tax on those profits was about $78 out of every $100. Yet anyone else earning the same income in some other way paid only $60 out of $100. That situation has persisted in Australia for decades, ever since the Commonwealth was established. During that period the conservative parties have dominated the Parliament-parties that purport to represent the private interest base in Australia-and they have allowed that situation to persist. In the history of this Commonwealth there has never been a more concerted approach to taxation reform than is taking place now. It is designed to make it possible for everyone to play on a flat field. We are trying to take out the holes, humps, rorts and benefits to make sure that the whole taxation system is equitable, efficient and simple, while also achieving the general objective that taxation seeks to achieve of providing levels of revenue for governments necessary so that they can pursue the objectives the community sets for them. For anyone to suggest, as the honourable member for Dawson appeared to do, that this package implied some sort of taxation increase is nothing short of incredible. The imputation system of dividends will cost the Government $300m in a full year. How tax rates can be said to increase while at the same time $300m is handed back to the shareholders of Australia completely escapes me. The imputation system means that in future after companies have paid what will be, after 1 July, their tax of 49 cents in every dollar that will then transfer, as a credit, to the shareholders when they receive their dividends. Let us assume that after 1 July a shareholder has the right to $100 of pre-tax company profits. The company will first pay out of that $100 $49 in company tax, leaving $51 to go to the shareholder. If a shareholder's total taxable income is in excess of $35,000 after 1 July he will pay a top marginal tax rate of 49c in the dollar. This means that he will have a liability of $49 in every $100 for the dividends he receives, but will receive a credit for the $49 which has already been paid by the company. The result is that that taxpayer in future will not pay any further personal income tax on those dividends. On the other hand, take the example of a person whose total taxable income is less than $35,000. That person will get the credit transferred to him or her of $49 out of every $100 that the company has already paid. That shareholder, the individual taxpayer, will be able to use that as a credit against his other tax liability. If that person has a tax liability of, say, $25 in every $100, he will get a credit for $49 in every $100 of dividends to which he would have been entitled and he will be able to offset his other tax commitments as a result of that credit. It has been mentioned that this type of imputation system is the purest of any in the world. For example, Germany, which has an imputation system of this kind, also has a higher top marginal personal tax rate. No country in the world has introduced a system as pure as the one before us. Many advantages have been mentioned. In the past, debt capital has had a very special attraction for the financing of corporate operations in Australia for this reason: When a company pays interest, it is able to use that interest as a cost claim against the tax which it would otherwise have paid. On the other hand, when it pays dividends, first of all it pays a company tax rate on the dividend and then the shareholder, who receives the dividend, also pays an additional personal tax. Enormous benefits will accrue to Australian corporate structures as a result of this. Some people have asked: `Why should we be handing back $300m in tax credits to shareholders?' The fundamental reason for that is this: That $300m will go back to people who have been meeting their tax commitments under the most appropriate tax structures that existed. As a result of the total tax package, this Government is providing total taxation benefits to the Australian people in the benefits that came in last year together with the benefits that will come in on 1 July this year equal to $4,500m. Never before has there been a reduction in tax liability to that extent. The Government will be bringing back into revenue-this is against the $4,500m in tax concessions-about $1,500m. To a very large extent that $1,500m will be brought back as a result of ensuring that a lot of the rorts that existed within the system before will be eliminated. Capital gains in future will be taxed. Just as my constituents pay tax on their pay as you earn income, their wages and their salaries, so in future people who get their earnings as a result of capital gains will pay tax on them. Of course, the people on the Opposition benches scream about that. But we are going to tax capital gains in future. We have eliminated negative gearing; we have ensured that fringe benefits will be taxed; we have taken out the entertainment rorts; and we have made sure that people who wanted to claim benefits in their taxation will be required to substantiate their claims. So while all those things were legal in the past, we believe that they were not appropriate. We are ripping them out of the system and, as a result, we are going to pick up $1,500m which will go towards the financing of the $4,500m worth of tax concessions. The other way in which we will finance those tax concessions is by reducing expenditure at the Commonwealth level. That was the announcement which the Treasurer made last night in the May economic statement which has met with the approbation and applause of the whole nation. The Australian people know that the corrections which have been put into place, not only in the taxation system but in the operation-and the equity of the operations-of the Commonwealth Government at the Commonwealth level, are changes which they could never possibly have anticipated and could never possibly have expected from the Opposition parties. The Opposition parties when in government never provided it; we have provided it. They would never have done so. Mr HODGMAN(Denison)(9.51) —Mr Deputy Speaker, with your indulgence, may I wish my distinguished father, whom we all love very much, a very happy seventy-eighth birthday today, and I also wish the honourable member for Franklin (Mr Goodluck) a happy birthday, because it is his birthday today. That was the good news. I now turn to what this Hawke socialist Government has done to this country because it is just 3 1/2 years ago that I stood in this chamber and said that under the policies of the Hawke-Keating socialist Government we would see our national anthem changed from Advance Australia Fair to `Advance Taxtralia Fair'. That is precisely what has happened. This package of taxation measures continues the trend of a socialist doctrinaire government which is taxing the soul out of this country; a socialist government which has destroyed all incentive; and a socialist government which punishes those who seek to work hard, who seek to prosper and who seek to profit. I must congratulate my colleague the shadow Treasurer, the honourable member for Mackellar (Mr Carlton), on the excellent amendment which he has moved to the second reading, and which I adopt. The words are so important that they require restatement to bring home to the people of Australia, particularly the business community, that every day longer that this Hawke socialist Government remains in office, this country is being taxed into extinction. We condemn the measures that we are debating tonight because at the very time that company rates around the world are being lowered, this socialist Government has increased the company tax rate from 46 per cent to 49 per cent. If people want that in simple language, as the honourable member for Franklin conducted a business, it means that every company in Australia is working 180 days a year to pay the taxes of the Hawke socialist Government. I turn to my second point: The Treasurer (Mr Keating) says he has these tax reforms. The cost of the so-called tax reform proposals of the Hawke socialist Government has been to impose an additional $2,000m on the businesses of Australia. New business taxes have been imposed at the very time when the level of business investment in this country has fallen. The Government is kicking business. At a time when investment is falling, it is imposing more taxes and it is kicking Australian business while it is down. As the shadow Treasurer pointed out-my colleague the honourable member for Parkes (Mr Cobb) has also pointed out in this House-we have today the highest level of bankruptcies for many years. Mr Goodluck —Shame. Mr HODGMAN —It is a shame because young men and women who are trying to have a go are being taxed out of business. If the tax does not get them, the interest rates do. These are deliberate policies of the Hawke socialist Government. They are not accidental. People frequently say to me: `Why do you call it the Hawke socialist Government?'. I do, because it is. Its leader is a self-confessed, unashamed socialist and its party platform espouses socialism. Look who is rising to his feet. Mr Robert Brown —Mr Deputy Speaker, I take a point of order. I have made this point before. If the term `socialist' were applied to me and to this Government by some people, I would take it as a compliment. But if, Mr Deputy Speaker, as you understand the Standing Orders, I am personally offended by any statement which is made by a member of the Opposition, I can ask for that term to be withdrawn. When that term socialist is used by the honourable member for Denison, I find it personally offensive and I ask that it be withdrawn. Mr DEPUTY SPEAKER(Mr Millar) —Order! The honourable member for Charlton has made his point. The expression as used, I think, is within acceptable parameters. If the honourable member for Charlton seeks to divorce himself from the accusation, he may seek the opportunity to make a personal explanation at an appropriate time. Mr Robert Brown —But, Mr Deputy Speaker, is it appropriate for a fascist to refer to the Government as a socialist government? Mr DEPUTY SPEAKER —Order! The honourable member for Charlton offends. Mr HODGMAN —I am not a fascist. Mr Robert Brown —Of course you are. Mr HODGMAN —I am not. Of course those opposite are socialists and it is in their platform. To return to the debate, we note with concern the interaction of the proposals in the Bills, with the foreign tax credit system. The new capital gains tax imposes a tax disadvantage on companies and on their shareholders. Not only are we kicking companies when investment is dropping by taxing them harder, we are kicking those who wish to form companies and those who wish to invest in them. If that is not pure, doctrinaire socialism, if not Marxism, I do not know what it is. The Bill contains unnecessarily complex administrative and compliance procedures for companies. The whole package of legislation is not to put Australia into top gear, but to put it into reverse gear. I shall give the House the statistics on what this wretched Government has done, through its wretched taxation system, to the people of Australia. One remembers March 1983 when the Rt. Hon. Malcolm Fraser was Prime Minister of Australia-- Mr Goodluck —A good fellow, too. Mr HODGMAN —He was a good fellow and, my word, he looks better by the day. The people thought that Malcolm Fraser was a tough, hard man. Do the honourable members know that an average single income Australian family on average weekly earnings paid $65 a week in tax under Malcolm Fraser? How much are they paying under Prime Minister Hawke and the Keating-Hawke socialist Government? The same family is paying $102 a week in tax. Mr Goodluck —How much? Mr HODGMAN —I said $102 a week. That figure has gone from $65 a week under Malcolm Fraser to $102 a week under Bob Hawke, an increase of over 55 per cent. Malcolm Fraser is starting to look like Father Christmas as a result of the actions of the Hawke socialist Government. Yet was it not Prime Minister Hawke who stood on the steps of the Sydney Opera House and proclaimed to all the world `Immediate tax cuts for 98 per cent of the Australian workers'? Immediate? The first batch took two and a half years to come and the second batch is still on the way. It is the greatest confidence trick ever perpetrated on the workers of Australia. They know that every day of every week that they work, whereas they paid $65 a week in tax under Prime Minister Fraser, they pay $102 under Prime Minister Hawke. The fact is that they are paying $37 a week for the privilege of having the country ripped to pieces by the Prime Minister and the Treasurer. They are ripping this country to pieces, tearing out its heart and raping the economy-and the ordinary Australian worker is being ripped off by $37 a week in additional taxes to pay the bills for the Government's socialist policies. Mrs Kelly —On a point of order, Mr Deputy Speaker: The honourable member's remarks are not relevant to the Bills before the House. Mr HODGMAN —Oh, they are, they-- Mr DEPUTY SPEAKER(Mr Millar) —Order! The honourable member has not been called. There is a cognate debate before the House, which is widely embracing, and I am not in a position to disallow the remarks of the honourable member for Denison. Mr HODGMAN —The honourable member for Canberra (Mrs Kelly) is an old friend, but she should have looked at the Bills. They include the Income Tax Rates Amendment Bill and the Income Tax (Franking Deficit) Bill, and I am referring to tax rates. My time has almost expired. I have been talking about direct tax, but what about indirect tax? The automatic indexation of excise is a socialist bias that has made it impossible for the ordinary Australian worker to afford a beer and a smoke in the pub when he finishes work. The young kids of Australia can pay cash for a car, but have to pay for the petrol on hire purchase. It is only a matter of time until this Government puts metres on the ends of the beds. That is the way that it is going-it has taxed just about everything else. There is little that is has left untaxed and untouched. Of the two three-letter words that most Australians talks about, the one that we are debating tonight is `tax'. I am sick of it. This Government has created the worst economic record in the shortest possible time. The Prime Minister should already be in the Guinness Book of Records for his second achievement-he has broken more promises in a shorter period of time than any other Prime Minister in the history of Australia. Our overseas debt has gone up threefold. As the shadow Treasurer pointed out, we now owe $105 billion. The Government has bankrupted the country. It has put a burden of debt around the necks of our children. Every time we breathe, open our mouths, go to work or do anything, the Hawke socialist Government wants to tax us. Comrades, time is running out. At the next Federal election the Government is going to be swept out of office, and the sooner that time comes, the better. The sooner the Minister at the table, the Minister for Health (Dr Blewett), with his Medicare monster, is consigned to the dark dungeons of history so that we can all forget him and what he has done, the better for all Australians and the better for the future of this country. I hate him. The sooner he goes, the better. As soon as the people of Australia can get their hands on him, through the ballot box, they will strangle him, they will destroy him and they will decimate him. Amendment negatived. Original question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Dr Blewett) read a third time. Consideration resumed from 2 April, on motion by Mr Keating: That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Dr Blewett) read a third time. Consideration resumed from 2 April, on motion by Mr Keating: That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Dr Blewett) read a third time. Debate resumed from 6 May, on motion by Mr Hurford: That the Bill be now read a second time. Mr CARLTON(Mackellar)(10.04) —I foreshadowed that I would move a second reading amendment at this point, so I now move: That all words after `That' be omitted with a view to substituting the following words: `whilst not declining to give the Bill a second reading, the House is of the opinion that the provisions relating to the entitlement of an authorised taxation officer to facilities and assistance in a building or place should be accompanied by provisions for the owner or occupier to be reimbursed by the Commissioner of Taxation for all reasonable expenses incurred in making those facilities and assistance available'. Mr DEPUTY SPEAKER(Mr Millar) —Is the amendment seconded? Mr Reith —I second the amendment. Amendment negatived. Original question resolved in the affirmative. Bill read a second time. The Bill. Mr CARLTON(Mackellar)(10.05) —I moved a second reading amendment to the Taxation Laws Amendment Bill (No. 2) to the effect that where an officer of the Australian Taxation Office is inspecting premises of a taxpayer and requires facilities to be produced in accordance with amendments in this Bill, the Commissioner of Taxation should be responsible for all reasonable expenses incurred in making those facilities and that assistance available. The purpose of my second reading amendment was to request the Government to withdraw the Bill and to recast it in those terms. The Government, most unfortunately, has not acceded to my request. Therefore, I wish to bring to the attention of the House the position of the Opposition in relation to this matter. Under existing provisions of the Income Tax Assessment Act and related Acts, the Commissioner has the power to require any person to attend and give evidence relating to the income or assessment of a person and to produce relevant documentation. Under this amendment there is a requirement for taxpayers to give assistance to Tax Office investigators rather than simply them allowing access and not obstructing them. I quote one of the amendments to be made by Schedule 4 of the Bill in relation to one of the various Acts to be amended, the Australian Capital Territory Taxation (Administration) Act 1969: Section 97: Add at the end the following subsection: (3) The occupier of land entered or proposed to be entered by an officer under subsection (1) shall provide the officer with all reasonable facilities and assistance for the effective exercise of powers under this section. We presume this to mean that the occupier will need to allow investigators reasonable use of such facilities as photocopying, telephones, light, power, work facilities and space. Presumably, it will also entail reasonable assistance in the form of advice as to where relevant documents are located. That would mean the use of the personnel or the people working for the company being investigated which, in turn, means time for any business which has to worry about its costs. The Opposition is very concerned about this extension of the powers of the Commissioner. On the face of it, it is a reasonable request. The wording is quite reasonable. It looks all right. But unfortunately members of the Opposition and, we are to understand, members of the Government, have had increasing numbers of complaints through their electoral offices as to the manner in which officers of the Taxation Office conduct their investigations. We believe that in recent times an attitude has been developing which is far too dictatorial, far too demanding-- Mr Robert Brown —A lot of people pay their taxes. Mr CARLTON —The honourable member must not misunderstand me. I have a very clear understanding of the requirement that people pay their taxes. I understand the honourable member's concern and I agree with it. I will explain the Opposition's view on this matter. There is a delicate balance between the requirement that people pay their legitimate taxes, and there is absolutely no way we will detract from that requirement, and-the honourable member may well have had representations through his office about this-the manner in which investigations are conducted. This is fundamentally a matter of civil liberties. I know, from various events and issues in which the honourable member and I have been involved, that we share an interest in this matter. It is quite a genuine interest. I think there have been enough representation to members on both sides of the House to give rise to very serious concern about the manner in which investigations are conducted and so to whether they intrude upon the civil liberties of the citizen. That must be balanced against the requirement for the proper collection of revenue. That is very difficult because it involves flesh and blood and the particular interests of many taxpayers, some of whom are quite venal and quite capable of trying to mislead. On the other hand, there is an attitude of officialdom which, if taken too far, can intrude into the civil liberties of quite decent people. It is quite a difficult matter. The Opposition very seriously considered moving to eliminate this amendment from the Bill. In other words, we were attracted to the view that the existing access powers of the Commissioner of Taxation were quite sufficient and that the requirement as stated in the Bill for the taxpayer to provide extra facilities could be misused. In fact, we were worried that it might well be misused. I must say that within the Opposition we had quite a lot of internal argument about what we should do on this. Dr Charlesworth —Again? Mr CARLTON —This is a reasonable matter. One of the problems in this Parliament is that there is far too much of this sort of partisan attack. Mr Robert Brown —On both sides? Mr CARLTON —We do not get much chance to state our case. Most of the proceedings of this place are reported during Question Time. During Question Time it is all one-sided; we on this side do not get much of a chance to state our case in these matters. In this particular case we decided as an Opposition that we would not try to defeat clause 62 but would try to amend it so as to require the Commissioner to reimburse the taxpayer for reasonable costs incurred. However, we were advised by the Clerks of the House that it was impossible for us to move an amendment to that effect because the clause deals with a call on revenue and only a Minister can move such an amendment. Therefore, on behalf of the Opposition, I moved a second reading amendment asking the Government to withdraw the Bill and recast it with a requirement for the Commissioner to reimburse taxpayers for reasonable expenses incurred in providing assistance to the Commissioner. We regarded that as quite a reasonable request. Unfortunately the Government decided in this place-and I suppose it has not had enough time to consider the matter properly, but it may well be that it will reconsider its view before the Bill reaches the Senate-not to support the Opposition amendment and redraft the Bill accordingly. The Opposition does not feel disposed to go as far as trying to defeat the amendment by voting against it. However, during the passage of the Bill between its consideration in this chamber and its introduction in the Senate, I urge the Government to consider the possibility of the Commissioner's being required to reimburse reasonable expenses. On those grounds we in the Opposition would be quite happy with the clause. As it stands at the moment clause 62 is quite reasonable in that it provides: The occupier . . . shall provide the officer with all reasonable facilities and assistance for the effective exercise of powers under this section. I think it is important for the Opposition to make the general public complaint that we are receiving an increasing number of complaints about the way in which investigations are conducted, about the way in which demands are made and about the way in which settlements are suggested where there are great penalties for taxpayers who do not accede to the requests of the Australian Taxation Office. Most of the onus is on the taxpayer in those situations. If they do not pay up according to demands, there is a very great financial penalty for them in terms of interest costs on the money involved and tremendous delays in the hearing of these matters. At the moment we think that, if taxpayers are honest, the balance tends to be against them. But we understand full well that some of the people who approach us are not people who should be supported. Some people will go to extraordinary lengths to defeat the Commissioner in the proper pursuit of his objectives. It is a very difficult matter, and it is made more difficult by the administrative chaos which unfortunately exists within the Taxation Office at the moment because of the 800 pages of additional tax legislation that the present Treasurer has imposed upon it. That is our view on this matter. We ask that the Government reconsider this matter between here and the Senate. The CHAIRMAN —Order! It being 10.15 p.m., I shall report progress. Progress reported. Mr DEPUTY SPEAKER(Mr Millar) —It being 10.15 p.m., I propose the question: That the House do now adjourn. Mr Dawkins-Mr Deputy Speaker, I require the question to be put forthwith without debate. Question resolved in the negative. Consideration resumed. Mr COBB(Parkes)(10.16) —I move: Schedule 4, page 54, Income Tax Assessment Act 1936, omit proposed subsection 263 (3). The present section 263 of the Income Tax Assessment Act provides the Commissioner for Taxation and authorised officers with the power of access to buildings and documents without having to give notice. That may sound reasonable, but in practice these powers have been abused beyond belief. Now these powers are to be expanded even more. Schedule 4 of this Bill will add a completely new sub-section, 263 (3), which says that any authorised tax officer who proposes to enter or who has entered a building to carry out his investigations is entitled to `reasonable facilities and assistance'. I rather like the way in which the Government has slipped in the word `reasonable'. That is done for a purpose as such words are meant to sound innocuous and therefore difficult to oppose. However, a knowledge of how the Act has worked in the past, with all the abuses that have gone with it, could lead one only to the conclusion that the last thing we need in Australia today is a further extension of powers in this area. An inkling of what is proposed shows up when we read the explanatory memorandum to the Bill explaining what powers it is intended to confer. A person will have to provide photocopying, telephone, light, power, and work space facilities. One will have to allow tax officers to extract relevant information stored on computer. One will have to give advice as to where relevant documents are located and give access to areas where such documents are located. Mr Conquest —And morning tea? Mr COBB —That would complete the list. It goes on to say that penalties of $1,000 will be applied for breaches of these so-called reasonable requests. I pause here to stress that I am talking about ordinary Australian taxpayers, not criminals. It is worth recapping what the present law is. The Taxation Commissioner and his officers can burst into any office or building in this country now, at any hour of the day or night, totally without warning, and do so without a warrant. He can gain entry to any premises by any means-- Mr Braithwaite —It sounds like burglary. Mr COBB —It does sound like burglary. He can gain access by any means including forcible entry and the destruction of property. In this respect it is worth reading the case of Kerrison v. Federal Commissioner of Taxation. The Commissioner can now demand the production of any documents relating to the tax affairs of a taxpayer and he can demand the personal attendance of any taxpayer at a place for questioning, under section 264. The taxpayer must answer any question to the extent he is capable of doing so. The Gestapo, no doubt, had similar rules. Failure to do so can attract a fine of $4,000. That is the law now. If we contrast that with the criminal law we find that under criminal law the police must first obtain a search warrant. The Taxation Commissioner does not have to do that. Under criminal law accused persons have a right to remain silent. One does not have that right under the taxation laws. Under the criminal law, one is innocent until proven guilty. Under section 8y of the Act a director of an offending company is deemed guilty until proven innocent. That is the situation now. Tonight we should be winding those powers back, for heavens sake, not extending them. Why is this Government doing this? It has been snowed by the Taxation Office. There is a hatred in the Taxation Office; especially at the top, of all taxpayers, with the possible exception of the Treasurer who, I am told, is the beneficiary of some leniency. The Tax Office today is already acting above and beyond all reasonable powers given to it. It is taking an attitude to taxpayers out of line with that taken by previous Commissioners of Taxation. Taxpayers of Australia are being subjected to sickening treatment. They have fewer rights than a common criminal; they are being harassed and terrified beyond all reasonable bounds. The Commissioner of Taxation will not be stopped or thwarted in any way. Not content with this Goebbels-like power that it now exercises, the Tax Office wants to go further. The Treasurer is being used as an unthinking conduit by the Australian Taxation Office to ram through Parliament powers that the High Court of Australia is denying it. In the case of O'Reilly v. the Commissioner of the State Bank in Victoria, the High Court indicated that a person cannot refuse the Tax Commissioner access to premises, but that the Tax Commissioner cannot demand that that person assist him in his search. Let us be quite clear on what we are voting on tonight. If proposed new section 263 (3) goes through, a tax officer will be able to request any person, even a taxpayer in his own home, to render such assistance. A tax officer can burst in without notice at any time and, despite the urgency of other work that might be taking place, can demand of the staff: `Do this; do that. Get this; get that.' If a taxpayer, faced with this real-world situation, thinks that is an unreasonable request, will he have the time, the wherewithal, the courage or the knowledge to debate the meaning of that word with him? Any misjudgment of the meaning could cost $1,000 a throw. Provisions such as those in proposed new section 263 (3) would be regarded as totally unacceptable in the criminal world, because they ride roughshod over every basic legal and democratic right of an accused citizen to adequate representation and a fair hearing. I say to all honourable members: Do not in this House give the Tax Commissioner the extra powers that he cannot win in the courts. If we omit this proposed new section, as I propose, we will not be protecting tax cheats. It has been established on several occasions that the Commissioner already has ample powers to carry out his duties. Surely the Minister cannot argue that the present laws are inadequate. I have just gone through them. As the honourable member for Mackellar (Mr Carlton) so eloquently put it, the vast majority of taxpayers readily comply with the Commissioner's reasonable requests. To want now to be able compulsorily to enlist the assistance of occupiers of buildings in conducting investigations, and to do so without any cost recompense, is beyond the pale. Surely it is not too much to expect that, if a tax officer arrives at a taxpayer's home, that person be entitled to first obtain the advice of his accountants or advisers. Murderers can. Are taxpayers in this country to be considered below them? Proposed new section 263 (3) also appears to give further weight to the recent trend to bypass the tax agent of the taxpayer. Not only is this an immature and unprofessional approach, motivated no doubt by the frontier posse mentality, but also by acting this way the Tax Commissioner will end up getting less information. Where the Tax Commissioner does give notice, it should at least be sent to the service of notice address. The investigation is usually best conducted there as well. But unfortunately the Tax Commissioner seems to have been watching too many cowboy movies. To raid a taxpayer's premises, except in very special cases, is, apart from any- thing else, a gross invasion of privacy. If tax officers land in a country town and go to one's place, one can imagine the rumours that go round the town. Even if one is innocent-and nine out of 10 are; there could be some minor discrepancy-people will say: `The tax officers are in there investigating; he must be ripping off the system. What sort of a businessman is he?' Further, these investigations should be held say, for example, at the local council chambers, because if one is called in everyone in the chambers knows and the word goes around the town. They would be more properly be held at the tax agent's office. The Tax Office indulges in some dreadful public relations exercises. A proper format of investigation should be laid down. The trend of using accounting firms to do the Tax Commissioner's work should also be reversed. Almost 100 per cent of tax agents will do all they can to comply with reasonable requests now. However, the Tax Commissioner is making quite unreasonable demands. Let us not entrench and expand those demands with this legislation. Proposed new section 263 (3) will in fact override section 264, which gives all powers of access now, such as the demanding of documents, calling of witnesses, answering of questions and so on. If this legislation goes through, however innocently it may read, if one cannot answer the questions one could be judged to be hindering the Tax Commissioner and fined, and the tax agent could have his licence taken away. The obligation should be on the Commissioner of Taxation to approach the agent first instead of intimidating the client. People in this country are now more terrified of the Commissioner of Taxation than they are of the police, and many of them pay fines to the Commissioner of Taxation even though they are innocent, just to get the Commissioner off their backs. This is an outrageous situation we have let develop in what is supposed to be democratic and free society. I ask all honourable members to reject this horrid proposed new section 263 (3) and vote to have it deleted. Mr BRAITHWAITE(Dawson)(10.25) —I will not take the full 10 minutes; I just want to rise in support of my colleague, the honourable member for Parkes (Mr Cobb). What he said was basically a reflection of the feelings that I expressed during the second reading debate. The honourable member made a comparison between a criminal and the taxpayer, and I point out that the difference is that the criminal is allowed legal representation, apart from all the other rights that the honourable member mentioned. On this occasion, legal representation so far as the taxpayer is concerned, demands the right to be represented by his tax agent, who is the adviser and the person who can discuss properly the pros and cons with the auditor or the inspector at the time. To suggest that it is normal law, courtesy and equitable for a person who is an inspector under this clause to come in-and as I understand it, the High Court took the view that this type of thing was not provided for in common law; it is to be inserted as a special condition of our taxation law to bring it about-and for the taxpayer not to have that legal representation leaves the taxpayer open to many cases of abuse. I would suggest that there would not be anyone in this chamber who, if faced with an order from an inspector, would not come out with a clean sheet, and I say that most sincerely. A couple of years ago in this place, before honourable members had to substantiate their travelling allowances, a number of honourable members would have placed opposite their income statement just their claim for the amount without any call for any justification, and I suggest that in many cases that blanket coverage would not have stood up to the audit test. Now a percentage of taxpayers are going to be sued on the basis of these audit checks, and they will be unfairly treated if they do not have legal representation. It is important to realise what proposed new section 263 (3), which we seek to have deleted, will do. I mentioned earlier that this must be one of the first cases in history where a person who is about to be executed, as one might infer from an audit inspection, has to pay for his own execution. I go further than the provisions mentioned by my colleague to suggest that it would not be unlikely that the taxpayer would be asked to pay for the rope with which it is intended to hang him. There is no limit to the interpretation that can be put on the words: `Shall provide the Commissioner or the officer with all reasonable facilities and assistance for effective exercise of powers under this section'. What the effective exercise of powers under this section is would depend on the inspector at the time, and I come back to the point that many of these inspectors go out without the practical experience of knowing what they are about in an audit. I am sure some of them go out with the determination that their visit is going to be worth while because of the manner in which they harass the taxpayer for an admission of a liability that would not properly be there if they were represented by their tax agent. That brings up not only the liability for the tax that would be involved, but also the penalty involved. The whole new section 263, as I understand it, is one that would not be fitting of the law as far as the criminal code is concerned, and yet we feel fit to give the Australian Taxation Office these dictatorial powers unobtainable elsewhere in common law. So I certainly agree with my colleague that this proposed new section at least should be omitted from the amendment. Mr DAWKINS(Fremantle-Minister for Trade)(10.30) —On behalf of the Government and the Treasurer (Mr Keating), I indicate that the Government will not accept this amendment. Anyone listening to the debate would think that we have not been engaged over the last few years in trying to stem the great tide of tax avoidance which has imperilled the very taxation system of this country. What we are attempting to do is further clarify the powers of the Commissioner of Taxation. It is important not just to see this as an extension of the Tax Commissioner's powers; it is a matter of trying to clarify those powers for the benefit not only of the Tax Commissioner but also of the taxpayer. The case has been put to the Tax Commissioner by those who have made submissions to him that it is important for this area of the law to be clarified so that the taxpayer, in providing information, is not put in the difficult situation of exposing himself to possible attacks in relation to confidentiality issues. Those opposite in this debate have revealed a very great ignorance not only of the existing law but also of this legislation, because what is intended here is simply to intrude into this law provisions which already exist in other laws. This is not a great new advance. Anyone listening to some of the contributors in this debate would think that this provision was about to give the Tax Commissioner the power to enter into premises almost at gunpoint and require the absolute and unqualified assistance of the occupiers of those premises. Of course, the Tax Commissioner exercises the powers under section 263 only in very unusual circumstances. Listening to the honourable member for Parkes (Mr Cobb), one would be inclined to think that he was not even aware of what the existing provisions under section 263 are. He was attempting to deny that the Tax Commissioner should have the ability to exercise the powers which he already has under section 263. The amendment moved by those opposite is not about removing the provisions which already exist in the law but rather is to prevent a clarification of the powers as intended in the clause before us. Those opposite are erecting a straw man because it is not the intention that this law be used in the kind of cavalier way that they would have us believe. It is a perfectly reasonable provision which, as a result of the proper exercise of the Tax Commissioner's powers, would require people to assist investigators in the provision of information which the Tax Commissioner quite clearly requires in the exercise of his powers in relation to the tax laws of this country. Those opposite are attempting to say that there will be a wholesale extension of powers and a quite unprincipled use of those powers by tax officers. This is simply not the case. It is a question of clarifying procedures which have already been contested in the courts and which therefore need to be clarified unless we are to have a continual series of episodes where these powers are ill-defined and therefore capable of being challenged by taxpayers, at their very great cost. This is a perfectly reasonable provision. The point is that the investigators cannot unreasonably require the assistance of taxpayers. That is why the reference to `reasonable' is in the legislation. Mr Cobb —Define it for us. Mr DAWKINS —The honourable member knows what `reasonable' is. Everybody knows what `reasonable' is. No tax officer can unreasonably require this kind of assistance, because that is what the provision says. Mr Carlton —Dr Goebbels thought he was reasonable. That is nonsense. Mr DAWKINS —I might, not unfairly, point out to the honourable member for Mackellar that, if he spent a little more time producing a tax policy rather than indulging in this piffling debate about what is reasonable and what is unreasonable, I am sure the whole of Australia would be greatly relieved. Mr Carlton —I have done more work on tax policy than you did before the last election. Mr DAWKINS —If he has done so much work, would it not be a great idea to expose the results of his great effort? What he does here is delay the House with this irrelevant, piffling argument about what is reasonable or unreasonable. Mr Carlton —At least honourable members on this side argued reasonably. Mr DAWKINS —What we are talking about is a quite deliberate exercise on the part of the Government to overcome the problems of tax avoidance which, of course, ran away in the period of the Fraser-Howard Government. The CHAIRMAN —Order! The Minister will keep to the matter before the chamber, and the honourable member for Mackellar will cease interjecting. Mr DAWKINS —Before the last election we had a massive explosion of tax avoidance, something with which the former Government was totally incapable of dealing. When this Government has consistently and deliberately tried to eliminate tax avoidance from the system, we have this absurd argument being introduced by the Opposition, as on this occasion, about what is reasonable or unreasonable. As I said, if the honourable member for Mackellar would simply devote a minor part of his time to releasing the tax policy over which he has apparently been labouring for weeks and months-- Mr Carlton —On a point of order, Mr Chairman: The Opposition has put a perfectly reasonable argument in this matter. The Minister's comments are totally irrelevant. Other speakers from the Government side have been perfectly reasonable in their arguments, and this is most unseemly and quite out of order. The CHAIRMAN —Order! The Committee has before it the whole of the Taxation Laws Amendment Bill, which is about tax. The Minister is talking about tax, and he is in order and about to wind up. Mr DAWKINS —The point I simply wish to make is that there has been an enormous exaggeration of fantasy on the part of the Opposition in relation to this provision. Mr McGauran —Talk to a few accountants, tax agents and taxpayers! Mr DAWKINS —I am sure the honourable member for Gippsland spends a great deal of his time talking to tax agents and accountants. It is not something on which I spend a great deal of time. Nevertheless, if that is the way the honourable member wants to spend his time, that is up to him. The Government's obligation is to ensure that we have enforceable laws and that the Commissioner of Taxation has available to him the appropriate powers to ensure that the tax laws are complied with. That is what this provision is all about, and that is why the Government rejects the amendment from the Opposition. Amendment negatived. Bill agreed to. Bill reported without amendment; report adopted. Bill (on motion by Mr Dawkins)-by leave-read a third time. Consideration resumed from 6 May, on motion by Mr Hurford: That the Bill be now read a second time. Question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Dawkins)-read a third time. Motion (by Mr Dawkins) proposed: That the House do now adjourn. Mr BRAITHWAITE(Dawson)(10.41) —I am glad that the Minister for Trade (Mr Dawkins) is at the table. On 25 March the Minister tabled a cursory report on matters I raised, following a freedom of information request, about irregularities in accounting for the Australian Council of Trade Unions tour of Western Europe. Firstly, there was Mr Kelty's overclaiming of hotel bill, particularly his Swedish hotel, for which he claimed $800. Mr Kelty's bill at the hotel was $1,030. This was split between $430 paid in cash and $600 paid on Mr Kelty's Diners Club account. I refer to two things from the FOI evidence. Mr Counihan paid the $430 off Mr Kelty's bill from an advance to cover mission members' accommodation costs. Firstly, a hand-written page shows the amounts Mr Counihan paid off each tour member's Swedish hotel bill. Next to Mr Kelty's name was `$340'. Secondly, next to the $430 on Mr Kelty's Swedish bill the accounting section of the Department of Trade wrote `less Counihan'. It must be remembered that these are both Trade Department documents from the FOI office. I therefore concluded, as would any reasonable person, and as did the Department, that Mr Kelty had only paid $600 towards his Swedish hotel bill; that Mr Counihan paid the balance of $430-and thus that, by claiming that he was entitled to retain $800, Mr Kelty had overclaimed by $200. But the report of 25 March asserts that Mr Counihan did not pay $430 off Mr Kelty's bill. That is a remarkable change from the earlier evidence that was provided. A supplementary FOI request now sheds more light on this matter. A fax sent on the day that I asked my second question in the House again records that Mr Counihan paid $430 off Mr Kelty's bill. But later fax messages of the same day indicate that, while it had been assumed Mr Counihan had paid the $430, in fact Mr Kelty had paid this amount, but there was no separate receipt in Mr Kelty's name. This partly exculpated Mr Kelty from overclaiming $200, but at the same time, complicated matters by implying, that Mr Counihan's original claim was false, not supported by a receipt, and yet approved by the Department. I was not surprised that my second FOI request also turned up a statutory declaration by Mr Counihan, stating that he only paid $300 off the bills of nine mission members, but not including Mr Kelty's-as well as a minute advising he had been inadvertently overpaid $300 and returning a money order for this amount. Significantly, both were dated 23 March, the Monday following my asking questions in parliament, but some two months after the completion of the acquittal process which refunded $130 to Mr Counihan. I find this whole manoeuvre extremely contrived. There is more evidence supporting the hypothesis that the accounting section established that it was Mr Counihan, rather than Mr Kelty, who paid this $430. On 6 January 1987, Mr Kelty sent a copy of his Swedish Hotel Bill and Diners Club account to Mr Counihan personally. A date stamp shows the Trade Department's expenditure control section received it on 12 January apparently from Mr Counihan. A Trade Department accounting officer, Zarla Sloan, discovered Mr Counihan's $3,000 kitty just one day later, on 13 January. A memo records this discovery. It was this same day that Mr Counihan's expenses were acquitted and it was calculated that Mr Counihan was owed $130 on top of the $3,000 he was advanced. One would have thought that such and acquittal must have been on the basis of receipts produced by Mr Counihan. It was also on this same day that the accounting officer who discovered Mr Counihan's $3,000 kitty, had written the words ``less Counihan'' next to the $430 cash amount on Mr Kelty's bill. It is inconceivable the accounting section did not verify the existence of the travel kitty with Mr Counihan, and also verify that it was Mr Counihan who had paid the $430 in cash off Mr Kelty's bill. There was also probably indirect contact between Mr Kelty and the Trade Department's accounting section, most probably to determine whether Mr Kelty had the original bill. It is hard to imagine that the matter of who actually paid which amount was not canvassed. All of this would suggest that it was not Mr Kelty but Mr Counihan who paid the $430 and that the report was prepared from evidence contrived after my initial questioning, to clear Mr Kelty of the charge. Given that Zarla Sloan discovered the existence of the Counihan payments only the day after she received Mr Kelty's bill, it is almost certain that Mr Counihan must also have told her or the person who wrote the handwritten list of payments that it was he who paid the $430. Consequently, it is also hard to escape the conclusion that I originally drew, that Mr Kelty indeed overstated his Swedish hotel claim by $200 and that the subsequent report by the Minister offers nothing for which I should offer an apology for which he asked. I recommend to the House that this whole matter be made available to the Auditor-General for his inspection and investigation. I am quite prepared to make all the freedom of information matters available to him. Mr DEPUTY SPEAKER(Mr Millar) —Order! The honourable member's time has expired. Ms McHUGH(Phillip)(10.46) —I rise tonight to speak in praise of the Catholic Commission for Justice and Peace and in gratitude for the work that it has done. I speak not as a member of the Catholic Church but as a member of the Australian public and, of recent years, as a member of Parliament who is extremely grateful for the work that the Commission has produced. It is work which has raised the awareness of the Australian people of the needs of those Australians in poverty, homelessness and unemployment and generally in need of our compassion and care. Its discussion papers have consistently presented all points of view, especially on those most controversial issues such as nuclear disarmament and peace. It has raised for us the questions that have to be answered. Let me list some of the papers that have been produced in recent years: In 1974 `Lucky Australia: Some reflections on the life of the Christian in the Australian affluent society', `Poverty, Power and the Church-A reflection on the social and political responsibilities of Christians', `Taxation: placing poor people first', `Which Road for Young People?', `House and Home-A Christian call for housing justice', `Beyond Unemployment: A statement on human labour' and, last year, the one that got it into all the trouble, `Work for a Just Peace', a contribution to the very necessary discussion during the International Year of Peace. The Commission's work on poverty, housing, unemployment, Aborigines, taxation, women, the distribution of wealth in Australia and the myth that ours is an egalitarian society as far as income is concerned has been important to every Australian. The work of the Catholic Commission for Justice and Peace has been for the rest of Australia a visible sign of the Catholic Church's commitment to social justice. It has generated respect in government circles. It has consistently produced its work and sent it to members of parliament. It has been respected by Ministers in discussions with them. Its work has been consistently valuable and of importance to all of us. Let me read what a young woman in the Eastern Region Social Action Group said, in describing the sort of awareness that working with the Catholic Commission for Justice and Peace produced. This woman said: Our work on the issue of unemployment-I felt it changed a lot of thinking . . . It was a very educational experience to understand what was really happening. And we had people coming from different groups . . . people who were unemployed. We visited Mr Ellicott from the Eastern Suburbs . . . about ten of us went . . . we had a couple of youthful students, we had an old lady about seventy-eight, and everyone in between. It was rather peculiar group to face him- that was Mr Ellicott some years ago- and he had no idea . . . we had no affiliations with anything . . . and he was just very non-plussed, I think, because we didn't come under a particular label. And I found that very stimulating, being able to bring the concern of a very mixed group to someone like him. The Catholic Commission for Justice and Peace has for many years brought the concerns of the people in need in Australia to the Australian public generally, and I am particularly grateful for its bringing that to the attention of members of Parliament. I speak again, and I will speak consistently, in praise of the Catholic Commission for Justice and Peace. I thank it for all the work that it has produced over the years. Mr HODGMAN(Denison)(10.50) —It is my sad duty to inform the House that at 0945 hours today a Royal Australian Air Force Hawker Siddeley 748 was sighted flying at low level over the Lemonthyme forest area in north-western Tasmania. This is a very serious matter because I remind the House that just 48 hours ago this Government, which has been quite deceptive on this issue, was at pains to inform this House that any surveillance was being carried out by non-Royal Australian Air Force planes. I need not remind the House of the shame which befell all Australians and in particular all Tasmanians with the infamous spy flights episode back in 1983 when planes of the Royal Australian Air Force, piloted and crewed by men and women wearing the Queens' uniform, were directed by this Government to fly over Tasmania. They did this at low level in circumstances causing great concern and considerable fear in certain areas. The then Attorney-General, Senator Gareth Evans, QC, later said: `I did not expect them to go hot dogging'. This action had an enormous impact-- Mr Reith —He used the streaker's defence. Mr HODGMAN —As the shadow Minister, the honourable member for Flinders, reminds me, of course, Senator Evans relied on the notorious streaker's defence. I call on the Government to deny that a Royal Australian Air Force Hawker Siddeley 748 was flying over Tasmanian forest areas at 0945 hours today. My colleague the honourable member for Franklin (Mr Goodluck), who is present in the House, joins with me in calling upon the Government to deny that the said Royal Australian Air Force Hawker Siddeley 748 was equipped with photographic equipment and that the purpose of its flight was to take photographs of alleged forestry operations in north-western Tasmania. I repeat, because I want to impress it on those opposite who seem to think that this matter is one of hilarity, that the point that I am making is that it is an affront to a sovereign State of the Commonwealth of Australia that Royal Australian Air Force planes should be used and sent into action against Tasmania. I have to say that it makes a nonsense of the claims in the House yesterday that only civilian aircraft were being utilised. Mr Deputy Speaker, you served with distinction in the Royal Australian Air Force. I believe that every man and woman wearing the Queen's uniform in the Royal Australian Air Force will today feel shame if the fact is that, contrary to what the Parliament and the people have been told, an RAAF Hawker Siddeley 748 has been sent into action. My colleague the honourable member from Braddon (Mr Miles) is also present in the chamber. The plain fact is that Tasmania is an original State. The Constitution provides that we are one indissoluble Federal Commonwealth and yet these people treat Tasmania, with absolute impunity, as enemy territory. I have spoken with a Minister of the Crown in Tasmania, a former member of this House, who is also gravely concerned about this. I asked him whether there was any additional information and he said that the only additional information was that some malfunction may have occurred and the plane may have been forced to land at Wynyard Airport. I say to this Government which engages in deception and duplicity: Be careful before you deny this one because it may be that the records at Wynyard Airport will confirm this spy flight into what the Hawke socialist Government regards as enemy territory but which in fact is Australia's smallest but proudest State. We will fight back. You can send in your Luftwaffe as much as you like. You can send in your blitzkrieg but you will never overcome the spirit of the people of Tasmania. On behalf of my colleagues I have to say to the Government: Do not take us lightly. You have trodden on us; you have trampled on us; but we will fight back and we will beat you. Mr DEPUTY SPEAKER(Mr Millar) —Order! The honourable member's time has expired. Mr MAHER(Lowe)(10.55) —An answer to a question which I put to the Government dealing with dioxin buried in various parts of Sydney appears in Hansard of 6 May. Dioxin is a waste product from a popular herbicide that was used in the 1940s and 1950s to kill blackberries. Between 1949 and 1976 vast quantities of dioxin as a waste product were produced at a factory in Rhodes which ultimately was owned by Union Carbide. Unfortunately, my question which was directed to the Minister for Arts, Heritage and Environment (Mr Cohen) did not elicit the answers that I sought. The Minister literally said that the matter was a State responsibility. However, it has been revealed that large quantities of dioxin waste have been taken out for disposal and destruction overseas. There is surely a direct Commonwealth involvement. At this time experts in Sydney are trying to identify areas where dioxin has been found. They want to examine the areas concerned. An article on this topic in the Sydney Morning Herald in the last few days contains a photograph of Mr John Wicklund who is an expert in the field. Mr purpose in speaking in this debate is to ensure that the citizens of Lowe are safe from dioxin contact, and that the present inquiry will not finish until the people are sure that the sites where dioxin was dumped are clearly identified. The Sydney Morning Herald of 11 March featured a prominent article with maps showing two sites in the Lowe electorate-one a Concord in an area adjoining Concord golf club and another at a former tip at Homebush Bay where dioxin has been buried or dumped over the years. A paper which I obtained from the Parliamentary Library points out that five other sites have been investigated over the years and have been found to be cleared. However, I have had no assurance that all the land-filled areas around the bays on both sides of the Parramatta River have been checked. I refer to those areas in the electorates of Bennelong, which is held by the Leader of the Opposition (Mr Howard), Lowe, Dundas which take in the Parramatta River. Parks were created after the Second World War in areas which were used as municipal rubbish tips. It appears that some contractors were slipshod when they dumped dioxin waste and contaminated dioxin material in municipal rubbish tips. When I was a State member of parliament I was approached by a doctor who told me that a constituent had just died of cancer. The man claimed that when he was working for the local council some years before and was digging a trench in a park in a land-fill areas and came upon some drums that were buried deep down, he broke open the drums and was splashed with the liquid in them. I asked the doctor to give me more details. He would not even give me the man's name, which is understandable, but said that he would try to get the man's family to see me. That did not happen. I have done a certain amount of research in the Parliamentary Library, and came up with an article in Scientific American of February 1986, which infers that dioxin is not as harmful to health as is supposed. In Italy, at Seveso, many people were exposed to dioxin poisoning after an accident, but there has been no evidence of serious effects. There was burning of the skin and other effects and possible evidence of miscarriages. Furthermore, in Vietnam American scientists have examined 40,000 families who were exposed to Agent Orange, which is a byproduct of this chemical. The article contains the inference that a lot of people have been exposed to dioxin poisoning, but there is no evidence of fatalities and no strong evidence of what the chemical does. I want to be sure that before Union Carbide sends back its officials, the areas around Sydney in my electorate and in adjoining electorates can be declared free of dioxin and that, if it exists, those areas must be declared safe. If it is to be left in the ground, people must know. I support the local councils which are doing what they can to make these areas of Sydney safe for constituents for both active and passive recreation. Mr DEPUTY SPEAKER(Mr Millar) —Order! It being 11 p.m. the debate is concluded. The House stands adjourned until Tuesday, 26 May 1987, at 2 p.m. in accordance with the resolution agreed to this day. House adjourned at 11 p.m. Mr Ruddock to ask Madam Speaker- (1) Have you received a letter from Mr R. K. Cummins concerning the personal explanation of the Minister for Sport, Recreation and Tourism wherein the Minister asserted Mr Cummins was an expelled member of the Australian Labor Party and was a person of ill repute. (2) If so, will you indicate the tenor of the letter, and (b) will you table the letter. The following answers to questions were circulated: (Question No. 5027) Mr Hodges asked the Minister for Aboriginal Affairs, upon notice, on 17 February 1987: (1) What word processing or computer equipment has been introduced into the Minister's Department and statutory authorities responsible to the Minister since 1982. (2) Why was the equipment purchased and were any specific targets set in terms of time or cost savings and improved efficiencies. (3) What has been the cost of purchasing the equipment. (4) Has the introduction of the equipment necessitated the purchase of new office equipment; if so, what have been the costs of the additional purchases. (5) Has the introduction of the equipment led to changes in work practices; if so, what has been the nature of the changes. (6) What has been the incidence of repetition strain injury (RSI) in the Minister's Department since 1982. (7) How many lost working days have been caused by RSI related illnesses since 1982. (8) How many persons have been forced to retire from the Minister's Department or statutory authorities responsible to the Minister as a result of RSI and what have been the compensation costs of this early retirement. (9) Has introduction of the equipment (a) saved money and (b) improved efficiency in the Minister's Department or the statutory authorities responsible to the Minister. Mr Holding —The answer to the honourable member's question is as follows: (1) Aboriginal Development Commission; Honeywell DPS-6, NEC APC111 and IV and Adler word processing systems. Australian Institute of Aboriginal Studies; WICAT System 200 multi-user computer Sun 3/160 multi-user computer, Morrow Micro-Design single-user computer, Digital Equipment Corporation Ranbow 100 and Personal computer, Two Osborne 1, three Kaypro-11, two Kaypro 4 and one Apple 11i portable, Sytek Local Net 20 Local are network. Aboriginal Hostels Limited; 1 Alto 8000 CPM computer, 8 Sanyo MBC 1000 CPM, 1 Apple Mackintosh, 1 Apple Image printer. Department of Aboriginal Affairs; 15 Desktop computers and one portable personal computer with printers, 30 visual display terminals and ten printers for accessing a bureau network. (2) Aboriginal Development Commission; The equipment was purchased to: Provide improved financial recording and management Provide better access to information about loans made by the Commission Improve management of projects Reduce costs associated with production of publications and films Reduce storage needs Eliminate repetitive clerical procedures The only target set was in terms of time for the financial system changeover from manual to the on-line in-house system targeted for early 1983-84. Australian Institute of Aboriginal Studies; Purchased and upgraded during the period to replace smaller units and to improve efficiency in areas such as publishing, accounting, library services, word processing and Research activities. Aboriginal Hostels Limited; To increase capacity for General ledger-keeping Word processing Data storage and analysis Desk top publishing Department of Aboriginal Affairs; Purchased to assist the Department in the performance of its functions. Targets were set to provide timely and efficient information services which, in most instances, would have required a staffing increase of 10%. (3) Aboriginal Development Commission; $757,015 Australian Institute of Aboriginal Studies; $329,196 Aboriginal Hostels Limited; $179,375 Department of Aboriginal Affairs; $850,000 (4) Aboriginal Development Commission; $5,250 Australian Institute of Aboriginal Studies; $13,540 Aboriginal Hostels Limited; $8,827 Department of Aboriginal Affairs; $18,674 (5) Aboriginal Development Commission; Yes. The changes have been Manual practices discontinued Improved financial reconciliation Improved retrieval functions Queries on loan accounts answered readily with easy access to the stored information. Australian Institute of Aboriginal Studies; The system is not yet fully implemented therefore changes have not been noticeable. It is expected, however, that with introduction of full computerisation, changes in work practices will inevitably result. Aboriginal Hostels Limited; Introduction of new equipment has led to the retraining of some staff and changes in duties for some positions to include computer operations. Department of Aboriginal Affairs; Greater us of VDTs has resulted in decreasing reliance on manual filing systems. The introduction of Word Processing equipment has increased the Department's capabilities to produce high quality accurate work in a shorter time. The system is networked throughout Australia thus enabling communication between word processing centres. (6) Aboriginal Development Commission; 5 cases Australian Institute of Aboriginal Studies; 4 cases Aboriginal Hostels Limited; 5 cases Department of Aboriginal Affairs; 25 cases (7) Aboriginal Development Commission; 196 days Australian Institute of Aboriginal Studies; 255.3 days Aboriginal Hostels Limited; 72 days Department of Aboriginal Affairs; 2635 days (8) Aboriginal Development Commission: (a) Nil; (b) Nil. Australian Institute of Aboriginal Studies: (a) Nil; (b) Nil. Aboriginal Hostels Limited: (a) Nil; (b) Nil. Department of Aboriginal Affairs: (a) Nil; (b) Statutory payments in accordance with legislation of $175.50 per week each currently for 3 officers in Central Office. (9) Aboriginal Development Commission: (a) Yes; (b) Yes. Australian Institute of Aboriginal Studies: (a) The introduction of the equipment has not, as yet, shown a saving as equipment is still being purchased; (b) When fully implemented, is expected to increase efficiency in all areas. Aboriginal Hostels Limited: (a) Yes. Cost savings have been achieved in all areas, especially accounting and publication productions, such as the Annual Report; (b) Yes. New equipment has improved the efficiency and effectiveness of the Company's operations. Department of Aboriginal Affairs: (a) Yes; (b) Yes. (Question No. 5042) Mr Jacobi asked the Attorney-General, upon notice, on 17 February 1987: Is it an anachronism, as stated by the Director of Public Prosecutions in his annual report for 1985-86, that a person charged with an offence against federal law can bring proceedings before a court in one State in order to prevent or delay being brought before the court of another State which, under the Constitution, is the proper court to deal with the charges; if so, will he amend the Service and Execution of Process Act to provide that the function of the court in the State where an offender is arrested should be limited to ensuring that the arrest warrant has been properly issued and enforced. Mr Lionel Bowen —The answer to the honourable member's question is as follows: Part III of the Service and Execution of Process Act 1901 makes provision for interstate execution of warrants. Where a person is apprehended in one State under a warrant issued and endorsed in another State, and a Magistrate orders the person to be returned to the State in which the original warrant was issued, it is open to that person to seek review of the Magistrate's order in the Supreme Court. The operation of the Service and Execution of Process Act 1901 is the subject of a reference to the Law Reform Commission. The issue referred to by the Honourable Member has been raised by the Director of Public Prosecutions with the Law Reform Commission in that context. Consideration will be given to the Director's remarks in the course of the Government's examination of the Law Reform Commission's report. That report is expected to be finalised soon.