Wednesday, 4 November 1987 Madam SPEAKER (Hon. Joan Child) took the chair at 10 a.m., and read prayers. Madam SPEAKER —I have received a message from the Senate acquainting the House of a Senate resolution relating to powers and proceedings of the Senate and the House of Representatives Standing Committees on Infrastructure when sitting as a joint committee and seeking concurrence to paragraphs (2) to (5) inclusive of the resolution. Copies of the message have been circulated in the chamber. With the consent of the House, the text of the message will be incorporated in Hansard. The document read as follows- The Senate acquaints the House of Representatives of the following Resolution agreed to by the Senate this day: (1) That the Standing Committee on Infrastructure, when considering the matters referred to it on 26 October 1987, viz: ``All notices of intention to modify or vary the plan of lay-out of the City of Canberra and its environs, and all modifications and variations of that plan, under section 12a of the Seat of Government (Administration) Act 1910'', be empowered to sit as a joint committee with the Standing Committee on Infrastructure of the House of Representatives when that Committee is considering those matters. (2) That the joint committee appoint as its Chairman the Chairman of the Senate Committee or the Chairman of the House of Representatives Committee. (3) That the quorum of the joint committee be 2 Senators and 2 members of the House of Representatives. (4) That a sub-committee of the Senate Committee, when considering the matters referred to in paragraph (1), be empowered to sit with a sub-committee of the House of Representatives Committee, when that sub-committee is considering those matters, as a sub-committee of the joint committee. (5) That a Senator who is not a member of the Senate Committee may attend a meeting of the joint committee or a sub-committee, with the approval of the joint committee or sub-committee, and participate in its proceedings and deliberations, but may not vote. (6) That nothing in this resolution be taken to affect the power of the Senate Committee to consider the matters referred to in paragraph (1) or its duty to report to the Senate on those matters. The Senate requests the concurrence of the House of Representatives in paragraphs (2) to (5), inclusive, of this Resolution. Ordered that the message be taken into consideration at the next sitting. Madam SPEAKER —I have received the following message from the Senate: The Senate, having considered Message No. 51 of the House of Representatives, has agreed to the following Resolution in connection therewith: (1) That the Senate concurs in paragraph (2) of the Resolution transmitted to the Senate by Message No. 51 of the House of Representatives relating to the use by the House of Representatives Standing Committee on Infrastructure of the evidence and records of the Joint Committees on the Australian Capital Territory appointed during previous Parliaments. (2) That the provisions of the Resolution, so far as they are inconsistent with the Standing Orders, have effect notwithstanding anything contained in the Standing Orders. Bill returned from the Senate without requests. Debate resumed from 21 October, on motion by Dr Blewett: That the Bill be now read a second time. Mr PORTER(Barker)(10.03) —The Australian housing industry has been subjected to four years of Labor's stop-start policies. Now it is faced with added uncertainty following the share market crash. The Australian housing market is a fragile one. To be vigorous and healthy, housing requires a climate of economic stability and certainty. These ingredients have been lacking under this Government. As a result, the housing industry has been on a roller-coaster ride of exaggerated booms and busts. Over the past four years this big spending Hawke-Keating Government has accumulated deficits of $23,000m with borrowing and interest payments to match. Because the Government has been the biggest single borrower in the market-place, crowding out the smaller borrowers, interest rates have reached and remained at record high levels. These record high interest rates are the biggest single factor keeping tens of thousands of Australian families from achieving their dream of home ownership. There is no doubt about the unsatisfied demand for new houses-the August 1986 and August 1987 reports of the Indicative Planning Council for the Housing Industry put the demand for new houses at 30,000 and 40,000 respectively above projected new housing commencements. But year after year this demand for new houses remains unfulfilled. After a sustained period of record high interest rates in the last month or so we began to see a slight easing in rates. At the end of September this resulted in an enthusiastic response from a pent-up market waiting for the first signs of just such a reduction. For a brief period in some States we experienced a boom in housing sales both in terms of volume and prices. Traditional indicators such as loans for owner occupancy and housing starts were up. Much of the activity in this mini-boom was in the upper end of the market with little help for the first home buyer population where there is the majority of the unmet new housing demand. Then came the events of 27 October which have launched us into uncharted economic waters. Initially there was the stock market crash and then, with growing concern about our economy and no action from the Government to restore confidence, the selloff of Australian shares and concerns about commodity prices has led to a selloff of our currency which has forced the Australian dollar down to an 18-month low of under US67c against indeed a much weakened American dollar. While the depreciation of the Australian dollar may help our balance of trade and current account deficits because of our reliance on commodity exports, the cause of the decrease in the dollar's value will not help the housing industry. If overseas money continues to be withdrawn from the Australian economy there will be more upward pressure placed on interest rates. In addition, Reserve Bank of Australia action to hold the Australian dollar will lead to higher rates. It is all very well for Mr White of the Westpac Banking Corporation to say that the banks are awash with money from the share selloff but this is now being counterbalanced by the flight of capital overseas and the demand the Reserve Bank is making on money markets. If Mr White is right, why have short term interest rates such as the 90 day bill rate gone from 12.56 per cent after the Budget to 13.59 per cent today-a rise of over one per cent. The lessons from the past are all too clear. Australian home buyers just cannot afford high interest rates. Growth in the housing industry will not be sustainable if interest rates begin to rise again. Any upward movement in interest rates will certainly put a rapid end to the recent short-lived mini-boom in housing sales. As long as our high level of overseas debt remains, interest rates and the Australian housing industry will continue to remain the whipping boy of the Australian economy. The housing industry and the home buyer are paying the penalty for the extravagance of this big spending, big taxing Labor Government. Housing in Australia is at its worst in the nation's history and the record of the Hawke-Keating Government is clear: a record number of over 160,000 applicants waiting for public housing; a record number of over 64,000 applicants waiting for home purchase assistance under State programs; a cut of $648m to States for public housing and capital grants in this the International Year of Shelter for the Homeless; record high home mortgage interest rates in 1986-87; one of the worst years on record for housing starts with 1986-87 demand exceeding starts by 30,000; housing demand in 1987-88 is expected to outstrip starts by up to 42,000; and home owners are paying up to 17 per cent more of their income on mortgage repayments than they were a decade ago. The Bill before us provides no solutions for the problems this Government has created. It simply provides more of the same, with tighter controls and less money. The revised Commonwealth State Housing Agreement (CSHA) referenced in this Bill takes us further down the road of Commonwealth intervention in State housing policy matters with the resultant duplication at Commonwealth and State levels. For example, the revised agreement specifies that the level of spending for rental accommodation by the States shall not be less than 50 per cent of total CSHA funds-that is $700m for each of the next three years; it shall not be less than 50 per cent of total Loan Council borrowing program moneys nominated for housing; and it shall not be less than 50 per cent of total State matching funds. Additionally, the agreement encourages States to put money from the proceeds of the sale of public housing into rental accommodation. The States are in a much better position than the Commonwealth to assess the housing needs of their own communities, and they are therefore in a more favourable position to determine how State housing dollars should be allocated. These provisions of the new Commonwealth-State Housing Agreement are simply extensions of the Labor Government's housing policy which proposed to double the proportion of housing stock in public tenure by 1992. This would mean that one in every ten Australian families would be paying rent to a government landlord. This is a policy which has failed, and which, in part, has brought the housing industry to its current crisis. Experience over the years has shown that there is a direct correlation between the volume of public housing stock and the number of people waiting for public housing. The more people are encouraged to rely on public housing and the more public housing stock is built or acquired, the longer the waiting lists for public housing have become. The ranking of States in order of the length of waiting lists for public housing is exactly the same as the ranking of the States in order of public housing stock available, and this list in no way corresponds to a ranking in terms of population, employment or other socio-economic indicators. The States with the longest queues are the States with the largest number of public housing units. This is so regardless of the population of the State. For example, as at June 1986 Victoria, with a population of just over four million, had 51,000 public housing units and 28,700 on public housing queues. South Australia, with a third of the population of Victoria, had 56,000 public housing units-5,000 more than Victoria-but the South Australian queue was 39,600. That is 11,000 more people in the queue than in Victoria. New South Wales has a population that is around 25 per cent greater than that of Victoria. It has double the number of public housing units, yet it has double the public housing queue of Victoria. Victoria, with 51,000 public rental units, has 28,700 waiting. New South Wales, with 102,000 public housing units, has 57,400 waiting. I provide the Minister for Community Services and Health (Dr Blewett) with a copy of a table setting our the provision of public housing units and the queues and seek leave to have it incorporated in Hansard. Leave granted. The table read as follows- Public Housing: Waiting lists and available stock by State 30 June, 1986 State Public Housing Stock waiting lists Population NSW... 102,222 57,437 5,543,500 SA... 56,028 39,600 1,373,100 Vic... 51,007 28,722 4,164,700 WA... 30,792 11,190 1,440,600 Qld... 27,577 9,328 2,592,600 Tas... 12,689 4,398 446,900 NT... 7,375 3,744 148,100 Total... 287,690 154,419 15,973,900 Mr PORTER —The simple fact is, the more public housing a State has, the longer its waiting list for public housing, and the same is true of the nation. The more public rental housing we provide, the longer become the waiting lists for that public housing. In addition to the encouragement the Government has provided for people to rely on public housing which leads to this demand, another reason for this phenomenon is that the more money available for housing spent on providing rental accommodation, the less money is available for providing home purchase assistance. What more proof could we want of the failed housing policy of this Government? And yet the Bill before us locks us into more of the same policy, with even greater emphasis on public rental accommodation. This policy will perpetuate the deterioration in the level of home ownership, resulting in more public renters and long queues. The Bill provides no incentive for self-provision and home ownership and instead encourages reliance on totally government funded housing. This is the sharp end of this Government's socialist philosophy: undermine home ownership and foster reliance on the State. Whilst there should be some provision for public housing, we need to address the current imbalance and provide greater incentives for home ownership. Clearly, to oppose this Bill thereby cutting off some $700m in Commonwealth funding for the States would not be responsible and therefore I move as an amendment: That all words after `That' be omitted with a view to substituting the following words: `whilst not opposing the provisions of this Bill, the House: (1) condemns the Government for its further intrusion into State housing programs involving more administrative duplication and waste; and (2) believes greater responsibility for the provision of housing should rest with the States who are in the best position to address their communities' needs'. Under this Government, Australia's once proud record of being a world leader in the level of home owner occupancy is slipping and the dream of home ownership is souring. Home owner occupancy in Australia used to be among the highest in the world at 72.5 per cent but it has fallen to 69.1 per cent and continues to fall. The path ahead for us is clear. If we are to raise ourselves from this Labor inspired malaise, the nation must make a new commitment to home ownership in the conviction that home ownership not just represents a dream for all families, but is a positive and sound contribution to this nation's economy, its recovery, and to the future security of all Australians. There are those who would argue that investment in the family home is not a productive investment when compared with investment in the industrial infrastructure, for example. On the contrary, the family home is essentially linked to family stability, strength and security and the family is the nation's greatest resource. Additionally, in an aging society such as Australia, the provision of retirement security represents an actuarial economic commitment of staggering proportions. Social security payments are growing at an alarming rate each year. I submit that the family home has an essential link with the retirement security of Australians. A mortgage free home in retirement provides not only the essential commodity of housing but a ready source of capital should circumstances indicate that an alternative living arrangement is appropriate. Further, the effects of housing construction as an economic and employment stimulator have long since been established and accepted. It is estimated that $100m spent in housing results in another $140m income in the rest of the economy and that each on-site job in home building generates another job in the rest of the economy. Finally, the simple fact remains that each year we are in need of more housing. In the coming year the Indicative Planning Council for the Housing Industry has predicted a demand for 160,000 to 170,000 new houses. If the individual does not invest in home ownership who will? The Government? The private landlord? Clearly, the only option for meeting the housing needs of the nation rests with the individual home buyers. Any other alternative would change the existing time-honoured and acceptable face of Australian society regarding tenure homes. The challenge of the housing crisis to the Government is two-fold. The Government must first establish and maintain sound policies which provide a stable and certain economic environment in which the housing industry can flourish. Primary in the tasks needed to accomplish this is the control over government debt and borrowing. Additionally, the Government must respond to the needs of home buyers and home owners with commitments which assist and encourage those who undertake to invest in a private home. A variety of alternatives to the current arrangements have been voiced and put forward by various industry groups with an interest in home owner occupancy in Australia. My goal over the next few months is to review those alternatives with a view to presenting a new approach. The clearest message that any government can send to the nation regarding a commitment to home owner occupancy is that home ownership in the eyes of the Government counted for something. My goal will be to make that objective more attainable for those who are currently excluded by reason of high mortgage interest rates and lack of financial incentive. I exhort the Government to do likewise. Madam SPEAKER —Is the amendment seconded? Mr Carlton —I second the amendment. Ms McHUGH(Phillip)(10.23) —It is interesting that the Opposition addresses the Housing Assistance Amendment Bill, which deals with the provision of money for public housing, by talking mainly about home ownership in Australia. Many people will remember that, before the last election, the Opposition actually had as one of its policies the abolition of the Commonwealth-State Housing Agreement, which shows the extent to which Opposition members ignore the need for the provision of public housing. I remind the Opposition shadow spokesman, the honourable member for Barker (Mr Porter), that in 1983 this Government introduced the first home owners scheme. We not only realise and implement the Government's responsibilities towards helping people get their own homes but also regard as a very serious responsibility the provision of public housing. The purpose of this Bill is to authorise an appropriation for the provision of financial assistance for public housing for the years 1988-89 and 1989-90 and to authorise the Commonwealth Minister to reallocate specific housing assistance grants between States. This Bill seeks to extend the existing funding arrangements by providing that a guaranteed annual base level grant funding of $700m be provided in 1988-89 and 1989-90. From this amount of $700m a guaranteed annual base of $11m is specified for the local government and community housing program and $14m is specified for the crisis accommodation program components of the Commonwealth-State Housing Agreement. Our responsibilities in the Commonwealth-State Housing Agreement extend to areas which the Opposition does not seem to realise exist. For instance, in the Commonwealth-State Housing Agreement specific purpose programs, we attend to the needs of many people who will never be buying their own homes. This assistance is provided through the rental housing assistance for pensioners program, the rental housing assistance for Aboriginals program, the crisis accommodation program, the mortgage and rent relief scheme and the local government and community housing program. As I have said, this Bill supplies a guaranteed annual base of $11m for that latter program to which I wish to direct my attention this morning. The local government and community housing program is designed to encourage alternative forms of public housing tenure and greater tenant participation in the management of these dwellings. Funds go to local governments and community groups to provide and manage low cost rental housing, boarding housing and hostel accommodation. Organisations are expected to make contributions, wherever possible, in the form of funds, dwellings, land, expertise, knowledge or whatever is appropriate. This is one of the most innovative programs of the Commonwealth-State Housing Agreement and it is having a growing success. There is need for innovation in public housing. There are two very comprehensive articles in the magazine Australian Society which I hope the shadow spokesperson, the honourable member for Barker, will read, because they will reveal to him many of the problems that are facing both public and private housing in the International Year of Shelter for the Homeless. It seems that the Opposition is unaware that many people in Australia need public housing and are not in the market for private housing. One of the articles points out: Homeless people form only the tip of the iceberg of housing problems in Australia. Hidden from the public gaze are hundreds of thousands of people condemned through low income, discrimination or disability to live in inadequate housing, overcrowded, substandard, poorly located, high cost or insecure (and often a combination of these factors). People living in the private rental sector continue to experience the highest incidence of housing-related poverty, with 20 per cent living below the poverty line . . . Single parents are worst off, with 40 per cent living in poverty after housing, and an alarming 62 per cent of single parents in private rental in poverty after housing. The second most vulnerable group are young single people. Over one-fifth of singles between 15 and 24 are in poverty after housing. In general, elderly people experience a relatively low incidence of after-housing poverty (3.9 per cent of couples and 5.2 per cent of singles), mainly because people in this age group who own homes have generally paid them off. But poverty is prevalent among old people who rent privately. Of all elderly couples and single people renting from private landlords, one-quarter live in poverty after paying rent. An article in yesterday's Sydney Morning Herald points out that figures issued by the Australian Bureau of Statistics show that one in four families in New South Wales have an income of below $290 a week. The historic family package introduced by this Government will give much needed financial assistance to families in poverty. The package includes an increase of 50 per cent in rent assistance. I remind the Opposition again that poor people do not buy houses; they rent or they live in caravans. The supply of private rental accommodation, as we all know, has decreased recently at an alarming rate. All sorts of things have been blamed for that decrease in the level of private rental accommodation available, including taxation measures such as the quarantining of negative gearing. I am of the view that that has occurred because of a decrease in the private rental market throughout the world. It is not as a result of specific taxation measures brought in by this Government. We have reintroduced negative gearing, which may or may not lead to an increase in supply in private rental accommodation. But you can bet your life that rents will still be spiralling, even if the supply increases. I hope that the supply will increase. The availability of affordable housing is a key to social justice. Virginia Creaser pointed out in the article in Australian Society that public housing needs to be increased to provide decent long term, secure, affordable housing. She said: Public housing can have `a profound impact' in stabilising the lives of people in crisis. High cost, substandard or overcrowded accommodation can turn able people into homelessness by triggering marriage break-up or overuse of credit, or by eroding self-esteem leading to an inability to gain employment. Such negative attributes are generally the lot of low income people who are forced, through lack of housing choice, into the private rental market. Housing related poverty in Australia is placing enormous pressures on government at all levels. The Government realises those responsibilities. Commonwealth, State and local government must take up the challenge, and this legislation gives an opportunity for State and local government to become involved in more innovative and diverse housing projects. Positive changes are occurring already. New public housing has greatly improved its image, its diversity and its quality. Large housing estates are no longer the norm; they are being replaced by unstigmatised public housing in scattered, smaller and better located areas. Local government is beginning to add to its traditional role an involvement in public housing. Joint venture participation by local government and community groups has already been encouraged through this Government's local government community housing program. Many useful and innovative developments, including common equity rental co-operatives, have been launched from this base. Program funds are limited, but $11m is guaranteed this year. These funds are meant for program development; they are really seeding funds. There is considerable potential for extending joint venture arrangements well beyond the confines of this Budget. Once a common set of guidelines has been established, the marketing of opportunities for joint venture participation can be expected to encourage significant interest. The reason I am so aware of this program is that the very model for it began in a local government area within my own electorate. Some years ago the local council in Waverley, under the mayoralty of my State colleague Ernie Page, began a wide range of social welfare reforms, including community welfare and housing reforms. Those programs took shape under that council. It proved that local government has a very important role to play in the development of public housing for its own area. Local government, logically, is suited to that involvement; it knows its own area best. The programs initiated by the Waverley Council at that time-including the appointment of a housing officer, the first in Australia-were taken up by local government areas all over Australia. They were used as a model, and they were used as a model for this legislation. I think most people here know that the Australian Labor Party lost control of that excellent council in 1983, and immediately thereafter the Liberal controlled local government of that area began to dismantle every one of those programs. I have spoken in great detail on that in the past. I have said it was to be hoped that Labor would regain control of the Waverley Council and begin to reinstitute the programs. That has just happened. Labor is again in control of the Waverley Council. It will reinstate the position of housing officer in the new year, and it has already agreed in principle to just the type of venture that is encouraged by this legislation. It has agreed in principle to a joint venture with the Eastern Suburbs Rental Housing Association to purchase a property, perhaps a block of six to eight flats. It will be a shared equity arrangement to protect the venture in the future so that even if the Council does change hands the program will not be got rid of, as has happened in the past. The joint venture accommodation will be managed by the Eastern Suburbs Rental Housing Association, with support from the Council, and this legislation which we are amending today gives these organisations the encouragement and the ability to undertake such a program. Mr CADMAN(Mitchell)(10.35) —The current Government has had a regime for home buyers which has put most homes out of the reach of the average Australian. Having done that by high interest rates policies, which have been a positive feature of the Government's economic policies, the Government has proceeded to reduce the amount of funds available for the ever-increasing number of people who cannot afford to buy a home and who are seeking some relief by approaching governments for government assisted housing. The proportion in real terms of assistance provided by this Government to other governments for housing has declined in the last two years; the Government is now providing the lowest level in real terms for many years of assistance to other governments for housing. The Government, having encouraged an economic climate in which the affordability of homes has become more and more difficult, has proceeded to cut the ability of people to get into government housing. It is wrong in every way. The stability of our community, the capacity of people to establish shelter for themselves and for their families, has been seriously cut by this Government. It is an unfeeling, unsympathetic and un-Australian approach to the problems of people establishing their own homes. I notice that in this Budget the greatest increase in any sector of the whole housing portfolio went to the administration of housing grants. It is a condemnation of the Government that a proportionately greater amount of money will be taken up in the administration of the Government's housing assistance schemes while there has been a major cut of 18 per cent on the level of government provided housing assistance last year. So here we have the Government of equity, the Government of compassion, the Government seeking to be all things to all people, not helping those in greatest need-home buyers and those seeking to establish a home. The Treasurer (Mr Keating) can wander the world-many Ministers can wander the world-discussing with international bankers his image and his prestige, but at home we see a different story. Back in Australia we see just what the Government's real intention is towards the Australian community. The Government has entered into this regime of high interest rates by borrowing more money than it should have borrowed, thereby inflating our position compared with the rest of the world. The Government has not seen fit to adopt an attitude of moderation when times such as we are in demand it. Rather, it has felt that it must listen to the trade unions of Australia and follow their policies rather than take initiatives of its own. An indication of the degree of affordability of housing loans can be gained by comparing median weekly family income and average monthly loan repayments for new loan approvals. This relationship recognises that a family generally can afford to allocate approximately one-quarter of its gross income to meet its shelter needs. During the March quarter of 1987, all States exhibited a decline in home loan affordability compared with the March quarter of 1986. Only Western Australia, Tasmania and the Australian Capital Territory remained below the 25 per cent benchmark. The Australian figure increased over that yearly period from 21.3 per cent in the March quarter of 1986 to 27.4 per cent in the March quarter just concluded; that is, 6 per cent more was being outlaid by families of their average weekly incomes towards purchasing their homes. It shows a massive reduction in the living standards of all Australians, and the Government has embarked on this policy knowing that by retaining high interest rates in Australia it will attract the capital inflow which will continue falsely to boost the economy. That capital inflow based on high interest rates is a false economy because it is a speculative inflow of funds rather than solid investment in capital and fields where there will be job creation and further opportunities for an expanding economy. It has been a conscious decision to balance the books by having high interest rates. The Reserve Bank of Australia has been in on it; the Government has been in on it. What has been the result? The result is massively declining home approvals over the last 12 months; massively declining opportunities for people to purchase their own homes. If one looks back over the last couple of years, one will notice that in 1985 housing approvals dropped 4 per cent compared with the previous year. In 1986 they dropped 17 per cent, and in July this year they dropped another one per cent-a cumulative impact of a 22 per cent drop in housing approvals. Over that two-year period, from July to July, there was a 22 per cent drop in home approvals. The pattern goes on but it gets worse in many instances. If we add the month of August, we see a total impact of 24 per cent. The approval rate keeps falling, even though the comparable figures for the previous year themselves represented a fall. Over that period the Government has adopted high interest policies for its own benefit, but it is ruining the lives of many Australians. The Budget figures indicate that a low level of housing assistance is being provided to State governments, which are anxious to provide welfare housing. Whether it be assistance to first home buyers or assistance under the Commonwealth-State Housing Agreement, the Government has not seen fit to respond to the needs of the Australian community. That is a tragedy, because this Government proclaims itself as a government that understands the needs of average Australians. I believe that Australians deserve and want to own their own homes. Any survey in any suburb of any city would show that 90 to 98 per cent of Australians wish to own their own homes, and they make it a direct goal. We hear from the Government that there is an increasing demand for rental accommodation. There is, but it is a narrow market. The real option that Australians want to exercise is to purchase their own homes. No people are more anxious to purchase their homes than the migrants. In fact, the migrant community has the top home ownership rate of any group in Australia. The score for Australian born home owners is higher than for other English speaking groups. According to the Australian Bureau of Statistics, which recently conducted a household expenditure survey, 84 per cent of foreign born non-English speaking home holders owned or were buying their own homes, and the Australian born average was 71.8 per cent. That is what migrants want; they want a stake in Australia, and they are not being allowed to have it. The high interest regime that this Government has adopted to suit its own international image has created grave difficulties for many Australians wanting to purchase their own homes. It is no good for the Government to say, in regard to the Housing Assistance Amendment Bill, `We're propping up the welfare systems of the States by providing a little money to the State governments'. It is providing less and less. It is walking away from the clients that it claims to support. The Italian born community has the highest rate of home ownership in our community-92 per cent. That is a massive figure, and should give the Government an idea of how important a stake in Australia migrants have. Of all Greek born people, 88.7 per cent own homes or are buying them. The figure for the Dutch is 83 per cent; Yugoslavs, 79 per cent; Germans, 76 per cent; and the average figure for Australians born here is 71 per cent. The British and Irish scored 69 per cent and New Zealanders 51 per cent. So the non-English speaking community wants to invest in Australia, and it is being denied that opportunity. Newspaper headlines show that the writing was on the wall many years ago. In 1984 a headline by Ross Gittins read, `Hawke's home subsidy ingenious but still not foolproof'. We have seen that. In 1986 a headline in the Canberra Times read: `Wran attacks government on housing'. Eighteen months ago the former Premier of New South Wales saw what was going to happen and saw this Government's paltry, inadequate response. Successive articles have been headed, `home loans deregulated'. They deregulated into high interest rates. That was the regime at the time. It is a continuing regime. Another headline in the Sun-Herald read, `Funds for home loans drying up'. That article contained a chart showing how it is almost impossible for average Australians to buy their own homes. One would have thought that that was enough punishment. One would have thought that the Government had done enough to destroy the dreams of Australians, particularly those of a non-English speaking background. Let us look at what the Government is considering now. Since coming to office in 1983 the Labor Government has imposed measures such as the assets test and the capital gains tax and has partly wiped the negative gearing provisions. It has continued its march towards a wealth tax. One only has to look at the quotes of the past few weeks to see what is in store for home owners. The Minister for Finance (Senator Walsh) said: A wealth tax would have to be imposed on the family home if it was to be effective. One of the Government's Ministers is saying that the Government will make it impossible for people to buy homes because of high interest rates; it is not going to provide funds for the States at the level it has previously and then it wants a wealth tax for those lucky enough to own their own homes. The Melbourne Sun of 21 October reported Senator Walsh as saying: If a wealth tax was to raise enough money and be economically feasible it would have to be applied to the middle level not just the top end. I assume by that he meant income earners. Senator Walsh is saying, `Let us get the lot. Let us grab all Australians in our net'. Even the Minister for Foreign Affairs and Trade (Mr Hayden) was reported in the Australian on 20 October as saying: I think there is a very strong case for assessing what the distribution of wealth is in our community and the level of that wealth. It seem to me there are powerful arguments for some exploration of opportunity for redistribution to benefit those less fortunate in our society. The article went on: Mr Hayden said there were extraordinary displays of conspicuous consumption going on in this community cheek by jowl with some awful poverty. There is no doubt that there is that awful poverty. What is the Government doing about poverty and the need for people to provide shelter for themselves? It has brought in high interest rates and increased those interest rates. Even the Real Estate Institute of Australia, which is oriented to selling homes, as the House would understand, has made statements about the drop in interest rates. It says in one of its bulletins: Despite the fall in prime interest rates, mortgage rates remained stable but high, with only a 0.5 per cent fall being recorded at the end of July. Obviously, further falls are needed to bring potential buyers into the market. Further falls will remain dependent upon significant and sustained declines in market interest rates. Although the community can read about what is happening to bond rates and fancy money rates, it knows jolly well that mortgage rates have not moved. They have been held consistently high. People in the community know they are paying out a greater and greater proportion of their monthly incomes to stay in their homes. They only have to do the family budget each week to know they are paying more and more under this Government that proclaims itself the custodian of those who are not well off. As well as maintaining that high interest rate regime, the Bill before the House today also proposes that the Government will provide less under the Commonwealth-State Housing Agreement. I will run through the figures because they are interesting. In the housing assistance to other governments category there will be a drop of 16.8 per cent-this is for people who need Housing Commission homes. There will be a drop of 51 per cent for defence service homes. There will be a drop of 45 per cent for housing in the Australian Capital Territory. For housing in the other category there will be a drop of 76 per cent. There will be an increase in administration of 11 per cent and there will be a welcome increase in assistance, although from a low base, to first home owners of 10 per cent. So the Government has ignored the poor and made it impossible for other people to purchase their own homes. What sort of Government is this? It walks away from its responsibilities to those people who have a great commitment to buying their own homes. I have cited figures to the House relating to the commitment of people from non-English speaking backgrounds to home buying. All but 8 per cent of the Italian community has purchased or is buying its own homes; 92 per cent of Italian families own their own homes. These people are being punished by this Government's interest rate regime. One can run through the statistics for the Dutch, Yugoslav, Greek and German communities and find exactly the same pattern. The home grown part of the Australian community has a commitment of 71 per cent to home ownership. That is the proportion of Aussies who either own or are purchasing their own homes. The Government is destroying their dreams. The Government is making it impossible for young people in our Western suburbs to buy their own home. One can see, even in Canberra, the declining standards of housing; there are smaller blocks and smaller homes. People are jammed closer together as a result of sheer economic necessity. Overheads have increased, interest charges have increased and the Government has wiped its hands of the problem. It is no wonder that in western Sydney at the last Federal election there was an overall loss to the Australian Labor Party of at least 5 per cent in all seats and higher in many electorates. The Aussies in those electorates, whether or not they are from migrant backgrounds, have an overwhelming commitment to owning their own homes. The Government has walked away from that responsibility. Each day we hear the Treasurer talking about world affairs and how he is regarded in Geneva and Washington but never how he is regarded in his own electorate where people turned out to vote against him because of the regime that he has put on Aussies to pay more and more to own their own homes. He is making it impossible for increasing numbers of people to enter into a home purchase. Then, there was the ultimate disregard of the Australian community-cutting assistance to housing commissions around Australia. Ultimately, the Government walked away from the really poor. The Government says that they will manage. It says, `We will give them a little bit more money in the pocket'. That is an illusory little bit more money in the pocket because it does not compensate. The Government says, `Go out and buy your own homes'. Those people cannot do that. The Government is wrong and deserves to be condemned. I support the amendment. Mr JENKINS(Scullin)(10.54) —The measures contained in the Housing Assistance Amendment Bill 1987 are in keeping with the traditional concern of Labor governments for public housing. In April 1943 it was the Curtin Government that established the Commonwealth Housing Commission to study the housing needs in each State. In 1945 it was the Chifley Government that negotiated the first Commonwealth-State Housing Agreement. It was the Whitlam Government that revived the role of Federal Government in housing after years of neglect from conservative governments. Under Whitlam, expenditure on public housing rose from 2.2 per cent of total public investment in 1972-73 to 5.1 per cent in 1975-76. Adequate and affordable housing was one of the commitments on which the Hawke Government was elected in 1983. In the 1984 Housing Assistance Act the Government honoured its commitment to restructure housing policy and assistance in Australia. This landmark of social legislation was a recognition that affordable and secure housing is essential for the well-being of all Australians. Under this Act, the 1984 Commonwealth-State Housing Agreement was negotiated with the State governments. In the 1984 agreement, for the first time, clear and positive statements were made about the need to assess the quality of housing provided, and the need for public housing to reflect the diverse range of targeted tenants. The Bill before the House continues the Government's commitment to provide a guaranteed high level of base funding for the next triennium. Funding for the States and the Northern Territory will be guaranteed at a base level of $700m for 1988-89 and 1989-90. As the Minister for Community Services and Health (Dr Blewett) pointed out in his second reading speech, this is $200m more than the record base funding provided in the first triennium and 3 1/2 times the base level provided for in the previous Government's 1981 agreement. It is worth recalling that during the election campaign those opposite were committed to a policy of terminating the Commonwealth-State Housing Agreement, and despite the review of many of their policies that seems to be taking place, from today's debate it seems that they stick by this policy. They want to wash their hands of any responsibility in this area. We hear no talk about any commitment on levels of funding, even in the eventuality that they would be returned to power and scrap the Agreement and their involvement. The Commonwealth has a role in public housing and this Government has played a very constructive role in this area. The new Commonwealth-State Housing Agreement has been strengthened to ensure that the States meet their responsibility for public housing. Of the 126,000 to 130,000 housing starts this year, 1987-88, some 25,000 will be public housing stock. In my home State of Victoria, the Commonwealth Government's aims in housing are shared by the Cain Government. The Victorian State Labor Government sees secure, affordable housing as fundamental to everybody's well-being. Housing is one of that Government's major priorities within its social justice strategy. Enshrined in the 1983 Victorian Housing Act is a commitment to ensure that, to quote from the legislation: Every person in Victoria has adequate and appropriate housing at a price within his or her means by encouraging 1) the provision of well maintained public housing of suitable quality and location, 2) the distribution, according to need, of Government housing financial assistance. Despite the efforts of the Commonwealth Government, there is increasing evidence that poverty, after housing costs have been taken into account, is on the increase. A recent study by the Victorian Ministry of Housing shows that housing related poverty has almost doubled in the last decade, most markedly for those in private sector accommodation. In Victoria, 40 per cent of people living below the poverty line, as assessed taking into account housing costs, are in the private rental sector. This has impacted most severely on single people. Single people in the 25 to 64 age group endure an above-average incidence of poverty related to housing costs. This Government has at least recognised this as a problem and has taken a series of measures to help to alleviate the problem. For instance, social security beneficiaries and low income working families under Labor have seen increases in rent assistance, the extension of rent assistance to those on unemployment benefit and more liberalised tests on rent assistance, and they will see the extension of the rent assistance to low income families receiving the family allowance supplement and to unemployed families from December 1987. This will be the first time that direct Federal Government assistance has been provided to low income families as part of the family package. This Government has also sponsored the very successful first home owners scheme. This has helped to reduce pressure on the low cost end of the private rental market. As a result of a measure that was announced in this Budget it is hoped that the removal of the quarantining of negative gearing may have the effect of boosting the stock of private rental accommodation and helping to stabilise rents. The private rental market has not demonstrated the capacity to respond to this situation in terms of both cost and availability. Let us look at costs. In March 1987 the median cost of a one-bedroom flat in Melbourne was $70 per week. That is approximately 70 per cent of the adult unemployment rate. As for availability, in January 1987 the vacancy rate in Melbourne was 1.7 per cent. As the Ministry of Housing study shows, this is well below the three per cent often quoted by the industry as providing a reasonable balance between supply and demand. Whilst dwelling on the private sector, may I reflect on something that I hope is atypical of some entrepreneurial developers in Australia. In last weekend's Weekend Australian, in a glossy advertising supplement, I was somewhat shocked and dismayed to read this statement: The streets these days are full of cockroaches, and most of them are human. Every man has a right to protect his family, himself and his possessions. To live in peace and safety. Sanctuary Cove is an island of civilisation in a violent world, and we have taken steps to ensure it remains so. The author of those words is Michael Gore, a famous figure in the so-called white-shoe brigade of Queensland politics. He used these words in advertising a housing estate where: You may now buy your Patio Home. Priced at $825,000. How obscene! How sick for somebody to use those words in the promotion of such a scheme! The advertising leaflet continues: Welcome to Civilisation. The residential area of Sanctuary Cove is unashamedly elitist. It is a place where successful people will live in a community of their peers. An environment protected by its own Act of Parliament. Let us just dwell on that. One of the great deregulators, the Queensland Government, is protecting its friends by Acts of Parliament. The whole thing sickens me. The project is sponsored by Ariadne Australia Ltd. Let us reflect on that company's social responsibility. The Sydney Morning Herald last Saturday outlined a study commissioned by that paper, prepared by the stock exchange research service Statex. The study looked at tax paid as a percentage of pre-tax profits for Australia's top 150 companies. Let us have a look at the list of the lowest tax paying companies. Ninth on the list is Ariadne, which paid 8.16c in the dollar. Here we have Mike Gore talking about cockroaches in the streets and civilisation. It is a great and gross obscenity. No wonder there are Australians that are concerned by conspicuous consumption; no wonder there are people that are querying what is happening to the distribution of wealth in Australia. Let it not be said that this is based on some sort of politics of envy, because it is something that should be of great concern. A development such as this is being promoted in this absurd and obscene way in a State with the lowest public housing stock per head of population. It is shameful. The coalition parties want to wipe their hands of any involvement in public housing. In short, the demands for adequate and affordable public housing are growing. In Victoria as at 30 June 1987 there were approximately 30,000 applicants on the public rental housing waiting lists. I think we should look at some of the reasons for this. By widening the eligibility, a number of single people who previously were ineligible in some States are now eligible. The Victorian situation has been affected by that Government's attempts and policy to deinstitutionalise a number of our aged and disabled people. Let us not be too glib in the way we look at the reasons for the increase in the housing waiting lists. Unfortunately, single parents and single adults without dependants are joining families and the elderly on low incomes as those in need of public housing. At the same time, another discussion paper of the Victorian Minister of Housing shows that approximately one-third of the State public housing stock is run down and inadequate. This discussion paper identified the elderly as the worst affected, due to the problems of heating, noise and access. Fortunately, in recognition of this problem, the Victorian Government will spend $31.6m this year on improvements to housing stock. Priority areas include Broadmeadows in my electorate and I welcome these initiatives by the Victorian Government. The increasing demand for new public housing, taken together with the need to upgrade existing stock, amounts to a problem of increasing magnitude that must be tackled with renewed vigour. As I stated at the outset, adequate housing is one of the basic criteria for the well-being of all Australians. It is appropriate that, in this International Year of Shelter for the Homeless, which has as its objectives `to develop strategies to improve the shelter and neighbourhoods of the poor and disadvantaged towards the year 2000', the Government's ongoing commitment to the provision of public housing is highlighted and reinforced by the Bill before the House. Mr McVEIGH(Groom)(11.06) —As an admirer of the mother and father of the honourable member for Scullin (Mr Jenkins), I can readily understand how pleased they would be to receive a copy of his speech. I do not happen to agree with all that is contained in his speech but I think he expressed his point of view with logic and sincerity and obviously he has a feeling for the poor section of the community. I just know that his mother and father will be thrilled when they receive a copy of his speech. I remind the honourable member that it is not always the case that all the good players are in one team or on one side of politics. On occasions we, on this side of the Parliament, have a right and legitimate grievance when things are sometimes misrepresented. I say to the honourable member and to other Government members that the first home owners scheme was not introduced in Australia by either the Hawke Administration or the Whitlam Administration; I think it was introduced a long time previously, in the Menzies era. So, technically, the first home owners scheme was sponsored by a conservative government. One of the great pleasures that I had as a Minister for Housing and Construction was to broaden the concept of the first home owners scheme and include a special allocation of finance on a family basis. It is the practice of members of the Australian Labor Party to get up in this House and try to lay claim to the fact that they are the people who introduced the first home owners scheme. I just point out to the honourable member that that is incorrect and I know that he will accept, in the spirit in which I offer it, that slight correction to his speech. It is with a feeling of regret that we, in this lucky country, are currently bearing witness to such tremendous poverty being suffered by a great many of our compatriots. Therefore, I rise to commend the Government for seeking to implement measures to counteract this crippling problem, through the medium of its Housing Assistance Amendment Bill. The Government has heralded this Bill as the significant breakthrough needed to help ameliorate the problems of poverty and subsequent homelessness. However, I question whether it fulfils these objectives. I would like now to juxtapose these problems with the Government's proposed solution in order to see how far it actually goes towards counteracting these problems. Since 1981, the number of Australians involved in the process of purchasing a home has risen marginally. We are now looking at a national figure of around 72 per cent of people who are either home owners or purchasers. However, the past decade, corresponding with this period, has seen these people paying up to 17 per cent more of their incomes on mortgage repayments. In Brisbane, this figure now stands at 27 per cent, which is dwarfed by the staggering 45 per cent currently being paid by some home buyers in Sydney. This burden has been further exacerbated by a 5.5 per cent rise in interest rates since 1979, coupled with, roughly, a 20 per cent increase in the cost of housing in the last five years. In sum, therefore, Australians are now being forced to pay higher prices for homes, which they can ill-afford to do in the current economic climate. This theory is supported by the bankruptcy figures for the July-September quarter issued recently by the Attorney-General's Department. The figures show that bankruptcy currently is at an all-time high. The record massive bankruptcy figure of 560 in New South Wales for the three-month period directly reflects the aforementioned high costs of mortgage repayments in that State. According to the Housing Loans Insurance Corporation, by the end of the 1985-86 financial year, one-half of one per cent of total loans were in arrears. This represents a massive $7.2m in repayments that home buyers simply could not afford to meet. So we see how low income families are forced to become the servile adjuncts entrapped in a reified world of poverty. This crisis situation further serves to cripple those poorer households which are experiencing increased difficulty coping with rent repayments, let alone finding enough money for a deposit. Among the poorer households we see evidence of higher levels of unemployment and dependency on pensions and benefits. These unfortunate people, therefore, are forced to rely on rental housing provision. Whilst the more fortunate members of this impoverished group may gain access to public or other forms of non-profit housing, others will continue to rely on private rental housing or pursue less satisfactory options, such as long term caravan living, sharing or delayed housing formation. Multiple occupation, overcrowding and homelessness, particularly among the young, are widespread. Many low income tenants often have to choose whether to feed their children adequately or keep up with their rental payments. For those who simply cannot keep up with rental payments, long term caravan living has become the normal way of life. Regrettably, these people now total between 250,000 and 300,000 of our fellow Australians. Last year in Queensland, 56,000 people were forced to exist and bring up families in caravan parks. New South Wales had a figure of 43,000; Western Australia, 26,000 and Victoria, 18,000. In addition, a further 5,000 people have been forced to seek alternative means of accommodation, such as caravans in the backyards of other people's homes, tents and houseboats moored on the banks of rivers. Another 2,000 people exist in impoverished dwellings, usually constructed from scrap materials and refuse that they manage to scavenge. Such is the depressing picture of poverty which, although significant to most Australians, is not always apparent. On current trends and on reasonable expectations for the future, it is clearly of great importance that a viable pool of rental housing is retained. Indeed, the roots of the current crisis lie in overall shortages. There is an overriding need to expand supply to cater for present shortages and an inevitable growth in need. How far do the measures sought to be implemented by the Government through the amendment to the Housing Assistance Act go towards rectifying this crisis situation? I applaud the Commonwealth Government for its decision to increase the base level of its funding to the States by $200m for the next two years of this triennium. Of course, given the high inflation rate, the real value in the third year will be less. Obviously, the Government has acknowledged the fact that if this problem of housing-related poverty has any chance of being alleviated, financial assistance must be given specifically to public housing programs. The Government seeks to do this by making available to the States $11m for the purpose of the local government and community assistance program and $14m for the crisis accommodation program. These facts of life are to be regretted. I wonder whether, in positive circles, we are doing enough in terms of the record number of marriage breakups and the increased breakdown of family life. Maybe we are not doing enough by way of marriage guidance; we are not doing enough to educate people that marriage is a partnership and that it requires sacrifice by both people. We will not rectify these problems overnight, and it is good for the Government to be seen to be putting these amounts of money into what we term crisis situations. I just wish there were no crisis situations, but I commend the Government for its action. I do not see any mileage, political or otherwise, in forever criticising a government. I think this is a good move, and I congratulate the Government. I just hope that in the future the need for this allocation decreases, but if it continues I hope the Government might see fit to increase these amounts, notwithstanding the pledges it has made in this legislation. Maybe there could be an increase in the next two years of the triennium. I am fully aware, as all honourable members would be through their association with local government, the Salvation Army and the St Vincent de Paul Society, that a real need does exist. In a spirit of bipartisanship I just want to say that as far as I am concerned and as far as the Opposition is concerned we not only support the Government but also compliment it for taking this measure. I think all of us would admit, from the knowledge we have of our own constituencies, that the amount provided is not enough to eradicate the problem completely; however, it does provide a springboard from which the States may propel themselves into useful aid programs for the homeless and poverty stricken. I hope that the example set by the Government may be a trigger which will encourage private people to donate to and help rectify what I believe is a very serious problem nationally, and a problem which obviously is of great importance in a personal sense. Further, the legislation functions as an incentive for the States to increases their own housing expenditure in these areas. A significant aspect of this amendment, too, is the decision of the Federal Government to allow the States to nominate up to 100 per cent of the loan component of their State government borrowing program for public housing in 1987-88. This is a direct departure from the previous practice of the Federal Government to impose ceilings on the percentage of the Commonwealth grant to be used within the spheres of these two schemes. In the last financial year Queensland was restricted to using a mere 33 1/3 per cent of its grant for crisis housing. This was a reduction of the previous year's limit of 50 per cent. It is indeed imperative that the States be afforded this opportunity to nominate the relevant percentage of their grants that they deem necessary to cover their individual needs for public housing. This should be allowed in order to reflect the priorities and differing requirements of each State. At this juncture I should also like to record my support for the measures the Government proposes to take which will effectively ensure that 50 per cent of the total funds will be directed toward public rental assistance, specifically, to make provision for the supply of affordable rental housing for those lower income families to whom I referred earlier. The Federal Government has also seen fit to take the responsible step of reviewing the income of the recipients of these benefits at regular intervals. This will ensure that those who are genuinely floundering in the mire of poverty are the ones being tossed the rope and dragged from almost certain annihilation. Whilst this level of Federal Government intervention into State matters is indeed favourable, our major concern about this amendment Bill, as previous speakers from this side have suggested, focuses primarily on the power of the Federal Government to dictate the strategies that may be employed by State governments in the provision of specific housing assistance schemes. The power of the appropriate Federal Minister to reallocate grants from one State to another, or even back to the Commonwealth, should the Federal Government not agree with the procedures adopted by the State Government with respect to special purpose schemes, is a smack at State autonomy. As I illustrated earlier in this speech, the housing poverty crisis varies from State to State. Therefore, a State Minister is the best person to have knowledge of these problems and take the appropriate measures to deal with them, rather than someone in a centralised bureaucracy in Canberra. This broad brush treatment by the Federal Government of the States as a whole is ineffectual when seeking to fight the serious problems of poverty. If one maintains this metaphor of painting, the following argument clearly emerges: In art, it is the artist who is the only one possessing an intimate knowledge of his or her own work. While this does not preclude the art critic from passing judgment, the artist does, however, remain the only true authority on the work because of this close affiliation the artist has with the work. So too, the individual State governments possess this intimate knowledge of the areas of poverty and homelessness within their respective States and how best to tackle this problem. The Federal Government cannot hope to have the same intimate knowledge of each of the six States and the Northern Territory. Therefore, it should not have the power to make such autocratic decisions which ultimately determine the direction that financial assistance will take. On the basis of this argument then, the power of the Federal Government to interfere in State issues should be limited. And subsequently, State governments should be given more power so that they have the opportunity properly to govern the States. As a final remark, I once again commend the Federal Government on recognising the plight of the low income families in their bid to secure a roof over their head and offer my support of the Government's move to provide assistance to this impoverished group. I do, however, suggest that the Government play down its Big Brother role in order to establish more of a partnership with respect to the States if they are to succeed in helping the homeless and poverty-stricken to escape from the concrete gaol of a modern megalopolis. Ms JAKOBSEN(Cowan)(11.21) —Housing is a basic requirement of all members of our society. Sadly, it is not one which is universally met, even with the comprehensive programs which our Government has introduced. However, we are doing everything possible to ensure that shelter is provided to all categories of people, including those in crisis and without means. Amongst the general population there are many families who are unable to afford to buy a house or even to rent a home on the private rental market. For this reason and to help these people, the Hawke Labor Government has provided unprecedented levels of funding for public housing construction in conjunction with State governments, and I welcome that initiative. While consistently working to reduce interest rates so that housing purchase would be more affordable, we have endeavoured to make available more public housing across Australia. The Treasurer (Mr Keating) has also tackled the overheating of residential property purchase in major State capitals by clamping down on foreign investment in residential real estate. This initiative has been applauded by some honourable members opposite. The Commonwealth-State Housing Agreement has been a great success. Its triennial evaluation in 1986 concluded that public housing programs are generally efficient, effective and well targeted. The $700m guaranteed to State governments for the provision of public housing is $200m more than the base funding provided in the first triennium and 3 1/2 times more than the base level provided for in the Howard-Fraser Liberal Government's agreement in 1981. The tortuous logic of the Opposition housing spokesman is beyond belief. He draws attention to the fact that the States with the largest amount of public housing are those with the longest queues. This phenomenon can be explained by the fact that the Labor States are much more likely to be flexible in their rules on eligibility for public housing. The increases have resulted from an increase in the number of people eligible-it is as simple as that-and those people include young single people who were previously ineligible in some States. Furthermore, increased awareness of available assistance and the deinstitutionalisation of aged and disabled people would certainly have lengthened the waiting lists. I can distinctly recall some honourable members opposite calling for more public housing, often in the context of the home ownership debate. I am not quite sure whether their intention is to exclude poorer people from home ownership. In saying that, I exclude the honourable member for Groom (Mr McVeigh). Secure, affordable housing is what people require. Where the needy are concerned the private sector does not provide this except in rare circumstances. Even people on relatively high incomes would be nervous if they had to rely on the exigencies of the private rental market for tenure and stability in housing. This is not to say that private landlords are heartless; far from it. But their perspective is not that which places a priority on housing provision. Rather, they have invested in rental property and their primary concern is either profit or loss, depending on their taxation situation. The honourable member for Phillip (Ms McHugh) put her finger on the right point when she referred to the reduction in stigma attached to public housing. The better the quality and positioning of public housing, the more likely it is that low income families will seek to access it. For instance, if public housing is ghettoised and/or concentrated on the outskirts of cities away from centres of employment, people who need work will not be able to utilise it. The time it takes to commute to work will be too long or make it too difficult, given that public transport is often less than satisfactory in such areas. The initiatives taken in the public housing and home ownership areas are excellent in the Labor States. The Commonwealth Government has also wholeheartedly supported the ambitions of Australians who want to buy a home through the assistance of the first home owners scheme. It is a nonsense for the Opposition to claim that the increased demand for public housing results necessarily from an increase in the inability of people to purchase a home. Where there is no hope of obtaining public housing, people will stop applying for it. They will resign themselves to high private rentals, or live at home with their extended family, with overcrowding resulting. The growth of available public housing encourages such people to register for accommodation. Innovative schemes exist in States like Western Australia which protect public housing tenants and allow them securely to contemplate the extension of their position into home purchase. The first home owners grant can be used as a deposit or as mortgage repayment assistance for people in such circumstances. The Federal Government's initiative of the family package will combine with the first home owners scheme to lift the income of pensioners and low income working families to the point where they can realistically contemplate home ownership. Alternatively, they will be able to access rental assistance which can be offset against the cost of private rental. Such steps address the difficulties of pensioners and low income earners in a compassionate and realistic way. Honourable members opposite bleat about the poor and people who cannot afford a home. They had their opportunity when they were in government, and they failed dismally. The people of Australia know that this Labor Government is committed to programs which provide housing for people in all walks of life when assistance of some type is required. We have tackled the problem of high interest rates inherited from those opposite. We have introduced and expanded the first home owners scheme, with 250,000 families being helped through its auspices. The income eligibility ceiling now takes account of the number of children in a family. This was an excellent initiative which I applauded at the time, as did many members on this side of the House. Private rental assistance is now provided to families in need and affordable public housing is available throughout the nation. Crisis accommodation is provided in as many areas as possible, as is local government and community housing. The Commonwealth-State Housing Agreement will be amended to ensure that all State matching contributions for home purchase assistance, and Loan Council nominated funds used for home purchase assistance, are channelled through the home purchase assistance account. The Government's intention to vet schemes that States bring into effect is very important. Although some of these schemes have existed in Western Australia for some time and have operated very well, it is important that the Commonwealth have an overview of them. The honourable member for Scullin (Mr Jenkins) referred to the Curtin, Chifley and Whitlam governments' commitment to public housing. This Housing Assistance Amendment Bill continues the Hawke Labor Government's commitment in the same area. I commend the Bill to the House. (Quorum formed) Mr WRIGHT(Capricornia)(11.31) —It is quite amazing that the honourable member for Barker (Mr Porter) should bring forward this amendment. It is quite amazing that he should suggest that the Government deserves some sort of condemnation for its intrusion into State housing programs. It is clear to me that he does not understand what has been taking place when it comes to Commonwealth-State housing relations. I want to use one analogy which relates to when this Government and this Parliament handed over to the States the isolated patients travel allowance. It was suggested that the States ought to handle this realm of government, the delivery of Commonwealth services. We gave the States an extra 25 per cent top up on the money available to them and they were supposed to expand upon and continue the quality of service provided by the Commonwealth. What has happened? In Queensland that is not the case. Despite the 25 per cent increase and despite the handing over of this responsibility there are fewer benefits and the patients are paying more. That is what can happen when the Commonwealth hands over one of its services to the States. Nevertheless, the Opposition is saying the Government is intruding on the housing responsibilities of the States. What nonsense! Clearly the honourable member for Barker has not bothered to read the Housing Ministers Conference report of April 1986. It concluded that the public housing programs under the Commonwealth-State Housing Agreement `are generally efficient, effective and well targeted'. The State Ministers said this, not just the Commonwealth, not just the Australian Labor Party. The Commonwealth and State Ministers came together, talked through the situation, recognised what had taken place since 1984 and came up with that assessment of that agreement. I suggest to the honourable member for Barker that he look at the initiatives this Government has undertaken and put in place. The first home owners scheme has been changed. There is a greater and wider eligibility. The Government has ensured that some 260,000 home buyers have been able to enter the scheme and it is estimated that in 1987-88 $220m will be spent. This is the Government that has reintroduced negative gearing. This is the Government that has introduced a rental assistance scheme of up to $15 for people on family allowances, on supplements and unemployment benefits. This is the Government that plans, in 1987-88, to provide $1.114 billion to the States and the Territories for public housing. That is a 100 per cent increase over the 1982-83 expenditure when the Opposition was in government. Of this $1.114 billion, $700m is provided under the housing agreement and another $414m under Loan Council arrangements. Honourable members should look also at other assistance given in this area. The amount of $37.5m is made available under the rental assistance program for pensioners; $60m under the rental assistance program for Aboriginal people; $15.5m in crisis accommodation; $25m under the mortgage release scheme and $12m under the local government and community housing program. Everywhere we have these initiatives-initiatives the Government has introduced. This is the Government that is concerned about the growing number of people waiting to get housing. The Government is addressing the problem. I suggest the honourable member for Barker and other members opposite ought to look back at what they did. They will find that if the Government hands over too much to the States, as the honourable member for Barker is suggesting, the people will suffer. This year the Government is giving some $414m under Loan Council arrangements. Under those arrangements the States are allowed to spend 100 per cent of that in the public housing sector. The cost of that money from the Commonwealth is 4.5 per cent. Prior to coming into this chamber I had a member of my staff contact the Queensland Housing Commission to ask what interest rate it was charging on its loans. The Commonwealth is charging 4.5 per cent; the Queensland State Government is charging 14.5 per cent. If there is any problem it comes back to the way that State is administering the system. I believe the amendment put forward by the honourable member for Barker is pathetic. It is unwarranted and it demonstrates that he and his colleagues in the Opposition do not understand the housing market. They do not understand the importance of public housing and they do not understand the special and difficult role the Government has undertaken since 1983. Funding to the States and to the Northern Territory will be guaranteed under this legislation at the $700m base rate for 1988-89 and through 1989-90. That is $200m more than the base rate in 1984 when the previous triennium housing program was set up. It is 3 1/2 times more than the 1981 triennium housing program. Instead of restricting the States, the Government is opening up the rights of the States. Clearly there has to be some control if States are not adhering the the guidelines or if they are not going along with the special programs. This legislation will guarantee that the Commonwealth can intervene, that it can retain or redirect that money, but it is giving the States the right to nominate up to 100 per cent of the loan component of their State government borrowing programs for public housing over the present financial year. The Government has worked out an agreement with the States that is economically realistic, that is realistic in terms of demand and that is addressing existing problems. This Government introduced the local government and community housing program. I think in the first three years of that program $27m was made available. In the first year, $7m was provided because it was only part of a year, and $10m was made available in each of the following two years. Now, $11m is set aside in the 1988-89 and the 1989-90 period. Another $14m has been set aside for crisis accommodation. I do not believe the Commonwealth needs to hand over these projects to the States. We have seen what happened under the local government and community housing program in my own region of Mount Morgan. The council sought $200,000 for a very important local government housing program and it was vetoed at the State level. No reason or excuse was given; it was simply vetoed. One sometimes questions whether the politics of that Government play a far greater role than the importance of the project. I welcome the changes to the Act the Minister for Community Services and Health (Dr Blewett) is bringing forward. I welcome the changes that will ensure action will be taken to make sure our rental stock is not depleted by sales. If something is sold it must be sold at or near replacement cost. I welcome also the fact that young people will be given access to public housing. I understand there has been an enormous demand. Problems have arisen when families have grown up in a public home and the husband has died. An elderly woman may be left in a three-bedroom home. In such cases there needs to be a relocation, a change in the approach that is taken at present. But we have to ensure that those in need are given access to public housing. That is what this legislation is about. The amendment brought forward by the Opposition is pathetic. Members opposite are grasping at straws. It is quite amazing to attack this Government on its record on public housing. I suggest that the Opposition look at-I ask the Minister to look at this also-other areas that affect our people. Certainly, these problem areas are not ones resulting from this Government's policy on public housing. There are problems resulting from the loan arrangements in the private housing sector-a sector on which the honourable member for Barker seems to place all his reliance. For instance, in my State of Queensland a personal loan for a home can be taken out at 21 per cent but the moment the borrower defaults by one day on that payment under the loan agreement the interest rate rises to 31 per cent. It stays at 31 per cent. There is nothing we can do about that legally because the money lenders legislation in Queensland means nothing. The State Government has walked away from its responsibilities in that area. I suggest also that this Government, whether it be by way of some sort of committee or simply through the Commonwealth-State Housing Agreement, have a hard look at the deposit arrangements-the no deposit arrangements-into which some building societies are getting. I refer to the situation that occurred during the recent election campaign when one of my opponents was accused-there are statutory declarations to back this up-of putting people into housing by using a falsified deposit document. It said on the building society document that there was a 5 per cent deposit. However, the people concerned said that in fact they paid no deposit. What was happening was that $7,000 or $8,000 was being added to the house price. This was then being subtracted as the alleged deposit. I suggest also that we undertake some sort of program, particularly in the private purchase area, to convince people and to educate people about the money they can save by restructuring their repayment programs, particularly by restructuring them on a fortnightly basis. I also believe that we ought to have a hard look at the situation whereby people buying a home can be forced into using a particular solicitor. I suggest that needs to be referred to the Trade Practices Commission because I believe that that is a restrictive trade practice. The same sorts of rules prevent people from doing their own conveyancing. I question whether that should be so. Finally, I refer to the way in which the banks hold up the interest on loans that people take out. It is strange that whenever there is an economic problem the banks are quick to force up interest rates but when things are on the way down they hold existing rates as long as they can. They make many millions of dollars because of that. Setting aside those matters, it is clear that this Government has taken the initiative to overcome the problems in the housing industry. This is the Government that has recognised the long waiting lists for housing. This is the Government that has made available money to the States to allow them to get at that problem, because these matters are best dealt with from a State administrative point of view. However, the funding has to come from the Commonwealth. Again, this is the Government that has made sure that that funding is available. I believe that the Minister and the Government should be commended for their initiatives. I find it rather strange that the Opposition should bring forward such a pathetic amendment. Dr BLEWETT(Bonython-Minister for Community Services and Health)(11.43) —I must say that I think that anyone who listened to this debate or who reads it in Hansard will find it an illuminating comment on the state of the opposition in this House. There were speeches from three members of the Opposition; two of them shadow Ministers, the third speaker not a shadow Minister. Yet there is no doubt that the most intelligent, most understanding and most sympathetic contribution to the debate on the Opposition side was that of the backbencher. He at least joined with Government members in understanding the challenges that we face in this area of housing. The two Opposition front bench speakers really dwelt in a fantasy world. The honourable member for Capricornia (Mr Wright) just pointed out the extraordinary basis of the kinds of fantasies those honourable members produced. First of all, one was led to believe that somehow there had been a kind of golden age in housing before the Hawke Labor Government came to power. I point out that in March 1983 the housing industry in this country was at an all time low. I ask honourable members just to look at the housing commencements predicted for this year. Even with all the economic difficulties that this Government has faced it is estimated that there will be between 126,000 and 130,000 housing commencements this year compared with only 105,000 commencements back in 1983. Therefore, we have to contrast the situation we inherited with what has been achieved in what we are all prepared to admit are situations of great difficulty. The even greater fantasy that flowed through the speeches of the honourable member for Mitchell (Mr Cadman) and the honourable member for Barker (Mr Porter) was that somehow there had been a decline of spending on housing under this Government. It is true that this year we have not been quite able to maintain the record spending of the last two years, but I refer everybody to page 392 of Budget Paper No. 1 where the massive increase in funding to housing under this Government is made clear. Indeed, if we compare the spending on housing in the last year of the Fraser Government with this year's spending we see that there has been a 75 per cent increase of funding in less than five years. As the honourable member for Capricornia pointed out, under the Commonwealth-State Housing Agreement, which we are discussing in the Housing Assistance Amendment Bill, the amount allocated has increased from about $200m to $700m. Honourable members opposite are standing up and speaking in a kind of fantasy world when they attack expenditure in the housing area by this Government. In fact, this Government has made a massive contribution to housing expenditure. We have endeavoured to direct it at all forms of need. We heard the honourable member for Barker saying that we are concerned only with public housing. Such a statement ignores the first home owners scheme of this Government which is designed to enable people, particularly less well off people, to get access to funding for the purchase of their own homes. That has been the most successful first home owners scheme in the history of this country. It has already produced over a quarter of a million homes for people eligible under this scheme. At the moment the rate of applications is running at 900 a week. It is enabling people to purchase their own homes through this system of government aid. Representative of the quality of the Opposition's criticism was of course the argument-I think it was the honourable member for Mitchell who said this-that the administrative cost of our first home owners scheme had gone up this year. The simple reason that cost has gone up is that we are automating administration of the scheme this year. That means a one-off extra cost this year, but it will mean much cheaper administration in the years ahead. Therefore, I think we can dismiss most of what we heard this morning from the Opposition front bench speakers. I respect what was said by the Opposition back bench member, the honourable member for Groom (Mr McVeigh), who is of course knowledgeable about the housing industry and who made a worthwhile contribution from the Opposition side. As to the amendment, we simply dismiss that. The notion that this Government, which contributes $700m to the States for housing, should not have some reasonable say in some of the ways that that money is spent, is extraordinary. Let me say that the Commonwealth-State Housing Agreement is not imposed by the Commonwealth on the States, but has been the result of negotiations. I would like to congratulate my predecessor, the present Minister for Administrative Services (Mr West), for the negotiations he undertook with the States to produce the new agreement. I do not believe that any of the States believe that the extra Commonwealth requiremens, to ensure that that $700m paid to the States is wisely used, are an imposition. I think that we can simply dismiss the amendment. Certainly, this Government accepts that if it is spending taxpayers' money in that way it has to have effective rules to see that its goals and outcomes are achieved. One other point I will briefly mention is that the honourable member for Barker made an alleged correlation between the size of waiting lists for public housing and the number of public housing units in particular States. I think that the honourable member for Cowan (Ms Jakobsen) dealt with that quite correctly. One has to allow for a very different situation in each State. There are different rules. If one looks at the particular discrepancies that occur one sees that they are very much explained by historically different policies pursued by the States in relation to public housing. Of course, we recognise that public housing is a tremendously important part of the housing market. Sometimes that did not seem to be realised by members of the Opposition, apart, again, from the honourable member for Groom. A lot of people in this society still are not able to afford their own homes. Therefore, the public housing sector remains a key one for this Government. It is, of course, one of the reasons why we have increased the amount going to the States for public housing by over three times in the course of this Government. I simply ask the House to reject the amendment. Question put: That the words proposed to be omitted (Mr Porter's amendment) stand part of the question. The House divided. (Mr Deputy Speaker-Mr C. A. Blanchard) Ayes . . . . . . . . . . . 70 Noes . . . . . . . . . . . 56 —— Majority . . . . . . . . . 14 —— Baldwin, P. J. Jenkins, H. A.Beazley, K. C. Johns, G. T.Beddall, D. P. Kelly, R. J.Bilney, G. N. Kent, L.Blewett, N. Kerr, D. J. C.Bowen, Lionel Klugman, R. E.Brown, Robert Lamb, A. H. (Teller)Brumby, J. M. Lavarch, M. H.Campbell, G. Lee, M. J.Charles, D. E. Lindsay, E. J.Charlesworth, R. I. McHugh, J.Cleeland, P. R. McLeay, LeoCourtice, B. W. Martin, S. P.Crawford, M. C. Mildren, J. B.Cross, M. D. Milton, P.Cunningham, B. T. (Teller) Morris, AllanDarling, E. E. Morris, PeterDubois, S. C. Mountford, J. G.Duffy, M. J. O'Keefe, N. P.Fatin, W. F. O'Neil, L. R. T.Fitzgibbon, E. J. Price, L. R. S.Free, R. V. Saunderson, J.Gayler, J. Scholes, G. G. D.Gear, G. Sciacca, C.Gorman, R. N. J. Scott, J. L.Grace, E. L. Simmons, D. W.Griffiths, A. G. Snow, J. H.Hand, G. L. Snowdon, W. E.Harvey, E. R. Staples, P. R.Hayden, W. G. Theophanous, A. C.Holding, A. C. Tickner, R. E.Howe, B. L. Uren, T.Humphreys, B. C. West, S. J.Hurford, C. J. Willis, R.Jakobsen, C. A. Wright, K. W. Adermann, A. E. Jull, D. F.Aldred, K. J. Lloyd, B.Andrew, J. N. (Teller) McArthur, F. S.Beale, J. H. MacKellar, M. J. R.Blunt, C. W. McVeigh, D. T.Brown, N. A. Macphee, I. M.Burr, M. A. Millar, P. C.Cadman, A. G. Moore, J. C.Cameron, Donald Nehl, G. B.Cameron, Ewen Peacock, A. S.Cameron, Ian Porter, J. R.Carlton, J. J. Prosser, G. D.Cobb, M. R. Reith, P. K.Connolly, D. M. Robinson, IanCowan, D. B. Ruddock, P. M.Dobie, J. D. M. Shack, P. D.Downer, A. J. G. Sharp, J. R.Edwards, Harry Shipton, R. F.Fife, W. C. Sinclair, I. McC.Fischer, Tim Smith, W. L.Fisher, Peter Spender, J. M.Goodluck, B. J. Sullivan, K. J.Hall, Steele Tuckey, C. W.Halverson, R. G. Webster, A. P.Hawker, D. P. M. White, P. N. D.Hewson, J. R. Wilson, I. B. C.Hicks, N. J. (Teller) Woods, R. L.Hunt, R. J. D. Wooldridge, M. R. L. Question so resolved in the affirmative. Amendment negatived. Original question resolved in the affirmative. Bill read a second time. Message from the Administrator recommending appropriation announced. Leave granted for third reading to be moved forthwith. Bill (on motion by Dr Blewett) read a third time. Debate resumed from 22 October, on motion by Mr Willis: That the Bill be now read a second time. Mr MOORE(Ryan)(12.00) —The Management and Investment Companies Legislation Bill before the House is not opposed by the Opposition. Indeed, the management and investment company (MIC) program was introduced as an initiative by the former Government. David Thomson, who was the Minister for Science at the time, was responsible for putting together the Espie High Technology Financing Committee which ultimately reported to the new government, and the bipartisan approach was continued with the establishment of the MIC program. It is a refreshing adventure into the business world and has been one of the success stories of a bipartisan approach in which some common understanding of the rather poor levels of venture capital and high technology development in this nation was addressed. I will refresh honourable members' memories of what the MIC program is about. The MIC program was directed to promote the establishment and development of a private sector venture capital market in Australia and to encourage management and financial support for the start-up and early growth of Australian based enterprises which had the potential to grow rapidly into substantial businesses, were export oriented and used innovative technology. A venture capital company under the MIC program must be staffed by a multi-disciplinary team of professionals possessing management, financial, marketing and technical skills. A venture capital company-this is always a loosely defined and thrown around term-must provide patient, professional equity investment in a portfolio of potentially high growth businesses, add value through management participation and seek high capital gains on disinvestment. These terms were applied as part of the criteria by the Licensing Board which was established so that those corporations which sought to be included under this program could apply and be judged on their merits. The MIC Licensing Board was established by the Commonwealth Parliament to administer the program within the terms of the Management and Investment Companies Act 1983. The licensing of MICs was to raise an approved level of tax deductible capital. A tax incentive-a deduction of 100 per cent of the amount invested-was offered to subscribers to new shares in MIC. The investment by MICs in businesses was certified by the Licensing Board against the criteria set out in the legislation. MICs invest in businesses as wide ranging as biotechnology, communications and other major areas of advancement. Any potential investee business must possess the following significant features: firstly, the use of innovative technology; secondly, an export orientation; thirdly, international competitiveness; fourthly, the potential for rapid growth; and, finally, the potential for creating skilled employment in Australia. There are no restrictions on who may actually invest in MICs. To date 11 companies are licensed under the Act. All these companies have participated in the four capital raisings of $40m as determined by the MIC Licensing Board. Up to 31 May 1987, which is the last figure I have, some $176m had been raised. In the main that has been done by the division of $40m per year by four. Additional subscriptions have been raised, primarily by CP Ventures Ltd from non-taxpaying institutions, to top this up. The legislation before the House gives rise to two significant changes. Firstly, it allows any of the 11 existing companies under the MIC scheme to withdraw from the scheme without affecting their tax position under the scheme. However, as honourable members would be aware, the clawback provision allows any member that subscribes for capital under this scheme under the licensed $40m per year to claim the whole amount as a tax deduction in the year of subscription. If a member seeks to sell shares before the four-year period elapses, the clawback provision enables the Australian Taxation Office to disallow past deductions, depending on whether it is the first, second, third or fourth year. Under this legislation the taxation provisions still apply to the investor but the company is able to move out of the scheme and, by doing so, is able to raise capital beyond that which is set down to it under the licensing provision. Currently, MICs may raise from their investors only the amount of the $40m a year that is allotted to them by the Licensing Board. Let us assume that the 11 companies are limited to $4m each per year. They may not go to the public to raise capital beyond that amount. Under reasonable market conditions, in a successful mode companies could be expected to raise a lot more than that-that is, their licensing entitlement plus what they could raise from the market-place. However, CP Ventures and one or two others have been able to raise additional money from non-taxpaying institutions. This Bill enables companies to go beyond the set amount and raise additional money. This would have been far more applicable under reasonable market conditions, but today share prices are down so low that very few of the 11 MICs are selling above par. As a consequence, the ability to act under this provision is now extremely limited. It is regrettable that this provision was not implemented a year ago when the MICs started pressuring for it. This would have enabled companies under very optimistic market circumstances to raise a substantial amount of money to help carry through their programs. It would have put them in a funded position for many years to come. Under this Bill they are now allowed to go beyond the $40m entitlement per year to spread the deduction; in other words, the amount of money that was first contributed to that company is allowed as a deduction and all sums after that are purely capital subscribed. The beauty of this provision is that it will enable some companies to carry on. It certainly will be of benefit to corporations in the very difficult conditions that confront the share market today and will continue to confront the share markets of the world for some time to come. Under those circumstances, I think the action taken in this Bill is correct, though late. The whole basis of the MIC scheme was to encourage investment in companies meeting the criteria I mentioned: use of innovation technology; export orientation; competitiveness; rapid growth; and the creation of skilled employment in Australia. It is not possible to establish those sorts of investments quickly. It will take one or two years to identify the areas of investment and to put together the team of management that is necessary to handle the diversity of the investments, to see the companies through the establishment period and to make the capital investment and management decisions that are required in these companies. There have been some very notable successes, but they have taken time to mature. I refer here to some of the investee companies that Techniche Ltd has been able to partake in. One is the Agen Co. which recently made a significant breakthrough in the area of blood testing by developing a simple device which I think will make a major contribution to the diagnosis of certain major ailments these days and will also lend itself to international sales. Other developments through the range of these companies will inevitably flow on, in the areas of high tech computers and transport. But there have been some notable failures. One of the most amusing MIC investee companies is none other than Amann Aviation Pty Ltd which we have heard so much about in recent times. It certainly must have missed the bus for management techniques and a few of the other qualifying factors for an MIC company, but it certainly got some innovative thinking going at the former Department of Aviation even if it did not get any out of the MIC scheme. At the moment there is a crisis within the capital markets of the world. Any innovative company is undoubtedly, a risk taker. When people invest in risk companies they are very aware that not only are they placing their moneys behind a venture which may or may not succeed, but also they are placing themselves in an area of international competition which, at present, is subject to all sorts of vagaries; in other words, government protections, currency movements and commodity price movements. Because of that we, in Australia, found in the lead up to the events in October a very rapid development of corporations, not only those companies that took advantage of the MIC scheme but also the many companies that joined the second boards of the Australian stock exchanges. That innovation was not in place two years ago. Those companies which came on to the boards with a lesser capital requirement than the stock exchanges needed and, in some cases, with a Country Party voting system to enable them to protect themselves against unwanted predators, were looking for extra venture money to support programs which certainly carried many question marks. They varied from fish ventures to building materials, boating ventures, holiday and leisure activities, some manufacturing ventures and a wide range of others. As a consequence of the recent stock market crash a lot of those companies will not succeed as the capital will not be available to them. As they disappear from the boards, the strength of this program will be seen for what it is. People will not go into those areas of investment. Areas that offer a tax deduction, some proven track record and some sense of real performance will be taken up by investors and the remainder will feel the pinch of a declining entrepreneurial spirit and a declining inclination by investors to participate in the market-place because of the many problems that undoubtedly will be with us over the coming years. I would now like to draw attention to the conflicting points of view put forward by the Minister for Industry, Technology and Commerce, Senator Button, and the Treasurer (Mr Keating). It is well known that the Treasurer tried to put this scheme to bed or, more appropriately, send it to the cemetery some time ago. But to the everlasting credit of the Minister for Industry, Technology and Commerce, it will survive until at least 30 June 1989. Finally we are seeing some recognition of the fact that the sorts of investments that have gone on through the MIC scheme are very much in the national interest. What can be done is shown by the establishment work of the Management Investment Companies Licensing Board, the sorts of people to whom it has granted licences and the direction in which the 11 companies which have undertaken the scheme have applied themselves. I hope that the review of corporate tax, to which this scheme will be subject, recognises the enormous amount of work that has gone into it. I am also hopeful that the Government will not move hastily to chop it off. Investment over a period of three to four years will not allow maturity in a business or in a company without appropriate support. It is also worth noting that the Chairman of the Licensing Board, Mr Ward-Ambler, wrote to the Minister for Industry, Technology and Commerce concerning a report relating to the MIC scheme by the Bureau of Industry Economics (BIE) within that Department. The letter states: The Board has concluded the BIE report is flawed . . . The conclusions, recommendations and executive summary by no means fully accord with much of the factual and evidential material elsewhere in the report. Since the release of that report it has been impossible for those involved with the MICs to develop any long term plan for company development. Only recently Senator Button was able to hold the position of the MICs until next year. Undoubtedly the forthcoming corporate tax review had a great deal to do with the decision to extend that position for only one year. But for the tax review it is certain that Senator Button would have won from the Cabinet an extension of the life of the scheme, at least for another two years. By doing that he would have assured the success of many of the very small embryo research-based corporations that have begun to spring up. In short, at a time of great uncertainty in the share market, at a time when capital raising will be extraordinarily hard to meet and at a time when a scheme has been in place for four years and has proven successful, it would be a great pity indeed to see shortcomings of misjudgment by the Treasurer and bickerings between him and the Minister for Industry, Technology and Commerce allowed to proceed at the expense of what I regard as a great innovation in this area by both the former Government and the current Government. Mr BALDWIN(Sydney)(12.18) —As far as I can tell, the Management and Investment Companies Legislation Amendment Bill, which is before the House, is fairly non-controversial. I believe that it is supported by the Opposition and, as I understand it, it is supported by and large by the participants in the venture capital market. I have had an opportunity to speak to a number of participants in the management investment companies (MIC) program and the legislation seems to be regarded as something which is necessary and desirable to make it possible for MICs to exit the program in a reasonably orderly fashion. The legislation itself aims to amend the Management and Investment Companies Act and also the Income Tax Assessment Act in order to: (i) permit a MIC to raise non-tax concessional capital in conjunction with tax concessional capital; and (ii) enable a MIC to exit the program without triggering the tax clawback arrangements by surrendering its licence. I do not think there is any great argument about those provisions. They were part of a package of decisions with regard to the future of the program that were announced by the Government on 6 October. Those announcements included a decision to extend the program until 30 June 1989. Thereafter the future of the program is to be considered under the auspices of the Review of Business Taxation which is taking place at the moment. There is also to be a continuation of the upper limit of $20m per annum in revenue forgone. That was the Government's position as at 6 October 1987. At this stage we do not have a firm decision in regard to the future of the program after 1989. The MIC program was an attempt to address certain deficiencies in the functioning of the Australian capital market, particularly as it affects the so-called venture capital market which, prior to the introduction of the MIC program, was virtually non-existent, the point being that there was a need for entities that could provide risk capital for ventures, particularly in high technology and export oriented areas. There was a perceived lack of managerial expertise in many of those new ventures and it was felt that there was a need for a new type of structure in the capital market which could address those problems. I guess it would have to be said that the MIC program was not envisaged as having a permanent life; it was seen as something that would provide a catalytic role and lead to the creation of a venture capital market which would exist, to a large degree, outside the MIC program. There is a fair amount of evidence to suggest that that has started to occur. The figure on the growth of the venture capital market-there is a bit of argument about how one defines that term-was $2m as at 30 June 1983 and, as at 31 March 1987, it had expanded to $310m. Over that period it has gone from virtual non-existence to being something reasonably substantial. Undoubtedly, the management and investment company program has been a major element in that growth. The figures are set out in the report entitled Review of venture capital in Australia and the MIC Program, which was prepared by the Bureau of Industry Economics (BIE). The projection for the year ending 31 March 1988 is for a venture capital market of some $570m. Obviously, in the light of the subsequent stock market collapse, the figure will need to be revised. I do not think that anybody disputes that the management investment company program has contributed to the development of the venture capital market in a major and substantial way. One important feature of the program is the limitation in the revenue loss that can arise from the 100 per cent tax concession for investment in management and investment companies. A maximum limit of $20m per annum is set. There has been a cumulative revenue cost to government of some $60m since the program was first introduced. The future of the program was addressed in the report which was presented by the BIE in July this year. The report was fairly extensive although, as I understand it, it was prepared within a fairly short period. The Bureau ended up recommending two possible options as to the future of the program. One was the effective ending of the program in mid-1988 and the second was the ending of the program in mid-1990. Obviously, those recommendations are controversial. The various arms of government and the various departments have different views about the issue. The MIC Licensing Board has its own views and those are set out in the report. It is clear that there is a fair diversity of views on the future of the program. That is something we need to address. Now that the future of the program is to be placed under the broad heading of the review of business taxation, which is overwhelmingly a Treasury exercise with, as I understand it, very little input from other departments, there is a legitimate concern, I feel, about whether we will get an adequate consideration of the issues concerned. The Treasury's view is set out on page 120 of the report. I quote one sentence: The Treasury submission takes the view that the emergence of Second Board markets and non-MIC equity investment companies suggests that there is no longer any significant gap in venture capital markets. That is an immensely controversial proposition which is disputed by the Licensing Board. It is disputed strongly by participants in the venture capital market. The fact that, apparently, the program is to be considered almost solely by Treasury, in terms of the preparation of recommendations to government, is a major potential area of concern. A number of things have emerged regarding the nature of the venture capital market and these are set out in the BIE's report. One of the arguments used by those who believe that the need for the MIC program has diminished significantly is that the MIC share of the total venture capital market has fallen reasonably consistently. It is still very substantial, but now slightly less than half of the venture capital market is accounted for by MICs. Another feature of the program that has emerged is that it remains the case that individuals are the main sources of capital for MICs. There is still relatively little support from institutions. Although there is evidence of increasing support from institutions, it is still small. That remains a concern. There is also some interesting information about the respective role of the MIC and non-MIC components of the venture capital market. It is clear that the MICs play a large role in the start-up phase of ventures and their early development. In so doing, they clearly address a deficiency which existed previously in the market. The MICs have also tended to place a greater emphasis on the provision of management support in the venture capital market than have non-MIC participants. Those are some of the features of the role of the MICs which indicate that they have helped to fill a significant gap in the Australian capital market. The key question concerns the appropriateness of terminating the program. The Bureau of Industry Economics, in its review, essentially came down in favour of terminating it. The program was envisaged, at its inception, as not having a permanent life. However, I guess it is a question of when the program is terminated. The BIE wants to terminate it in the relatively short term. It gave the options of mid-1988 or mid-1990. The Bureau referred to rapid expansion and the availability of venture capital both inside and outside the MIC program, the argument being that the evidence of a so-called venture capital gap is diminishing strongly. To put this into perspective, it is important to compare Australia with the United States of America. According to the report's figures, we were looking at a venture capital market of some $300m as at March this year. The United States has a venture capital market of the order of $27 billion. If that comparison has any validity, even taking account of the great difference in the size of the respective economies, it seems to suggest that in Australia there is still a much smaller venture capital market than one could regard as optimal. It is also worth noting that with the stock market downturn, the fairly optimistic prediction of the size of the venture capital market next year will have to be revised. The estimate in the Bureau's report was $570m. Of course, since the stock market collapse there has been an enormous change. I will quote briefly from an article which appeared on page 38 of yesterday's Australian Financial Review under the heading `Venture capital drought will hurt hi-tech sector': High technology companies are set to be the hardest hit in the current stock market crisis as venture capital dries up and investors pull out of high risk enterprises. Already, numerous high technology floats have been aborted and the share price of many listed technology companies has plummeted. Observers are forecasting the failure of a number of the more blue-sky ventures. The second board is now no longer an option for those companies and sources of potential finance are dwindling fast. So it does seem that the stock market crash has had a significant impact on the venture capital market, the long term implications of which are not clear at the moment. Nonetheless, it does seem to suggest that there is a need to look at this issue anew. I refer also to a report of the Bureau of Industry Economics which, on page 72, makes reference to the possibility of a bad turn in the stock market: A downturn in the share market could lead to a loss of interest by investors in such companies as well as in young high-risk businesses. Some businesses interviewed felt that, in these circumstances, the availability of equity capital from the MICs would be vital to the development of young companies. I understand I have to finish now, but I really do think that the future of the program needs to be looked at very carefully. Given the Treasury's well-known prejudices, or views, on the matter, it is of some concern that it will have almost exclusive carriage of the preparation of recommendations to the Government on this matter. Dr HARRY EDWARDS(Berowra)(12.32) —The Management and Investment Companies Legislation Amendment Bill follows consideration by the Government of a review of the management and investment companies (MIC) program by the Bureau of Industry Economics. As the honourable member for Sydney (Mr Baldwin) suggested, the Opposition does support the Bill. The particular thrust of the Bill is, since the program has always been seen as a seeding or kick-starting measure, to provide a suitable phasing out mechanism to allow a management and investment company to leave the program-stand on its own feet, without benefit of the tax concession in its raising of capital-in an orderly and non-prejudicial fashion. The amendments in the Bill to promote this are essentially to permit management and investment companies to raise non-tax concessional capital, and to enable them to exit the program without their investors losing the benefit of their initial tax concession. The Opposition has supported this program since its inception. It sprang originally from an initiative of the Minister for Science in the Fraser Government, the Hon. David Thompson, who commissioned the report of the High Technology and Financing Committee, under the chairmanship of Sir Frank Espie of CRA Ltd, who headed up a committee of the Australian Academy of Technological Sciences. The report was completed and presented in the context of the 1983 election campaign, and the Hawke Government, on its accession to office, finally picked it up and legislated for the establishment of these management and investment companies in late 1983. The complementary tax measure was enacted in the nick of time, in June 1984, so that the program really got going in 1983-84. The purpose of the program, as the honourable member for Sydney and others have said, was to promote the establishment and development of a private sector venture capital market in Australia. Its centrepiece was the formation of management and investment companies, called MICs, and that was to be fostered by the provision of a tax incentive to encourage investors to subscribe capital in them. The incentive was that such subscriptions were 100 per cent tax deductible in the year that the capital was subscribed. In turn, the role of management and investment companies was to invest in new, fledgling, high technology, export-oriented and potentially fast growing businesses. I take this opportunity to stress that the selecting of investments and decisions on risk taking, the picking of winners and losers in this area, frequently a high technology area, are thus matters for the private sector and the market-place, where they properly belong. The role of these management and investment companies is also to afford new businesses-the honourable member for Sydney also stressed this-not only finance but also management, technological and marketing assistance. Provision was made for a board to license management and investment companies as part of a mechanism for limiting the cost of the tax concession to the Government. Still, that board's role is minimal in the whole scheme of things, and so it has been virtually a 100 per cent private sector operation-as was originally intended. Within this framework the quantum of tax deductible capital subscribed has been limited to the order of $40m each year, at a cost to the Government in tax forgone of the order of $20m a year. To date some 11 companies have been licensed. There are some well known names amongst them, including BT Innovation Ltd, Continental Venture Capital Ltd, Western Pacific Investment Co. Ltd, and so on. In recent times the program has been under something of a cloud, with threats to terminate it. The Government decision reflected in this legislation to continue the program at least to 30 June 1989 is welcomed by the Opposition. That decision-I go back to the second reading speech of the Minister for Industrial Relations (Mr Willis) when introducing the Bill-reflects the Government's view that while the program has stimulated an increased availability of venture capital, to quote the Minister: . . . the Government remains unconvinced as to the durability of the venture capital market if the MIC program were to be terminated at this time . . . The Minister went on to refer to three factors that the Government took into consideration when reaching its decision. They are, again to quote the Minister: . . . firstly, many of the new non-MICs are still a good deal smaller than the MICs and with only a limited amount of capital available; secondly, the MICs, unlike the non-MICs, focus their investments primarily at the more risky start-up and early growth stages of business development, with emphasis upon technology-based and export-oriented industries- I will come back to that in a moment- thirdly, MICs appear to devote more time towards providing management support than the non-MICs. This was a part of the whole concept. I want to return to that statement of the Minister that the management and investment companies focus their investments primarily on the more risky start-up and early growth phase. There is out there in the market-place a widespread perception that in fact even though the management and investment companies enjoy this considerable tax concession in raising capital, they are not giving sufficient support to the really risky end of the operation. The Minister went on in his speech to say: . . . while financial deregulation had resulted in greater flexibility and competition within the financial system, this had not yet, to any great extent, flowed over into the high risk venture capital market, but had mainly benefited the more traditional areas of financial activity. That reflects the perception I referred to a moment ago that the management and investment program itself, while commendable and something which, as I say, the Opposition supports and welcomes the continuation of, is perhaps not adequately catering for the very high risk end of the market. When speaking recently to the chairman of a merchant banking group the question was put, `Why are you fellows not doing more of what you are supposed to do, which is supporting the high risk projects?'. The answer that was given by that gentleman was, `Well, we had to be in this program, but our reputation is so high we cannot afford a failure'. I do not contend that that necessarily reflects the attitude of principals associated with all management and investment companies but to the extent that it is representative of the situation it certainly is not good enough. I simply report this perception that is in the community to some extent and trust that the more risky end will be better catered for. The Minister went on to state: The Government believes that the key to the long term viability of the venture capital market lies with its ability to attract funds from the major financial institutions. The institutions have begun to show an increased interest in venture capital but it is still very tentative. It is even more tentative now because today we are debating this measure in the context of the current stock exchange downturn. An alternative to venture capital provided by an institution-management and investment company, or otherwise-which has boomed in recent times in the context of the bull share market, has been listing on the second board. But with this historic stock exchange downturn it is now well-nigh impossible to find an underwriter for an issue, a float, on the second board, or indeed on the first board for that matter, and most such floats that were in the pipeline have been aborted. This greatly increases direct pressure on the management and investment companies and the particular sources of venture capital. I do not refer only to demands from entirely new projects but also to those from existing enterprises which have received initial funding and which now need further support for expansion. The fact is that the availability of the second board has virtually dried up. One can only lament that the excesses of the `casino economy'-I do not often appropriate a term of the President of the Australian Council of Trade Unions but I think this one has some merit-that the excesses of the recent bull run on the world stock exchanges and the suddenness and magnitude of the inevitable reaction, probably not fully played out yet, should have such an inhibiting and indeed disastrous effect on this sector of the real economy: the small, new, often high technology, export oriented, and employment creating businesses struggling to get established and to expand. I have some very close associations with a number of them. It is a sector which doubtless includes companies which will be among Australia's large, front rank, export-oriented manufacturing companies of the future. Madam Deputy Speaker, I conclude by saying that I commend the Government for extending the scheme. It is regrettable that notwithstanding the ravages of inflation, the funding of the program-namely, $20m per annum in revenue forgone-has remained the same since its inception in the 1983-84 financial year. Nevertheless, it was never intended as other than a seeding program to encourage the development of a private sector venture capital market. That is happening -though, on the basis of my direct experience and the anecdotal evidence, not to the extent that one would have hoped for. Nevertheless in all the circumstances the Opposition supports this measure. Madam DEPUTY SPEAKER(Mrs Darling) -It being 12.45 p.m., the debate is interrupted in accordance with sessional order 101a. The debate may be resumed at a later hour. Sitting suspended from 12.45 to 2 p.m. Mr LIONEL BOWEN(Kingsford-Smith-Deputy Prime Minister) —The Prime Minister (Mr Hawke) is still unwell and will not be able to attend the House today, although he is recovering. I inform the House that the Minister for Primary Industries and Energy, Mr Kerin, departed on overseas business today and he will return on 21 November. In his absence the Minister for Resources, Mr Peter Morris, is the Acting Minister for Primary Industries and Energy. Mr HOWARD —My question is directed to the Treasurer. I remind him that on 26 October he referred approvingly to the financial authority of the New York Wall Street Journal. I ask him whether his attention has been drawn to the article in the most recent edition of that journal which says, inter alia: If there is a booby prize for stock markets, in the current tumult Australia is a strong contender. Is he also aware that the article states that a weaker Australian dollar will lead to a tightening of monetary policy and a lifting of interest rates? Is it true that the Australian stock market has fallen by 44 per cent since late September-considerably more than major overseas markets? Is it true that the Australian dollar has fallen by 10 per cent against the world's major currencies since its post-Budget peak on 22 September? Is it a fact that Australia's inflation rate runs at more than double the Organisation for Economic Co-operation and Development average? Is it a fact that Australia's gross foreign debt is now 42 per cent of gross domestic product, compared with 21 per cent in June 1983? Is it a fact that our current account deficit is the second largest in the Western world? Madam SPEAKER —Order! The Leader of the Opposition is making a speech. He will finish his question. Mr HOWARD —Is it a fact that the Government has supported an across the board wage increase at a time when nominal wage increases run far ahead of those of our major trading partners? Is it not time for the Treasurer to stop lecturing the rest of the world and to come clean with the Australian people as to why Australia is performing so badly and, most importantly, what he intends to do about it? Mr KEATING —Seeing that the Leader of the Opposition has asked a long question, I will give him a long reply. With respect to my lecturing of the rest of the world, let me read what the United Kingdom Chancellor of the Exchequer said regarding some of the topics which I have been addressing. A Reuters report reads: U.K. Chancellor of the Exchequer Nigel Lawson said early, decisive action on the US Budget deficit was needed to avert a crisis of confidence on world markets. He told political journalists the Reagan Administration and Congress need to swallow their differences. The key must be efficient and credible cuts in the Budget deficit, he said. Lawson said a $23 billion deficit cut for the current year as stipulated by the Gramm-Rudman law must be considered a bare minimum, and that a higher figure was preferred. I hope they can act sooner than the November 20 Gramm-Rudman deadline to cut the deficit, he said. So we are not alone in making these points. The reason we are not is that they are very valid and very sensible points, and now is the time for people to make them. Overnight there was a beat-up by the Australian Broadcasting Corporation (ABC) about the exchange rate which was taken up this morning by some honourable members opposite who are not literate in these matters, including the Leader of the Opposition. I quote from a transcript of an interview with him: Q. You think the dollar has gone down because of the outflow of capital? JWH. Why else does it go down? I can understand that, having regard to his dinosaur background in managing the exchange rate. When one has a managed system, a set rate, what moves is not the rate, but the capital inflow and capital outflow. That is why, during conversations in that period, reference was always made to capital inflow and outflow. That is why both the Leader of the Opposition and Senator Stone are fixing on it today. That is a legacy of their days as regulators managing the system. In a floating exchange rate system, it is the rate that moves. It is the rate that allows equilibration. It is the rate that makes the shift. Mr Howard —What causes it to move? The outflow of money, you dope. Mr KEATING —You do not understand that. I know that you do not understand it, because Malcolm put your weights up as a regulator. The Leader of the Opposition, along with John Stone, regulated the exchange rate. Of course, he still thinks in terms of capital outflow, capital inflow and the solid rate. The rate is shifting. Does he remember that we floated it in 1983? Mr Tuckey —Madam Speaker, on a point of order-- Madam SPEAKER —The honourable member will wait until he is called. Mr KEATING —This had better be a point of order, Madam Speaker. Madam SPEAKER —I call the honourable member for O'Connor. Mr Tuckey —My point of order is on the matter of relevance. Madam SPEAKER —Order! Before the honourable member starts, may I point out that the question was very far ranging. There were 12 parts to the question and they were quite far ranging. Mr Tuckey —Madam Speaker, if I may make my point of order now: none of the parts of the question related to history or the fixing of the exchange rate. I say to you-- Madam SPEAKER —Order! The honourable member will resume his seat. Mr Tuckey —Madam Speaker, I have the right to make my point of order and draw your attention to a precedent. Madam SPEAKER —The honourable member has drawn the attention of the House to the matter of relevance. The Chair has suggested to the honourable member that the question was in 12 parts and it ranged far and wide. I call the Treasurer. Mr Tuckey —Madam Speaker, on a further point of order-- Madam SPEAKER —I have called the Treasurer. The honourable member will resume his seat. Mr KEATING —Madam Speaker, they ask the questions but they do not like the answers. People are springing to the defence of the Leader of the Opposition because he is jammed in the mental framework of the late 1970s, under a managed exchange rate. All his utterances today show that he does not understand what has happened under his feet. It is a further illustration of the fact that he and Senator Stone are a pair of dinosaurs in the Australian economic system-dinosaurs that are extinct everywhere else and, of course, are in the process of dying here. That is the first point that I make. The second point is that the exchange rate at 4 o'clock yesterday afternoon was 67.3c. It opened here at 9 a.m. at 67.2c. In other words, it opened here this morning at about where it was last night. It dropped 20 points overnight. Because of that the ABC talked about a further major fall in the currency. The honourable member for Bennelong and the Deputy Leader of the Opposition, like a couple of big gropers, have come in hook, line and sinker. With their mouths open, they have tried to grab the bait. The exchange rate strengthened to nearly 68c. So if we use the model of the Leader of the Opposition, we have had a crisis of confidence overnight and we have had capital outflow. The rate has now moved up to 67.7c. Therefore, by his reckoning, we have had massive capital inflow. There was capital outflow overnight. Now that the rate has strengthened to nearly 68c, we have had capital inflow. Is that right? Of course it is not right. He is in trouble in more ways than one. There was no crisis in the currency. Overnight we saw the normal sorts of movements around a rate. Let me deal with the stock market. The Australian stock market rose inordinately above other stock markets and has fallen further than other stock markets. One may argue that it has done so in response to the fact that it rose inordinately higher. Mr Moore —That is not right. Mr KEATING —One of the factors also is an early rush to judgment-- Madam SPEAKER —Order! The honourable member for Ryan will cease interjecting. Mr KEATING —about commodity prices. Mr Moore —He is talking rubbish. Madam SPEAKER —The honourable member for Ryan! Mr KEATING —I know; the doyen of the Brisbane Stock Exchange. Mr Moore interjecting- Madam SPEAKER —The honourable member for Ryan will cease interjecting. Mr KEATING —It has also done so about commodity prices. Madam SPEAKER —Order! Would the Treasurer cease for a moment. If the honourable member for Ryan disagrees with what the Treasurer says, it does not give him the right to go against the Standing Orders. I have called him to order three times. I expect him to heed the Chair. Mr KEATING —The correction we have seen in the stock market is explained by that point. The second point is that there is a rush to judgment about commodity prices. We saw copper soar today as inventories for the base metals continue to deteriorate. We have seen a continued strengthening in the world commodity prices. So this view that world commodity prices are going to fall apart and retribution will be taken on the Australian dollar is premature. It was not long ago that I was asked at the National Press Club and elsewhere, `Treasurer, what are you going to do about the appreciation of the Australian dollar? What are you going to do about the fact that the dollar may become uncompetitive?'. This was a familiar question. The answer I gave was, `I do not think the people holding Australian debt will allow the rate to be rendered uncompetitive, and the market will handle it'. The market is now handling it and there is another flood of questions about the Australian dollar going down. This is all a commentary on a floating exchange rate that allows the maintenance of our competitiveness which was not allowed under the coalition government. Members of the Opposition are seeing the proper operation of market mechanisms which they opposed and which Senator Stone opposed and about which the Leader of the Opposition sat with his hands tied for years. The report in the Wall Street Journal relies upon a person by the name of David Peacock, an index analyst at the Sydney Stock Exchange. This is not a mainline comment by a United States person. He says: This is partly because the Australian market has risen further and faster than many others. That is the very view I have been putting for the last few days. The Leader of the Opposition draws on a report that supposedly condemns the Government and we find that that report is based on a view of a Sydney market analyst who shares the view the Government put three days earlier. If the Leader of the Opposition considers that a telling political point, maybe I am losing my grip. Finally, what is happening in Australia is that the market mechanism is working to adjust and maintain Australia's competitiveness. We are seeing some substantial return of stability and confidence in markets around the world, including our own markets-that includes the stock market and the foreign exchange market. We have the notion from honourable members opposite that we can go through a major depreciation to restore the competitiveness of this economy after the scorched earth policies of the Liberal and National parties and not have a burst of inflation, which we are now bringing back because of our wages policy, a policy which the Opposition does not have. All of this taking place against a backdrop of going to the electoral wire with a $6 billion unfunded tax cut, really demonstrates the total absence of credibility on the part of the Opposition to be putting any serious questions about the economy while it sticks to its line that its elections policies were right. The Opposition says that its election policies were right-that supply side economics are right. This is the very thing that has caused the crisis in United States fiscal policy, the very thing that has caused problems in financial and stock markets; that is, this inane view that one can cut tax and end up with more tax through confidence and incentive effects. The very essence of the policy of the Opposition is now in tatters. Members of the Opposition are still saying they are right. The fact is they are wrong and they will stay wrong. Madam SPEAKER —Order! I inform the House that we have present in the gallery this afternoon a parliamentary delegation from New Zealand led by Mr Ken Shirley, MP. On behalf of the House, I extend a very warm welcome to the members of the delegation. Mr LAVARCH —My question is directed to the Minister for Resources and is in two parts. Is the Minister aware of the construction by the Queensland Department of Forestry of a chemical storage depot next door to the Blackbutt primary school in the electorate of Fisher? Is this facility to be used for the storage of banned organochloride chemicals collected as part of the national pesticide recovery program? Mr PETER MORRIS —I am aware of the construction of this depot and the genuine fears that have been expressed by parents of children attending the Blackbutt school. As in so many areas, the Queensland Government has decided to push ahead with this project without consulting with local people. I dread to think of the consequences if unwise chemical storage practices at Blackbutt duplicate the fire which blazed through a similar facility at Tamworth a few weeks ago. In that case the New South Wales Government took immediate steps to take greater control of the pesticides recovery program to ensure there was not a repetition. That is not the case in Queensland. In fact-- Mr Ian Cameron —On a point of order, Madam Speaker: the fact of the matter is that the local authorities in Queensland are doing the collecting and the local people have been advised. Madam SPEAKER —The honourable member will resume his seat. That is not a point of order. Mr PETER MORRIS —I thank the honourable member because he is usually of help to me. His interjection is correct. I shall come to that in just a moment. In answer to the second part of the question by the honourable member for Fisher, I am advised that recalled chemicals in Queensland are being stored under the most potentially dangerous circumstances in this nation. The Queensland Government has shirked its responsibility in the program by cynically passing the collection process on to local authorities, as the honourable member said in his interjection. For example, in the cities of Townsville and Thurringowa, volatile farm chemicals are being stored in council depots in the middle of residential areas. Some councils have refused to co-operate with the Queensland Government, and it is not hard to understand why. Their expertise in providing storage facilities for such dangerous chemicals is simply not good enough. That does not worry the Queensland Government nor does it worry the National Party in Queensland. This Government has allocated $1m to assist the States in the collection and storage of these recalled chemicals. I believe, as does the honourable member for Fisher, that the people of Queensland have every right to ask their State Government what has happened to their share of that allocation when the Queensland Government has ridden roughshod over local authorities to have them do the dirty work for it. Mr PEACOCK —My question is addressed to the Treasurer. Is it a fact that in a confidential weekly report to the Treasurer dated 2 November 1987 a senior officer of the Reserve Bank of Australia told the Treasurer that part of the initial instability in our dollar last week was caused by the higher than expected September consumer price index figure? Was he also told that the Reserve Bank was forced to make large sales of foreign currency and that in fact last week the Bank had `a significant presence in the market'? Was he also told by the Reserve Bank that compared with other currencies, as measured by the trade weighted index, the Australian dollar has fallen to 51.7c this week and is now down to 51c? Was he also told last week that there was a record $37 billion foreign exchange market turnover on Thursday of last week? Finally, what excuse does the Treasurer offer for the loss of confidence in both our currency and his policies? Mr KEATING —Madam Speaker, if it was not so sad it would be comical. We can see the lack of understanding about a loss of confidence when the question is put in those terms. Members of the Opposition are quite happy to beat the life out of the currency of their own country whenever it suits them. The Australian dollar has climbed appreciably through 1987, mainly because the Government kept monetary policy very tight until the fiscal packages of May and the Budget were firmly in place. Those high coupons attracted enormous support to our bond market. Our bond market was the best performer in the past 12 months. That brought a lot of support to the rate. I was questioned continually about the appreciation of the dollar and the impacts of that on competitiveness. In other words, people thought it was going high and to levels which were rendering Australia uncompetitive. It is an entirely reasonable thing that, when the Government has changed the balance of policy off monetary policy to fiscal policy and lowered interest rates, some of that buoyancy on the rate is not present. Also it is entirely reasonable that in the change that has taken place in the stock markets and the view about our vulnerability as a commodity producer, and some market views about commodity prices, the rate would move down and settle at a different level. That is not about confidence in the Government's policies. It is about a mature judgment. Firstly, it is about the interest rates offered, compared to what were offered; secondly, it is about the state of the world, post the stock market collapse; and, thirdly, it is also about the views of some people concerning Australia's exposure on commodities. That is it. We have had all this extravagant language. This morning we had an Australian Broadcasting Corporation report about a move on the currency. In come honourable members opposite. The Australian Broadcasting Corporation is wrong. It was beaten to hell. It is a disgrace that the Australian Broadcasting Corporation news editors let the story run all day. The fact of the matter is that the rate opened here, as it closed last night, by dropping 20c and then strengthening during the day. The Opposition is running on this sort of story. It thinks that it has found some gold with a report from the Reserve Bank of Australia stating what the trade weighted index is. The trade weighted index is shown on every Reuters screen every minute of the day. If honourable members opposite had ever looked at a Reuters screen they would know that. The other points raised in the question are entirely points of comment about economic conditions. They carry no more status than that. The fact is that this Government has made substantial changes. We have dramatically shifted fiscal policy. We have run an intelligent monetary policy and, I think, an enlightened and effective wages policy. That is what stands Australia in good stead. It is the quality of the changes and the security of management that stand Australia in good stead not the scatty, ratbag, harebrained changes to policy of the kind proposed by an Opposition which would have been prepared to haemorrhage our fiscal policy and Budget. That is the position. That is why the rest of the world regards the Opposition as a joke. Because one has a bounden duty to give a sane reply, one does; otherwise one would not bother. Madam SPEAKER —I inform the House that we have present in the gallery today two former members of this House, Reg Gillard, the former member for Macquarie, and Bill Yates, the former member for Holt. On behalf of the House, I bid them welcome. Honourable members-Hear, hear! Mr SAUNDERSON —My question is addressed to the Minister for Administrative Services. I ask: What are the Government's intentions concerning rationalisation of Commonwealth owned office accommodation in Sydney and Melbourne? Mr WEST —Part of our strategy to rationalise the Commonwealth office accommodation for Sydney and Melbourne is, firstly, to dispose of several major property holdings in Sydney and Melbourne and, secondly, to construct two major new office buildings in those cities. On the sales policy side, the Government of course has decided to sell a long term lease on Chifley Square in Sydney and, in Melbourne, to sell part of the Commonwealth property holdings at the corner of Spring Street and La Trobe Street. As far as the Sydney tender is concerned that transaction will close on 14 December this year. For Melbourne, the tender will close on 28 January next year. On the construction side which is, of course, the very positive scale of this reappraisal strategy for property holdings in Sydney and Melbourne, we intend to build two major office accommodation buildings under the civil works programs to be owned by the Commonwealth. In Sydney this building will be constructed on the site of the former Australian Gas Light Co. building near the Central Railway Station. The cost will be $120m-odd. It will be a large building with a floor space of some 50,000 square metres. At this stage the major occupant is intended to be the Australian Taxation Office. As far as Melbourne is concerned, on the corner of Lonsdale Street and Spring Street we intend to go ahead with an even larger project and construct 110,000 square metres of office accommodation in two stages. Stage one will be a 60,000 square metre job at a cost of $143m. The honourable member for Throsby and the honourable member for Wide Bay who are both members of the Parliamentary Standing Committee on Public Works will be very pleased to know that these buildings will be constructed on budget as part of the civil works program and that both will be referred to the Public Works Committee for consideration later this year and from there referred back to this Parliament for approval. I expect that the building in Sydney will be ready for occupation in late 1991 and that stage 1 of the Melbourne project will be ready by early to mid-1992. These decisions have been welcomed very warmly by the construction industry. Also they are welcomed in the community for the employment which, no doubt, they will generate. They are particularly welcomed by Public Service employees, obviously for the modern office accommodation space that will be provided for them. So, as far as our strategies are concerned to provide office accommodation in Sydney and Melbourne, there are two policy strands. Firstly, we have a major sales program. Secondly, we have a major construction program that will provide extra Commonwealth owned office space and a great number of extra jobs in the construction industry. Dr HEWSON —I refer the Treasurer to his Reuters screen and to the fact that our dollar has now fallen by over 10 per cent on a trade weighted basis since its post-Budget peak on 22 September. Will the Treasurer inform the House what impact he believes this presumably unexpected devaluation will have on his Budget forecasts for inflation, net interest payments on our overseas debt and for our current account deficit? Mr KEATING —I do not give a running inflation commentary week by week on the exchange rate. We are yet to see what deflationary influence we have had from the appreciation of the dollar over the last eight or nine months or so and to see what impact that has in the cumulative figures. Of course, that would be weighed against some inflationary impact were this to become a permanent condition. However, one is not certain what influence it will have in the short term. That is why, sensibly, the Government does not try to estimate on a week by week or day by day basis. Mr UREN —I direct my question to the Treasurer and ask whether his attention has been drawn to an article in the Sydney Morning Herald last Saturday which highlighted the exceptionally low rate of taxation paid by some of Australia's leading corporations. Is the Treasurer aware that the Sydney Stock Exchange Research Service study has shown that whilst the official company tax is 49 per cent, the top 150 companies paid an average rate of tax of just 26.7 per cent and that companies such as John Spalvin's, Adelaide Steamship Co. Ltd and Ron Brierley's Industrial Equity Ltd paid less than 5 per cent and that companies controlled by Bond, Holmes a Court and Elliott paid around 10 per cent? What assurance can the Treasurer give the working people of this country, who are being forced to make sacrifices while the large corporations evade paying tax, that this current situation will not be tolerated by a Labor government? Mr KEATING —The author of that article has written a number of fallacious articles about the tax performance of companies. They are fallacious, to the extent that their implications are fallacious, not the record. There is this immature view, which comes from a lack of understanding of the tax system and is obviously widespread, that the 49 per cent company rate is paid on the gross company income of companies. It is not. It is paid on the balance that is left after legitimate allowances are made for depreciation, cost depreciation and any other provisions of the tax law that apply. That 49 per cent, which applies on the net, may then be calculated to seem to be 26 per cent or so on the gross, but the fact is that it is the appropriate rate of tax. It is that issue which the Government is currently looking at in the business tax review-that is, whether or not Australia would benefit from the trade-off in having fewer deductions but a lower company tax rate. The fact is that corporate tax has risen substantially under this Government, because of the fact that there has been more activity and higher profits and we have broadened the tax base. The other hare which the author of the article set running a year or so ago, which is essentially the same hare, is that if a company owned nothing other than, say, Australian blue-chip shares and its income was exclusively dividend income, it would pay no tax. Its tax would be zero because it gets its section 46 rebate. I thought that the honourable member for Reid would understand that, because I have made that point to him on a number of occasions. Perhaps he is interested in educating coalition members on the point. Let me continue educating them. Many of the entrepreneurial companies own mostly shares in other companies. Therefore, much of their earnings, being dividends, are protected against further tax-that is, they are not taxed again and, if they pass to another company, again. If they were taxed at 49 per cent once and then passed to a company and taxed at 49 per cent again, and then to another company and taxed at 49 per cent, in the end there would be nothing. There is a thing called a section 46 rebate, so that once the primary company tax is paid, that rebate is carried through to other companies. Mr Carlton —They are taxed too much. Madam SPEAKER —Order! The honourable member for Mackellar may not interject at will. All interjections are out of order, and continued interjections are disorderly. Mr KEATING —Some of the entrepreneurial companies own operating companies in their own right. Those which actually operate companies pay the principal tax themselves, but the greater part of their income is dividend income, on which the tax has already been paid, so it is not exceptional at all to find a company with the tax rate of 5 per cent on what is seen to be its gross dividends, because its gross dividends have already been taxed. The fact is that the tax which is payable is the tax payable on that part of the company's earnings which come from the operating business that it has. Of course, there are all sorts of issues through which one cannot peer, such as debt and prior operating losses, and all of these other things are bound up; but the fact of the matter is that the Australian corporate tax base is tighter, better protected and stronger now than it ever has been. That is why, if one adjusts the tax paid on the gross operating surplus and adjusts it for interest rates and depreciation, and for the heightened interest rates through the late 1970s and the early 1980s, one will find that, on an adjusted basis, the tax on company income in gross domestic product is rising and has been rising since 1983. I have published a paper by the Treasury on this subject, which anyone in the House is welcome to. That is the position. It is a very poor form of journalism to lay an issue like this out-to throw the dead cat on the road and not explain why the section 46 rebate operates, and how it is entirely possible to have a company which owns a dividend stream from a public company which should pay no tax whatsoever; that the tax rate should be zero for a company which owns nothing but dividend income. That is the point that Colleen Ryan, the author of this article, has now not made on two occasions, which makes her articles, in the broad, irresponsible. Mr SINCLAIR —Just to keep him alert, I direct my question also to the Treasurer. In the light of his sympathetic scrutiny of the recent New South Wales Budget, the Treasurer will be aware that recurrent outlays in that Budget are budgeted to increase by 3.3 per cent in real terms in 1987-88, and that this is the largest rise in recurrent expenditure of any State Budget this financial year. How does he reconcile his warm endorsement of this New South Wales Budget with the need to restrain public sector demand and release resources for use in the private sector in today's uncertain economic climate? Mr KEATING —There is old fiscal rectitude himself. This is the crowd who, 12 weeks ago, were running for the lick of their lives to the electoral wire with $6 billion of unfunded tax cuts flitting around the landscape, and saying `The balanced budget? Don't worry about that'. I remember the debates in here when the Prime Minister told the Leader of the Opposition that we would fight the election on tax, and the Leader of the Opposition said, `We'll see who will fight the election on tax'. Then we asked what the Opposition's tax policy was and were told that we would find out at the right moment. The right moment was, in typical Ash Street style, three weeks before the end of a campaign in which the Leader of the Opposition thought that he could dodge every journalist asking sensible questions about how it would be funded. He thought that a bit of slick gab and slick talk and dodging the questions would get him to the electoral wire and that as Prime Minister he would simply say-- Mr Tuckey —I rise on a point of order, Madam Speaker, concerning section 145, which deals with relevance. The question quite clearly referred to the problems facing Australia related to the New South Wales Budget. We have not heard one word about that, and the Treasurer does not want to talk about it. Madam SPEAKER —I am sure that you will. Mr KEATING —We have got to the stage where the Leader of the Opposition and the Leader of the National Party of Australia have to be protected from answers by the honourable member for O'Connor. If that is their position, fine. Mr Tuckey —I just want you to answer the question. Madam SPEAKER —Order! The honourable member for O'Connor will cease interjecting. Mr KEATING —The Opposition made a dash to the electoral wire with an irresponsible policy which would have destroyed all confidence in our financial markets. When a poll in the middle of the election campaign showed some movement to the coalition, the exchange rate moved rapidly down and everyone on the market was saying that that was the reason. It was obvious to all and sundry that such a policy would have destroyed much of the adjustment process that the Government had undertaken. It is against that background that the right honourable member for New England has had the hide to put this question. Let me make this point, which I made yesterday and will make again. This has been the first government to pull the States back into line. In taking the brunt of the burden of the fall in the public sector borrowing requirement (PSBR) by cutting our own expenditure in unprecedented ways, we have also urged the States to cut theirs and to cut their borrowings. We took a $1,000m cut off the States at the Premiers Conference, a cut of 21 per cent in their borrowings. Their borrowing program went back by 21.4 per cent. Let me record again that in 1982-83, the State's public sector borrowing requirement was 3.6 per cent of gross domestic product (GDP). In other words, in the last year of the last Government, of which the right honourable member for New England and the honourable member for Bennelong were leading members, the PSBR on the States' account was 3.6 per cent of GDP. In 1987-88, we expect that to be 1.8 per cent or, in terms of net PSBR, just over 2 per cent, now that all the State budgets have been presented. On the recurrent side, there is a cut of $1,000m on the part of the Commonwealth to the States recurrent budgets. New South Wales has borne that. New South Wales has complied happily with those changes. It complied with the changes to borrowings, the cuts to Commonwealth outlays to the States and $300m of specific purpose payments as well. All of a sudden its Budget is supposed to become an issue, according to the people who vandalised Australian public policy and would have done so again given the opportunity in July. Mr LINDSAY —I ask the Minister for Land Transport and Infrastructure Support to inform the House as to what steps are being taken by the Government to facilitate radio services for the massive influx of Japanese tourists into Australia. Mr DUNCAN —I thank the honourable member for his question. Mr Ian Cameron —What about radio services for outback Australia? Madam SPEAKER —Order! The honourable member for Maranoa will cease interjecting. Mr Ian Cameron —He should be doing something about television for outback Australia. Madam SPEAKER —Order! The honourable member for Maranoa will not argue with the Chair. He has been interjecting ad nauseam. We will not have any more. Mr DUNCAN —I am pleased to be able to advise the house that the Government has today issued a licence to enable a personalised radio service aimed specifically at Japanese tourists to be operated in this country. It will be a Japanese language service carrying news and information about tourist activities, Australian history, customs, lifestyle, music and human interest material to Japanese tourists. It will also be a commercial outfit which will broadcast advertisements enabling Australian manufacturers and suppliers to target Japanese tourist customers more specifically than occurs at present. The service is to be operated by a firm called Fidelity Communications Corporation Ltd and is part of the video and audio entertainment and information services system which is being developed by the Department of Transport and Communications. More than 300,000 Japanese people are expected to visit Australia in 1988. Currently, I understand, Australia services about 35 per cent of the world Japanese tourist market, which is a pretty significant sector of that market. The new service is intended to ensure that we can promote tourism by Japanese in this country. I am sure that this development will be an important contribution to ensuring that we can facilitate that tourist boom. As well as enabling our Japanese visitors to appreciate better their stay in Australia, it must also be remembered that the so-called Travrad service will have a significantly beneficial impact upon our balance of trade situation through its support of the Australian tourist and retail sectors. I think this is an important initiative. It is one that should be welcomed by all members of the House. Mr ALDRED —Will the Minister for Land Transport and Infrastructure Support acknowledge that the aviation route distance limitations he tabled yesterday confirm the monopoly created to and from Christmas Island for the Ansett Airlines and Thomas Nationwide Transport Ltd BAE146s, a monopoly defended in another place on allegedly technical grounds by Senator Evans? Would the Minister now specifically indicate what other available civil aircraft types can supposedly fly the route as suggested in this House by the Minister for Primary Industries and Energy? Mr DUNCAN —Not everybody has the same sort of attitude to the world as the honourable member, who seems to see a conspiracy coming around every corner. The situation is quite simple. Those air navigation regulations are not new regulations, as the honourable member knows. They were not-- Mr Aldred —Madam Speaker, I raise a point of order. At no point did I suggest that they are new regulations. I simply pointed out that they confirm a monopoly. Madam SPEAKER —Order! That is not a point of order. The honourable member should not raise frivolous points of order. Mr DUNCAN —The implication in the honourable member's question was that in some way the air navigation regulation had been made in some strange way to meet the situation at Christmas Island, which is an utter fabrication. The situation, quite simply, is that the agreement that has been made was made in accordance with the Air Navigation Regulations, the safety regulations, that have applied long term in this country. If we had stepped in any way outside those regulations, then the Opposition would have been down on us like a ton of bricks. We have not done that. We have complied with them properly. The agreement that was reached was reached with the intention, quite specifically, of upholding those regulations. That is what we have done and, while I am the Minister, that is what we will continue to do. We will uphold the air navigation safety regulations in this nation. Mr Aldred —Madam Speaker, I raise a point of order. The Standing Orders require, clearly, that an answer shall be relevant. The Minister still has not answered what other types of aircraft can fly on the route. Madam SPEAKER —Order! The Minister has answered the question. The honourable member has no point of order. Mr SCOTT —Is the Minister for Defence Science and Personnel aware that probably for the first time in its history the Royal Australian Navy has appointed a woman as an executive officer at an operational base? Can the Minister advise the House of opportunities available for the employment and promotion of women in the Australian Defence Force? Mrs KELLY —I thank the honourable member for his question. I congratulate one of his constituents, Lieutenant-Commander Sandra Coulson, who I understand is being promoted to the rank of commander at the end of this year and will be second in charge of HMAS Platypus. She is a very good example of the sort of encouragement that women in the Services receive in aspiring to higher positions. The Government is committed to expanding opportunities and career prospects for women. We have seen an increase in the numbers of women in the Australian Defence Force over the last few years. For example, from July 1984 to July 1987 the figures have gone from 4,673 to 6,239. Promotional opportunities are open for women for the position of brigadier and equivalent and 35 per cent of officer positions are open to women. In fact, from July 1984 to October 1987 we have seen an increase of 50 per cent in the number of women officers in the Australian Defence Force and the positions of major equivalent and above have increased by 60 per cent in that period. Women in the Services are making a very important contribution. Their services are valued and we look forward to giving them many opportunities in the future to play an increasing role. Women in the Services have a greater opportunity to do so. Mr HOWARD —My question is addressed to the Minister for Land Transport and Infrastructure Support and is supplementary to the question asked by the honourable member for Bruce. If in fact the reason for the documents being drawn as they were is the reason stated by the Minister, why was it that in order to comply with the Air Navigation Regulations the document simply did not state a maximum weight and associated specifications requirement rather than specifically naming a particular aircraft? If the former course had been followed it would have been possible for any aircraft to have complied with those requirements. Mr DUNCAN —All I can answer for is the advice that my Department gave, which is all honourable members could expect me to do. The situation is that the Air Navigation Regulations are quite clear on this matter. It is quite clear that aircraft such as 737s do not comply with the Air Navigation Regulations. It is quite clear that aircraft such as F28s do not comply directly with the Air Navigation Regulations. In those circumstances, my understanding of the situation is that the aircraft which was discussed and which did comply was the aircraft that was named in the agreement. The agreement provides for an aircraft which complies with the Air Navigation Regulations. Mr LEE —Is the Attorney-General aware of reports in yesterday's Sydney Morning Herald that Inspector Noel Dwyer, a former head of the Queensland Police Licensing Branch, stated in evidence given to the Fitzgerald Commission of Inquiry into Possible Illegal Activities and Associated Police Misconduct that he believed that telephone calls to the office of the former Police Commissioner, Sir Terence Lewis, were taped `mainly for accuracy'? Will the Attorney-General ask the Australian Federal Police to contact the Acting Queensland Police Commissioner and Sir Terence Lewis to ensure that these claims that Federal law on telephone interceptions has been breached are thoroughly investigated? Mr LIONEL BOWEN —I am aware of the statements which are alleged to have been made before the Fitzgerald inquiry. Allegations were made and it does not necessarily follow that there is direct evidence that what was alleged did in fact happen. The law provides that, if there is an interception of a telephone communication, it is an offence. The other point is that it is also an offence to record a conversation unless the person at the other end is aware that it is being recorded. Honourable members would be aware that I would not express any other opinion on this matter. But if there is any suggestion of further investigation that would be a matter for the Australian Federal Police to look at. This gives me the opportunity to mention another matter. Recently we passed an amendment to the Telecommunications (Interception) Act to provide that, in future, illegal interceptions would not be admitted in evidence. In our original submission to the Parliament proposed section 64 provided that, where current proceedings were in place, we would still allow the existing law to apply. That is deemed to be the law, as in Hilton v. Wells, where the court would have a discretion as to whether it would admit illegal evidence. It now transpires that some matters that are pending are in jeopardy because, at that time, the Opposition felt-- Mr Howard —No. Mr LIONEL BOWEN —Some matters are in jeopardy because proposed section 64 was objected to. I know that the Opposition does not think that is the position but it is clear that the section 64 we had in place would have allowed the prosecutions to continue. These matters are in jeopardy now and we have not really proclaimed the Act on the basis that we think current criminal proceedings ought to be the subject of further prosecution. We will rely on that law again being amended. I understand that the Opposition is prepared to reconsider its position. If so, I would be anxious to introduce a further amendment so that those matters would be able to proceed. Mr Reith —Our policy is unchanged. Mr LIONEL BOWEN —The Opposition's policy was very clear. It did not understand the point, to the extent-- Mr Howard —Yes, we did. Mr LIONEL BOWEN —The Opposition objected to proposed section 64. Mr Howard —No. Mr LIONEL BOWEN —I would welcome the opportunity now to know whether the Opposition will co-operate with what we originally intended. That is the position. Mr Howard —You have a talk with him. Mr LIONEL BOWEN —I do not need to talk to the honourable member for Flinders because the matter was debated here. It will be illegal to have telephone intercepts once the Act is proclaimed. People will also be unable to introduce tapes of telephone intercepts as evidence. But, in the interim, we need to cover existing prosecutions. Mr KEATING(Blaxland-Treasurer) —Pursuant to section 45 of the Industries Assistance Commission Act 1973, I present the annual report of the Industries Assistance Commission for 1986-87 and a statement of what action has been taken during that year in respect of each report made to the Minister by the Commission during that year or a preceding year. Further details of action taken on individual reports can be found in table A 11.4, pages 222 to 255, of the Commission's annual report. Motion (by Mr Young) proposed: That the House take note of the paper. Debate (on motion by Mr Fife) adjourned. Mr YOUNG(Port Adelaide-Minister for Immigration, Local Government and Ethnic Affairs) —Pursuant to section 32 of the Albury-Wodonga Development Act 1973, I present the annual report and financial statements of the Albury-Wodonga Development Corporation, together with the Auditor-General's report, for 1986-87. Mr YOUNG(Port Adelaide-Minister for Immigration, Local Government and Ethnic Affairs) —On behalf of the Minister for Finance (Senator Walsh) and pursuant to section 21 of the Papua New Guinea (Staffing Assistance) Act 1973, I present the annual report of the Papua New Guinea superannuation scheme for 1986-87. Mr WILLIS(Gellibrand-Minister for Industrial Relations) —Pursuant to section 37 of the Australian Industry Development Corporation Act 1970, I present the annual report and financial statements of the Australian Industry Development Corporation, together with the Auditor-General's report, for 1986-87. Mr HOWARD(Bennelong-Leader of the Opposition) —Mr Deputy Speaker, I seek leave to make a personal explanation. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Does the honourable member claim to have been misrepresented? Mr HOWARD —Yes. During Question Time the Treasurer (Mr Keating), in referring to the taxation policy of the Liberal Party of Australia at the last election-he specifically identified me with that policy-made the quite inaccurate statement that that policy represented an exercise in supply side economics. This is a claim that the Treasurer has falsely made on a number of occasions and I take this opportunity to reject that claim. In support of that I point out that commonly understood supply side economics state that if one cuts tax the additional economic activity generated by the incentive effects of that cut in tax is enough to pay for the tax cut. I have never embraced a policy based upon supply side economics. We did not do so in the last election and we would not do so in the future. I point out that in the costing of our taxation policy less than one-seventh of the total costing was to be paid for from incentive effects. That figure was judged by the Institute of Policy Studies at the Monash University to have been on the conservative side. Our tax package was to be paid for by spending cuts, not by an exercise in supply side voodooism. To the extent that the Treasurer-or indeed anybody else-because his notions have received some support in some sections of the Press, has said it, he is yet again wrong and the Australian Labor Party myth machine about the nature of coalition economic policies once again is working overtime. 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 petition of the undersigned respectfully showeth. We most strongly oppose the process of Food Irradiation by radioactive Cobalt 60 or any other radioactive substance. We oppose the introduction of regulations that will facilitate the food irradiation process by State Governments. We express our deep concern at this attempt to extend the use of radioactive substances and exposure of workers to radiation. We call on the Government to immediately ban the importation of radioactive Cobalt 60 or other radioactive substances and to immediately disallow the regulations that permit the irradiation of food here in Australia. by Mr Beale,Mr Jenkins,Mr Milton and Mr Scott. To the Speaker and members of the House of Representatives in Parliament assembled, your humble petitioners showeth: 1. The proposed Australia Card will have a dramatic impact on the lives of all Australians. 2. Therefore your petitioners request a national referendum on the Australia Card Bill before the proposal is resubmitted to Parliament. As in duty bound your petitioners will ever pray. by Mr Beale,Mr Macphee,Mr Ruddock and Mr Shipton. To the Speaker and members of the House of Representatives in 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,Mr Cobb,Dr Harry Edwards and Mr Webster. To the Honourable the Speaker and members of the House of Representatives in the Parliament assembled: The humble petition of the undersigned citizens of the Maranoa Electorate respectfully showeth that: The Hawke Labor Government's ID Card proposal is the most far reaching and intrusive piece of Australian legislation ever, and that on all the evidence available 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 taxpayers' money and a significant infringement of civil liberties. And your petitioners, as in duty bound, will ever pray. by Mr Ian Cameron. To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. The humble petition of the undersigned citizens of the Lyne Electorate respectfully showeth that: The Hawke Labor Government's ID card proposal is the most far reaching and intrusive piece of Australian Legislation ever, and that on all the evidence available will not tackle in the most cost-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 taxpayers' money and a significant infringement of civil liberties. And your petitioners as in duty bound will ever pray. by Mr Cowan. To the Honourable the Speaker, and members of the House of Representatives assembled in Parliament. This petition of Australian residents shows that we strongly oppose the introduction of the `Australia Card' or any form of compulsory identity cards. We believe that the introduction of Identity cards will erode civil liberties; will create an increased risk of invasion of privacy; and will not result in any significant increase in Government revenue. We call on the Parliament to immediately reject any proposals for the introduction of compulsory Identity cards. by Mr Macphee. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled-The petition of the undersigned expresses concern that some scientists in Australia are intent on undertaking destructive experimentation on human embryos. This subject was examined exhaustively by the 1985-86 Senate Select Committee on Senator Harradine's Human Embryo Experimentation Bill which received 270 submissions and more than 2,000 pages of evidence. The report of the Senate Committee recommended in October 1986 that the Commonwealth Government make unlawful any destructive experiment which frustrated the development of the human embryo. Your petitioners therefore request the House of Representatives and the Government of the Commonwealth of Australia to: Implement without delay the major recommendation of the Senate Select Committee to outlaw destructive experimentations on human embryos. And your petitioners, as in duty bound, will ever pray. by Mr Ian Cameron,Mr Ian Robinson and Mr Ruddock. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. Your petitioners respectfully sheweth. That the introduction of an Identity Card, to be called the Australia Card, and a National Identification Numbering System, is not in keeping with the established rights, privileges and customs of the Australian people. It is therefore the will and desire of the said petitioners that the proposed legislation be neither introduced in its original form, nor amended in any way, but totally withdrawn. And your petitioners, as in duty bound, will ever pray. by Mr Braithwaite and Mr McVeigh. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. This petition of 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 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 justifications for the proposal have 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 Macphee and Mr Porter. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. We, the undersigned citizens, respectfully showeth: That we are totally opposed to the introduction of the Labor Government's Identity Card; that this form of national and compulsory identification will be intrusive, costly for taxpayers and business and will not be effective in combating tax evasion, illegal immigration or in social security fraud; that we are deeply concerned at the Labor Government's inability to provide effective and efficient methods to combat tax evasion and social security fraud without resorting to expensive, ineffective and authoritarian measures which are alien to the Australian way of life; that we call upon the Labor Government to improve management systems within the Australian Tax Office and other Departments to crack down on tax evasion and fraudulent practices. And your petitioners as in duty bound will ever pray. by Mr Porter and Mr White. 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. 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 Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth that: Any proposals to time local telephone calls gravely concerns all country people. Isolation and communication was the second biggest problem facing rural women according to the ``Survey of Rural Women'' questionnaire and any attempt at timing local calls will add to this problem, not decrease it. Your petitioners humbly pray that the House of Representatives in Parliament assembled, urge the Parliament to: Ensure that Telecom do not proceed with the timing of local telephone calls. And your petitioners as in duty bound will ever pray. by Mr Ian Cameron. The Honourable, the Speaker and Members of the House of Representatives of the Commonwealth of Australia in Parliament assembled. The humble Petition of the undersigned citizens of Australia respectfully showeth concern: About the evil caused by the fact that x-rated videos with their depiction of unnatural sex and often horrible violence, are allowed to circulate around Australia from Canberra. And your petitioners, therefore humbly pray that such circulation be prevented. The laws regarding obscenity in the media should also be revived and enforced. And your petitioners, as in duty bound, will ever pray. by Mr Ian Cameron. To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: That the proposed introduction of compulsory identification cards should not be considered any further, and in the event of it coming again before parliament it should be rejected because: We do not accept the concept of an I.D. card as necessary to control social security fraud or tax evasion, It would be an unwarranted infringement of individual privacy and our democratic society, in particular because it being required to work, operate a bank account, enter hospital or enter into any transaction, It would cause a further large and costly growth in the bureaucracy and burden on tax payers, It cannot be guaranteed that the aggregated private information would not be misused for other purposes, The people of Australia should be fully informed and consulted in a referendum before legislation for any such change with such wide-ranging effect is considered, and We call upon the Government to cease immediately any endeavour to introduce this invasion upon our lives. And your petitioners, as in duty bound, will ever pray. by Mr Cobb. To the Honourable the Speaker and members of the House of Representatives in Parliament assembled. The petition of the undersigned shows that the petitioners are concerned that the Minister for Health proposes to delete from the Medical Benefits Schedule those item numbers covering the treatment of sun-damaged skin and warts by specialists. They fear that those patients suffering cronicly from these problems cannot always be treated successfully by a general practitioner. They protest that they will be financially disadvantaged. They also realise that their problems require early detection and expert treatment, if the petitioners are not to be exposed to increased risk of skin and other cancers. Your petitioners request that the House of Representatives, in Parliament assembled, should recognise our concern and permit the abovementioned items in the medical schedule to be reinstated. And your petitioners, as in duty bound, will ever pray. by Mr Connolly. 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 oppose plans by Telecom Australia to close many of the Telecom Business Offices (TBOs) and replace them with a reduced service to be co-located with the District Customer Services Office. We believe the public should be able to make telephone bill payments, applications for new services, selection of telephones and complaints, in person at a convenient and easily accessible location. Telecom Business Offices provide this service, and therefore it is wrong that their contribution and performance will only be assessed on their sales revenue. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, urge the Government to: instruct the management of Telecom Australia to immediately cease all action to close any Telecom Business Offices. And your petitioners, as in duty bound, will ever pray. by Mr O'Neil. 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 Ruddock. To the Honourable the Speaker and Members of the House of Representatives in Parliament assembled. We the undersigned, call on the Federal Government to give notice to terminate the lease of the US base at Pine Gap before October 1986. We believe that in the interests of world peace and the Australian people, this lease should be terminated and the base closed because Pine Gap is a spy base and a war base. Since it was opened in 1969, it has eavesdropped on Australian telephone telex communications. Information obtained in this way was used by the CIA to destabilise the Whitlam Government in late 1975. It provides communication facilities for CIA activity in countries throughout the world, much of which is connected with overthrowing other country's governments. Last year it became clear Pine Gap was spying on Greece. The electronic and photographic information its satellites receive is used to select nuclear targets in the territory of the Soviet Union and its allies. Many US military activities short of nuclear war are also co-ordinated by Pine Gap. These include the war against Vietnam and the invasion of Lebanon by US marines in 1984. Pine Gap spends only a tiny percentage of its time monitoring arms control agreements, and even then the data gathered is so top-secret Australia has no access to it. Pine Gap's role will be expanded under Reagan's Star Wars scheme to extend the arms race to outer space, threatening the existence of our planet. by 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 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: The Hawke Labor Government's Industrial Relations Bill will increase industrial disputation, bankrupt companies, and give the union movement total and absolute power over the Australian community. Your petitioners humbly pray that the House of Representatives, in Parliament assembled, urge the Government to: Reject Labor's Industrial Relations Bill to save Australia from the actions of militant unions and give our economy a chance of recovering. 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 assembled in Parliament: This petition of certain residents of the Australian Capital Territory shows: That we are totally opposed to the imminent construction of a highrise hotel on the parkland area between the Boulevard and the CAGA Centre and Akuna Street and Allara Street. Your petitioners therefore request that the development of this hotel not proceed and the further destruction of parkland and recreational areas within the city cease. by Mrs Kelly. To the Speaker of the House of Representatives in Parliament assembled. The petition of the undersigned citizens of the Australian Capital Territory respectfully showeth: That the present stallholders of the Belconnen and Fyshwick Retail Markets have made an offer of $2 million to the government for each of the markets, and although this matches the government's estimate of the markets worth, the offer has not been accepted. Failure of the stallholders to retain the markets could result in their sale to other commercial interests with the displacement of the present stallholders and increased costs being passed on to consumers. Your petitioners therefore pray that: The Present stallholders of the Belconnen and Fyshwick Markets should be given the first option on the sale of the markets. And your petitioners in duty bound will ever pray. by Mrs Kelly. Petitions received. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Madam Speaker has received a letter from the Deputy Leader of the Opposition (Mr Peacock) proposing that a definite matter of public importance be submitted to the House for discussion, namely: The increased vulnerability of the Australian economy as a consequence of the continuing high risk economic strategies of the Government. 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 PEACOCK(Kooyong)(3.02) —A reading of newspapers today, international as well as our own, leads Australians inescapably to the view that the Opposition has been putting for months. The headline on one page of the Australian Financial Review reads, `Wall St Journal finds Australia most vulnerable'. That article in the Wall Street Journal commenced: If there is a booby prize for stock markets in the current tumult, Australia is a strong contender to win it. Going on to discuss that, Mr Brian Minton, chief economist with Merrill Lynch (Australia) Pty Ltd, said: Australia is wearing the thinnest economic veneer. Lest it be thought that this was a mere passing comment, one of our older established banks, the ANZ Bank Ltd, is quoted in a headline in the Australian as warning that the worst is yet to come. Those headlines and articles which I have just quoted briefly and succinctly sum up in part what the Opposition has been putting prior to, during and after the Budget brought down last September. Yet, in the face of mounting criticism, this Government does nothing. Claiming credit for previous stock market rises, it ducks when the market dives, claiming that the world is responsible, that the fall in world commodity prices has placed Australia in a vulnerable position. That is the height of hypocrisy. The reverse of that theory was reached in this House yesterday when the Minister for Primary Industries and Energy (Mr Kerin) claimed credit, on behalf of the Government, for the rising price of wool. It has long been an arrogant government but, like most of that type, it is also craven under pressure. It is craven and irresponsible and it blames all but itself. It can be summed up by saying that Labor's approach is craven and irresponsible. It refuses to take responsibility for the current economic malaise in Australia. It is the Government that is responsible, not for the stock market crash, but for the malaise, for its 4 1/2 years of wasted opportunity. We described the Budget that was brought down as a wasted opportunity and is not the proof of that being seen now? The Government has had five Budgets, three mini-Budgets and two summits, and our economy is in a mess. When it took over government, Labor ran two massive Budget deficits. The first Budget deficit of the Treasurer (Mr Keating) was almost double the last deficit of the Fraser Government. The Treasurer boosted Government spending under the misapprehension of giving the economy `a kick start'. A kick start indeed! All the Government's policies did was bring about a binge of private and public consumption expenditure. Labor's Budget deficit swallowed Australia's savings and ran up a huge foreign debt. As I have said in this House before, this Government has presided over a quadrupling of our foreign debt. It has presided over the downgrading of our international AAA credit rating for the first time in the nation's history. It has put our economy, as others are now saying in concert with us, in an extremely vulnerable position. It is no wonder that the Government has asked whether Australia can cope with a downturn in world economic activity or a slump in commodity prices. It is the Government that is responsible for our current vulnerable position. That is what the Opposition has been saying and we are being joined, week by week, by more commentators including, today, articles in the Wall Street Journal-the journal that only last week, the Treasurer told us, was probably the most widely read journal today. At every opportunity this Government and, in particular, the Treasurer ramble on about what has happened over the last four years. Not a concerted bit of evidence as to what future action would be taken was given by the Treasurer today. If one wanted to see the ultimate fall from grace it is this petrified creature occupying the Treasury position seeing the chance of grabbing the prime ministership evaporating-frozen. The arrogance is still there, but to use the phrase of an old colleague of mine, `I'd hate to buy him at his price and sell him at mine'. It would not be too good today. In he comes, day after day, exuding arrogance, but he has no blueprints, schedules or proposals for what many are accurately describing as the most vulnerable economy in the world. Time after time, day after day, we are subjected to the most nauseating drivel on how this Treasurer has brought the Budget into balance, how he has reduced the net public sector borrowing requirement (PSBR). He has not done so. The balanced Budget was a facade. The Budget had an underlying deficit of $2.5 billion. Honourable members have heard enough of our comments on the PSBR. It is now time to hear what the Government is going to do. We are well aware of its past failures in fiscal and wages policy. We are well aware that the Government has brought about a fundamental fiscal imbalance with huge deficits and that it has eroded our competitiveness with increases in wages of about 6 1/2 per cent per annum, with little or no increase in productivity since it was elected. In the Budget the Government-it is not just what we or outside commentators are saying; its own Minister for Finance, Senator Walsh, said it-did not have the `political courage' to cut government expenditure. That, in blunter terms, is what we have been saying for months. The Government did not have the political courage to force the pace of adjustment of domestic policies in the face of our external imbalance. It missed an opportunity. It brought down a Budget with an underlying deficit of $2.5 billion. Now, the Government is putting out the story-one can read it here and there in the fine print of the commentaries-that it does not want to `drive the economy through the floor'. The Government is trying to provide some explanation as to why it is sitting pat. That is the Treasurer's latest contribution to economic theory, following his earlier `kick start' contribution. Let us look at how the Treasurer grasps at straws to support the Government's economic strategy. On Monday, in answer to a question in the House, the Treasurer dug up some anecdotal evidence-chitchat with a few people-that the old investment situation might be all right. Again last week the Prime Minister (Mr Hawke) and the Treasurer hailed the September consumer price index (CPI) figure as a welcome result and confirmation that the Government's economic strategy was on track. Well the confidential report to the Treasurer prepared by Dr Norton, the head of the financial markets section of the Reserve Bank of Australia, seemed to take a slightly different view, stating that the September quarter CPI figure was at the top of the market range of expectations, and as a consequence the currency fell. It then steadied, only because of the further intervention of the Reserve Bank by engaging in large sales of foreign currency. Mr Rocher —I thought they had floated the currency? Mr PEACOCK —Floated the currency? The way the currency is floating at the moment it would not even rise against the Matabele gumbo bead. Clearly the Government's economic strategy is out of kilter with the real world. The Reserve Bank has had to intervene on a huge scale to prevent the currency from falling even further against what is a very weak United States dollar. Cuts in government spending release resources, do they not, for use in the private sector? Cuts in government spending fund tax cuts and a reduction in the Government's underlying deficit. So on two scores alone such cuts would strengthen the fundamental position of the economy, and of course that is what we are advocating. A cut in taxes increases the incentive to work, it increases the incentive to invest. A reduction in government borrowing tends to reduce interest rates. Both these measures would provide some hope for an improvement in investment. That is why it is imperative that the Government get on with the job of reducing government expenditure, for further delays will simply make the problem worse. The economy will fail to adjust and Australia will continue to accumulate foreign debt at an undoubtedly unsustainable rate. Failure to act imposes extremely large social costs on our country, quite apart from the economic burden. The continued high levels of government spending tie down resources in the non-tradable government sector or, to state the problem another way, our pace of adjustment in the production of exports and import substitutes is delayed. Perhaps the greatest testimony to the Government's craven irresponsibility is its wages policy. Year in, year out, nominal wages in this country have increased by some 6 1/2 per cent. Our rate of wage and price inflation is amongst the highest in the Organisation for Economic Co-operation and Development. As a consequence, our currency has been devalued repeatedly under this Government. In 1987-88 a wage package in the neighbourhood of 6 1/2 per cent will be negotiated, with little increase in productivity. The Government failed to oppose the current across the board wage increase; it has failed, therefore, to give the signal that Australia is serious about getting on top of wage and price inflation. It has behaved in an incredibly craven and irresponsible manner. Again let us look at what the Government is going to do. Do we know what it is going to do tomorrow? Mr Hicks —Zero. Mr PEACOCK —No, not zero on this occasion. The Treasurer and the Minister for Industrial Relations (Mr Willis) will consult with the government in exile, the Australian Council of Trade Unions, concerning next year's wages policy. So the nation has to sit around and wait-we all have to sit around and wait-while the Government gets permission to adopt a new wages policy. The Government does not have any policies of its own; it has no guts to take on the trade union movement and say what any other duly elected government would say: `We had an election a few months ago, we won and we are running the country; not you, the trade union officials'. The Government's action is a cop out, and it is symptomatic of the cop out in other areas of its conduct of economic policy today. We need forthright, tough and decisive action so that wages can be set not just according to the demands of the trade union leaders. They are not the ones who will lose their jobs, it is the men and women in the work force who may lose their jobs. It does not affect these officials that the Government kowtows to. Wages have to be set not according to their demands but according to productivity. It happens yet again that the Opposition has the right policy. We have the right wages policy, for we will decentralise the labour market, we will break the control of the trade union leadership, we will break the control of the Creans and the Keltys and we will reform industrial relations so that working men and women can negotiate at the enterprise level. Foreign investors are beginning to see through the Government, to lose faith in its ability, and tragically in Australia's ability, to weather the impending disruptions to world economic activity. The Government has been warned often enough, and by an increasing number of people in the international community. We started warning the Government at the time of the Budget, well before the collapse of the stock market. Undoubtedly this Labor Government has to take responsibility for this current mess; it has to take responsibility for any further depressed conditions that lie ahead. Labor has failed this nation, and an increasing number of people recognise that. It has failed miserably to provide our country with a balanced fiscal policy or with a wages policy based on productivity, and consequently with a strong external sector. In short, as so many are joining the Opposition in saying, the fundamentals are weak. The Government has failed to strengthen the underlying position of our economy, and it has failed because it has been craven and it has been irresponsible. As Senator Walsh has said, we are moving further down the Argentinean road. Our most pressing issues are our high current account deficit, our high external debt, our extremely low investment in plant and equipment, our high wage and price inflation and our low productivity. Yet Labor does nothing. Labor cringes; Labor hides. It should produce the blueprint the nation requires. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Order! The honourable member's time has expired. Mr HOLDING(Melbourne Ports-Minister for Employment Services and Youth Affairs and Minister Assisting the Treasurer)(3.17) —This is the third occasion in three weeks that we have heard from the Deputy Leader of the Opposition (Mr Peacock) a speech which basically reiterates, perhaps today with a little more hyperbole than usual, with a few more dramatic gestures, the same things that he said at the time of the election. He said it then less eloquently, and now he has the gall to come in here and say that this Government is without an economic policy. Let us deal with some of the propositions put by the Deputy Leader of the Opposition. We have heard it all before. The answer, he says, is very simple: it is to cut taxes, and to cut public spending. We heard that during the election campaign, but did we ever hear during that campaign, and do we hear now, where the Opposition proposes to cut public spending? Mr Tuckey —Yes. Mr HOLDING —Not from this Opposition and not from the honourable member opposite. The reality is, and it is a matter now of public knowledge, that when the honourable gentleman became Deputy Leader and shadow Treasurer he indicated-I believe with some integrity and with some foresight-that it was necessary to overhaul totally the economic policies of the Opposition, and he was going to take the Opposition in a new direction, as well he should have. We learn today from the Australian Financial Review, a newspaper which seems to impress the honourable gentleman, that that intention of the Deputy Leader of the Opposition has been rolled. We are now told that the Opposition's policy, rather than being subject to significant, substantial or total review, will simply be fine tuned. So we have heard from the Deputy Leader of the Opposition today essentially the same old arguments. Let us put those arguments into three contexts. I refer first to the allegation that this Government is not responding to the economic pressures that confront Australian society. The Deputy Leader said that the Government was failing to change the pace, and he said that we had a treasurer who is craven and insipid in the face of these economic challenges. It is a nonsense to suggest that there is no coherent economic strategy. To talk about accelerating the pace is to overlook the fact that this Government has had to spend its period in office making very considerable adjustments to bring the Australian economy back into balance. The Opposition cannot blame this Government for the collapse in share prices, but equally it would be irresponsible for the Treasurer (Mr Keating) not to have regard to that. He said in an address last week to the World Economic Outlook Seminar: But any judgment about what response we should make must be made against the background that the Government has firmly in place an effective economic strategy for the long haul. As in the past, we will adjust the specific policy settings within that ongoing strategy whenever that is warranted by changed circumstances. As in the past, any such changes will not be knee jerk reactions but designed to fit within that strategy and sustain it over the long haul. Of course there will be periods of considerable uncertainty regarding the recent decline in share prices and of course the Government and the Treasurer are monitoring every aspect of that very closely. We will not go in for irresponsible scaremongering. If there is any group in Australian society praying for a recession, it is honourable gentlemen opposite-because they believe that with such a disastrous economic downturn, in the absence of any kind of coherent economic philosophy, their political time would have come. So what we are getting from the Opposition week after week is a restatement of the same old things it said during the elections-more unfunded tax cuts and more arguments about cuts in public expenditure. But never on any occasion does the Opposition say where the cuts should be. Should they be in education or social welfare spending? Where does the Opposition suggest these cuts be made? How is it that when it comes to identifying the cuts there is nothing but silence? A week or two ago the shadow Treasurer was talking about the need for a mini-Budget: that was the fashion at that stage. The Government's response to this fall in share prices will depend upon a wide range of factors including, as the Treasurer has stressed, the response of the United States Government in addressing its Budget and current account deficits. Although undoubtedly some of those people who were involved in maximising their profits when share prices were up were adversely hit when the run stopped and were caught with a share decline. These declines need to be seen against the background of five years during which share prices increased substantially. In this context it could be argued that share prices have come back more into line with underlying earnings potential. That said, reduced private sector wealth and increased uncertainty about the economic outlook are likely to result in a slowing in the growth of private consumption expenditure and growth in private consumption is now likely to be slightly below the Budget estimate. In the case of business investment, reduced share prices will make it more difficult for businessmen to raise equity funds. Investment may also be restrained by the increased uncertainty about economic prospects generally. However, it should be noted that following the Budget there had been indications of an improvement in the outlook for investment. Hence, any reduction in business investment plans will be from a firm base, especially in the tradable sectors. Overall growth in domestic demand may now be slightly below the Budget time forecast of 1 3/4 per cent. The prospects for the Australian economy in 1987-88 are not substantially changed from the assessment in the 1987-88 Budget Papers. As such, the Government's policy framework remains appropriate. Of course, one has to watch all aspects of what is a sensitive economic situation. But we will adjust policies within that broad framework just as we have done it in the past when confronted with changed external circumstances. As I said, what we had from the shadow Treasurer today was simply a repeat of the attempt to buy votes in the last election, an attempt that was cynical in the extreme and an attempt which was rejected by the Australian people. But there was one further aspect of the honourable gentleman's case today which does not come as any surprise. Under the Government of which he was a member, the real growth in the Australian economy took place amongst those who were rorting the system-the tax dodgers. The greatest expansion in our economy was amongst those who, under the honourable gentlemen opposite, could choose whether or not they met their taxation obligations, and the rest of Australia was made to pay for it. Of course, there are those who made considerable profits out of the stock market boom and there are those who are now suffering for it. But who are we told by the honourable gentlemen opposite have now to pay the measure of some of the problems that arise from the fall in stock market prices? Do they suggest the tax dodgers? Do they suggest those who were not producing anything but who were simply exchanging pieces of paper and making considerable fortunes? No. Who is going to bear the burden of the economic rantings of the honourable gentlemen opposite? The Australian wage and salary earner who never had the option of tax dodging, who had tax taken out of his pay packet every week. The only thing that can be said about the speech of the shadow Treasurer is that there was a certain logical consistency. What can one expect from men and women opposite who have consistently opposed wage increases to the ordinary Australian time after time? Is it any accident that while the tax dodging mates of the honourable gentlemen opposite were ripping off the system, as a matter of deep political and economic philosophy they were able to oppose 19 out of the 21 national wage cases. Think about that. When the trade union movement had to go into the court to argue for increases, on 19 out of the 21 occasions the men who did nothing about the scandals of tax evasion and tax dodging were there to say that it was inappropriate that the wage and salary earners had any increase. Of course, with the stock market collapse who is again to bear the brunt? Who are we going to blame? Not the mates of the honourable gentlemen opposite; it again will be the wage and salary earner. Dr Harry Edwards —What about his mates? Mr HOLDING —The honourable member knows the reality. Average Australian workers are not enemies because they are trade unionists; they are decent hardworking Australians. They were entitled to their wage and salary increases and they had to prove it. But when it came to measuring up to the economic crisis which confronted Australia and which was a product of the lean years of the Fraser Government, it was the accord reached by the trade union movement and the Australian Council of Trade Union (ACTU) which provided a secure basis for our economic recovery. The trade union movement and the ACTU were prepared to say to their members, `You cannot expect to get the full measure of wage and salary increases'. Which Australian company said to its middle-management, `You'll have to forgo some of your wage and salary increases.'? Which one of those people said, `Well, perhaps given the nature of what is occurring in Australian society and our economic problems, we ought to pay our full measure of tax, or perhaps we should see that some of the profits will be forgone and used to bolster manufacturing industry and other sections that are so desperately in need in this society'. Not a bit of it. The ACTU and the trade union movement have shown a willingness, a readiness, to co-operate with the total economic strategy which can lead to our economic recovery. Honourable gentlemen opposite lack anything that looks like a coherent economic policy. They are still using the old mumbo-jumbo that they used during the last election. They are saying, `We need more tax cuts. Don't ask how we will pay for them, but we need more tax cuts'. They mean tax cuts for their friends and no wage increases for the working people of Australia. They want more tax cuts and cuts in the public sector. They say, `Don't ask us where we will make those cuts. Don't ask us whether we will hit the pensioners in the community or those relying on social welfare benefits. Don't ask us whether we will cut the heart out of our education institutions or out of our defence forces. Don't ask us where we will make cuts, just trust us'. Members of the Opposition are not worthy of trust because they had an opportunity and they failed. They created an economic crisis and this Government had to spend many years turning it around. We have turned it around. We will not respond to the economic mumbo-jumbo of honourable gentlemen opposite. Nothing new has been said in this debate over the last three weeks. All that honourable members opposite are doing is hoping and praying for an economic recession so that they can say, `We told you so' and hope the Australian people will be gullible enough to allow them to slip into office on the basis of a recession which, deep in their hearts, they want. They have absolutely no kind of economic philosophy and, what is worse, no kind of economic integrity, to enable them to make any positive contribution to the solution of these problems. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Order! The Minister's time has expired. Mr PEACOCK(Kooyong) —I seek leave to make a brief personal explanation. Mr DEPUTY SPEAKER —Does the honourable member claim to have been misrepresented? Mr PEACOCK —I do. Mr DEPUTY SPEAKER —The honourable member may proceed. Mr PEACOCK —The Minister for Employment Services and Youth Affairs (Mr Holding), at the commencement of his address, quoted from an article in today's Australian Financial Review, written by Amanda Buckley and headed `Fine tuning only for Opposition's economic policy'. The article incorrectly interprets a letter from Senator Durack to the Leader of the Opposition (Mr Howard). In my interviews on economic policy, tax policy and the like, I have differentiated between a broad economic policy document concerning the macro settings of fiscal and monetary policies, wages and microeconomic policies-we will be updating the policy which was previously called `Policies for Business' which we issued last year; that will be our broad economic policy-and the tax policy, which, as was the case previously, will be issued by us separately. The economic policy, as issued, needs only some fine tuning, as Senator Durack has written. The separate tax policy, however, will be put under closer review. The distinction is not understood by Miss Buckley or by the Minister. Dr HEWSON(Wentworth)(3.33) —When I was listening to the honourable member for Melbourne Ports (Mr Holding), I was reminded of a recent incident on an international flight. After the plane had taken off, the pilot said over the intercom, `While there is some bad news, I have some good news. The bad news, of course, is that our navigation system has gone out. You shouldn't worry that we don't know where we are or what we're doing. The good news is that we've picked up a tail wind and we are making incredible time'. That is very much the sort of explanation the honourable gentleman gave us in the words that he used. He sought to suggest that the current Australian economy and this Government and its policies are somehow different from everywhere else. It is all somebody else's fault. It has all happened, essentially, because the United States has not put its house in order. The reason that the United States stock market and the United States dollar are falling is that the United States has not put its house in order. I suggest to the honourable member that, if that is the case, it is even more true for us today. Our stock market has fallen further and faster and our dollar has fallen further and faster than have our United States counterparts. The honourable member mentioned a speech made last week by the Treasurer (Mr Keating) at a conference in Melbourne in which he outlined some of the details of this assessment of the world scene, the stock market crash and our policy response. In that speech he made quite a lot of the point that, if the United States does not adjust, that adjustment will be forced on it; that financial markets will vote with their feet, as they are; the dollar will collapse; and, ultimately, the needed policy adjustments will be made. Again, I say to the honourable member: If that is the case in the United States, it is also surely the case in Australia. It is interesting that the honourable member and the Treasurer seem to have learnt virtually nothing from their past experience. Remember in 1985, on two occasions, and in 1986, when they were dragged screaming to the recognition that something was fundamentally wrong, as our dollar fell by about 30 per cent? I suggest that they look at the Reuters screed that the Treasurer referred to today and see what has happened in the last couple of weeks. As our dollar has again fallen by 10 per cent on a trade weighted basis, financial markets are again voting with their feet. Financial markets are making the very same points to us that they are making to others. We in this country have not put our house in order. The interesting thing is that the Government seems very much to be a victim of its own propaganda. It believes a lot of the rhetoric and hogwash that it has been pushing around the place. It is now sitting back complacently while our economic situation is deteriorating so dramatically. The Treasurer made the very interesting suggestion in the House today that we on this side of the House are very much economic simpletons. We do not understand what is happening. We do not understand the fact that, now that we have a floating currency, financial markets will not be able to exercise their judgment and capital will not be able to flow out. It is indeed a very interesting suggestion on the part of the Treasurer. Of course, if it were true that we had a freely floating exchange rate, he could probably get somewhere with his argument. But the fact is that we in this country do not have anything like a floating exchange rate. We have one of the dirtiest floats in the Western world. If one looks at what the Reserve Bank of Australia has been doing in recent days in financial markets, one will get the very clear idea that it has been cushioning the fall of the currency. As a result, our reserves have already fallen quite significantly, probably by about $1 billion in the last few weeks, in an attempt to forestall the vote of the financial markets. Of course, even the Reserve Bank is a little more sophisticated these days. It is intervening in the forward exchange market as well. So some of its intervention will not show up for some time, but it will show up eventually as a further fall in our international reserves. The suggestion that we have a floating currency, that capital outflow is not significant and that the financial markets are not making judgments about us is obviously quite misplaced. All international portfolio managers and others are assessing the current situation. What should one expect them to do in the current circumstances? Surely they will take a long, hard look at us and say, `There's a commodity exporting country. There's a country that hasn't made the necessary policy adjustments, despite all the rhetoric of the Government. There's a country that basically has an exotic currency'. In current circumstances what else would they do but take their money and run. Most of those international portfolio managers were overexposed, in their term, to the Australian dollar, and they are now in the process of making significant adjustments to those exposures and moving out. The honourable member for Melbourne Ports read selectively from the speech made by the Treasurer last week at an Australian conference, but he stopped short of reading the rest of the page he was reading from and beyond, when the Treasurer went on to tell what he had done in regard to the crisis. The Treasurer has tried to have a bit both ways. On occasions he has tried to imply that he did not need to react and he did not need to change his forecasts or his Budget assumptions; but, on other occasions, he wants us to feel that he is doing something, so every now and again he makes one or two statements to suggest that he is on the track. In that speech he listed a couple of things that he had specifically done since the collapse of the stock market and since our dollar started to plummet. Firstly, he said he had increased the liquidity in the economy, which makes a heck of a lot of sense does it not, in a country where the inflation rate is already double that of our trading partners and is unlikely to decline anywhere near as fast as the Treasurer suggested in the Budget-and particularly so now, given that we have had another 10 per cent devaluation of the dollar since the Budget. Secondly, the Government has paid yet another wage increase since the stock market collapse. Is it a very sensible policy to pay an additional wage increase at the time when all our trading partners are pulling in their horns? We have already had wage increases in this country, according to the Treasurer's Budget assumptions, that were double that of our trading partners, but we see the Treasurer paying yet another wage increase. Thirdly-he does not say this but he should have-he has in part engineered the fall in the currency as much as there has been a judgment of financial markets. Why does the Treasurer have a vested interest in a devaluation in this country? To be cynical, it is because of the way the book of the Reserve Bank is managed. The Reserve Bank will make additional profits as a result of devaluation. The Treasurer will then visit the Governor sometime near the middle of next year and try to extract even more than $2.6 billion already built into this year's magic and illusionary Budget. It is a nice, cosy little tete-a-tete, a nice little arrangement. He will visit the Governor again in June, twist his arm and take another half a billion dollars or $1 billion or so out of the kitty. Perhaps that is why he is sitting back so complacently. That is how he can make the Budget add up. When he gets to the crunch and his numbers are not in line, he can visit one of his mates and he can make them line up. I am also fascinated that he suggests we do not need to change our forecasts. Today I asked him a question about the impact of the recent 10 per cent devaluation on the consumer price index (CPI), on our current account deficit and on interest payments on our external debt. He dispensed the implicit argument in the question with the statement that he does not go around making short term adjustments to his forecasts. I would not want him to miss out; so I shall do it for him. I suggest to the Treasurer that if that 10 per cent devaluation is sustained-and the probability is that it will be even more-it will probably add about one per cent to the CPI this year. It will probably add about $1 billion to the invisible item, our balance of payments. It will probably worsen our trade imbalance to the tune of about $300m to $500m as we get another adverse J-curve effect. On the basis of what has happened in the past few weeks there is little way that the Treasurer's Budget forecasts can stand. His Budget forecasts for the exchange rate were very much for a trade weighted index of 56. Today it is down around 51 and falling. This morning on the steps of Parliament House the Treasurer tried to dispense with the suggestion that maybe we are under downward pressure. He attacked, unjustifiably, the Australian Broadcasting Corporation for the arguments it put this morning. He does nothing in a policy sense to give anyone any confidence that he knows what he is doing or where he is going. Thinking about the Treasurer and the Minister Assisting the Treasurer (Mr Holding) and the sorts of arguments they have put to the House, I was reminded of the movie Being There which starred Peter Sellers. It was a classic movie in which the simpleton, Chance the gardener, inadvertently ends up as Chauncey Gardener, a presidential adviser. He was asked what might be needed to stimulate growth in the American economy. His answer was in the following terms: As long as the roots are not severed all is well. All will be well in the garden. In the garden growth has its seasons. First comes spring, then summer and then you have fall and winter. Then we get spring and summer again. That is very much the complacent sort of answer the Treasurer has given-everything is supposed to be good in this garden. I suggest at present we have not only Chauncey Gardener but also Chauncey Keating and Chauncey Holding. Mr DEPUTY SPEAKER(Mr Leo McLeay) -Order! I point out to the honourable member for Wentworth that though his anecdote was rather amusing, he should refer to members and Ministers by their titles. I call the honourable member for Rankin. Mr BEDDALL(Rankin)(3.43) —As the honourable member for Wentworth (Dr Hewson) is using anecdotes, perhaps the next one should be, `We'll all be rooned, said Hanrahan' which is quite appropriate for the Opposition. During this debate members of the Opposition articulated the problems Australia may face, without suggesting any solutions. What honourable members opposite conveniently forget is the economic legacy left to us by the current Leader of the Opposition (Mr Howard). The Deputy Leader of the Opposition (Mr Peacock) must also shoulder responsibility for the disastrous economic policies inflicted on this country by the Fraser Government-a government of which he was a senior Minister. Even the Deputy Leader of the Opposition, with his limited understanding of economics, must realise that the world economy is now more vulnerable to sudden change than it has been at any time in history. Every economic decision that this Government has taken since 1983 has been made to claw back Australia's economic sovereignty. The major inheritance we received from the previous coalition Government was extreme vulnerability to international economic downturns. Their policies gave this country no capacity to fight back. This Government's policies are aimed at giving Australia back this capacity. The Australian economy in 1987 is far better placed than it has been at any time in the past 30 years to withstand external economic pressures. Naturally, the Government does not pretend to say that overseas economic events will not have an impact on our economy. What we do say is that with the right macroeconomic mix we can limit the impact on the Australian economy. Our vulnerability stems from 30 years of policy failure under conservative governments. We have had an overreliance on a narrow export base in commodities-commodities that have collapsed in price in the past two years. When we came to office, Australia was a nation virtually without a competitive secondary industry structure. The Howard induced recession of 1982 almost totally destroyed Australian manufacturing industry. With an overvalued dollar and an overregulated financial system, Australian business had no opportunity to compete in a world market. Jobs were lost, businesses closed and Australia faced prolonged economic decline. This Government took up the challenge and set about introducing a policy mix aimed at creating employment whilst at the same time reducing inflation. This policy mix has been remarkably successful and one of the key ingredients of this has been the prices and incomes accord. The co-operation of the trade union movement in bringing about economic change has been unprecedented in this country's history. There has been a fall in the real unit labour cost in every successive year since the Government's election in 1983. We have achieved these reductions without acrimony or bitterness but by co-operation. The other major weapon the Government has used has been fiscal policy. The level of Commonwealth spending cuts has been significant and was achieved with the twin policy objectives of fairness and equity. When elected to office in 1983 we had a Budget deficit in prospect of $9.6 billion. In our first Budget of 1983-84, the deficit was 4.1 per cent of gross domestic product. In the financial year 1987-88 this has been reduced to zero. In Australia our response to the massive collapse in the terms of trade has been $7 billion out of our current budgetary outlays between August 1986 and September 1987. If our friend and trading partner the United States of America had exercised the same fiscal responsibility it would have been the equivalent of cutting $175 billion in the United States deficit. In other words adjustment of an equivalent scale as has happened in Australia would have virtually balanced the United States Budget. The structural changes made to the Australian economy will mean that over the coming financial year we have eliminated the Commonwealth's demand on financial markets. These changes are important because we are not looking just to reducing the current account deficit or just to stabilising our external debt. Rather, we are seeking sustainable adjustment in these areas so that our living standards in future will be less vulnerable to external shocks of the kind we have experienced in recent years and more particularly in recent weeks. We have to make our industries and our economy much more efficient and attuned to world markets. The Government has done much in this regard and will continue on its path of reform. The list is impressive and bears repeating. We have deregulated the financial markets, reformed the tax system, liberalised foreign investment policy, introduced greater flexibility on to the wages determination system and encouraged the removal of restrictive work and management practices. Only recently we have also set in train the deregulation of the domestic airline industry and announced a thorough review of our education and training programs. The health of the economy can not be determined by simple Government decisions. We need a work force that is better trained so that it can make its contribution to more efficient, more flexible, less vulnerable world competitive Australian industries. This Government has continued to show that it is sufficiently flexible to meet any new challenge that may present itself. What the Opposition needs to do is to articulate in a much clearer way than the honourable member for Kooyong (Mr Peacock) has what policy changes it would make in the current circumstances. In the election campaign in July this year the Opposition promised a tax bribe to the Australian people which would have brought about a collapse in the confidence in the Australian economy. It could not have been funded responsibly. The Opposition's policy would have led to a larger Budget deficit, increased inflation and eventually to a massive recession. Naturally, the Opposition did not expect to win the election or to implement those tax cuts. What members of the Opposition further fail to realise is that the economic game has changed. The major world economy is now not just the United States. The economies of Japan and West Germany play as important a role in determining the economic well-being of the world as the United States. As all countries have freed up their financial systems, billions of dollars move around the world with the press of a computer keyboard. Confidence in the economic management of a nation is vital if world markets are to treat a nation fairly. The lastest Budget brought down by the Treasurer (Mr Keating) was well received both domestically and internationally. It convinced world markets that this Government is on track and is making the structural adjustments that this economy needs. The Opposition response is a typical knee-jerk reaction. A couple of matters of public importance and a Press release and it considers that it has made a valuable contribution to the economic debate in this country. What this Opposition has to do is to participate in the economic debate and not just mouth slogans put forward for it by people from the economic think tanks of the New Right. The structural changes that this Government has made will have a long term impact on the future prosperity of this country. The changes that have been brought about after deep and careful consideration have laid the groundwork for a competitive prosperous Australian economy for generations to come. Economic strategies alone are not sufficient to bring about a healthy Australian economy. What is needed is a range of policies across portfolios that are geared to dragging Australia out of its economic malaise. It is my contention that this Government has such a range of policies, particularly in the area of industry policy. We have seen the implementation of the steel industry plan, the car industry plan, the textile, clothing and footwear plan, plus many more innovative packages that are aimed at mixing and matching the Australian economy into a more competitive world player. Following the election, the Prime Minister (Mr Hawke) in his ministerial reorganisation gave high emphasis to the areas of trade, manufacturing and skills development. These are the areas that Australia must concentrate on to rebuild its economy. One would think that after five years of opposition honourable members opposite would be able to make a more constructive contribution to a debate than has been made here today. It is apparent that honourable members opposite have no understanding or realisation of the changes that this Government has already brought about. We are now in a position where Australia can face the challenges of the world economy because of the economic strategies of this Government. The major economic debate on the Opposition's side of the House appears to be whether it was the previous Prime Minister, Malcolm Fraser, or the previous Treasurer, the honourable member for Bennelong (Mr Howard), who held up the economic changes that were so obviously necessary from the late 1970s. The latest contribution from the Leader of the Opposition, the honourable member for Bennelong, is to run around talking about a capital flight from this country because of the downward movement of the Australian dollar. It is ironic that at the very time he was giving his Press conference on the front steps of Parliament House this morning the dollar rose. Does this mean that, in the terminology of the Leader of the Opposition, there was a sudden inflow of capital? This is total nonsense. A flexible exchange rate is meant to stop sudden inflows and outflows of capital. As the Australian dollar meets world demands there is no incentive for overseas investors to move currency rapidly. In fact, as the Australian dollar depreciates it is more attractive to overseas investors, particularly the Japanese, to seek out investment opportunities in this country. The world markets know and appreciate that this Government is making the structural changes necessary to meet the economic challenge. It is because of this confidence that I encourage the Treasurer to maintain the current economic policies he has successfully implemented over the past five years and to maintain his high degree of flexibility as circumstances change. Nobody could have predicted the collapse in world commodity prices which wiped $1 billion off the price of our wheat exports alone. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Order! The honourable member's time has expired. The debate is concluded. Bill presented by Dr Blewett, and read a first time. Dr BLEWETT(Bonython-Minister for Community Services and Health)(3.54) —I move: That the Bill be now read a second time. This Bill will amend the Aged or Disabled Persons Homes Act 1954, the National Health Act 1953, the Health Insurance Act 1973 and the States Grants (Nurses Education Transfer Assistance) Act 1985. The major purpose of this Bill is to introduce new variable capital funding arrangements for hostels and to improve the legislative base for the management of the new nursing home recurrent funding system introduced on 1 July 1987. The Bill also introduces improved new arrangements for conditions of capital and recurrent subsidies for hostels. These measures will enable better targeting of Commonwealth funding to hostel accommodation and care for disadvantaged groups and will achieve greater efficiency in Commonwealth funding of nursing homes. In April 1986, a review of nursing homes and hostels reported on a future strategy for the development of residential care programs for the aged. The Government endorsed the broad thrust of the review's recommendations and in the 1986-87 Budget commenced a staged program of reform of residential care services for aged people. This reform program has the primary objective of responding to community needs by encouraging the further development of hostels and community care services, and of increasing the quality of care and life of aged people. Implementation of the first two stages of the reform strategy is proceeding with the establishment of new needs-based planning arrangements, the development of co-ordinated assessment services for the elderly, the expansion of hostel and home and community care services, the development of a special services program, the phasing in of new recurrent funding arrangements for non-government nursing homes from 1 July 1987 and the introduction of quality of care standards for nursing homes. The new variable capital funding arrangements for hostels, given effect to by this Bill, introduce the third stage of the program for reform of residential care services for the aged. In adopting a staged reform strategy the Government has recognised the importance of effecting gradual change in the aged care industry to minimise disruption in the lives of the 110,000 frail aged people in various forms of residential care presently receiving Commonwealth funding. In developing the overall program the Government recognised that the co-operation of service providers and the community would be necessary to fully achieve its objectives and to this end the Government has undertaken an extensive round of consultations with service providers, consumer and welfare organisations, and State governments on the proposed funding arrangements for hostels. Briefly, the proposed amendments under the Aged or Disabled Persons Homes Act 1954 will enable the Commonwealth to target its capital funding for hostels to achieve equitable access to hostels of people with limited means and all other people requiring and choosing hostel accommodation and care. This will be achieved by variation in the level of Commonwealth capital subsidy based, among other things, on the proportion of financially disadvantaged residents to be accommodated and the capacity of future residents to contribute towards the construction of the hostel. In 1954 the Commonwealth introduced a capital subsidy program to stimulate the provision of suitable accommodation for aged people. Administrative arrangements of successive governments have meant that capital subsidies are provided on a two for one basis up to a maximum subsidy limit per place. In practice, however, the maximum subsidy arrangements result in a subsidy closer to one for one. A similar per place payment is provided for most projects, irrespective of the means of future residents or the financial capacity of the organisation receiving the subsidy. Furthermore, current legislative provisions prevent refundable entry contributions paid by residents from being considered as part of an organisation's available funds in determining the amount of a Commonwealth capital subsidy, even though the practice of requesting entry contributions is widespread in the hostel sector. This creates two major problems. First, residents are uncertain of their rights attached to these payments, and many do not have any protection in relation to refunds of their entry contributions. Second, it increases the financial burden on organisations by necessitating that they find other sources of funds which can be considered as part of their matching funds for Commonwealth capital grants. In addition, no formal link exists between capital and recurrent funding provisions and in the past this has led to the Commonwealth providing capital funds for many `motel-like' hostels which do not receive recurrent subsidies for care services as the residents are well able to look after themselves. Consequently, the existing capital and recurrent funding arrangements do not target Commonwealth funds to organisations providing accommodation and care for disadvantaged groups or provide incentives for organisations to maximise the use of their own funds or of residents' entry contributions. As I have mentioned, this Bill includes a number of amendments to the Aged or Disabled Persons Homes Act 1954 designed to address these difficulties and to provide greater protection for residents. The Bill enables the Minister to determine guidelines for the assessment of the amount of a capital grant to be paid for the establishment of a hostel. The guidelines will be gazetted, tabled and subject to possible disallowance. The guidelines will have regard to, among other things, any contribution to the capital cost of the hostel which could be made by residents and the organisation, borrowing of moneys by the organisation, class or classes of persons to be accommodated, and the maximum amount of the grant. Other amendments provided for in this Bill will remove restrictions on moneys to be taken into account in determining Commonwealth capital grants. The Bill will enable borrowed moneys which can be repaid by resident contributions or from payments made by the State or the Commonwealth-other than under the Aged or Disabled Persons Homes Act 1954-to be taken into account in determining Commonwealth capital grants. The Bill also provides the Minister with the discretionary power to enable Commonwealth or State Government organisations, or organisations which conduct public hospitals, to be treated as eligible organisations for the purposes of the Aged or Disabled Persons Homes Act 1954. This will enable some joint hostel ventures to proceed. This Bill also introduces new conditions for capital and recurrent funding and changes the existing arrangements for determining conditions of recurrent funding. The new arrangements and additional conditions clarify up front the requirements of Commonwealth capital and recurrent funding. The Bill will enable the Minister to specify conditions of a capital grant for a hostel and organisations will be required to enter into an agreement in relation to these conditions. The conditions of agreements for capital funding set out in the Bill must be met by an eligible organisation and include provision for compliance by that organisation with conditions of grant, the repayment of financial assistance and the recovery of amounts taken as representing the Commonwealth's interest. The conditions will also include that an organisation shall comply with the conditions of recurrent funding. This introduces a link between existing capital and recurrent funding provisions and ensures that Commonwealth capital funding is targeted to the provision of hostel accommodation for the frail aged. In addition, capital grants will be subject to the provision of accommodation and care of a determined number of financially disadvantaged people to further target government funding to this group. Similarly, this Bill will enable hostel recurrent subsidies to be subject to gazetted conditions which will be tabled and subject to possible disallowance. As well as the current conditions enforced through the existing hostel recurrent subsidies agreement, additional conditions relating to residents' rights and obligations, including provision of refunds for entry contributions, accountability of organisations to residents and specified outcome standards to be achieved, will be included. Non-compliance with conditions may mean suspension or cancellation of Commonwealth recurrent subsidies. I should stress that the details of those provisions which are to be gazetted, tabled and subject to disallowance will not be finalised until the Government has completed national consultations and discussions with service provider and consumer organisations. The Bill also includes amendments to the Aged or Disabled Persons Homes Act 1954 which will simplify the administration of the capital subsidy program. These amendments change the formula for determining the capital cost of a home by enabling the cost of equipment to be taken into account in determining the capital cost of a home. The amendments in this Bill to the National Health Act 1953 will facilitate the administration of the new nursing home recurrent funding arrangements introduced on 1 July 1987 and will introduce measures to assist fraud controls in relation to current administrative procedures. The successful implementation of the new standard grant funding arrangements depends to some extent on the financial data obtained from nursing home proprietors. In accordance with the new nursing homes financial arrangements principles, at the end of each financial year a reconciliation between estimated nursing and personal care costs and actual costs is to be undertaken. Under current legislative provisions, it is not clear that details of nursing and personal care costs are required to be kept by proprietors. This Bill therefore provides that particulars in relation to nursing and personal care costs should be submitted by proprietors in a form approved by the secretary at such times, and in respect of such periods, as are determined by the secretary. These determinations will be gazetted, tabled and subject to possible disallowance. This amendment will allow prospective fees determinations to be calculated more quickly and efficiently. Consistent with the Government's acceptance of the recommendations of the recent review of systems dealing with fraud, a number of measures in this Bill will assist in reducing the potential for fraudulent practices by nursing home proprietors. The Bill extends the current provisions relating to inspections of nursing home records to enable an officer authorised by the Minister to inspect documents or records that relate to the operation of a nursing home, wherever these records are kept. The Bill also provides that the manner in which nursing home records are to be kept may be prescribed. This will overcome current problems where some proprietors keep their records on accounting documents which reflect more that one business operation, making it difficult to verify during end of year reconciliations whether expenditure has in fact been incurred. The Bill also provides for extended evidence collecting powers and amends penalty provisions under Parts V, VA and VC of the National Health Act 1953 to bring these provisions into line with penalty provisions in other Commonwealth legislation. The Bill also amends the National Health Act 1953 to remove the Minister's discretion to depart from the new nursing homes financial arrangements principles in reviewing fees determinations decisions. These principles are an integral part of the new funding arrangements and were designed to minimise discretions. If the transition to a standard grant funding system for nursing homes is to succeed, the principles must be applied in all cases of review of fees determinations decisions. The Bill also clarifies ministerial review powers by enabling all fees determinations decisions to be subject to review. As foreshadowed by the former Minister for Community Services, Chris Hurford, in his second reading speech on the Nursing Homes and Hostels Legislation Amendment Bill 1987 in the autumn sittings 1987, a new mechanism for approving the transfer of nursing home beds from one location to another is also provided for in this Bill. In addition, another amendment to the National Health Act 1953 in this Bill gives effect to an undertaking given by Senator Susan Ryan on behalf of the then Minister for Community Services during the Senate debate on the Nursing Homes and Hostels Legislation Amendment Bill 1987 and prevents any action being taken against a nursing home under the new non-compliance with standards powers until a standards review panel has been established in the State or Territory in which the home is situated. The Bill amends secrecy provisions of the National Health Act 1953 to bring them into line with similar provisions under the Health Insurance Act 1973. Currently, the information which may be released to prescribed persons or authorities is not specified. This Bill will permit only information of a kind prescribed by regulation to be made available to a person or authority. This enhances the protection of personal privacy under the National Health Act 1953. The Bill also provides for a minor amendment to the Health Insurance Act 1973 to remove, in the interests of protecting privacy of patients, the requirement for the tabling of instruments determining patients as needing acute care. Finally, a minor amendment to the States Grants (Nurse Education Transfer Assistance) Act 1985 is also provided for in this Bill. The Commonwealth has provided funds to the States and the Northern Territory under the States Grants (Nurse Education Transfer Assistance) Act since 1985 to assist with the transfer of basic training courses for nurses from hospitals to colleges of advanced education. The number of places being partially funded by the Commonwealth is increasing year by year so that by the end of 1993, the hospital-based training courses will be completely phased out. By authorising funding for the next transmission, this Bill amends the States Grants (Nurse Education Transfer Assistance) Act 1985 to allow the transfer of nurse education to continue at an orderly rate. The new funding arrangements for hostels under the Aged or Disabled Persons Homes Act 1954 are expected to result in savings in $7m in each of the years 1987-88, 1988-89 and 1989-90. The amendments to the States Grants (Nurse Education Transfer Assistance) Act 1985 will authorise, subject to appropriation, expenditure to assist in the transfer of nurse education from hospitals to colleges of advanced education of $14m in the calendar year 1988, $21m in the calendar year 1989, and $28m in each of the years 1990 to 1993. The other measures in the Bill have no readily quantifiable financial impact, although it is expected that they may result in some small savings in administrative costs. I commend the Bill to the House. I present the explanatory memorandum to this Bill. Debate (on motion by Mr Blunt) adjourned. Bill presented by Mr Peter Morris, for Mr Kerin, and read a first time. Mr PETER MORRIS(Shortland-Minister for Resources)(4.10) —I move: That the Bill be now read a second time. The purpose of this Bill is to give effect to amendments to the River Murray Waters Agreement between the Commonwealth, New South Wales, Victoria and South Australia for the improved management of the land, water and environmental resources of the Murray-Darling Basin. The amendments are set out in the schedule to this Bill. The Murray-Darling Basin comprises about one-seventh of Australia. It produces about one-third of Australia's total output from natural resource-based industries. It supports 25 per cent of the nation's cattle and dairy farms, about 50 per cent of its sheep, lambs and crop land, and almost 75 per cent of its irrigated land. Production derived is valued at some $10 billion annually. It is Australia's agricultural heartland. We have been historically successful in our approach to harvesting the waters of the basin to ensure reliable supplies for irrigation, urban and industrial use. This success, however, has to be measured against the cost of deteriorating water and land quality and diminished environmental amenity. Inadequate attention to the need for an environmentally and economically integrated approach to natural resource management in the basin has, however, in some instances already set in train resource degradation processes that threaten resource viability. Indeed, it is hard to escape the conclusion that, in many ways, past land, water and environmental management practices have been largely exploitive and not conducive to sustainable use of the resources of the basin. Historically, debate has focused on the security and use of the priceless waters of the River Murray, a not insignificant factor in accelerating the advent of Federation. The first River Murray Waters Agreement, to resolve developing conflicts in the use of River Murray waters, was signed in 1914, legislation came into effect in 1915 and the River Murray Commission was established in 1917. As a result of the first major review of the Agreement in 1983, the responsibilities of the River Murray Commission were extended to include water quality matters but an holistic approach to basin resource management remained elusive. Not that this should be surprising to anyone. Management of the land, water and environmental resources of the basin involves three State governments-four if you include Queensland-and the Commonwealth, as well as a multiplicity of local government and regional agencies. Mr Ian Cameron —If! Put it in. Mr PETER MORRIS —When the River Murray flows into Queensland, it will be appropriate. It requires the reconciliation of the disparate interests and aspirations of a diverse population of over two million people within boundaries encompassing in excess of one million square kilometres. This reconciliation, while necessarily predicated on sound technical analyses, must inevitably involve hard political and economic choices between competing objectives and measures. The breakthrough came in November 1985 when Ministers of the Commonwealth, New South Wales, Victoria and South Australia with responsibility for natural resources met to specifically discuss strategies to improve natural resources management in the basin. In a genuinely historic initiative, the four governments decided to shelve parochial interests and adopt a strong, co-operative approach to better management of the basin. The most immediately visible outcome of the meeting was the agreement to establish a Murray-Darling Basin Ministerial Council on an ongoing basis. Mr Ian Cameron —Where was Queensland? Mr PETER MORRIS —The same place it has always been. Ministers also initiated a wide ranging work program to develop institutional and technical options for improved basin management. Council met in August 1986 and in March 1987. In the light of its deliberations and the substantial body of advice provided by its advisory committees, all four governments have now agreed to revise substantially the institutional arrangements for managing the basin. The Bill currently before the House complements similar legislation before the parliaments of the other three signatories and aims to have in place by 1 January 1988 an institutional framework at inter-governmental level that will facilitate and support State based initiatives. The amendments to the River Murray Waters Agreement will give a clear legislative base to the operations of the Murray-Darling Basin Ministerial Council. The Council will provide a focus for consideration of planning and management issues for the sustainable use of the natural resources of the basin. It will be responsible for the development of policies and strategies for their efficient, equitable and co-ordinated management. Composed of those Ministers representing the portfolios of water, land and environment from the four governments, the Council will be in a position to make informed political judgments and balanced trade-off decisions. It will be able to take a holistic, overview stance on management issues. It is this that distinguishes the current initiative from past endeavours which have been State-based or, in the case of the River Murray Waters Agreement, confined to the regulation of a particular resource or aspects of it. The amendments before the House also propose the establishment of a new Murray-Darling Basin Commission to replace the River Murray Commission. This new Commission will assume the River Murray Commission's regulatory responsibilities under the River Murray Waters Agreement, and will also have a broader advisory responsibility to the Ministerial Council on land, environment and water matters not covered in the Agreement. Another important element in the proposed legislation is the provision for a direct line of communication between Council and the basin community. From the very outset, Ministers have been mindful of the crucial role that the community will play in the development of improved management practices in the basin. Accordingly, the proposed legislation includes express provision for a community advisory committee to provide a focus for community input. The formation of a community forum will allow the great variety of local interests the opportunity for consultation on the management of the basin's natural resources. Such a body will perform the vital role of eliciting and synthesising-as far as is possible-the diversity of community views on particular management issues, and will provide an avenue for two-way communication between the Council and the people of the basin. Consultation must, of course, involve more than drawing community concerns to Council's attention. Consultation must also carry responsibilities, and private aspirations may well need to be modified in the light of the larger public benefit. It will be essential to the success of the basin initiative that the community accept both the opportunities and the responsibilities of involvement provided for under this legislation. The Government is confident that the legislation currently before the House will provide an institutional framework commensurate with the task to be done. Ultimate success will depend upon a close, responsible and responsive partnership between all the governments involved and between governments and the people of the basin. The Council will need to move with cautious speed. Success will not be achieved easily or overnight, and a long term commitment is required. But the basin community and the nation will benefit from our efforts to secure the long term integrity of the natural resources of the basin. That is a goal very much worth striving for. I present the explanatory memorandum to this Bill. I commend the Bill to honourable members. Debate (on motion by Mr Tim Fischer) adjourned. Bill presented by Mr Peter Morris, for Mr Kerin, and read a first time. Mr PETER MORRIS(Shortland-Minister for Resources)(4.19) —I move: That the Bill be now read a second time. The Dairy Produce Act 1986 prescribes criminal penalties for the export of dairy produce in breach of International Dairy Arrangement (IDA) price minima. The purpose of this Bill is to substitute economic penalties for such breaches. The principal Act, inter alia, establishes the Australian Dairy Corporation (ADC) and provides it with export control powers. It recognises the Australian commitment to the IDA established under the General Agreement on Tariffs and Trade (GATT) and provides the basis for fulfilling the Government's commitment to the minimum prices which are set under the arrangement. The main objective of the arrangement is to expand and to liberalise world trade in dairy products under as stable market conditions as possible, on the basis of mutual benefit to exporting and importing countries. Australia as a signatory to the arrangement is committed to ensuring that its obligations are fulfilled. However, there are concerns that the measures embodied in the Dairy Produce Act for ensuring compliance with the international price minima are inappropriate in practice and should be more comparable with the measures adopted by other major exporter members of the IDA. The IDA requires countries participating in the arrangement to take the steps necessary to ensure that export prices of dairy products are not less than the IDA prescribed minima. However, mechanisms for ensuring observance are left to individual participants to develop; they are not prescribed in the International Dairy Agreement. The European Community (EC) uses its export refund system to meet its obligations for observance of IDA minimum prices. We have had repeated assurances from the EC Commission that the refunds are set at levels that would make it impossible for EC traders to export dairy products at less than IDA minimum prices and still make a profit on each sale. Nevertheless the Commission does concede that its refund system does not impose an effective price discipline and that it is technically possible for its traders to enter into loss contracts or manipulate products and currencies in order to trade below IDA minima. In New Zealand, another major IDA participant and exporter, the sole exporter of dairy products is the New Zealand Dairy Board. The legislation governing the operations of the Board provides for it to comply with the general trade policy of the Government. This in turn requires that the Board's performance be consistent with the provisions of the International Dairy Agreement. By comparison Australia's current method of observance seems inappropriate and somewhat out of touch with commercial realities. Under the Dairy Produce Act a trader exporting in breach of IDA minimum prices is liable not only to a fine but also to a term of imprisonment of up to two years, in addition to suspension or cancellation of his or her export licence. However, criminal prosecution is a difficult course and is not a practical way of pursuing breaches of IDA minimum prices where they may come to notice. There have been no prosecutions under the legislation. In the current competitive international environment an economic approach to observing the IDA is considered more appropriate than an observance mechanism based on criminal penalties which are difficult to enforce. The provisions of the Bill which I will now elaborate are designed to bring about this change. Under the new arrangements it will continue to be a condition of licence that exporters comply with IDA minimum prices. The Australian Dairy Corporation will, in the event of a detected breach of an IDA price minimum, require the exporter to pay the difference between the actual sale price and the appropriate IDA price minimum to the Corporation. Payments by exporters are to be credited to the market support fund of the Corporation which is used to support the prices of manufactured dairy products. In the event that an exporter is detected to be in breach of a minimum price and fails to pay the Corporation the difference between the minimum and the actual sale price, the Corporation may suspend or cancel the exporter's licence. Where a breach is an unavoidable breach or where the exporter did not knowingly export dairy produce below the appropriate IDA price minimum, clause 3 of the Bill, sub-section 51a (5), provides the Corporation with the power to determine if a breach of IDA minimum price resulted from `exceptional circumstances'. If a determination is made by the ADC that such circumstances exist, the exporter will not be required to pay the difference between the IDA minimum and the actual sale price. I will be stressing to the ADC that this provision is not to be used to try to justify sales below the IDA minimum prices that do not accord with the circumstances I have already outlined covering unavoidable or unknown breaches. The Bill also incorporates appropriate review and appeal provisions. Section 118 of the Dairy Produce Act dealing with reconsideration and review of decisions of the Australian Dairy Corporation will be amended to include decisions made under section 51a dealing with the payment of the difference between the selling price and IDA minimum prices and determinations of `exceptional circumstances', and those under sub-section 59 (4) dealing with suspension and cancellation of export licences. These changes will enable exporters to appeal against decisions made under these sections with such decisions to be reviewable by the Administrative Appeals Tribunal. Another important change that the Bill provides is the automatic adjustment of GATT-IDA minimum prices in the regulations made under the Act relating to exports. At present when the International Dairy Products Council, the governing body of the IDA, agrees to changes in the minimum prices for dairy products there is an inevitable lag between the new minimum prices being adopted and the incorporation of these new prices in the relevant regulations. Clause 3 of the Bill, sub-section 51a (9), provides for the automatic incorporation of changes in IDA minimum prices in the regulations. This will ensure that the regulations reflect changes in minimum prices as and when they occur and will eliminate current lags in their implementation. The Corporation will continue to provide all licensed exporters with details of IDA minimum price changes as they occur, to ensure that exporters are fully aware of their minimum price obligations. The ADC's role in the proposed observance measures I have just outlined will not be greatly changed from its existing role; the approach is a logical extension of the Corporation's existing responsibilities to ensure IDA compliance through its export control powers. The Corporation will be required to maintain close scrutiny of export price movements and to ensure that exporters are meeting their obligations under the Act. Moreover, the Corporation will be required to make determinations under sub-section 51a (5) should the need arise. Since the ADC can export dairy products, the Corporation and its subsidiaries are required to comply with IDA minimum prices, just as are other exporters. Sub-sections 51a (6) and (7) deal with situations where Australia's trade in dairy products could be severely disadvantaged by the actions of others on the world market. In such circumstances the Bill provides for the Minister for Primary Industries and Energy to authorise the Corporation to trade at prices below the IDA minima. I envisage such an exemption being granted with the concurrence of the Minister for Foreign Affairs and Trade (Mr Hayden) after a review of all aspects of the situation. The Australian Government as a signatory to the IDA accepts fully the responsibilities that membership of the arrangement entails. The changed observance mechanism embodied in the Bill in no way reduces the Government's commitment and intent to ensure observance of IDA price minima by Australian dairy product exporters. Rather, the amendment has the objective of aligning the nature of Australia's observance mechanism more closely with that of other major participants. It is completely consistent with the rights and responsibilities of signatories of the IDA to determine and adopt appropriate national measures to ensure that export prices are not less than IDA prescribed minima. The Bill removes the unnecessarily restrictive penalty structures which are not suited to a commercial environment and substitutes measures that still ensure the preservation of integrity of the industry and Government. I present the explanatory memorandum to this Bill and commend the Bill to honourable members. Debate (on motion by Mr Ian Cameron) adjourned. Debate resumed. Mr KERR(Denison)(4.29) —In rising to debate the Management and Investment Companies Legislation Amendment Bill 1987, which is before the House, I remind the House that the purpose of the management investment companies (MIC) program is to favour and to assist in the direction of funds towards the cutting edge of Australia's attempts to restructure its industry. As the Minister for Industrial Relations (Mr Willis) said in his second reading speech: To 30 September 1987 the MICs have invested and committed almost $140m in 129 businesses across a range of industries, including computer hardware and software, medical equipment and products, scientific and technical services and industrial products and machinery. This expenditure has been generated by the 100 per cent tax deductibility which the MIC program has build in to encourage investors to place capital in these projects. But it is not only at the cutting edge of high technology in which MICs have encouraged investment; the program has also focused investment in areas of export arrangements. In that regard there have been some very interesting projects to which I will draw the House's attention. For example, MICs have assisted in funding the establishment of a major abalone project in Tasmania. That five-year project has created a world-leading export market potential for abalone. It is a high value, low volume production. MIC has also helped a tool and dye-making business move away from traditional practices into robotics and has committed over $1m to fund that move. This Bill addresses the future of MICs. The ultimate aim of the MIC project is to develop self-starting businesses ready to stand on their own feet. A number of MICs have been quite spectacularly successful in demonstrating a capacity to do that. The Bill contains provisions which enable MICs to draw capital from the market so they can go into MIC-type developments freely, without constraint, in an ordinary commercial way. The Bill also contains provisions whereby MICs, once they are commercially viable, can lift themselves out of the protective MIC umbrella without attracting the tax clawback arrangements which are designed to prevent taxation abuses. The Bill is focused on the undoubted success at this stage of a number of MICs and in evidence that the program has been very successful in encouraging sunrise industries to begin development in Australia. However, some clouds do exist on the horizon. Some of those clouds were referred to earlier in this debate by my colleague the honourable member for Sydney (Mr Baldwin). He drew attention to the problems that will exist in funding MICs due to the downturn in the stock markets. I draw the attention of the House to a very interesting, and I believe quite persuasive, article which appeared in yesterday's Australian Financial Review under the pen of Jane Ford. The article pointed out that, although MICs have been very successful in attracting venture capital, and indeed the second board has been very successful in attracting funds to hi-tech companies which have not even had the benefit of MIC tax advantages, that this is no longer the case in the wash-up of the decline in stock market values. It appears that hi-tech companies will be very hard hit in the wash-up. It appears that MIC funds will be drawn upon in a greater than expected way to support new sunrise companies which previously had expected to be able to float issues on the second board or to gain funds from the open market sector. That places in some doubt the conclusions of the report of the Bureau of Industry Economics which recommended the ultimate phasing out of the MIC sector. The Bureau of Industry Economics argues that the MIC program should be regarded as essentially a seeding program, designed to establish a self-sufficient hi-tech sector in the market which is able to stand up for itself. The Bureau stated in its report that it believed the sunrise sector of the economy was now in that position. There must now be some doubt about the Bureau's projections. It projected a very substantial increase in equity funds flowing into hi-tech companies from everyday market transactions which have no taxation advantages conferred on them. The Bureau predicted that the funds that would flow into the non-MIC sector would out- strip MIC funds in the financial year 1988. I think that most commentators would now regard that as an unlikely scenario. The projections can be found in tables 4.1 and 4.2 in the program evaluation report. My view, for what it is worth, is that, although the Government has undertaken to continue MICs until at least the end of 1989, they ought to be continued on a perpetual basis as a form of counter-cyclical insurance, so that when the market is doing well and funds are flowing easily and readily into venture capital sources the role of the MICs need not be emphasised-the Government need not be called upon to inject any substantial capital into the existing MICs-but so that the MIC sector remains and stands ready to perform a very important role when there is a downturn in the market, when it is difficult to attract venture capital into the riskier start-up venture end of sunrise capital. It remains very important for our country to be increasingly competitive. It remains important that Australia can continue to move into industry restructuring, even in periods of economic downturn. The MIC scheme can, I think, be regarded as a very appropriate form of counter-cyclical insurance existing on a perpetual basis, not merely as a project which can be wound down once it has served an initial seeding purpose. I commend the Government for the legislation. The legislation has vision. It has been part of the process of making sure Australia has a part to play at the cutting edge of technology and that government is directing appropriate expenditures into areas of export. It is a move which I believe all honourable members would applaud. I have drawn attention to the clouds that exist on the horizon and I commend to the attention of the Minister the remarks I have made about the possibility of MICs being regarded as perpetual parts of the investment climate to ensure that, even in times of economic downturn, there remains the capacity for the economy to respond aggressively at the cutting edge so that we remain able to adjust and grow as an economy. Mr MacKELLAR(Warringah)(4.39) —The Opposition does not oppose the amendments before the House in the Management and Investment Companies Amendment Bill 1987. As the record will show, we have offered enthusiastic support for this form of government assistance since its inception in the Management and Investment Companies Act 1983. What concerns me, however, is that, as in so much of its handling of economic matters, the Government's treatment of Australia's infant venture capital market has been insensitive to the fragile nature of that market and has, unfortunately, created uncertainties which could both distort and retard its future growth. Furthermore, the events of recent weeks in Australia's stock markets will not only aggravate that uncertainty but also reinforce the urgent need for continuing government assistance. Let us be clear about the purpose of this legislation. Its primary purpose is to encourage the establishment of a venture capital market to support high risk entrepreneurial activity to young innovative export-oriented businesses with the potential for rapid growth. The need for government incentives to assist the development of a venture capital market was recommended in a number of official reports in the years immediately before 1983. The Espie High Technology and Financing Committee, in particular, found that Australia was failing to generate a sufficient number of growth oriented firms to replace those being lost in the older sections of manufacturing. More seriously, the Committee found that Australia was failing to grasp the opportunities offered by high technological industries for wealth creation and employment growth. It was in that context that the Government and the Opposition gave their support to a Government-sponsored management and investment companies (MIC) program. It is fair to say that the scheme has been enormously successful over its first three years of operation and it was largely due to the growth of the non-MIC component of the venture capital market in conjunction with strong MIC growth that the Government appeared in 1986 to be considering the termination of the MIC program. That this is so is reflected in the Australian Science and Technology Council (ASTEC) report of September 1987 entitled Improving Australia's competitiveness through Industrial Research and Development, where it states at page five: Termination is certainly a considered option by the Government. As well, the terms of reference to a Bureau of Industry Economics (BIE) survey of the MIC program in 1987 also included the option of ceasing the program as at 30 June 1988. It is worth reflecting that despite a recommendation from both ASTEC and BIE, that the scheme be terminated at June 1988, the Government has decided on an extension to 30 June 1989 subject to further review. I believe the extension is commendable and very necessary, but in my view the target of 1989 is now totally inappropriate. I was interested in the remarks of the previous speaker, the honourable member for Denison (Mr Kerr), who seems to support that point of view. An Australian venture capital market did become established over the period 1983-86 but it is now plainly evident that the strength of that growth was very largely due to the very nature of the risk component in a bull stock exchange market, and that it lacks the maturity to withstand the stock market winds of change which are now blowing so vigorously. It is worth reflecting at this point on overseas experience. The Americans established a similar government-sponsored investment company program in 1958 and while the proportion of venture capital raised by that program has fallen from 24 per cent of total capital raised in 1977 to 10 per cent in 1984, the American Government still supports that program some 20 years after its establishment; and it does so in the clear belief that even at 10 per cent of the venture capital market, the program offers worthwhile opportunities for the creation of successful enterprises which might otherwise be left undeveloped. The United Kingdom (UK) is similarly placed. With the Government scheme established in 1981, and still operating today. There is a contribution to the total capital raising of venture companies of a little under 20 per cent. France, Japan and Sweden also have officially supported programs. The point I am making, and stressing, is that some of the most industrialised and developed countries in the world deem it wise to continue giving support to venture companies. Compare that to Australia's circumstances. Our MIC program has been in operation only three years and the venture capital funds of those companies was a hefty 43.5 per cent of total venture funds as at March 1987-and that in a period of a highly excited capital market. So we can compare three years and 43 per cent with 20 years and 10 per cent in the United States of America (USA), and six years and 10 per cent in the UK. The figures speak for themselves and I find myself very genuinely puzzled as to how some of Australia's most respected academics and research bureaucrats have been so ready to dismiss those overseas experiences and believe that we have been able to achieve what has not been achieved in any other country. Given the nature of that stock market today I believe the extension of the scheme only to 1989 is equally unsound. The well publicised option to terminate the scheme has created a most unfortunate uncertainty in the venture capital market itself, affecting the management and entrepreneurial skills which are so necessary to its ongoing success. I can see no justification for even contemplating such an option. Again the overseas experience is that the immediate tax concession cost of the scheme is more than compensated in the longer term by income generated by successful investment companies. So if the Government was hesitating over the scheme because of its apparent cost, its judgment was certainly misplaced. Equally, I feel a real concern about the role of ASTEC and the Bureau of Industry Economics in this matter. Both organisations are devoted to creating future growth opportunities for Australian industry and I find that objective hard to reconcile with their hasty willingness to suggest the premature termination of the MIC program. Turning from some of the worrying comments and attitudes evident in the reports of both ASTEC and the BIE, I commend the Management and Investment Licensing Board-the body responsible for the management of the Government's program-for both its professionalism and the quality of its management, as indicated in successive annual reports and in its evidence to the BIE's 1987 survey of MICs. Three particular comments made by the Licensing Board deserve to be highlighted. The first is the clearest possible statement in its 1985-86 annual report that with the support of government a venture capital market was now emerging-I emphasise that; it is now emerging-as a material element of the Australian financial markets. It should be noted that it is not firmly established; it is not at a level of maturity where it could stand on its own feet, but it is an emerging market which has the potential to play a vital role in encouraging entrepreneurial investment. The Board's second noteworthy observation is that overseas experience shows that in a mature market the highly successful investments may take up to five to seven years to be realised. In the light of those observations it is interesting to note that the BIE stated that MIC shareholders will not be adversely affected by the recently introduced capital gains tax. The Board, on the other hand, has stated that the capital gains tax will seriously retard the growth of the venture capital market, and it goes on to observe that the relative treatment of venture capitalists in the USA, the UK and Canada will continue to make those countries preferred locations for most mobile venture investments. If the Licensing Board is accurate with these several observations, I express the hope that the Government will give the Board's advice greater weight than appears to have been the case in the past. All of us who support a government role in encouraging the establishment of a venture capital market in Australia must be concerned at the effect that the present dramatic downturn in the world's financial markets could have on the availability of venture capital for start-up risk investments and on the success of well established venture enterprises. I acknowledge that this situation has developed after the BIE's report, the Government's consideration of that report and the drafting of the amending legislation now before the House. However, now that it has occurred, and in view of its likely adverse impact on Australian investment companies, I believe it is no longer appropriate for the Government to be considering the termination of this program in 1989 or 1990, but rather it should give its unqualified support to venture companies by indicating in this debate that the program will not be terminated before 1993-the tenth anniversary of its establishment. Furthermore, in view of the uncertainty in the financial markets I would also suggest that there is an equally urgent need to reassess the suitability of existing concessions as well as those to be granted by this Bill. They may no longer be appropriate or sufficient if we are truly in the business of creating a mature, long term venture capital market in this country. The Government is giving some indication that it is inclined towards policies which could well create an adolescent market which will be brought to its knees in periods of economic difficulty and prosper only in those counter periods of prosperity. The concessions to be extended to the program in this Bill appear to be commendable, but I do suggest that one of the most serious remaining limitations is the ceiling of $20m on approved capital, a level which is clearly insufficient to give continuing support to well established and mature investments, let alone giving encouragement to those emerging companies and the hundreds of proposals which are placed before the board for approval for start-up support. There would also appear to be a need for the Government to reconsider the guidelines imposed on MICs as many entrepreneurs see it as unnecessarily restrictive to impose the present limitation on the type of activity in which an MIC might invest. I am certain that the Licensing Board would be able to offer a number of other worthwhile suggestions to the Government as to the type of concessions best suited to take Australia's emerging venture capital market through the next few years of difficulty and into a mature status capable of standing alone in the financial markets. It is enormously important that the Government give urgent consideration to these suggestions, and I hope that we have a positive response from the Minister for Industrial Relations (Mr Willis) at the conclusion of the debate. Mr BILNEY(Kingston)(4.51) —I rise with pleasure in support of the Management and Investment Companies Legislation Amendment Bill 1987 which, as other speakers have said, amends both the Management and Investment Companies Act 1983 and the Income Tax Assessment Act 1936. The amendments will enable management investment companies (MICs) to raise non-tax concessional capital in conjunction with tax concessional capital as well as allowing the existing older MICs to surrender their licences and leave the program without triggering the current tax clawback arrangements provided the shareholders retain their holdings for the agreed four year term. Also, the amendments guarantee the survival of the MIC program until 30 June 1989. They have come about following a review, as other speakers have mentioned, of the program by the Bureau of Industry Economics. These amendments to the highly successful MIC scheme are to be warmly welcomed. They are further evidence of the Labor Government's determination to provide a secure financial base and sound managerial support for innovative high technology industry in Australia. It is essential that we do this. As the Australian Manufacturing Council has argued in its report Future Directions for Australian Manufacturing Industry, which came out this year, skill and technology intensive activities could transform the Australian economy by creating new job opportunities and providing a more secure foundation for continued economic prosperity. With our exports of primary production facing increased competition from often highly subsidised overseas producers who have greater resources-deeper pockets-to do that than we do, the need to adopt a strategy such as this is pressing. We simply must increase the width of our export base if we are to maintain national incomes and living standards at current levels. Therefore, it is imperative that we increase the international competitiveness of manufacturing industry. Developing viable, high technology manufacturing industry is the way in which to do this. Not to do so would be to ignore what the Economic Planning Advisory Committee (EPAC) has identified as `one of the fastest growing areas in world trade' in its report High Technology Industries in Australia which came out this year. Ignoring those areas is what our conservative opponents, at least until recent times, would have had us do; that is, to ignore the potential of high technology industries to provide a sound economic future for Australia and to shun innovation. Instead of supporting a constructive response to international economic reality, Opposition members merely criticised and carped. They have continually bemoaned the fact that the sheep's back is not as comfortable as it once was. Such complacency typified their time in government. It is a national disgrace that during the Fraser years those who now sit opposite, those great advocates of incentive and enterprise, did nothing to encourage Australians with ideas-Australians who write 2 per cent of the world's scientific papers and who make 0.7 per cent of the world's patent applications despite Australians making up only 0.3 per cent of the world's population. Rather than nurturing such talent for the benefit of our economy, Opposition members drove it overseas, to the unending gratitude of our competitors-and to their economic benefit. Because our conservative opponents were content to preside over what was one of our worst taxation systems in the world, tax cheats flourished and the incentive to invest productively was destroyed, starving innovators of much-needed funds and decimating manufacturing industry. Thanks to the complacency of those opposite, the share of Australia's gross domestic product being invested in industrial research and development fell to a mere one per cent in 1981-82, compared with research and development investment averaging two and a half times this level in the United States, the United Kingdom, West Germany and Japan. Even worse is the fact that those economic policies made productive investment so unattractive that business research and development spending made up only 22 per cent of an already dismal total. Fortunately, this Government's record stands in stark contrast to that of our opponents and we have been able to repair at least some of the damage their policies caused. As EPAC concluded in its report High Technology Industries in Australia, to which I have already referred, policies such as the industry offsets program, investment allowances for research and development and the MIC scheme have `improved the country's capacity to innovate'. Indeed, the General Manager of the Queensland Innovation Centre, Dr Ron Sampson, argued at a recent seminar that the Hawke Government's technology programs are amongst the best in the world. He said: Innovation networks here, without a doubt, are state of the art. They have been able to build on . . . experience . . . overseas, avoiding the pitfalls that others have hit. I am sure that in time Australian innovation networks will be considered an important step in ensuring Australian prosperity for the future. Together with the deregulation of financial markets to allow second board listings, the MIC scheme has provided Australian innovators with managerial advice and venture capital previously unavailable to them. These amendments will increase our capacity to do this, enabling more companies to commercialise their innovations and inventions. Whilst in June 1983 only about $2m in venture capital was available for high risk, high technology companies, by March of this year the amount available had increased to $310m and it is expected to rise to $570m by March 1988-a staggering increase. As of September this year, MICs had provided $140m of this venture capital figure, supporting 129 businesses across a range of industries. Hence, we are now able to turn the table on our overseas competitors, with MICs meeting applications for venture capital at nearly twice the rate accepted by similar schemes in the United Kingdom and the United States. This is according to data in Rydges magazine of March 1987. It is a particular pleasure for me to support these amendments because I come from South Australia. I want to talk for a moment about the South Australian connection. Already institutional support for companies under the MIC scheme is producing real economic benefits for Australia which far outweigh the scheme's cost to the taxpayer. At the end of June last year, for example, the companies invested in had a turnover of $150m, export income of $50m, they employed 2,000 people and, by a rough calculation, they generated between $18m and $20m in tax revenue, thus virtually paying for themselves. Many of them, such as the South Australian firm Laserex Pty Ltd, now have the financial resources to go it alone and are seeking listing as second board companies. As a South Australian, I am happy to note that much of this has occurred in Adelaide thanks to the far-sighted policies of the Bannon Government, whose support of high technology extends even beyond the confines of companies licensed under the MIC scheme. Thanks to the Bannon Government's efforts, Adelaide has been recognised by the Australian Financial Review, among others, as the high tech centre of Australia. This is in no small measure due to the creation of Technology Park, Adelaide, which has been so successful that it is now growing at a rate 10 times that of similar centres in North America. I thoroughly recommend that any member of this House who has not seen Technology Park should go to see it. Already the park has attracted 35 tenants, 32 of which have located their head offices there. That, of course, is a very important step for a company to take. Mr Deputy Speaker, as you would know, in some of the smaller States we are sick of seeing decisions taken by head offices in other States or indeed overseas which bear little relation to the benefit of our home State. The firms which have located their head office in Technology Park include very significant companies such as the Australasian division of British Aerospace and Duntech International, a communications manufacturer which previously had its headquarters in the United States. A very significant firm located in Technology Park is Austek Microsystems, which has produced the very large scale integrated chip. The development of that breakthrough-I think it is clear that that firm is state of the art; it is certainly exporting to Silicon Valley, rather than importing from it-was aided by the location nearby of the Adelaide Innovation Centre and the Adelaide Microelectronics Centre. Such innovators are not confined to Technology Park in South Australia. Elsewhere in the State a forestry firm has developed a method of using saplings for structural timber that has been acclaimed internationally. I would like to point to a couple of examples in my electorate. The firm Sola Optical, which is the largest employer in the electorate of Kingston, is a vivid example of the benefits of encouraging technological innovation and export oriented manufacturing. Sola Optical enjoys major export success. It is a very large player on the international scene with regard to plastic spectacle lenses because it has been innovative and willing to spend real money in support of a research and development effort. It does the high value added, high technology work at its plant in Lonsdale in Adelaide and has subsidiaries overseas in a number of countries which do what we have been accustomed to believe was our role-that is, the low technology, low value added work. It has reversed the process. If more firms took the attitude that it has taken, our difficulties would be over much sooner than otherwise. At the other end of the scale I have in my electorate a number of firms which are developing orchid exports. Many people may ask what on earth that has to do with high technology or, indeed, with this Bill. The fact is that nowadays development of orchids for export involves a considerable investment in tissue culturing, cloning and very smart technology which, I am pleased to say, is state of the art in my electorate. I believe that firms such as Adelaide Orchids Pty Ltd and Valley Orchids are now exporting to tough markets such as Japan and the United States, and are doing extremely well. The future of Australia depends on such large and small firms. Amendments like these will yield more firms by guaranteeing a stable venture capital market for other Australian innovators, which will ease their transition from MIC support to true financial independence. No longer are Australian innovators denied venture capital from institutional investors under the provisions of this Bill. No longer are they forced to live on overdrafts or to mortgage their homes in altogether too typical pattern, as we have seen in the past, or to move overseas. With the MIC scheme, they are getting the backing they need to develop their ideas in Australia, for Australians and for the future of this country. Mr PETER MORRIS(Shortland-Minister for Resources)(5.04) —I thank those honourable members on both sides of the House who have participated in what has been a positive and constructive debate. I reiterate that the program objectives of the legislation are to promote the development of a viable private sector venture capital market and the provision of equity capital and management guidance to young, innovative businesses. Some questions were raised about the continuation of the program beyond June 1989. In response, I say that the continuation of the program beyond that date will be decided in the context of the program objectives, as well as the outcome of the review of business taxation. Again, I thank those honourable members who participated in the debate. I commend the Management and Investment Companies Legislation Amendment Bill to the House. Question resolved in the affirmative. Bill read a second time. Leave granted for third reading to be moved forthwith. Bill (on motion by Mr Peter Morris) read a third time. Bill presented by Mr Humphreys, for Mr Howe, and read a first time. Mr HUMPHREYS(Griffith-Minister for Veterans' Affairs)(5.06) —I move: That the Bill be now read a second time. This Bill contains amendments to the Social Security Act 1947 and the Veterans' Entitlements Act 1986 and minor amendments to several other Acts to implement decisions announced in the May economic statement and the 1987-88 Budget Speech. This Bill provides for the introduction of the family package which was announced earlier this year as a Labor Government election commitment. The family package is the centrepiece of this Government's attack on child poverty, not only for families where parents depend on social security because they are sick or unemployed, but for working families who have carried the burden of economic adjustment over the past few years. The family package is based on the basic principle that every Australian child has the right to an adequate standard of living. It is also based on the solid Labor tradition of help for people in need of support. It was the Lang Labor Government which introduced the world's first child endowment-to recognise the extra costs of families with children. The Curtin Labor Government gave child endowment a new priority by increasing payments and extending them to Aboriginal communities and to people with the custody of orphans. The Whitlam Labor Government introduced the handicapped child's allowance to provide extra support to families with handicapped children. The Hawke Government's family package will build on this record to deliver substantial increases in public support for children. It includes the family allowance supplement-a new payment which aims to help families on low wages meet the day to day expenses of bringing up children. Subject to an income test, a family allowance supplement of $22 a week will be paid for each child under the age of 13, and $28 a week will be paid for 13-, 14- and 15-year-olds in recognition of the extra costs associated with teenage children. The family allowance supplement replaces the family income supplement which paid $17 a week for each child in working families according to a more stringent income test. In order to make the family allowance supplement an enduring reform, the Government is committed to increase the payment in real terms over the next two years. We will index the payment in the same way we index pensions. In this financial year we estimate that around one million children will enjoy a better standard of living from the tax free benefits of this package-440,000 children in working families and another 740,000 children from out of work families. Child payments for families which depend on income support from social security will be increased automatically in December from $17 a week to the new levels under the family package. This Labor Government has been steadily increasing payments for children in the social security system. In fact, the family allowance supplement will be the fifth pay increase for the poorest children in our community since 1983. The rate of increase in this Bill is by far the most significant to date. In total, there has been a 120 per cent increase in additional pensions and benefits-the child payments for families on social security-for children aged under 13, and a massive 180 per cent increase for young teenagers over the rates payable under the Fraser Government. There are two additional parts to the family package. The family package will extend rent assistance of up to $15 a week for low income working families in privately rented homes. This is the first time that rental assistance has been offered to help working families with their housing costs. Families on unemployment and sickness benefit will no longer have to serve a separate waiting period for rent assistance, and will get their help for housing from their first benefit payment. The package also contains more money for disabled children-with the introduction of the new child disability allowance, paid at $112 a month per child to all families with disabled children. The child disability allowance will be income-test free and up to 10,000 additional children are expected to qualify for the payment. The 27,000 severely disabled children currently getting the handicapped child's allowance will be transferred automatically to the new payment-and their allowance will be increased from $92 to $112 a month. Another 5,000 marginally less disabled children will have the income test on their payments removed and will also receive more money under the family package. The Department of Social Security is to start a major consultation on eligibility criteria for the child disability allowance to make sure that the right children get the right money at the right time. The measures outlined in this Bill demonstrate this Government's firm commitment to ensure that no Australian child need live in poverty by 1990. The package takes the first step towards constructing a new system of public support for children which stresses the need for adequate payments-targeted at those families which need help the most. This Bill represents substantial gains for our most disadvantaged families which have suffered from the impact of sickness or unemployment. It also highlights the need to support working families bringing up children on low incomes. The family allowance supplement is designed to allow income to increase by 25 per cent over any four week period without affecting payments. This is to accommodate pay fluctuations such as overtime. The structure of this historically important payment aims to encourage people to stay in the work force, where there is potential for them to build a decent standard of living on the basis of an independent wage. The family package will increase the disposable incomes of working families, making them much better off than comparable families living on unemployment benefit. This emphasis on labour market participation in the structure of social security benefits is reflected by changes contained in this Bill in the area of income support for young people. The job search allowance will replace unemployment benefit for 16-year-olds and 17-year-olds in January-it will make it very clear that income support is closely tied to the need for young people to be better prepared for the work force. The Commonwealth Employment Service will maintain close contact with young people on the job search allowance. Where those young people need extra help to find a job, they can be enrolled in vocational training courses, or instructed in job searching skills. We cannot let our young people waste their potential. The job search allowance aims to give them a helping hand in constructive ways. Job search allowance, sickness benefit and special benefit for people under 18 years will, in most cases, be subject to a parental income test similar to the one which applies to Austudy payments. Job search allowance will be paid at $50 a week, subject to a parental income test-but this test will not reduce the payment below $25 a week. Job search allowance will, of course, be subject to an income test on the young person's own income. An assets test is being introduced on the payment of unemployment, sickness and special benefits to people who are aged 25 and over. Under the assets test, benefit will generally not be paid to people whose assets exceed a specified amount. These amounts are the same as those used for the pension assets test. The Government expects to save some $24.5m in 1988-89 through the introduction of this initiative. The age of 25 years for the benefits assets test has been included because available information indicates that very few young people below that age would be disqualified by the assets test. Not to include that age threshold would add greatly to administrative costs and effort for very little return. People in financial hardship and not eligible to apply for other forms of Commonwealth income support may receive benefit under the hardship provisions. Under the hardship provisions of the assets test, certain assets can be disregarded. However, income which could reasonably be generated by those disregarded assets is taken into account when calculating the rate of pension payable under the hardship provisions. Recent interpretations of these provisions by the Administrative Appeals Tribunal have undermined its purpose and effect, so this Bill contains a measure to clarify the Government's intention. Pension calculated under the financial hardship test will be reduced by the greater of 2.5 per cent per annum of the property disregarded under the test; or the income which could reasonably be expected to be obtained from commercial use of the property disregarded under the test. The assets test will also be amended to ensure that the deprivation provisions will apply in situations where the person ceases work and disposes of property at the same time. This is to reverse the effect of a recent Federal Court decision. The Bill before us also contains measures to clarify the treatment of income from investments and to ensure that people with deferred income, including income from friendly society bonds, are not advantaged over pensioners and beneficiaries with more straightforward forms of income such as that deriving from bank deposits. Depending on the type of investment involved, income will be assessed either on a regular basis throughout the term or, as in the case of market-linked investments, be averaged out over the 12 months after the person realises a profit on the investment. The income from deferred income investments which were obtained before 1 January 1988 will continue to be assessed when it is realised. The double orphans' pension of $60 per month will be extended to children who have one deceased parent and whose surviving parent is a nursing home patient for an indefinite period. The Government considers that the guardians of these children are as deserving of financial assistance as those of children whose surviving parent is receiving treatment in a mental hospital for an indefinite period. Several changes which will assist pensioners are being introduced in this Bill. The pensioner earnings credit arrangement will encourage pensioners and supporting parents to obtain short term work without reduction in pension. It will help pensioners, particularly sole parents, make the transition between relying on social security payments and being financially independent through employment. Eligibility for carer's pension will be extended to people who are caring for an age or invalid pensioner at home but who are not close relatives. This is a compassionate measure to assist friends to provide care in a home environment for those who are unable to look after themselves. The fringe benefits rules are being changed so that persons whose incomes go above the income limits can retain entitlement to fringe benefits for up to 3 months, provided their incomes do not go over 125 per cent of their limit. This measure will be of particular assistance to pensioners who obtain part time employment or receive other income which is indexed by consumer price index changes and to those receiving overseas payments who have in the past sometimes lost fringe because their income has been affected by fluctuations in exchange rates. The Bill before us graphically demonstrates this Government's continuing concern for those in our society most in need of support. It provides for significant additional payments to families on modest incomes and for increases in additional payments for children made to pensioners and beneficiaries. The Bill contains measures, such as the assets test on benefits and the parental income test for job search allowance, which will reduce expenditure currently being paid to those who are able to provide for themselves and their families and enable resources to be directed to those in greatest need. The Bill will also make a number of amendments to the veterans' entitlement legislation. Some of these amendments reflect those which I have already outlined for social security legislation. This will ensure consistency in the treatment of service pensioners and social security pensioners in the following areas, namely, modification of the definition of `income' that is used for the purpose of assessing the rate of service pension payable; amendments to the assets test provisions; easing of the application of the fringe benefits test; and enabling service pensioners to take advantage of earnings credit arrangements. The Bill also gives legislative effect to the Government's major decision not to allow the adverse interpretations given in three recent Federal Court decisions to the provisions of the Veterans' Entitlements Act relating to eligibility for the totally and permanently incapacitated rate (TPI) and intermediate rate of pension to stand. The Federal Court took the view that the eligibility criteria must be met by a veteran on a continuing basis and that such a pension was not payable after attaining normal retirement age or indefinitely. In order to overcome this interpretation, the Bill provides two related changes. The first will ensure that initial eligibility for the grant of TPI or intermediate rate pension is not to be determined on a continuing basis. Eligibility is to be determined by reference to whether a veteran meets the requirements of section 23 or 24 on the date of lodgment of a pension claim or application. The amendment will prevent account being taken of alterations in the veteran's circumstances, subsequent to lodging the claim or application, which might adversely affect eligibility. This will avoid the possibility of a grant of TPI or intermediate rate pension that is made being limited by the determining body to a specified period, up to say retirement age, as was adverted to by the Federal Court in the McGuire case. The second change is to insert a new section 24A in the Veterans' Entitlements Act. This will ensure that persons who are eligible to receive and are receiving a TPI or intermediate rate pension will not ordinarily lose payment of the pension at such a rate in their lifetime. The only exceptions are where the grant of pension would not have been made but for a false statement or misrepresentation or, where the veteran's war-caused incapacity improves to the extent that he or she is undertaking, or becomes capable of undertaking, remunerative work for periods greater than specified in the existing law. The amendments to be made in respect of TPI and intermediate rate pension do not other- wise affect the changes to eligibility for these pensions made by Repatriation Legislation Amendment Act 1985 and carried through in the Veterans' Entitlements Act and the interpretations given to the relevant provisions by the courts; nor do the amendments affect the powers of the Veterans' Review Board or the Administrative Appeals Tribunal to review whether the initial grant of TPI or intermediate rate pension was made properly. Another important change is that, in accordance with the Government's electoral undertaking, the Bill will extend eligibility for full hospital and medical treatment to returned ex-service women of World War II. This recognises the valuable contribution made by such women in the defence of this nation during that war. Other amendments proposed to be made to veterans affairs legislation provide for increases in the rates of the minor benefits available to eligible persons and increases in the rates of clothing allowance, attendant allowance and recreation transport allowance. I commend the Bill to the House and present the explanatory memorandum. Debate (on motion by Mr Tim Fischer) adjourned. Bill presented by Mr Humphreys, and read a first time. Mr HUMPHREYS(Griffith-Minister for Veterans' Affairs)(5.23) —I move: That the Bill be now read a second time. The Bill before the House makes a number of changes to the National Health Act and the Health Insurance Act to take account of changes to the Social Security Act introduced in the Budget and the May economic statement. Two of the three changes in this Bill are amendments to the Social Security and Veterans' Entitlements Amendment Bill (No. 2) 1987. All three changes relate to the operation of the pharmaceutical benefits scheme. The first change inserts in the Health Insurance Act a set amount of allowable income in respect of each eligible dependent child to be included in the income test for the health care card for disadvantaged families. This obviates the need to refer to the Social Security Act to determine the appropriate amount. The second change will enable persons receiving a job search allowance to receive free or concessional pharmaceutical benefit items. The third change will temporarily restore eligibility for free pharmaceutical benefit items to certain former class A widow pensioners and supporting parent beneficiaries who lost their pension or benefit as a result of recent changes to social security legislation. The Health Insurance Act specifies the income test for the health care card, which allows disadvantaged persons to qualify for concessional pharmaceutical benefits. To be declared as disadvantaged a person's allowable income must be less than an amount determined under the income test provisions of the Act. In determining this amount the Health Insurance Act currently refers to the level of additional benefit payable for each dependent child. With the implementation of the Government's family package there will be different rates of additional benefit for dependent children, depending on their age. A technical amendment is therefore required to make it clear that existing entitlements to the health care card will be retained. The Bill would therefore amend the Health Insurance Act to substitute a dollar amount of $34 per week for each dependent child in lieu of the current formula based on the additional benefit for children. The amount has been chosen to maintain the current level of additional income for children under the income test for the health care card. The Bill allows for subsequent increases in this amount by regulation. There are considerable advantages, in terms of administrative efficiency and ease of understanding, in retaining an income test based on a single amount allowable per child, rather than introduce an income test defined on the basis of differential amounts according to the age of dependent children. Clause 8 of the Bill in part relates to the job search allowance for 16- to 17-year-olds. The allowance, to come into effect from 1 January 1988, necessitates amending the National Health Act to include those persons in its definition of pensioner and concessional beneficiary. The amendment enables recipients of a job search allowance to receive prescription pharmaceuticals at the concessional rate of $2.50 while medically fit to search for work and at no charge when the recipient is sick and unable to seek work. These provisions would effectively leave unchanged the pharmaceutical entitlements available to people aged 16 and 17 years who currently qualify for unemployment or sickness benefits. A further amendment to the National Health Act will restore, until the end of 1988, eligibility for pensioner health benefit cards and thus free pharmaceutical benefits for those persons whose entitlement to class A widows pension or supporting parents benefit ceased between 1 September 1987 and 31 December 1987 as a result of changes announced in the May Economic Statement restricting such payments to those with children under 16. I present the explanatory memorandum to this Bill. I commend the Bill to the House. Debate (on motion by Mr Connolly) ad- journed. Debate resumed from 29 October, on motion by Mr Holding: That the Bill be now read a second time. Mr CARLTON(Mackellar)(5.29) —We are debating the Overseas Students Charge Amendment Bill 1987, the purpose of which is to amend the Overseas Students Charge Act of 1979 and to fix charge rates for overseas students for the 1988 academic year. Students entering courses for the first time at universities, institutes, colleges of advanced education or technical and further education colleges will pay 55 per cent of the full average cost of their courses as a fee which is up from the 45 per cent paid in 1987. As a result of an earlier Opposition initiative forced on the Government in the Senate some time ago, students who entered courses in earlier years remain at the lower recovery level at which they entered their courses. We believed that it was only fair that if students had come to Australia with a particular understanding of a course cost they should not suffer any more than an adjustment for inflation and so on over the period of their course. It would be unfair for them to pay an additional percentage of the full recovery in succeeding years. There is also an increase in the charge for secondary students coming from overseas, in line with the increase in the consumer price index, from $300 a year to $328 a year. As a result of these changes, the charges that will be made by the institutions are, for higher places, about $5,000 or $6,000, so they are quite considerable, but nonetheless we have attracted quite a number of overseas students. There is an element of subsidy in the charge that is set, and the Government sets a quota on the number of overseas students allowed in under the subsidised scheme. For 1988 a new quota is being set at 3,500 people as new entrants in all categories, so the total next year of overseas students subject to subsidised places is 3,400 secondary students and 13,300 tertiary students, of which 800 will attend technical and further education colleges. There are 16,700 subsidised places overall and of these, the Commonwealth meets fees for 1,000. They are sponsored students under our overseas aid schemes, plus another 1,700 subsidised students from Papua New Guinea, China and the South Pacific on another regional program. That leaves 14,000 students liable for the overseas students charge. The Budget Papers say 14,500 as a total, but I could not understand where the 500 came from. The receipts for 1987-88 from this charge are $64.8m, up $15m over 1986-87. Outside the quotas, the institutions may offer places to overseas students on a full fee basis, that is, full recovery of costs. They may retain the fees but there is a cutback in the funds available to them in capital grants over the years ahead as a partial offset. For students from developing countries, and that is 95 per cent of them, the balance of the cost to the Commonwealth over and above the charge recovered through this program is contributed by the Australian International Development Assistance Bureau (AIDAB), and that is part of our overseas aid program. The AIDAB contribution to the education budget is $85.1m in 1987-88, which is down $2.8m from the previous year. The Opposition supports the concept of aid to students from surrounding developing countries. It is something that coalition governments have pursued over a very long period. The Colombo Plan was set up under the Menzies Government, and I think it may even have been established by Sir Percy Spender as Minister for External Affairs, as he was called in those days. Mr Spender —It certainly was. Mr CARLTON —It is nice to see present his son, the honourable member for North Sydney, participating in this debate. This support for overseas students coming to Australia has a long and honoured history in our coalition parties, and we certainly support the Government's continuation of similar programs. We are concerned that the amount that has gone through on this is down by $2.8m on the previous year. We support the subsidisation of overseas students here because we believe that we are making a contribution to the development in those countries, but also we get a lot out of it. There is an important cultural enrichment on our campuses. I can certainly remember from 30 years ago, when I was on the campus of Sydney University, meeting, for the first time, a number of students from surrounding countries, and that gave me my first understanding of their life-styles and cultures, and something about them. I have made firm friends from that period, whom I still have. The admission of overseas students over this period has assisted, very much, tolerance and understanding in the Australian community. There has been some friction, and the friction on campuses is always highlighted by the Press searching for some sort of sensational story. My understanding, certainly from my experience and that of my children at university these days, is that the overall effect of the presence of these students is to enrich the campuses and to provide a basis of understanding between students from Australia and those from surrounding countries. Therefore, it is of considerable importance to Australia, not just in the sense that we are trying to contribute to the development of the countries of origin. In addition to the foreign aid subsidy of students, the Opposition supports the attraction of fee paying overseas students, but we do not support the arbitrary and unnecessary restrictions on institutions governing the enrolment of fee paying students. Therefore, I would like to move on behalf of the Opposition an amendment to the motion as follows: 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 condemns the Government for: (1) its arbitrary and unnecessary restrictions on the rights of tertiary institutions to attract fee paying students from overseas; and (2) refusing admission into tertiary education to Australian students who are not awarded a free place but who are prepared to pay a fee for admission on the same basis as overseas students'. That second point is a very important one because, unfortunately, the Government has got itself into a terrible hang-up over this charging of fees. Universities and colleges of advanced education are allowed by the Government to admit overseas students prepared to pay fees, but not Australian students. As a result of this absurd policy, some 20,000 qualified students were denied entry to universities and colleges this year, when many would have been prepared to pay a fee to gain entry. This really amounts to gross discrimination against Australian students. This farcical situation has arisen basically because of the hang-ups of the Australian Labor Party (ALP) on tertiary fees. Although the ALP platform is against tertiary fees, the Government has been prepared to charge a disguised fee in the form of an administration charge and next year is introducing fees for higher degree courses. It also seems permissible in the Government's eyes to charge overseas students a tuition fee. But when it comes to opening up additional places above and beyond the free places provided by the taxpayer for Australian school leavers, the Government is paralysed by its internal political squabbles. The Minister for Employment, Education and Training (Mr Dawkins) should admit that the Government's fee policy is already a farce and act to open up our universities and colleges to all qualified applicants for the 1988 academic year. If one follows ALP politics, one will know that this is a very emotional subject within that Party. The Prime Minister (Mr Hawke), in his policy speech on 23 June 1987, said, `We are opposed to tertiary tuition fees'. The word `tuition' is carefully chosen. This is a careful subterfuge on the part of the Prime Minister to try to make out that the Government has not already imposed fees for tertiary students in the form of the so-called higher education administration charge. A fee is a fee is a fee as far as the Opposition and students are concerned, and this fee was introduced at $250 for the current year and will go up to $263 for the next year. To call it an administration charge to try to make the Prime Minister's promise in the election and in the ALP platform seem to mean something, we believe is typical of the kind of misrepresentation that the Government indulges in all the time. The real difficulty goes back to the ALP platform. I have here an extract from the 1986 platform and clause 26 says unequivocally: `Maintain the provision of free tertiary education'. As far as I am concerned, any reading of that would preclude the Government from imposing the higher administration-- Mr DEPUTY SPEAKER(Mr Millar) —Order! The Chair interrupts the honourable member. The honourable member for Lilley will desist. If she seeks to speak with the advisers she should do so from the other side. From where she is, she technically admits them to chamber and they become strangers in the chamber and subject to the consequence of that action. Mr CARLTON —To go back to the ALP platform, paragraph 20 states: Maintain the provision of free tertiary education. That paragraph is clearly breached by the higher education administration charge. There is no question about that. If the Prime Minister, having used in his policy speech the words `We are opposed to tertiary tuition fees', believes that he can follow the platform by the use of the word `tuition' and adding `administration charge', he is talking through his hat. Paragraph 24 in the ALP platform states: Ensure that overseas marketing of education does not undermine free access by Australians to tertiary institutions, or the quality of the education provided. It is quite clear that the drafters of the program wanted to pin the Government down on this issue of fees; in other words, they say that there should not be any fees at all. The Opposition's position on this matter is quite clear; we made it clear before the last election. We say that there should be made available the number of free places that the taxpayer has been accustomed to supporting. That is increased year by year in line with budgetary arrangements and what is available from revenues from taxpayers. In addition to that we say that the institution should be free to admit Australian or overseas students on such terms and conditions as they wish to decide. Over and above that there is the subsidy for overseas student places provided through the foreign aid programs of the Government. Let us get it quite clear what the Opposition is in favour of. We are wholly in favour of the free places currently available to students at tertiary education institutions being maintained and changed each year in accordance with our budgetary capacity. We are fully in favour of foreign aid subsidy to overseas students, certainly those from developing countries, in line with our past practice and for the reasons I gave earlier in my speech. We believe also that the institutions should have the flexibility over and above that to be able to admit students on terms and conditions mutually acceptable to the institutions and the students. That would remove this absurd restriction which would require, in the present case, the institutions to charge on a full recovery basis. If the institutions wish to expand the numbers of students they have on a marginal costing basis, that is fine. They can admit more Australian students-this would be a very important benefit of our policy-from amongst those 20,000 students who were qualified to enter higher education this year but were not able to get in because of the lack of places in the institutions under current funding arrangements. The question of fees is developing very strongly. It is quite clear that the Minister for Finance, Senator Walsh, for a very long time has been in favour of the concept of imposing tertiary fees much more generally than they are now imposed. That is quite clear from his speeches. He has argued for that in the Cabinet over a long period and it was resisted tooth and nail by the previous Minister for Education, Senator Ryan. She lost the battle on the administration charge-or that particular fee which had to be dressed up as a so-called administration charge. It is quite clear to me from the statement on higher education made by the current Minister but also from remarks he has made to a number of people in recent times that he agrees with Senator Walsh and he believes that fees ought to be charged. Our purpose in allowing institutions to charge fees over and above the free places is twofold. Firstly, we want to provide some avenue for at least some of the 20,000 or more students who are qualified to enter universities but cannot, to get in by paying a fee. If the fee is charged on a marginal basis for some courses by those institutions, it may be quite a modest one, and that would be a valuable addition to the numbers of students able to take advantage of tertiary education. The other important reason why we believe it should be pursued is that we want to give the institutions more flexibility in managing their own resources. There is a very important debate developing on higher education in Australia today. It is really a clash between the Minister and us. I believe it is building up resistance on the part of the institutions to the general thrust of the Minister's policy. I think we all agree that we want more resources to go into higher education; there is no question about that. Our comparisons internationally are not good. We all believe that our education system should be providing more people who are better skilled, better trained and better educated both for the work force and for the enrichment of our cultural life. We all want that. Taxpayers' funds are limited and so we all want to expand tertiary education at the minimum cost to the taxpayer. The Minister and I would certainly agree on that. We also want to improve the performance of the institutions, but where the gap is opening up is in the belief on the part of the Minister that this can best be done by putting the sources of advice to the Minister into a single pot-that is, the new National Board of Employment, Education and Training-and by bringing about change by central direction from the Government. Change in the institutions has been proceeding at too slow a pace within the highly regulated environment in which they work. Whilst the institutions have had historical rigidities, they have had superimposed on those rigidities a number of other rigidities by the Commonwealth Tertiary Education Commission and by the rules laid down by the central Government. The present Minister clearly believes that the pace of adaptation of these institutions and their flexibility can be speeded up by central direction. He has lectured them on their shortcomings and he is obviously taking more power into his own hands in an attempt to change the structure, nature, management and courses of the institutions. I believe that approach will be counter-productive. The Opposition has a very firm view that we will achieve a better result if, on the one hand, we make the institutions more responsive to consumer demands and if, on the other hand, we give them more control over their own resources. We believe that the more we delegate authority in this system, the more we free up the institutions to respond to needs. The more power we give to the consumers to make a choice between individual courses and institutions through the higher education scholarships, which we propose in our policy, the more we devolve the whole problem and the better result we get. I do not have a great deal of faith in central government departments being able to decide what is best in the national interest. They can certainly indicate from time to time any feelings the Government might have about the direction of national interest at any particular time-I do not object to that-but for them to try to force on the institutions their single views, often based on advice from permanent public servants here in Canberra, of what is the national interest now and over the next 20 or 30 years is a grave mistake. I have much greater faith-- Mr DEPUTY SPEAKER —Order! I think the honourable gentleman, whilst offering to the House words of undoubted value, is fairly testing relevance. I invite him to come back to this rather restricted Bill. Mr CARLTON —Thank you, Mr Deputy Speaker. I will just relate that to this fee question because it is an integral part of that question. If you will allow me one more paragraph on this, I will relate it to the fees. Mr DEPUTY SPEAKER —The honourable member has the Chair's indulgence. Mr CARLTON —Thank you very much, Mr Deputy Speaker. I will make it clear what the link is. The institutions will make their own myriad of decisions in the education market-place in meeting the needs of their customers-that is, the students-and in meeting the needs of their teaching staff and their researchers. They will be making these decisions all over the place. It is a pluralistic system. I have more faith in the overall outcome of all those hundreds of thousands of individual decisions being right for Australia in the medium to long term than I have in the capacity of a group of people in Canberra to say that this is what is needed in the national interest. Mr Deputy Speaker, you may well ask how this relates to fees. The flexibility of the resources of these institutions is a key part of this. Whilst those institutions rely virtually wholly on the taxpayer for their funding, that taxpayer funding will be accompanied by close regulation and it will also be limited by the capacity of the taxpayer to pay. The more that money is provided through private sources-through fees, sponsorship from industry, or whatever means-the more that those people are able to adapt in the market-place and make their individual decisions, some of which will be quite different from others. But, overall, they are more likely to reflect the national interest in the longer term than bureaucratic impositions. That really is the link between this overall debate on the future of higher education and this important issue of fees. To summarise, we are not denying the Bill a passage. We have moved an amendment to draw attention to the fact that there is too much regulation on the institutions in their capacity to charge fees for overseas students. At the same time, whilst they are allowed currently to charge fees to overseas students and admit those students to places in Australian universities, over and above the free Australian quota, they are not allowed to accept qualified Australian students able to pay a fee on the same basis as overseas students. Whilst there are 20,000 qualified students wanting to get places in 1987 which are simply not available, it makes no sense at all to us to restrict the universities and colleges in this way. We believe that they should be free to admit Australian students on at least the same basis as they admit overseas students. We would go further than that. We would allow the institutions to admit either overseas or Australian students over and above the Government's subsidised ones in whatever way they chose and, in so doing, at the same time we would be freeing up those institutions to be more adaptable, to be more flexible, and to be able to manage themselves more effectively and, we believe, meet the national interest far more effectively than would be the case if decisions were imposed by the Minister for Employment, Education and Training on the advice of the Public Service in Canberra. Mr DEPUTY SPEAKER —Is the amendment seconded? Mr Spender —I second the amendment. Mrs DARLING(Lilley)(5.53) —The Overseas Students Charge Amendment Bill, which is before the House, amends section 6 of the Overseas Students Charge Act 1979 to fix the overseas students charge rates for the 1988 academic year. This follows the statement made by the then Minister for Education, Senator Ryan, in May of this year, when she announced that the overseas students charge for new students enrolling in the triennium 1988-90 for all higher education courses would be set at 55 per cent of full average cost. For these students the actual charge in 1988 will be of the order of $6,313, or $7,153, depending on whether the student is entering a high or low cost course and depending on the full average cost of higher education places for subsidised overseas students. As indicated by Senator Ryan at that time, the 55 per cent rate of charge will be held constant throughout the period of the 1988-90 triennium for all those entering during that period. No students enrolled in the 1988-90 triennium will face the prospect of paying an increased proportion of full average costs in that period. For university and advanced education courses enrolled in and commenced before 1 January 1986, $4,456 has been allocated for medicine, veterinary science and dentistry, and $3,663 has been allocated for all other courses. For courses enrolled in and commenced from 1 January 1986 to 31 December 1987, $5,999 has been allocated for medicine, veterinary science or dentistry, and $5,159 has been allocated for all other courses. For courses enrolled in and commenced on or after 1 January 1988, $7,153 has been allocated for medicine, veterinary science or dentistry, and $6,313 has been allocated for all other courses. The amount of the overseas students charge for university and advanced education courses will be reduced by $263-the amount of the higher education administration charge payable to institutions by all higher education students in respect of the enrolment. For students in technical and further education (TAFE) courses who commenced before 1987, the overseas students charge in 1988 will be $593; it will be $833 for students who commenced in 1987, and $1,018 for new students in 1988. The charge has, in this way, been held at a fixed percentage of costs for TAFE students also. For all post-secondary students in the subsidised program, therefore, the only increase in the overseas students charge each year will be to reflect price movements. In fixing the rate of charge as a percentage of full average cost for the forthcoming triennium, the Government has strived to give students and their parents the degree of certainty and predictability they need to be able to plan in advance to meet the cost of studying in Australia. The overseas students charge for overseas secondary students will continue at the current level of $300, adjusted only for movements in the consumer price index. For 1988 this means a charge of the order of $328. I understand the plight of people in underdeveloped nations who look for assistance to developed nations such as Australia. It is the duty of developed nations such as Australia to assist but we must do so in a cost-effective manner. It helps no one-the students least of all-to be irrational or to overlook certain realities. One aspect we should consider is the ability and desire of the families of some overseas students to pay. Families of many foreign students are ready and obviously able to pay for a quality education and should be allowed to do so. South East Asian countries spend $2,000m a year on education-most of it in the United States of America and Europe-and the figure is growing rapidly. Malaysia alone has 65,000 students overseas. At the end of June there were more than 9,000 full fee paying foreign students in Australia. According to George Tarjan, Manager of the Trade and Service Branch of the Australian Trade Commission, those students pay an estimated $24m in fees alone. Mr Tarjan has gone on record as saying that that figure could quickly increase to more than $100m as more Australian facilities open their doors to Asian students. This increase has been building up since the Federal Government decided two years ago to allow foreign students to attend any institution with room for them, as long as they paid all their own costs and did not displace Australians. There are students who want our education and want to pay for it. In fact, Sue-Anne MacKnay who helps market private education services through the Western Australian Government's trading arm has pointed out that Australian education is much cheaper than that offered by other Western countries. Ms MacKnay notes that students who are travelling to the United States or Europe could easily be educated in Australia. We can offer a high standard of education cheater and closer to home. This is why guidelines were released in 1985 when the Government announced its new policy on overseas students under which universities and colleges of advanced education are able to offer full fee courses for overseas students. Of course, many potential students are not in this position. The Australian Government is very aware of and sensitive to this fact. The report entitled Mutual Advantage of the Committee of Review of Private Overseas Students Policy of March 1984 indicated quite clearly that over 50 per cent of students are not affluent by Australian standards and, in fact, are lagging. It has been estimated that there will be 3,400 subsidised places for overseas secondary students and 13,300 subsidised places for overseas tertiary students, including 800 TAFE students, in 1988. We believe that that is important. The estimated number of students liable for the overseas student charge in 1987-88 will be approximately 14,500. This figure does not include some 1,000 sponsored students and some 1,700 subsidised students from Papua New Guinea, China and South Pacific Islands whose liability is met from Australia's aid program. The Government is to continue to pay charges for subsidised private students from Papua New Guinea and South Pacific Island countries, for some students from China and for students sponsored by the Australian International Development Assistance Bureau (AIDAB), at a total cost of about $8.8m in 1987-88. These funds are to be appropriated through AIDAB and form part of Australia's overseas aid program. To reflect the fact that charges paid by overseas students, or on their behalf, do not cover full costs, further funds are to be appropriated through AIDAB. Of course, a contribution towards the education of students is also made by developing countries. That should be recognised. The overseas student charge paid by, or on behalf of, overseas students in Australian institutions is estimated to cover between 32 per cent and 55 per cent of the Commonwealth contribution towards the cost of providing places for those students. For students from developing countries, the balance of the cost to the Commonwealth is identified as the contribution to the education budget by AIDAB. Some 95 per cent of overseas students are from developing countries which, in general, derive substantial economic and other benefits from the education of their citizens in Australia. This is as it should be. It has been difficult in the past to be able to determine the full socio-economic and ethnic background of overseas students, but the report entitled Mutual Advantage, to which I referred earlier, gives some indication of major sources for students. At the secondary and tertiary level, 50 per cent are from Malaysia; 13 per cent from Hong Kong; 7 per cent from Indonesia; 5 per cent from Singapore and 4 per cent from Fiji. It is interesting to look at the ethnic make up of people from different countries. Taking Malaysia, which is the largest country of origin for overseas students in Australia, in 1984 the breakup was 71 per cent of Chinese origin, 10 per cent Malay and 4 per cent Indian. For Fiji, 56 per cent were Indian, 13 per cent Chinese and 11 per cent Fijian. While it is true that to study in Australia is not a cheap undertaking and that a very large number of overseas students are ethnic Chinese, as I have just demonstrated, on the whole they are not, by Australian standards, rich. For most of them their experience of Australia is not easy financially but it is generally found worth while. They form part of a diverse community which makes a contribution to Australia as well as receiving benefits from it. For years the Australian Government has acknowledged this two-way benefit-the process of communication between overseas and Australian students. Australia is held in high regard by nations such as Sri Lanka for our training and expertise in agriculture and other areas. The continuing transfer of this technology is desirable and, in fact, should be increased as conditions allow. I mention that to put in context the overall spectrum of the ways in which developed nations such as Australia can assist underdeveloped countries and strengthen bonds between ourselves and our neighbours. Sri Lanka still regards Australia with affection, not only because of recent strong ties but also, as the honourable member for Mackellar (Mr Carlton) pointed out, because of the introduction of the Colombo Plan in the 1950s and the involvement of Sir Percy Spender. The Colombo Plan and action at that time focused official attention in Australia on overseas students. When I visited Sri Lanka at the end of last year as leader of an Australian delegation, I became aware of the very warm feelings on the part of the Sri Lankan people towards the Australian Government and Sir Percy Spender. There is a tie between Australia and Sri Lanka which has strengthened, and the student intake is part of that. Development assistance became the principal objective for both the sponsored student program, which grew out of the Colombo Plan, and the private student program which had been developing slowly but steadily. This pattern continued throughout the 1960s and into the early 1970s. In 1973 a review of the overseas student program developed a policy with three major features: one was that development assistance ceased to be the major objective, allowing overseas students to enter Australia to undertake a much broader range of studies. Secondly, a ceiling of 10,000 was placed on the total number of private overseas students. Thirdly, because of the more liberal possibilities offered by the new program, overseas students had to convince authorities that they were bona fide students, and they would be required to leave Australia on completion of their studies. However, pressures grew both domestically and internationally. In 1980-81, Britain introduced a full cost policy for overseas students and by 1983 many of the students in our region, who otherwise would have gone to the United Kingdom, were seeing the advantages of an Australian education. The number of private overseas students in tertiary education in Australia grew from 6,700 in 1979, compared with 6,300 in 1973, to 10,600 in 1983. Mr Tim Fischer —Many from Malaysia. Mrs DARLING —Certainly, as the honour- able member for Farrer points out. Over the same period, the number of overseas secondary students grew from 1,400 to more than 5,000, and a very high percentage of those secondary students would have gone on to tertiary studies. There continue to be fully sponsored students, which is most essential, selected on the basis of development assistance needs by their own governments and funded entirely by the Australian Government through AIDAB. This does not mean that our effort stops here. It does not mean that, in future times as the financial situation allows, there should not be further development generally in the area of aid, particularly in the case of those people who are having a very hard time of it. Currently, the bulk of overseas students continue to be privately subsidised students. This legislation, in fixing overseas student charge rates for 1988, forms part of Australia's threefold approach to overseas student development; that is, sponsored students to meet specific development assistance aims; subsidised students to take account of broader educational, cultural and goodwill consideration; and full fee students. I have great pleasure in recommending this legislation to the House. Mr SPENDER(North Sydney)(6.09) —In supporting the amendment moved by the Opposition to the second reading of the Overseas Students Charge Amendment Bill I wish to concentrate attention upon two issues: first, the position of Australian students who would be willing to make a payment to get a position in higher education, in a university, but are currently refused that option, even though overseas students have it-- Mr DEPUTY SPEAKER(Mr Millar) — Order! I rather hope that the honourable member has in mind relating his remarks to the Bill, which is very restricted in nature in so much as it has a bearing on fees. Mr SPENDER —It most certainly does, but I remind you, Mr Deputy Speaker, that a second reading amendment has been moved, and that amendment says: Whilst not declining to give the Bill a second reading, the House condemns the Government for: (1) its arbitrary and unnecessary restrictions on the rights of tertiary institutions to attract fee paying students from overseas; and (2) refusing admission into tertiary education to Australian students who are not awarded a free place but who are prepared to pay a fee for admission on the same basis as overseas students. That raises, in the context of the debate on this Bill, two very simple and direct issues: first, the restrictions on the rights of tertiary institutions to attract fee paying students from overseas and, second, the same restrictions that apply to those institutions attracting fee paying students from within the country. As the honourable member for Mackellar (Mr Carlton) has pointed out, there are some 20,000 Australian students seeking places in higher education institutions but who are denied the very simple option of being able to pay for a place or make a contribution to a place on the same basis that an overseas student can. Let me take up that point. Is there any conceivable basis on which it can be advanced that as a matter of equity, as a matter of fairness and as a matter of rational approach to education, we should deny people the option of paying for education? Is there any possible argument for rejecting the right of someone to go to a university and say, `True it is that I have not qualified for one of the free places, but I am willing, as an Australian, to pay for a place in the university, or my parents are, on the same basis that overseas students presently pay; please let me in.'? Why should it not be left to the universities and other higher education institutions to make their own decisions? Why should Australian students be locked out of the opportunity to undertake higher education because of this curious, archaic, constricted approach to fee paying-an approach which is grounded on socialist principle? We are all entitled to our principles and the socialists are entitled to theirs, but they are not entitled to lock out of the education institutions of this country Australians who are willing to pay to go in but who cannot as they are not allowed that option. It is a disgrace that they should be denied that option, that prospect. I turn next to the position of overseas students. The honourable member for Lilley (Mrs Darling) in a very thoughtful speech about overseas students pointed out the importance of education to this country. She referred in passing to the Colombo Plan, which was indeed the brainchild of my father back in late 1950 and early 1951 when he was Minister for External Affairs. He recognised, as we all then started to recognise, the fact that we are not a European country; we are a country that is on the peripheries of South East Asia. We are a country which has a border on the Indian Ocean and a border on the South Pacific Ocean, and we are a country of our own region. This is our region; Europe is not. Mr Tim Fischer —We must interface more with Asia. Mr SPENDER —Exactly. We may like to visit Europe, we may like to visit America and all those interesting parts of the world, but this is our region. Our history will be made here, and our future will be made or broken here. This is where we have our interest. What is our interest? It is a national interest in Australia being sought after by students from South East Asia and from the South Pacific region as a place to come to study and to learn. What does education do? It dispels myths. It provides to the student who goes to another land the opportunity of learning about the people of that land. It opens up windows of understanding, of perception, which would otherwise be denied. It is very much in our interests that thousands and thousands of students should continue to come from South East Asia and the Pacific to Australian higher education institutions because if they get their higher education in this country they can go back to their countries with an understanding of our people, our culture and our attitudes-an understanding which I believe will do this country great good as in the future we will be dealing with people who have been here and who for the very great part, I believe, will carry away warm and favourable impressions of this country. Why, therefore, should we have a policy which says, very simply, that if a student pays full fees he can come down here but if, however, he does not pay full fees he must be subject to a quota. Why not, as the honourable member for Mackellar suggested in his speech, provide the universities with an option? Indeed, why not provide opportunities for private universities in higher education? We know that the Government's reaction to the announcement of the Bond University was one of flat rejection. Why should we reject private universities? Why should we prevent people from investing in universities if they wish to do so? Why should we prevent people from paying to send their children to universities when other places are not open to them? Is it not a very much better thing that parents should spend money on the education of their children rather than on buying a second car, having an overseas holiday or getting boozed every Friday night? Would it not be much more sensible if they had the incentive, as people have in America, to send their children to university? They would have to determine how to find the money, and budget accordingly. Mr Hand —How many average people go overseas? Mr SPENDER —They would then say, `No, we are not going for an overseas trip'. I think there was some sort of interjection from my colleague at the table, the Minister for Aboriginal Affairs, which asked, in effect, how many people go overseas. A great number of Australians go overseas, as he would understand if he travelled through South East Asia. So parents would have the option of how to spend their money, and if they want to spend money on the education of their children, is that not much better than spending it on holidays or on a second car? Is it not better that they make a sacrifice for that purpose? Mr Robert Brown —Admission is on the basis of merit, not on the basis of income or wealth. Mr SPENDER —We have now an interjection suggesting that we choose people on the basis of merit, not on the basis of income or wealth. I agree. If we are talking about the free places that is entirely correct, but if we are looking at the position of those who do not qualify for free places but who still would otherwise have qualified for a position in a university or some other higher education institution-I refer again to the 20,000 people who we know are denied the opportunity for higher education-why should they not be able to pay? Can members of the Government give me one good reason why, if the parents are willing to pay, they should not be told, `Yes, true it is that your child does not qualify for one of the free places but we are willing to take your child on the same basis as we take students from South East Asia; that is, you pay.'? There is no possible logic in the argument to the contrary. Mr Hand —Whose place will they take? Mr SPENDER —The answer is, of course, that as places are funded, as universities and other institutions of higher education make their own decisions, those higher education institutions will expand. Why does the Government not allow them to make the decisions rather than believe that all decisions should be made in Canberra? In short, that is the argument that I would put. It is, I think, a very simple one: when it comes to overseas students, why not allow the universities and other organisations of higher education to make a decision about those students who are not subsidised and who do not pay the full fees, to say, `All right, there are a number of places that we can provide at reduced fees and we see no reason why you should not come in'? In the case of Australian students, why should not the same choice be open to higher education institutions? I think it is a scandal that Government policy says, `No, you are not to have that choice. True it is, you are willing to pay what we now consider to be full fees. You are willing to pay the same fees that private students from overseas pay; but even though you are willing to do that we will deny your children the right to go to a university'. That is a scandal. Mr Robert Brown —You are going to chuck out my kids in order to put in kids from the North Shore. Mr SPENDER —Here we have it again coming up from my good colleague the honourable member for Charlton. Again he says, `This favours the people from the North Shore'. That is nonsense. We start from the proposition that there are a limited number of free places. Those go on merit. The next question is very simply: why not leave it to the universities to make their own choices as to other places? Why exclude Australian kids whose parents would be willing to pay? They may not be wealthy at all but just determined to give their children an education. Why not give them the chance? But the doctrinaire socialist answer is no, do not give them a chance; do not give them a choice; do not give Australian parents the right to choose. We will say-- Mr Hand —It is all wealth. Mr SPENDER —The Minister at the table is talking as though it is a matter of wealth; as though every one of the parents would be wealthy. He knows absolutely damn all about the world. What he seeks to do-- Madam DEPUTY SPEAKER(Mrs Darling) —Order! The Minister will cease interjecting and the honourable member for North Sydney will cease responding. Mr SPENDER —What the Minister seeks to do by sticking to these rejected principles of socialism is to exclude choice, to exclude the right of parents to save and to send their children to higher education institutions when those kids do not qualify otherwise. If that is his sort of world I will say this: nobody out there will agree with him. If he goes out and tells the Australian people that the Government is not going to give them that right of choice, they will say to him, `That does not seem to be fair. I would have thought that if parents want to save and the universities are willing to take their kids for a fee, it is very much better that those students should have the chance to go to the universities on a fee paying basis than not to go there at all'. Ms CRAWFORD(Forde)(6.24) —I rise to speak on the Overseas Students Charge Amendment Bill 1987, in which the Government proposes to set the charges for the 1988 academic year in relation to those students from overseas. It seems quite extraordinary that on a Bill which sets the charges for overseas students the Opposition is discussing the merits of having Australians paying full fees in universities. Good heavens! Surely the Opposition remembers that in 1972 the Whitlam Government dispensed with fees for tertiary education and thereby implanted within our Australian education system the notion of equity. That is what we as a Government stand for-education for all Australians. However, this amendment is not about education for Australians; it is simply the way in which the Australian Government proposes to look after those students who study in Australia who happen to come from overseas and the way in which we approach that program. The full fee program, as it is now called, has a twofold purpose. Firstly, it provides more opportunities for overseas students to study in Australia, without displacing Australian students, at no cost to the Australian Government. Secondly, it provides a source of foreign exchange as part of the Government's drive to improve export earnings in the services sector generally. Historically, we have had overseas students in Australia since 1904; that is, students from within our own region have come to Australia to seek and to gain from what they believe to be a high quality education process. We acknowledge the work that Sir Percy Spender did in the 1950s in developing the Colombo Plan which set out to provide assistance in the form of education for those countries in our region specifically as part of the development aid program. I, too, was a student at university in the 1960s and made friends with a large number of students who came from Asia. It was at that time, of course, the beginning of our acknowledgment that we were geographically part of Asia, that our future lay within acknowledging such and also that we as a country could make a very real contribution to those areas in our region which were developing and seeking our expertise. It was decided that education of people from those countries would enable them then to go back to their own country and make a contribution to the economy, to employment and, of course, to export earnings. Indeed, I can refer to two personal friends who, having studied agriculture here, now run very large plantations within the islands not far from here and who make a very great contribution to their country's employment situation and export earnings. That is one aspect of students having studied here in Australia, as was the object of the Colombo Plan. However, the situation has changed. Those students who came to Australia in the 1960s recognised and acknowledged that they would need to go home, that they were being helped and that Australia was offering assistance. With the discarding of the white Australia policy in 1973 and the decision to abolish tertiary fees within our education institutions, our overseas student program took on a very different meaning. It meant that many Asian students here would be able to stay and take advantage of migration policies. It also meant that they would be able not only to participate as people to whom we were giving assistance but to participate within the Australian economy and within the Australian system in general. That process continued and developed until the 1980s, when the United Kingdom introduced full tertiary fees for all of its overseas students. As the honour- able member for Lilley (Mrs Darling) has said, we saw many Asian students wishing to come to Australia to pursue their education because it was closer and because through those Colombo Plan students who had returned to their home- land our Asian neighbours had developed an affinity with Australia. The discarding of the white Australia policy also meant that within Asia Australia was seen as a country of integrity. It was no longer seen as being paternalistic in its approach to its Asian neighbours; nor was the thrust seen to be simply one of development and assistance. While we acknowledge that our overseas student programs come under our foreign aid umbrella, we must also acknowledge that they contribute in a very real sense to our export earnings. We acknowledge that students who come here to work and live spend money on accommodation and transport. Of course, the figure was close to $70m in the last financial year. That means that overseas students are making a very real financial contribution to the Australian economy. Of course, we acknowledge their contribution on a cultural level. Members of both the Government and the Opposition have said that the cultural benefits to the Australian community cannot be measured. In terms of tolerance, cultural exchange, generosity of spirit and, of course, very real education, the contribution which overseas students have made to the Australian education scene is very high. We would, of course, wish that to continue. However, we must acknowledge that we live in a time of financial restraint. We must balance the kind of aid which we can give to students who are most deserving and who come from the very poorest countries with that given to students who can afford to pay and who seek the kind of quality education which the Australian institutions offer; hence, the overseas student charges attempt to address that second group. The charges are not large. In fact, as Senator Ryan promised when she brought down the rules, the fees will not change for a whole triennium. They do not cover the full cost to the Government and/or to the institutions. Over 13,000 students are enjoying an Australian education under such a program. Indeed, Madam Deputy Speaker, as you will be aware, in 1983 the report of the Goldring Committee of Review of Private Overseas Students Policy quantified for the first time the notion of the hidden subsidy. As I have already said, it was in the region of $70m. So while we acknowledge that overseas students make a contribution in a cultural sense to our community, we are now also able to recognise in a quantitative way the contribution that overseas students make to our economy. We as a Government must not look only at that matter. We have made a commitment-which, as I said, goes back to 1904-that overseas students may participate and study in Australia. It is imperative that we continue to honour that, and not at the expense of places for our own youth, but in a spirit of generosity and of sharing, as part of the Asian region in which we all live. To suggest, as the Opposition has, that tertiary education for Australians will now be the prerogative of the fee payers is anathema to Government members. Madam Deputy Speaker, I can only recommend to you the Overseas Students Charge Amendment Bill. I look forward to it being put in place and to many overseas students participating fully in what is acknowledged as one of the very best and most equitable education systems in the world. Mr McVEIGH(Groom)(6.34) —This is the first occasion on which I have had the opportunity of following the honourable member for Forde (Ms Crawford). I compliment her on an excellent address. She indicated that she was born in a glorious part of Australia called Toowoomba. She received part of her education there, and also attended the same school in Brisbane as my wife and daughter. The people who taught her have taught her well. She was an excellent pupil. I was most impressed with all the things that she said, and I totally agree with those things. She displayed a little bit of the milk of human kindness that is appropriate from a Queenslander. The kindly and thoughtful reference that she made to Sir Percy Spender prevented her from criticising the previous speaker from this side of the House, the honourable member for North Sydney (Mr Spender). Maybe like her, I had some difficulty in understanding the relevance of the points that he made, on account of the type of legislation that we are debating. I understand that a pious amendment to the motion for the second reading has been moved. Occasionally one may question whether it is really an example of piety to move a pious motion. One is either for a piece of legislation or against it. I believe that this is a good piece of legislation. In the quietness of my mind, I cannot advance an argument as to why there should be free tuition for overseas students in Australia. After all, as the previous speaker said, other countries such as the United Kingdom introduced fees for overseas students some years ago. It is a world-wide trend. This type of legislation gives us the opportunity to establish and weigh up the benefits against the costs of the present system. Australia simply cannot afford to isolate itself from student mobility. It is a very mobile society. I was interested to read the statistics which show that there are an estimated one million students studying at higher educational levels in countries other than their own. The major receiving countries are the United States of America which takes about 32 per cent; France, 13 per cent; and the United Kingdom, 4.5 per cent, down from 7 per cent in 1978. I wonder why that United Kingdom figure is so. I would like to investigate that in some future debate. Canada takes 3 per cent and Australia about 1.2 per cent, not a very high percentage. The major sending countries are Iran, Greece, Nigeria and the United States of America. It is interesting to note that Malaysia and Hong Kong look to Australia to satisfy their needs. We need to look closely at whether we are offering courses in our universities and colleges of advanced education-I will come back to the latter in a minute-the qualifications of which are accepted in overseas countries. I understand that in Malaysia not all Australian higher education qualifications are recognised. I understand that that has something to do with conditions in the Public Service in Malaysia. Because it has not previously had a student with an Australian qualification, it cannot fit such a person into its system. We need to make sure that when people come here for an education their qualification fits them for employment in their own country and they are not at a disadvantage on account of the qualification that they receive here. There seems to be an enthusiasm in Australia, not only by governments, to encourage people to come here to obtain a university education. I would have thought that colleges of advanced education and our technical and further education (TAFE) system also offer equal qualifications, depending on what end product is required. We need to make sure that we are not just emphasising universities and forgetting about colleges of advanced education and TAFE. Four categories of students come to Australia under the private overseas students quota controlled program, and they number about 14,500. This is obviously an excellent system. It gives the opportunity to people who do not have the wherewithal for an education in their own country to obtain one here. I fully subscribe to the proposition that education should be available to all people, irrespective of the means of their parents or those who look after them. That is an excellent concept. Higher education is not, and must not, be the prerogative of the rich. For heaven's sake we got rid of that 20 years ago and we will not go back to that. I will not support that type of approach. Let us educate all children, and give them all that opportunity. The reservoir of wisdom does not happen to reside automatically with the sons and daughters of the rich. Other kids also have ability if they are given the opportunity. This is a marvellous program based on assistance to people on a means basis and not on a wealth basis. It provides an opportunity for people who have the wherewithal to come out here. I am not going to discourage them; that is their good luck. They are catered for, but we must give assistance to those who do not have the opportunity. I support that fully. Perhaps I should like to see it increased. I understand from the remarks of the honourable member for Forde that we are in difficult economic times. The Australian International Development Assistance Bureau program caters for about 1,500 students. I should like to see that increased. I can understand how that is not possible but that is how I should like to see taxpayers' funds being spent, rather than in providing facilities for the rich. The point I am particularly keen about, and the main reason why I sought to participate in the debate, is that I believe there is a need to examine off-shore education-the provision of education in the native country by Australian institutions. I applaud the initiative of the Darling Downs Institute of Advanced Education for what it is doing for people in Hong Kong, Malaysia and Thailand. Some 600 students are involved in programs at the Darling Downs Institute of Advanced Education. Most of them are interested in business or computer studies. In a final analysis-and I hope that education authorities in Australia will consider this-perhaps we would do better to export education to the students in their home countries because more students would have the opportunity to participate, instead of forcing them to leave their cultural backgrounds and come out here. Maybe what we need is a mix-an increase in the export of education and a continuation of the present system. Education is a highly marketable commodity and we need to be sure we get the best value for the taxpayers' dollar. The final point I want to make is that we need to monitor the program continually to ensure that the people who come out here for access to higher education get the skills they seek. Getting those skills enriches their lives-we understand that-but I hope they will then go back to their own countries so they can enrich the lives of the poorer people in their own countries. I do not think we have achieved anything at all with an overseas education program if the end result is that a considerable percentage of the students who come here remain here. Surely the whole concept is to improve the well-being, the health, the economic and social conditions or whatever of the people of the poorer countries-particularly those countries in South East Asia for whom we have a special responsibility. I do not and will not support those people coming out here and staying here because it happens to be perhaps a better place to live. They can do much better by returning to their own countries and making an attack on poverty. These are just a few points I wanted to make to indicate my total support and commitment for providing educational opportunities to poor people. The Australian taxpayer should be aware that education is a mobile commodity and that we have responsibilities in the south-east Pacific. we must make sure that qualifications earned in Australia are recognised in the home countries and, finally, that people who come out here should, wherever possible, consistent with needs as they arise, go back to help the people who made the sacrifices to send them here. Mr LINDSAY(Herbert)(6.45) —The purpose of the Overseas Students Charge Amendment Bill is to amend the Overseas Students Charge Act 1979 by fixing the overseas students charge rates for the 1988 academic year. The charge rates for overseas students will be increased to 55 per cent of the full average cost to the Commonwealth of places for new students who will commence university, advanced education and technical and further education courses on or after 1 January 1988. Charges will continue at the current percentage for courses commenced before January 1988. Details of the charge rates are indicated in the Bill. The overseas student charge was introduced in January 1987 for overseas post-graduate students enrolling in courses on or after that date. It applies to Government sponsored and institutionally sponsored students but it does not apply to post-graduate students from New Zealand or to students undertaking ad hoc or special courses or to students enrolling in courses prior to January 1987. The decision to introduce the overseas students charge for post-graduate students was motivated by the difficult Budget situation confronting Australia and the need to offset some of the cost to the Australian taxpayer of maintaining the overseas student program. The decision to introduce the overseas students charge for post-graduate students did have an impact on the opportunities for James Cook University to encourage more post-graduate students to study at that excellent university. The effect in 1987 on Government sponsored post-graduate scholarships and award programs for developed countries was offset by supplementary funding. In 1988 and subsequent years, however, the overseas students charge will have to be met from program funds. It is expected that this will cause about a 15 per cent reduction in the number of Government awards and scholarships available. There have been allegations that the high overseas student charge is causing unnecessary hardship. These claims have not been substantiated. This year, of the approximately 17,300 overseas students liable for the charge, only 107-less than one per cent-had not paid by the end of September. Of these, none had made a case of hardship to the Government. Although the charge now represents a significant contribution on the part of the families concerned, it is undeniable that, as Australians contribute to the cost of their education through the taxation system, overseas students should also contribute directly to the costs involved. This is accepted explicitly by all overseas students as a condition of entry at the time of their admission to Australia. Overseas students can meet the cost of the overseas students charge by working-they are allowed to work up to 20 hours per week-or, in the case of Malaysians, by resort to the Malaysian Government revolving loan fund. Tertiary students who commenced study before 1988 will continue to pay at the rate of 45 per cent of full average cost-or 32 per cent if they began in 1985 or before. As I said earlier, students commencing in 1988 will be required to pay 55 per cent of the full average cost. These charges continue to compare favourably with those for comparable quality courses in other major host countries such as the United States of America and Canada. The opportunities to market successfully educational services to foreign students has been acknowledged by Australian Governments for a long time. Indeed, Australia has a long and distinguished history of supply of educational services in, particularly, the Pacific, South East Asia and South Asian regions. Over many years Australia has developed an excellent reputation for the quality of its higher education sector. This excellent reputation has led to a consistently high level demand from overseas students for places in Australian higher education institutions. It has been responsible for a tremendous fund of good will. It has allowed Australian academics to become involved in the academic life of our region and in turn, this has led to Australian higher education institutions providing increasingly advanced support and investigation of a whole range of issues for the development of the region. The James Cook University of North Queensland is participating very actively in this role. Marine science, tropical veterinary science and engineering are three areas in which James Cook University has been most successful. Mr Robert Brown —A great university. Mr LINDSAY —Indeed, a great university. The university has been most successful not only in providing educational services but also has been successfully engaged in investigation and support services on behalf of a number of governments in the region which have taken advantage of the wide range of expertise provided by the university. In July 1985 the then Minister for Trade, the honourable member for Fremantle (Mr Dawkins), announced that two education trade survey missions aimed at developing exports of Australian educational services would visit South East Asia and Hong Kong. This initiative was a recognition by the Hawke Government, an authentic Australian government, that tertiary education was a key service area which offered significant potential for the development of an export activity. Members of these missions on their return suggested that Australia could earn $100m a year by 1988 by marketing educational services to foreign students. The mission's final report recommended to the Federal Government that educational institutions, government bodies and private corporations be allowed to market educational services to overseas students. The mission identified a strong regional market for such services, particularly in Indonesia and Malaysia. It also found demand in Hong Kong and Thailand and the prospect of marketing services to the Philippines and Singapore. The Hawke Government responded positively to the mission's report. The then Minister for Trade immediately encouraged the universities and colleges to develop their own courses and services in South East Asia. They were encouraged to offer undergraduate courses in Australia or overseas, short courses of up to six months in Australia or overseas, post-graduate courses and occasional and technical training. The then Minister said that the Government would set up educational universities in South East Asian and other Asian countries to help develop the market. Above all, he recognised that the new scheme would be of direct benefit to Australia's education through the provision of new courses, additional academic positions and enlarged facilities. Wisely, the Government ruled out any plans by totally private organisations to provide tertiary courses and decided not to allow funds for Australian student education to be diverted to the new overseas student program. By February 1987 the educational services were a new, bright spot in Australia's export trade. There had been a massive increase in the number of courses offered to full fee paying overseas students by Australia's universities and colleges. At the beginning of this year 370 courses were offered compared with only 16 in 1986-the first year of the full fee program, which had been introduced in 1985. Even the number of overseas secondary students buying Australia's educational services has tripled since 1986 from 250 to nearly 800 students in 1987. Ten secondary schools, three technical and further education colleges, 17 colleges of advanced education and 13 universities are now offering full cost courses. By July 1987 Australia's new export trade in tertiary education services was undergoing a boom in South East Asia. Approximately 2,000 new students from South East Asia are expected to buy an education in Australia this year-more than three times the number of students for 1986 when full fee enrolments began. There are indications that this is only a small fraction of the market. It is convincing proof that Australia can profitably market education services to foreign students and can do so in a way which will maximise long term benefits for Australia. The extraordinary interest being shown in this program is clear evidence of a firm demand within our region, and possibly elsewhere, for well marketed and well targeted Australian educational services. Its success will bring enormous benefits. Not only will it help redress Australia's poor trading performance but I am sure also that it will result in an influx of more than 10,000 Asian students over the next three years, all paying between $10,000 and $20,000 a year for the privilege of studying and living in Australia. There is no doubt that the sale of educational services to South East Asian countries offers an opportunity for Australia to link with the opportunities associated with the rapid growth of Asia's newly industrialised countries. I specifically mentioned opportunities for the sale of educational services in Indonesia. However, there have been some problems. Writing in the Sydney Morning Herald of 7 July 1987, Peter Quiddington said: Although demand has also been strong in Indonesia, the market there presents another set of problems. Potentially, it could provide a market 10 times the size of that in Malaysia- that is, of 12,000 students- There is a steady rise in the number of students passing through the high schools. The figure this year is 700,000, nine out of every 10 of whom are expected to seek some form of higher training. Of those who go abroad, more than half go to the US, with the rest divided between Hong Kong, Singapore, Canada, Japan, Britain, the Netherlands, Australia and New Zealand. According to an Austrade official in Jakarta, Ms Clare McMahon, attracting Indonesians will demand a great deal of skill. She said the problem of rival Australian institutions criticising each other was most typical of what should not be done. Jakarta, with its population of six million is just like a `small town', she says. `If there is any friction (among Australian representatives), it spreads like wildfire.' If Australia was to `break the nexus' between Indonesia and the US, it needed to adopt the smooth marketing approach used by the Americans and developed over more than 20 years in the business. `Gradually we need to sell the idea of a quality education,' she says: `At the moment, Indonesians don't believe Australia is really up to it. We need a co-ordinated approach and to look like a unit. So far, Australia has been its own worst enemy.' It is a unanimously held belief among Austrade officials that a strong selling point is the country's- that is, Australia's- high quality, government-backed education system. Most- Indonesians- will shy away from the issue of private universities being established in Queensland and Western Australia, saying that it is `too early to tell' what will be the effect of these or flatly `no comment'. This is an area in which this country must involve itself. It must involve itself in the export of educational services. As honourable members have said earlier in this debate, it is absolutely essential that opportunities be available for full fee paying overseas students to experience the culture, the educational system and the political system of this country and then return to their countries imbued with the spirit of democracy, freedom and liberty that we have here in Australia. We should never forget that education is more than a mere commodity to be bought and sold. It is a process which can have a profound impact on the lives of individuals and nations. The Hawke Government is proceeding with caution on the export of education services. Higher education courses must have quality and stability. Excellent standards must be maintained. So too must the excellent reputations of the higher education institutions be maintained. Finally, so too must the excellent reputation of Australia be maintained. Mr WILSON(Sturt)(6.58) —I join in this debate on the Overseas Students Charge Amendment Bill because I believe that this legislation is pointing in the direction in which we should move. We should move more quickly. We should free up the arrangements in a way in which, apparently, the Government is unwilling to do. Some years ago I spoke in this House about the desirability of Australia using part of its aid vote to establish what I then described as an Australian overseas university or an Australian university overseas. I suggested that we should provide the funds to Australian universities and tertiary institutions which would enable them to put together teams of professors, teachers and researchers who could take our education product to countries in our region-the developing countries-and teach in those countries probably more students than they would be able to teach here. I endorse what my colleague the honourable member for Groom (Mr McVeigh) had to say earlier in this debate. In this area of overseas aid, we need to ensure that we have a balance, that we provide some services overseas and some within Australia. In a sense, we need to do two things: on the one hand to export, albeit for a temporary period, our educators; and on the other hand, to import fee paying students from overseas countries who we can train here in skills that will enable them to go back to their countries and make a contribution to the development of their own countries, and in many instances, to lift those countries out of deep poverty. We have a broader reason for wanting to do both these things-export our educators and import fee paying students. We have the development reason, which I have outlined. But we also have the long term concern that we need to have an eye on our foreign relations. Nothing has a greater long term impact-intangible, because it cannot be measured-than having in other countries people who have experienced educational opportunities in Australia. The friendships that are shared, the cultural values that are exchanged, the social understandings that come about from students coming from one country to another and then returning home, will, in an immeasurable way, be able to lead to greater understanding and, we hope, a greater extent of peaceful relations in the world of the twenty-first century. The investment that we put into overseas aid and overseas students, whether in the form of teaching them overseas or teaching them in Australia, will help in achieving that goal of greater peace and understanding, particularly in our region, 10, 20 or 30 years from now. In that context, we cannot look for the measurable benefits this year or next year. We must recognise that the dividend takes a long time to mature. I support the concept of charging overseas students fees. I am concerned about the inflexibility of the arrangements as they now stand, whereby universities are required to charge either 55 per cent for a subsidised place or 100 per cent for an unsubsidised place. I believe that universities and tertiary institutions should be given some flexibility in charging 65, 75 or 80 per cent, charging the marginal cost of a student place. Likewise I think that if we want to do what the honourable member for Herbert (Mr Lindsay) suggested and develop the export of education, we should not restrict the institutions by putting them into a straitjacket by telling them what percentage of their students can come from overseas as compared with those from within Australia. I am sure that the institutions will recognise the educational value of having students from different backgrounds in their courses, and will set their own level of proportions of overseas students to Australians who are suitable for the course and the institution. I do not believe that we in this Parliament, or through the Government appointed by this Parliament, should put the institutions under constraints that inhibit their ability to market our educational services to fee paying students from overseas. I was interested to read in the Budget papers about the number of subsidised fee paying students from overseas. I note-and I express some concern about this-that there will be 3,500 new admissions to institutions in 1988 under the subsidised fee paying scheme. We have approximately-it varies according to how one assesses the numbers-between 15,000 and 17,000 overseas students in our tertiary institutions. If we are admitting only 3,500, we are reducing the level of our effort in terms of subsidised students. However, if one then analyses the 3,500 places, one finds that those places are not being made available to tertiary students. Of the 3,500 places, only 1,500 are for students attending tertiary institutions, against a basic population of tertiary students from overseas of about 14,000 to 15,000. That is setting in train a trend that will bring about a declining population of subsidised students in our tertiary institutions at a time when our near neighbours and the countries from which overseas students are coming are needing education places for their bright young people, so that they can get the training to help to develop their countries. I register that concern-that, of the 3,500 subsidised places, 2,000 are in the relatively cheap school places at secondary level rather than the more expensive places at university or college level. I turn now to the amendment moved by my colleague the shadow Minister for Education, the honourable member for Mackellar (Mr Carlton). I think that it is scandalous that we can talk in such glowing terms as those used by the honourable member for Herbert in the speech he made before mine about marketing our educational services and attracting students who are willing to pay fees whilst we deny to Australian students the opportunity of getting into the limited number of free places in universities being made available by this Government because those places are not available, even though they are willing in many instances to work to raise the fees, or whose families will support them, or who are prepared to pledge their future by going into debt to raise the funds necessary to pay the full fees. For that reason, I support strongly the amendment moved by my colleague the shadow Minister, in which we urge the Government to change its attitude and enable Australian students who cannot get into free places to enter universities by paying fees on a similar basis to the fees paid by overseas students. We could face the ridiculous situation whereby an Australian citizen with dual nationality, coming from the United Kingdom or from Singapore or Malaysia, entitled to carry two passports, because our law recognises one citizenship and the country of his birth recognises another citizenship, cannot get into an Australian university as an Australian, having been brought up here during all his educational years, but if he returns to the country of his parents' birth, travelling back to Australia on a passport that is of his parents' origin, he may then qualify to get into an Australian university. It is a disgrace that Australian students with the skills to undertake university courses are denied the opportunity to attend university simply because this Government has said that they cannot. The former Minister for Education, Senator Ryan, was asked the following question: . . . why this opportunity, available only to overseas students, is not available to the tens of thousands of Australian students who qualify but who are unable to make the quotas because of the very limited places? Her reply was: The answer is simply a policy one. It is a wrong, unfair and anti-Australian policy when we deny Australian students who have the ability, the motivation and desire to develop their skills by undertaking tertiary education the opportunity, even when they are prepared to pay the full fee. Therefore, there is a need for a fundamental policy change. I believe that change will come about only when there is a change of government and we are able to implement the policy on tertiary education announced by the Liberal and National parties in the lead-up to the last election. Mr COBB(Parkes)(7.11) —The purpose of the Overseas Students Charge Amendment Bill, as has been enunciated by previous speakers, is to set out the overseas students charge rate for 1988. In particular, it proposes to increase the overseas students charge to 55 per cent of the total average cost of a tertiary education place; namely, for universities, colleges of advanced education and technical and further education (TAFE) places. Those increases will apply from 1 January 1988. The charges for those who commenced before 1 January 1986 will remain at 32 per cent of the average cost, the charges for those who commenced after 1 January 1986 will remain at 45 per cent of the total cost but, as I said, those who start after 1 January next year will be charged 55 per cent of the total average cost. The more expensive courses such as medicine, veterinary science and dentistry will cost $7,153. All other university courses will be $6,313. It is interesting to note that if one extrapolates from those figures the average cost of more expensive courses to the taxpayer is $13,000 and of the less expensive ones $11,478. Last financial year these fees raised $49.6m. This financial year it is proposed to raise $64.8m from these charges. The TAFE charges are structured on similar percentages. Those who started before 1 January this year will pay a fee of $593; those who started after January this year will pay $833 and those who start a TAFE course after 1 January next year will pay a charge of $1,018, which means that the average cost to the taxpayer for the full course will be $1,851 a year. At present we have 19 universities in Australia and 46 colleges of advanced education which are educating 391,500 students who are being taught by 68,000 staff. The higher education expenditure in Australia at the moment is running at $2,558m, which is an increase of 2 per cent over last year's allocation. It is interesting to reflect that we have spent in excess of $31 billion since 1974. An average of 61 per cent of year 12 students in Australia go on to further studies. One can add another 14 per cent to that for those who defer further studies for 12 months. But in 1987 between 13,000 and 20,000 students could not secure a spot in universities even though they had the qualifications to get there. At 30 June this year some 14,444 overseas students were undertaking tertiary courses in Australia under the private overseas students quota control program. Another 622 students were at tertiary full fee institutions, and at tertiary institutions there were 1,585 who were fully sponsored by the Australian International Development Assistance Bureau. I seek leave to incorporate in Hansard a table showing the breakdown of the numbers from each country and the principal countries that send students to tertiary institutions in Australia. Leave granted. The table read as follows- The principal countries and the numbers of private overseas students undertaking tertiary studies at 30.6.87 are as follows: Malaysia ... 8,012 Hong Kong ... 1,368 Indonesia ... 1,128 Fiji ... 763 People's Republic of China ... 611 Singapore ... 590 United Kingdom ... 184 India ... 177 Thailand ... 159 Japan ... 148 Sri Lanka ... 132 Korea ... 125 United States of America ... 115 Canada ... 83 Tonga ... 65 Papua New Guinea ... 62 Federal Republic of Germany ... 60 Total ... 13,782 This represents 95 per cent of the total number of students in this program. Madam DEPUTY SPEAKER(Mrs Darling) —Order! It being 7.15 pm., I propose the question: That the House do now adjourn. Mr Hand-Madam Deputy Speaker, I require that the question be put forthwith without debate. Question resolved in the negative. Debate resumed. Mr COBB(Parkes) —I thank the House. The table clearly shows that the bulk of overseas students-8,000 of nearly 14,000-come from Malaysia. The next two countries in line are Hong Kong and Indonesia. Having given all these figures, I wish to state that the Opposition does not oppose this Bill which seeks to increase the overseas students charge to 55 per cent. I think it is a step in the right direction. The more people have to pay for their education, the more they will value the courses that are given. Many Australians believe that overseas students should pay all the fees. I have some sympathy with that point of view. Other Australians believe that no overseas students should be allowed into this country at all because there is a feeling that they squeeze out Australian students. I think that is an extreme point of view. If honourable members look at the figures, they will see that overseas students make up about only 4 per cent of all student numbers in this country. I believe it is a beneficial step to allow these students in because it creates good will. If we are to give aid to overseas countries I believe this is aid of the very best type. It exposes them to our way of life and it creates good will, as I have said. One often wonders where the politics of leaders such as the Gandhis and Cory Aquino would lie had they been educated in Moscow, for example, rather than in England or America. Of course, it does work the other way. I believe a leader in one of the Asian countries to the north of Australia who was educated in Australia is a little antagonistic towards policy in Australia at the moment. I would like to speak to the amendment, which is concerned with allowing overseas students and Australian students who pay the full fees to attend tertiary institutions. To understand better how this suggestion would benefit the universities, the TAFE colleges and the colleges of advanced education, it is worth doing a brief comparison with the school system. More than 25 per cent of students who attend schools pay a substantial proportion of the cost in fees. These, of course, go to the non-government schools. Non-government schools have quite a substantial injection of private funds. In other words, the Government does not have to pay the full cost of educating each child at a non-government school as it does at a government school. We have close to 800,000 students attending non-government schools. They pay, on average, about 40 per cent of the total cost of education. This releases taxpayers from paying well in excess of $1 billion that they would otherwise have to pay if the Government picked up the full tab. In other words, it releases taxpayers' dollars to be spent on public schools. This increases the facilities that can be placed at these schools for each student, it allows more teachers to be placed at these schools, it allows the parents a choice of sending their children to either a government or a non-government school, and it also allows the teachers a choice of teaching at either a government or a non-government school. Let us not forget that close to 48,000 teachers choose to teach at non-government schools. It also means higher salaries for teachers at government schools and it produces healthy competition and motivation throughout the school system. If this principle could be applied to the tertiary education level I think like benefits would flow through. Very few private funds go to universities now-about $150m, which is not much of the total Budget. Instead of deploring the shortage of resources available, as some university people do, I believe that they should look at this source of funds. In advocating what they are, they are only wanting to retain the Government's monopoly of tertiary education. If the Government allowed students to pay full fees and it allowed private universities to start up, I believe that it would expand the capacity of the present universities, improve the quality, allow more competition and a higher standard of excellence and release these institutions from their almost total dependence on the Government. Why someone should be denied the chance to study if he or she is willing to pay is quite beyond my comprehension. If this principle is to be extended logically throughout everything, the Government will next be denying people the right to buy books, beer and bread. In conclusion, the coalition supports this Bill but we particularly support the amendment and hope that the Government will take note of it. Mr HAND(Melbourne-Minister for Aboriginal Affairs)(7.21) —On behalf of the Government I would like to thank honourable members on both sides of the chamber for their contributions in this debate. 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 Mr Hand) read a third time. Motion (by Mr Hand) proposed: That the House do now adjourn. Mr N.A. Brown(Menzies)(7.23) —Last night in the adjournment debate we had presented what could be described as a left wing view of the world. It is appropriate on this occasion that the record should be completed-- Mr Tim Fischer —Balanced. Mr N.A. Brown —A balanced point of view should also be presented. The first contribution came from the honourable member for Hindmarsh (Mr Scott) who launched what he intended to be an attack on what he called United States bases in Australia. For the sake of the record, I simply want to draw his attention to the fact that what he refers to as United States bases in Australia are joint facilities between this country and the United States of America. It should be understood that they are not United States bases and it does not do him or anyone else any credit to refer to them as such. It should be remembered that those joint facilities are there for the preservation and the protection of the Australian interest which, as with so many things, are common with those interests of the United States of America. The honourable member should be reminded that we, together with the United States, stand for some very basic principles, such as the democratic parliamentary system of government which we both share. It should be remembered, and it should be stated to complete the record and to present a balanced view to the Australian people, that the only reason why we have shared defence facilities in this country between the United States and Australia is to protect and to promote those democratic interests. Finally, before leaving the speech of the honourable member for Hindmarsh, I simply draw to the attention of the House the fact that the honourable member for Hindmarsh called in one Christopher Boyce in support of his case and he sought to rely upon the words of wisdom of this Christopher Boyce. It should be said that Christopher Boyce is no innocent Peter Pan who was caught up in the web of the Central Intelligence Agency, as the honourable member sought to present. Christopher Boyce is a traitor to his own country-a man who, as a mature adult, sought to sell out the interests of his own country for money. We cannot rely on anything that that man says to advance any case whatsoever. Secondly, the honourable member for La Trobe (Mr Milton) launched an attack on what he referred to as abuses of human rights in Chile. I want to say only two things about that. The first point is that if there are no shortcomings in human rights in Chile it would be the only country in the world where there are no shortcomings in human rights. That should be stated very clearly at the outset. The second point is that it does not advance the case of those who criticise human rights in Chile one iota when they are selective in that way. I would like to hear the honourable member for La Trobe say on one occasion-I would like to hear other members of the Left of the Australian Labor Party say it on at least one occasion-that there are abuses of human rights in left wing countries, countries that have left wing governments. I would like to hear about the rights of trade unionists in Poland, for instance. I would like to hear about the way in which the Bill of Rights of the Soviet Union is put into operation. The Soviet Union has a Bill of Rights but no one can rely upon it or enforce it. The honourable member for La Trobe said that we should do two things to protest to Chile. Firstly, we should cut off diplomatic relations and, secondly, we should have no investment in Chile. I reject both those suggestions because, if they are to be valid, we should do exactly the same thing with the Soviet Union. I will accept the substance of the argument that was put against Chile and other countries at which members of the Labor Party like to point a finger when I hear them get up in this House and say on just one occasion that they also want to criticise and condemn communist and socialist countries for their continued and flagrant abuses of human rights. But they will never do it. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Order! The honourable member's time has expired. Mr LAVARCH(Fisher)(7.28) —The single largest residential development ever to be undertaken in Australia is proposed for Bribie Island and Caloundra Downs within and adjacent to my electorate. The proposal envisages the construction of a satellite city around a canal estate with an underwater tunnel linking an industrial town of 20,000 people, a resort town of 50,000 people, a retirement town of 20,000 people, a central town of 40,000 people and a private university with a supporting population of 30,000. If my arithmetic is accurate, that amounts to a development of 200,000 people. Needless to say, a development of such a scale has generated public interest and some concern. The concern centres on the fact that Bribie Island is an environmentally sensitive sand island and the adjoining coastline contains natural resources identified over a period as worthy of preservation. Further, Bribie Island has traditionally been a retirement settlement renowned for its beauty and easy pace of lifestyle. The State Government has also promised for 10 years that environmentally sensitive areas would be protected by way of a national park and an environmental park. The promise for the park dedication has been made by no other than the Queensland Premier on two occasions before State elections. After a long wait the parks will soon be gazetted. But, surprise, surprise, the actual park proposals differ vastly from those promised and the changes coincide with, and facilitate, the proposed super satellite city. Surely a major change to a long established proposal deserves both explanation and good, sound justification. Neither has been forthcoming. What explanation there has been has come from the local State National Party member for the area. He explains that the change has been necessary to allow the developer access to Pumicestone Passage which runs between the mainland and Bribie Island. At present, the developer's holding is located in the centre of the island and comprises some 1,947 hectares. On both the eastern or surf side and the western or passage side, there are areas which have been earmarked for a national park and an environmental park. The new proposal substantially changes this and even shifts the location of the national park from the extremely sensitive passage side to the surf side. The developer, the Emanuel group of companies, will apparently develop Bribie Island with some help. The help comes in the form of a trust and investment company from a Chinese province. My understanding is that the Chinese company proposes to acquire a complete half share in Emanuel (No. 14) Pty Ltd. This company owns considerable land holdings in south-east Queensland, formerly owned by Australian Paper Manufacturers Ltd. The total land owned by the Emanuel group is over 26,000 hectares, including the 1,947 hectares on Bribie Island and some 4,023 hectares at Caloundra Downs. The desirability of a foreign company gaining a half share of such huge land holdings is obviously a matter which should be considered by the Treasurer (Mr Keating) under the Foreign Takeovers Act. I call on the Treasurer and the Minister for the Environment and the Arts (Senator Richardson), in their respective areas of responsibility, to take the appropriate action in regard to their powers under the Commonwealth Foreign Takeovers Act and the Environment Protection (Impact of Proposals) Act, if the acquisition proceeds by the Chinese investors. In my opinion the developers should be designated a `proponent' pursuant to the environment protection Act and a full environment impact study should be undertaken on the affects on Bribie Island and the Pumicestone Passage of the residential and associated development. Bribie Island is too beautiful, and its resources too scarce, to be exploited without a full assessment and cost-benefit analysis. I have no confidence that the Queensland Government will ensure such a study. It is up to this Government to safeguard a settled community and a worthwhile and worthy environment. Mr MacKELLAR(Warringah)(7.33) —I speak in support of those medical and health care practitioners who have recently formed the Australian Society of Environmental Medicine. Small in number, they represent a growing field of established medicine which is deeply concerned with the relationship between the increasing complexity of our environment and its possible influence on our health. There is a growing perception in our community that many of the illnesses we are now suffering can be traced to what we eat, the air we breathe, what we touch and what touches us. Every day there are reports of environmental issues which have health implications. Recently we have been told that asthma deaths have more than doubled in Australia in the past 10 years, but we do not know why; that unacceptably high levels of pesticides have been found in Australian beef; that PVC piping may poison the water supply; that there is evidence linking antibiotics in animal feed with illnesses in humans; that excessive levels of cadmium have been found in 21 per cent of sheep kidneys tested in a recent national survey and that the toxic chemical dioxin has been found in a range of paper products. The list is endless. All this is bringing home forcefully to the Australian public that the apparent advantages flowing from the manipulation and control of our environment can, all too easily, bring with it unforseen and serious disadvantages. What is frequently not recognised is that there are really three separate issues involved. The first is the impact which certain chemicals and substances have on those people with specific allergies or sensitivities. Second, there is the potential danger to humans from direct exposure to poisons and highly toxic substances. Third, and this is my real concern, there is evidence that increasing intake of and exposure to chemicals is having long term cumulative and adverse effects on the reproductive, higher brain functions and immune systems of a wide spectrum of the population. People who have a conventional medical condition are well served by present medical services. Poorly served, though, are those who have a condition possibly involving maladaption to an increasingly complex environment. Few facilities are provided and few practitioners are interested in, or able to investigate, whether these conditions are caused by, or vary with, exposure to factors such as allergens, chemicals, nutritional and immunological status, fatigue, hormonal changes and/or psychological stress. It could be that many of those who are opting for alternative medicine are people with these complex problems. As well as other non-medical practitioners, some individual nutritional pharmacologists and orthomolecular psychiatrists are attempting to address these matters from the perspective of their particular speciality. Though some aspects of their work certainly lack scientific documentation of effectiveness and cost efficiency, patients and practitioners are adamant that their approaches are helpful and often so in situations where most or all other approaches have failed. I wish to make three observations and to make a plea for the Government to take an active and responsible interest in environmental medicine. First, rapid post-war changes in our urbanised society, its environment and our eating habits, have brought with them an increase in our exposure to, and consumption of, chemicals and non-food substances. Second, there appears to be an increasing public perception that a number of health-related disorders and allergies can be traced to the changes in, and complexity of, that environment. Unless orthodox medicine responds appropriately to people with such problems, the present drift to alternative medicine will continue and escalate. Third, while environmental medicine is very much in its infancy in Australia, its work and success in this field is such that it warrants more respect than appears to be the case, and almost certainly greater support and encouragement. The proposal I wish to place before the Australian medical profession, our health administrators and the Government is that scepticism towards environmental medicine should be converted into a healthy willingness to put more resources into well-supervised, well-designed, clinically-based research programs, to study the impact on humans of a rapidly changing environment and the increasing use of additives in our food industries. The first essential step in this direction is for the Government to establish an environmental medicine task force to advise it on how that study would best be conducted and the resources that might be required. Above all, that task force must be multi-disciplinary in composition as an acknowledgment that future research on environmental medicine must be a co-ordination of a large number and diversity of branches of medical research. Mr JENKINS(Scullin)(7.38) —The recent release of the reports of the Advisory Committees to the Constitutional Commission have created much interest in the question of constitutional review. In last week's grievance debate the honourable member for Denison (Mr Kerr) made a very learned contribution to the question of constitutional reform, in particular on the use, abuse and misuse of section 92. All this has served to remind me of some recent Tasmanian political history. In the Tasmanian context, the events of 11 July this year are significant for two reasons: firstly, the Australian Labor Party's momentous victory in Denison broke a 12-year drought of ALP representation from Tasmania in this House. I digress slightly to comment that I am sure my colleagues on this side of the House would agree, and those on the other side might concede, that the honourable member for Denison has made an impressive start to what I am sure will be a long and distinguished career in this place. Secondly, 11 July finally saw the election of John Devereux as a senator for the State of Tasmania. Subsequently Senator Devereux took his seat in the other place at the start of this parliamentary session. Most members would not need to be reminded that this event was some four months overdue. It must be remembered that Senator Devereux would have taken his place in the Senate in April or May of this year but for the intransigence, the treachery and the infamy of the Gray Liberal Tasmanian State Government. Following the resignation of the then Senator Don Grimes, an ALP endorsed senator, the Tasmanian electorate was denied a representative by the actions of the Tasmanian Government. When the then Mr Devereux had been put forward as the ALP nominee for the vacancy, honourable members will recall the failure of a joint sitting of the Tasmanian Parliament to appoint him. What a disgraceful blot on modern Tasmanian political history. All this occurred despite the Australian public's belief, following similar infamous acts by the conservative governments in Queensland and New South Wales, that they had by their vote in a 1977 referendum authorised a constitutional amendment which enshrined the practice that a Senate vacancy would be replaced by a nominee of the same political party as the senator whose place became vacant. In fact, on the previous 13 occasions in which a vacancy has occurred since the constitutional amendment of 1977 the vacancy has been filled without incident. State governments of all political persuasions have abided by the will of the people as it was reflected in the spirit of the 1977 referendum. In the situation in Tasmania in April of this year there was a fairly simple equation. There was one Senate vacancy to be filled by an Australian Labor Party nominee. The Australian Labor Party had one nomination to fill the one vacancy-John Devereux, the properly preselected candidate. It was such a simple equation that even the Leader of the Opposition, the honourable member for Bennelong (Mr Howard) understood it. He said on the public record that the ALP nomination, Mr Devereux, should have filled the Senate vacancy. In this House on 12 April this year he made his view quite clear when he said: I believe that persons appointed to fill casual vacancies of the kind created by Senator Grime's departure ought to be filled by the person nominated by the retiring senator's political party. But what we need to remember is that the Tasmanian Liberal Premier learnt his trade from the Queensland Premier, for whom simple equations are remarkably complex. Let us recall that during the last Queensland State election the Premier stunned a public gathering. When talking of electoral representation, he made the revelation: . . . It doesn't add up-you can't make one and one mean two . . . The actions of the Tasmanian Premier were those of a desperate man. Was his attempt at constitutional vandalism in this instance a diversion, a cynical attempt at petty point scoring intended to distract attention of the nation from the real issues, such as the ineptitude of his State Administration? In 1977 the Australian people expressed a firm view on the issue of Senate vacancies. They did so on the information provided to them by the political figures of the day. Let there be no doubt that the Australian people believed that the 1977 amendment constituted a fair, reasonable and final resolution to the issue of Senate vacancies. We have no less an authority on this matter than the former Prime Minister, Malcolm Fraser-not the flavour of month in the Liberal Party at the moment. In a Press statement of 4 May 1977 the then Prime Minister stated: The . . . proposal concerns the Senator you actually elect. Should he die or resign during his period of office, we believe that he ought to be replaced by somebody from the same political party and that the replacement Senator should serve out the remainder of this term. That means that the party balance determined at one election will be maintained until the next. He further stated that this was fair, reasonable, just and would make the Constitution work better. Introducing the Constitution Alteration (Senate Casual Vacancies) Bill in early 1977, the then Liberal Attorney-General, Mr Ellicott, informed the Parliament and the Australian people: The Government has concluded that the appropriate course is to invite the people of Australia to write provisions into the Constitution which will make clear and certain the manner in which Senate casual vacancies are to be filled. The effect of the amendments proposed is that a Senate casual vacancy will have to be filled by a person chosen from the same political party as the person he is to replace. Nothing can be clearer than that. Of this recent sad and sorry exercise in Tasmania the commentator Cassius, writing in the Daily Commercial News of Tuesday, 12 May 1987, had this to say: The constitutional fracas which has been provoked by Tasmanian Liberal Premier, Mr Gray, over the appointment to fill a casual vacancy in the Senate should never have arisen. That it has is solely the responsibility of those who drafted the Constitutional amendment which was endorsed by the people at the 1977 referendum. The commentary went on to add: Now it seems this was not achieved simply because those who drafted the amendment, presumably lawyers, were careless with the actual wording. . . . . There is no doubt as to the intent of the amendment . . . Put crudely this meant that the State Parliament was simply to be a rubber stamp for the name forwarded by the Party. Though not wishing to be flippant, I can only agree with the conclusion of the article from Cassius. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Order! The honourable member's time has expired. Mr WEBSTER(Macquarie)(7.43) —On 22 October this year an article in the Sydney Morning Herald commenced with the following rhetorical question and answer: Unhappy with your unborn baby's sex? Then have an abortion. The article was reporting on a study at Sydney's Royal Prince Alfred Hospital which found that women were having abortions because they felt their baby's sex was inappropriate. It had found that most of the aborted foetuses were female. One of the study's authors, Dr Tom Boogert, was reported as saying of these women: They find themselves pregnant, and having had the test done, proving to be normal, and having been given the sex of the baby, decide they have got three or four of that sex anyway and don't feel it's worthwhile to continue under those circumstances. Obviously I'm not happy about people terminating pregnancies but largely it's up to the patient. Most Australians will have seen the statistics for abortion in this country. It seems, however, that the simple statistical tale of the tens of thousands of human lives being arbitrarily terminated each year has either been unbelievable or simply overwhelming for most people. This publication of the study has succeeded where the statistics have failed. It has made ordinary citizens face the moral dimension of abortion on demand. Realising that the sex-related abortion story has reopened the abortion debate, some have sought to head off the debate by focusing on the question of whether a mother should be told the sex of her foetus. But as Dr Paul Shekleton is reported to have said, it is inconsistent that doctors could not accept the termination of pregnancy on the grounds of `wrong' sex when they otherwise did abortions on demand. That is the real point at issue once again-abortion on demand. Suddenly people realise that our laws are allowing the destruction of human life for any reason at all; indeed, for no reason at all. Suddenly people are feeling, legitimately, guilty as members of a society which has allowed the situation to get to this point. We have turned a blind eye to people who have decided to destroy human life simply to maintain a certain lifestyle or simply because they already had two of that type. We have been a party to other abortions because we have been unwilling to provide the social and financial support a mother with a disabled child would require, having proceeded with her pregnancy. We have even allowed the truth to be distorted by the manipulation of language. Abortion involves the termination, the destruction, of life-human life. But we do not talk about that; we talk about birth control and individual choice. We face in Australia today the systematic desacralisation of life. The ease with which persons can decide to terminate a pregnancy simply because they would prefer the other sex is simply the shocking evidence of that fact. There is an urgent need for this country to consider anew the availability of abortion on demand. We need to consider as well our own obligation to support women who face difficulties because of their pregnancy. We cannot stand in judgment on women or couples who abort a potentially handicapped baby or who shrink from the task of parenthood when we will not take up our own obligation to that unborn child and its mother. Albert Schweitzer is quoted as saying that if a person loses reverence for any part of life he will lose his reverence for all of life. He wrote: Someone who affirms life accepts as being good: to preserve life, to promote life, to raise to its highest value life which is capable of development; and as being evil; to destroy life, to injure life, to repress life which is capable of development. This country is collectively involved in the arbitrary, massive destruction of human life on a daily basis. We have been forced to face up to this reality by the publicity the abortion due to sex findings have received. We must ask ourselves simply, `Do we as a community revere human life? Do we want to be a life-affirming community?' If we do, we will stop abortion on demand. Mr SNOW(Eden-Monaro)(7.48) —I ask both State and Federal governments to recognise the value and advice of the people best trained to look after Australia's forests-foresters. There is mounting evidence that government foresters are not being properly heeded by their own governments. Failure to listen to foresters will lead to the economic decay of important communities in the timber areas of Australia-communities like Bombala, Nimmitabel, Delegate and Eden. As their Federal member I have worked with people in those districts; I have come to know them. In recent months I have seen very real fear, even terror, as people wrestle with the possibility of losing their capital investments, their family security and even family stability. There is no doubt that unless governments listen to the sensible, balanced views of foresters the fears of some of these people will be realised. Foresters have told the New South Wales Government that the Eden-Bombala forests can sustain viable sawlog hardwood industries in partnership with a woodchip industry which takes waste and timber not useable for sawlogs. I would be interested to know how much regard the New South Wales Government is giving to that advice. I would also be interested to know how much regard the Federal Government gave to the counsel of its Forests and Land Management Branch in the Department of Primary Industries and Energy before it made decisions on the forests in southern Tasmania and northern Queensland. My impression is that there is an increasing tendency by governments to listen to unqualified people when they make decisions on forests. Medical practitioners, non-specialist botanists, teachers and farmers are all able to speak with knowledge about forests, but not to the extent that foresters can. Even environmentalists know less about forests than foresters. Foresters have graduated with a Bachelor of Science in Forestry qualification after four years at the Australian National University or Melbourne University. A large number go on to post-graduate studies and foresters have in-house training to keep them skilled in their profession and craft. Fire schools, managerial training and technical training continue after graduation. Subjects dealt with in their courses include: wildlife, fire ecology, silviculture, hydrology, soils and nutrition, pathology and entomology. They liaise closely with, and have representation on, organisations such as the Commonwealth Scientific and Industrial Research Organisation and universities. It is not surprising that foresters are interested in sustainable forests and in protecting catchments and sensitive parts of the forests. If no action is taken to increase reserves in the Eden-Bombala forests, 45 per cent of the total crown forest area will not be logged. Thirty-five per cent of State forests will not be logged. Of the areas to be logged, the rate is low enough to protect large areas from the process. Where logging takes place there is no clear felling. Trees are retained. All growing trees are retained. Added to that are a minimum of five trees per hectare kept for seed and five trees per 15 hectares for wildlife, three to five trees around the perimeter of each log dump and monkey gums kept with nesting hollows. Under the foresters, 10 per cent or more of the canopy generally remains, plus 20 to 40 metre wide filter strips of forest per 40 hectares and over catchment. Foresters ensure that only trees which are marked can be removed and it is their job to see that only waste and timber unsuitable for logging goes to the chip mill. Foresters prescribe how logging takes place to keep down erosion and to take special precautions-for example, with wildlife and in wet weather and on slopes. The foresters say that we can have viable sawlog and chip industries and sustain our forests. Not to accept their word would bring some towns close to ruin. To argue that hardwood mills can divert to softwood is to ignore the fact that all softwood in the region is taken up by Softwood Holdings, a firm in Bombala. Taking every available pine log would increase employment there by no more than three or four people a year and would not employ the workers at Bombala, Nimmitabel, Bega and Eden saw mills. I welcome the recent announcement by Bob Ware, the Australian Labor Party candidate for Bega, that he wants a viable timber industry. He knows, as I do, that to close up thousands of hectares more of forest would be to throw people on to the jobs scrap-heap. It would also be ignoring the true forest specialists. I ask both State and Federal governments to heed the words of their forest experts. Mr DEPUTY SPEAKER(Mr Leo McLeay) —Order! The honourable member's time has expired. Mr CADMAN(Mitchell)(7.53) —The Hawke-Keating Government has delivered the worst bankruptcy rate that Australia has ever seen. We are in historic times in many ways but no feature is more historic than the number of businesses that have gone broke in a single year under any government. As I predicted in February, Australia has broken the record with bankruptcies numbering over 8,000 under the high interest rate, high tax, high charges and anti-incentive policies of this Government. On 17 February I asked the Treasurer (Mr Keating) a question about the levels of bankruptcy and the predictions for 1986-87. In part, the Treasurer replied: The honourable member for Mitchell makes no point about bankruptcies of small businesses. They occur all the time. Many people move in and out of small businesses. What one must look at is the buoyancy of the Australian economy, and the buoyancy of business in particular. That is what this Government has delivered to businesses . . . I will tell the House what this Government has delivered to business. In 1985-86, 6,400 businesses went broke. That was a record. In 1986-87, 8,597 businesses went broke. The September quarter figures on the number of bankruptcies indicate that there are likely to be close to 10,000 bankruptcies in the coming year. This Government has chosen to penalise those who work hard, the mum and dad businesses of Australia, with high interest rates, high taxes and charges. Then the Treasurer proceeds to tell the small business community of Australia that that sort of bankruptcy is good for it, and that is what the Government's policies are all about. Bankruptcies increased in 1986-87 by a record 34.2 per cent. The latest September quarter bankruptcy statistics are up 21 per cent on the same quarter of last year. We are heading for another disastrous year of bankruptcies. There is no wonder in my mind that the cartoonists of Australia portray the Treasurer as the Grim Reaper, because he is the Grim Reaper to so many honest, hardworking Australians whose businesses have gone broke. His portfolio does not include the administration of the Bankruptcy Act, but he would be the biggest bankruptcy receiver this country has seen. The effect of the recent stock market crash can only exacerbate pressures on business and the likelihood of further increases in bankruptcies. I believe the estimation of 10,000 bankruptcies for the record third year in a row for the forthcoming year will not be an overestimation. In fact, it is likely to be an underestimation. The Government must change its direction if those hard-working people who run small businesses are to survive. I particularly enter a plea for the hard-working settlers from overseas. Many of them own small businesses. Many husbands and wives are involved together in the business, and sometimes children as well. The Government must change its direction. The high interest rates, the high taxes and charges and the big spending and big borrowing policies have got to go. They are creating a disastrous climate for Australian small business, a climate which reflects the attitudes of the Government, and a climate which has created the highest number of bankruptcies on record. The Treasurer constantly preens himself, as he did in February when he said that the bankruptcy rate was nothing to worry about. Well, I have brought the evidence to the House today. What he said then was wrong. He has proved himself to be wrong. He broke the record last year, and he is heading for a record breaking year in 1987-88. It will be a disaster to celebrate our Bicentenary with the third year in a row of record bankruptcies. Mr HOLLIS(Throsby)(7.58) —Last night I spoke in this chamber about the Broken Hill Proprietary Co. Ltd (BHP) importing steel to Australia because it could not meet its domestic commitments, yet at the same time it was planning to shed 2,600 jobs at the Port Kembla steelworks. Today I was disturbed to read that my colleague, Senator Walsh, has accused the work force in the steel industry of behaving deplorably and eroding the benefits of the Government's steel industry plan. Representing as I do a steel region, knowing many of the people who work in the industry, I get somewhat fed up with the unwarranted attacks on the workers and the unions. If we are going to dish out criticism perhaps some should be directed at the management of BHP, whose record over many years has been appalling. I am not prepared to see all the blame going to the workers. For example if management rebuilt No. 4 blast furnace not only could it fill its domestic orders but also it need not import the 160,000 tonnes of steel it has imported this year. It is too easy and simplistic to put the blame on the workers. Today, many of the steel workers, who made the profits for BHP in the good old days, are retrenched and others are facing the loss of their jobs within the next 15 months. I am the first to recognise that we cannot turn back the clock to the good old days. But why, I ask, is BHP not prepared to now put back into Port Kembla some of the money it took out in the good old days-money that it used to make still more money by investing in oil and gas extraction and the development of the minerals export market. What, I would like to know, is the basis of BHP's new policy of no cross- subsidisation which precludes, so I am told, the rebuilding of the No. 4 blast furnace. Is there, I wonder, any connection between this new policy and the presence on BHP's board of directors of Mr John Elliott and Mr Robert Holmes a Court, each of whom owns 30 per cent of BHP's stock of shares? John Elliott, in particular, likes to remind us that there is too much taxation in Australia and so he invests much of his money overseas. Yet it is the Australian taxpayers' dollars that, through the steel industry plan, have helped BHP Port Kembla make a partial recovery. And where, I wonder, does he have his money invested overseas? Not, I hope, in West German steel mills! Mr DEPUTY SPEAKER —Order! It being 8 p.m., the debate is interrupted. The House stands adjourned until 10 a.m. tomorrow. House adjourned at 8 p.m. The following notices were given: Mr Young to move- (1) That sessional order 28b be amended by omitting from paragraph (a) (vii) ``Infrastructure'' and substituting ``Transport, Communications and Infrastructure''. (2) That references to the Standing Committee on Infrastructure in resolutions of the House of this session be read as references to the Standing Committee on Transport, Communications and Infrastructure. (3) That nominations notified to the Speaker of Members to be members of the Standing Committee on Infrastructure be nominations of Members to be members of the Standing Committee on Transport, Communications and Infrastructure. (4) That a message be sent to the Senate acquainting it of part (2) of this resolution. Mr Dawkins to present a Bill for an Act relating to the grant of financial assistance to the States and the Northern Territory with respect to tertiary education. Mr Dawkins to present a Bill for an Act to amend the States Grants (Tertiary Education Assistance) Act 1984, and for related purposes. Mr Dawkins to present a Bill for an Act to amend the Australian National University Act 1946. Mr Dawkins to present a Bill for an Act to amend the Canberra College of Advanced Education Act 1967. Mr Dawkins to present a Bill for an Act to amend the Maritime College Act 1978. Mr Dawkins to present a Bill for an Act to amend the States Grants (Schools Assistance) Act 1984, and for related purposes. Mr Dawkins to present a Bill for an Act to amend the States Grants (Education Assistance-Participation and Equity) Act 1983, and for related purposes. Mr Dawkins to present a Bill for an Act to amend the Student Assistance Act 1973. The following papers were deemed to have been presented on 4 November 1987: Export Inspection Charges Collection Act-Regulations-Statutory Rules 1987, No. 253. Export Inspection (Establishment Registration Charge) Act-Regulations-Statutory Rules 1987, No. 250. Export Inspection (Quantity Charge) Act-Regulations-Statutory Rules 1987, No. 251. Export Inspection (Service Charge) Act-Regulations-Statutory Rules 1987, No. 252. Livestock Slaughter (Export Inspection Charge) Act-Regulations-Statutory Rules 1987, No. 249. The following answers to questions were circulated: (Question No. 5) Mr Blunt asked the Minister for Immigration, Local Government and Ethnic Affairs, upon notice, on 15 September 1987: (1) When was the decision made to publish Citizenship News. (2) What is the estimated cost of each edition. (3) How often will it be published. (4) What staff resources are allocated to work on the publication. (5) How many persons and organisations have been sent application forms for copies. (6) What sum did the application forms cost to produce. (7) What sum did it cost to send out the forms and one copy of Citizenship News. (8) Does Citizenship News replace any departmental publications. (9) Were ethnic communities consulted about the publication; if so, (a) who was consulted, (b) when were they consulted and (c) what were their comments. (10) When was the Public Information Unit established. (11) What sum will it cost to operate. (12) How will the funds be spent. (13) How many staff will be employed in the Unit and at what levels will they be employed. (14) Were new staff needed for the unit or were staff provided from within his Department and the Australian Public Service. (15) Did the Public Information Unit replace any similar section of his Department; if so, why was it replaced. Mr Young —The answer to the honourable member's question is as follows: (1) January 1987. It was considered an efficient and interesting means of increasing public awareness of the benefits of citizenship for all Australians, and of encouraging other eligible people to apply. (2) Total cost of production of 40 000 copies was $18 689.53; cost per copy was approximately 47 cents. (3) Citizenship News was produced as a ``one-off'' publication. There are no plans to produce further issues. (4) Two officers in my Department's Central Office were directly involved in its production as part of their normal duties. One staff member in each Regional Office assisted in the engagement of freelance journalists and photographers in each State to prepare the stories and photographs. (5) Single copies of the publication were sent to all local councils, Migrant Resource Centres, Ethnic Communities Councils, community groups including church, union and welfare organisations, members of the ethnic media, all Federal members and Senators, and National Population Council members. A letter was enclosed with each copy inviting the recipient to order more copies by returning a tear-off slip at the bottom of the letter. (6) Approximately 1500 letters with tear-off application forms were photocopied in-house at negligible cost. (7) 1425 single copies and letters were sent out initially at a postage cost of approximately $1100. (8) No. (9) No. (10) January 1987. (11) At this stage the Unit has some $207 000 allocated for production activities in 1987-88. Salary costs for the Unit, when fully staffed, will be $78 966 per annum. (12) It is planned to spend the production funds principally on a range of information products for the general public including an information kit for schools, pamphlets/booklets of broad community interest, and an approved Bicentenary publication entitled ``1788-1988 Immigration and Australia''. Consideration is also being given to the production of a radio program. (13) The Unit has an allocation of three staff: 1 X Clerical Administrative, Class Eight; 1 X Clerical Administrative, Class Six; 1 X Clerical Assistant, Grade four; The Class 8 position has not yet been filled. (14) The staff allocations were made by the internal transfer of existing staff resources. (15) No. The Unit was established as an additional resource with a view to upgrading the Department's public information efforts. (Question No. 27) Mr MacKellar asked the Minister for Industrial Relations, upon notice, on 15 September 1987: (1) Does the 1985-86 annual report of the Trade Union Training Authority show that while the number of courses increased by 3.4% over the previous year and the number of participants by 8.6%, course costs increased by 80.4%. (2) What is the explanation for the increase in course costs and would it be reasonable to expect the Authority to include an appropriate explanation in the report in circumstances where unusually large cost increases occur. Mr Willis —The answer to the honourable member's question is as follows: (1) The 1985-86 annual report of the Trade Union Training Authority (TUTA) does show a 3.4% increase in the number of courses run by TUTA and an increase of 8.6% in the number of participants. It is assumed that the part of the Question relating to course costs refers to the figures reported as expenditure on this item in the Statement of Activity for the year ended 30 June 1986 at page 18 of the Trade Union Training Authority's 1985-86 Annual Report. That expenditure includes, for the year ended 1985-86, costs additional to those reported under this item in respect of the year ended 1984-85. For this reason, the two figures cannot be compared and, consequently, it is not correct to suggest that there had been an increase of 80.4% in course costs during 1985-86. A footnote at the bottom of page 18 of the annual report refers the reader to accompanying notes. (2) The 1985-86 annual report of TUTA provides very detailed explanations of revenue and expenditure statements at pages 24-27 in the section entitled ``Notes to and Forming Part of the Financial Statements''. The reader is informed that the notes form an integral part of each of the Financial Statements. The appropriate explanation of course costs appears at page 26, paragraph 13 under the heading, ``Administration Expenses Changes''. Paragraph 13 (c) indicates that the components of the course costs expenditure item were changed in 1985-86 to include catering costs. Thus the suggested increase of 80.4% is derived from a comparison of unlike data. Paragraph 13 of the notes also includes a statement in which expenditure item figures are adjusted to facilitate a proper comparison of Administration expenses over the two years in question. These adjusted figures indicate an increase of 17.9% in course costs over the two financial years. The 17.9% increase in course costs reflects the stated increases in training activity, that is, courses up by 3.4% and participants up by 8.6%, as well as the increased cost of course materials. A more useful measure of the cost of delivering courses is expressed in terms of Student Training Days. This is an efficiency indicator adopted by TUTA under program budgeting. The annual report at page 15 shows that in the reporting year, 1985-86, TUTA reduced the average real cost of its training from $151.06 per Student Training Day to $142.20 per Student Training Day. (Question No. 65) Mr Lloyd asked the Minister for Immigration, Local Government and Ethnic Affairs, upon notice, on 15 September 1987: What is the average waiting time for the issue of a visa to visit Australia in (a) London and (b) Hong Kong and what is the reason for any discrepancy. Mr Young —The answer to the honourable member's question is as follows: (a) The Australian High Commission in London provides a same day or ``while you wait'' visa service to people who apply in person. Some applicants choose to leave their passports for collection at a later stage. This applies to couriers who pick up and deliver on behalf of, say, travel agents. Visas are issued on the spot, or within the time requested by the applicant, where urgency is indicated. Applications lodged by mail are processed and passports returned to the applicants within four working days of receipt within the High Commission. (b) The Australian Consulate-General in Hong Kong provides a 72 hour visa service for all visitor applicants. Visa applications are usually lodged by mail, by courier or personally through a drop-box arrangement at the Consulate-General. Clients using the drop-box return for collection within a specified period (not more than 72 hours) or, if required, receive their passport by mail. On the spot visa issue is available where urgency is indicated. The slightly different approaches to processing visitor visa applications reflect differences in the caseload, and client preferences. In London 70% of applications are lodged by mail whereas in Hong Kong 80% of applications are lodged personally, or by agents. (Question No. 94) Mr Hollis asked the Attorney-General, upon notice, on 18 September 1987: (1) Did Australia declare, when it ratified the 1965 Convention on the Elimination of All Forms of Racial Discrimination on 30 September 1975, that it would seek from Parliament at the first suitable moment legislation specifically implementing the terms of Article 4 (a) making dissemination of racist ideas and incitement to racial discrimination punishable by law. (2) Has the Government considered introducing the legislation; if so, what has been the outcome of its deliberations. (3) Is he able to say whether any State Government has introduced such legislation. Mr Lionel Bowen —The answer to the honourable member's question is as follows: (1) The text of the declaration made by Australia on ratification of the Convention is: ``THE GOVERNMENT OF AUSTRALIA furthermore DECLARES that Australia is not at present in a position specifically to treat as offences all the matters covered by article 4 (a) of the Convention. Acts of the kind there mentioned are punishable only to the extent provided by the existing criminal law dealing with such matters as the maintenance of public order, public mischief, assault, riot, criminal libel, conspiracy and attempts. It is the intention of the Australian Government, at the first suitable moment, to seek from Parliament legislation specifically implementing the terms of article 4 (a).'' (2) The Commonwealth has had the matter under consideration for some time. A number of options have been suggested, including criminal sanctions, civil proceedings and complaint handling procedures similar to those followed by the Human Rights and Equal Opportunity Commission in other areas. The problems in this area are not considered susceptible to a simple solution involving the choice of one or other of these options. A major difficulty lies in striking a suitable balance between freedom of speech and the rights of people to live free from racist abuse. The New South Wales Government has recently announced its intention to establish a working party to consider legislation in that State to provide remedies for racial defamation. It is hoped that the outcome of the New South Wales initiative will be to throw further light on ways in which the objectives of eliminating race hatred and racist propaganda might best be achieved. (3) No such legislation has been introduced, so far as I am aware. (Question No. 199) Mr Hunt asked the Attorney-General, upon notice, on 6 October 1987: In relation to the Australian Federal Police, in each year since 1984-85, what was the (a) total number of employees, (b) total number of employees receiving workers' compensation payments, (c) gross expenditure on workers' compensation payments, (d) value of the average compensation claim and (e) number of compensation cases as a percentage of total employees. Mr Lionel Bowen —The answer to the honourable member's question is as follows: I am not able to supply all the relevant figures for the years 1984/85. However, the available statistics are as follows: (a) Average staffing levels were: 1984/1985-2932 1985/1986-3090 1986/1987-3178 (b) 1984/1985-Not available 1985/1986-727 1986/1987-660 (c) 1984/1985-Not available 1985/1986-$3,502,222 1986/1987-$3,619,759 (d) 1984/1985-Not available 1985/1986-Approximately $5,000 1986/1987-Approximately $5,500 Note: These figures were calculated utilizing the figures for the gross compensation expenditure per annum in (c) above and the total number of employees receiving workers' compensation payments in (b) above. The figures do not illustrate the range of claims determined, which could consist of merely a few dollars for a single visit to the doctor or alternatively up to many thousands of dollars for a complex case which could include large medical expenses and/or total or partial incapacity. (e) 1984/1985-Not available 1985/1986-Approximately 24% 1986/1987-Approximately 21% Note: These percentages were calculated by utilizing the figures for total numbers of employees in (a) above and the total number of employees receiving workers' compensation payments in (b) above.