Monday, 7 May 1984 The PRESIDENT (Senator the Hon. Douglas McClelland) took the chair at 2 p.m., and read prayers. Senator GRIMES(Tasmania-Acting Leader of the Government in the Senate) —I inform the Senate that the Minister for Industry and Commerce (Senator Button) left Australia on 4 May to address a symposium in Kuala Lumpur on 'ASEAN, Australia and Japan' and to hold industry discussions in Japan. I will act as Leader of the Government in the Senate and the Hon. John Brown is Acting Minister for Industry and Commerce until Senator Button returns on 13 May. In this chamber, Senator Walsh will represent the Minister for Industry and Commerce and the Minister for Employment and Industrial Relations (Mr Willis) and Senator Susan Ryan will represent the Minister for Communications in Senator Button's absence. I also inform the Senate that the Deputy Prime Minister and Minister for Trade (Mr Lionel Bowen) left Australia on 4 May to attend meetings on international trade with United States Special Trade Representative Brock in Washington. The Minister for Resources and Energy (Senator Walsh) is acting Minister for Trade until Mr Bowen returns on 15 May. Finally, I inform the Senate that the Minister for Health (Dr Blewett) left Australia on 4 May to attend the World Health Organisation conference in Geneva. The Minister for Science and Technology (Mr Barry Jones) is Acting Minister for Health until Dr Blewett returns on 25 May. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned teachers and students working and studying in TAFE colleges throughout Australia respectfully showeth that: 1. We assert that TAFE, with over 1 million students, requires greatly improved resources if it is to continue to train Australia's skilled workforce effectively. 2. We call upon the Commonwealth Government to provide greatly increased funds to ensure that TAFE is accessible to all Australians, unlike the present time when thousands of people are turned away from TAFE colleges each year. 3. We urge the Commonwealth Government to equip TAFE workshops with the advanced technology used in modern Australian industries, and to expand TAFE's capital works program so that sufficient quality accommodation is available for TAFE teachers and students. 4. We ask that the Commonwealth Government greatly increase TAFE's recurrent expenditure, so that TAFE can respond quickly and flexibly to industry, Government and community demands. And your petitioners as in duty bound will ever pray. by Senator Zakharov (from 860 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens respectfully showeth: That Regulations and an Ordinance before the Parliament amend the Customs ( Prohibited Imports) Regulation and the Customs (Cinematograph and Films) Regulations and supersedes the ACT Objectionable Publications Ordinance in such a manner as to be harmful to society by removing from existing Commonwealth Law- The power to prevent the importation and sale of hard core pornography (e.g. X- rated videos) and publications which consistently incite the use of hard drugs; The power to prevent the importation and sale of grossly obscene publications including those associated with blasphemy; The power to require videos for non-commercial use to be registered by the Films Censorship Board before release from Customs. Your petitioners humbly pray that the Senate in Parliament assembled should disallow the new Regulations and Ordinance and ensure: That the Attorney-General enforce existing laws; That the Censors more appropriately reflect reasonable and responsible community attitudes; That further measures be taken in association with the States to protect Australians, particularly women and children, from exploitation; That, because of the importance of this issue to the whole community a conscience vote be permitted to all Members of Parliament. And your petitioners as in duty bound will ever pray. by Senators Archer (from 47 citizens), Peter Baume (from 18 citizens), Harradine (from 134 citizens), Peter Rae (from 18 citizens), Richardson (from 36 citizens) , Robertson (from 24 citizens), Tate (from 50 citizens) and Watson (from 11 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth that: 1. We deplore recent moves by the Government to grant equal travelling allowances to the de facto partners of Parliamentarians as are currently enjoyed by spouses. 2. We further believe that such action belittles the institution of marriage and harms the status of the family unit in Australia. 3. We believe parliamentarians should offer leadership in moral as well as political affairs, and that the above recent action of the Government has contributed to the undermining of this principle. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 85 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens respectfully showeth that: 1. the Hawke Government's retirement income policies are piecemeal, inconsistent, and make no provision to encourage people to save towards their retirements; and 2. the Government's proposed assets test legislation is iniquitous and, if enacted, its effects would be discriminatory. Your petitioners humbly pray that the Senate, in Parliament assembled, urge the Government to: 1. scrap its proposed assets test legislation; 2. either institute a broad inquiry into Australia's retirement income and taxation systems or await the outcome of the Senate Standing Committee on Social Welfare's work on this matter; and 3. following the report of such a wide enquiry institute a retirement income policy which is fair and equitable, that encourages self-provision and which will be non-discriminatory. And your petitioners as in duty bound will ever pray. by Senator Messner (from 110 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia showeth: That there is grave cause for concern in the Australian community at the continuing sensationalist media and political campaign directed against the humanitarian and socially just effects of the Welfare State (most recently exemplified by the frontpage article 'One in 4 get Welfare Hand' in the Melbourne Herald of Monday, 3rd October 1983). That, whilst enlarging public awareness of the critical social problems facing our community, such articles tend to paint the victims of our social system as worthless parasites living off the work force. 1. We believe that the 635,000 persons receiving unemployment benefits at the end of June 1983 deserve full support from the Commonwealth, and that the 85,104 persons receiving sickness and special benefits deserve society's sympathy rather than castigation. 2. We also believe that the 2,011,542 persons receiving age, invalid, wife and widow pensions, supporting parent benefits and sheltered employment allowances at the end of June 1983 deserve help from the Commonwealth. 3. We affirm that it is the time-honoured and moral right of Australians to receive assistance in times of distress and hardship, and we remind the Parliament of the Commonwealth of Australia of its profound responsibility to safeguard and enhance the dignity and well-being of its citizens. And your petitioners as in duty bound will ever pray. by Senator Robert Ray (from 29 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully submit that: Although many occurrences of sexual harrassment in the workforce have been reported to various State government authorities, such as the Victorian Commission for Equal Opportunity, the real incidence of sexual intimidation in employment will not be known, or countered, until a national policy towards sexual harrassment is determined and implemented. We therefore submit that: 1. The National Committee on Discrimination in Employment and Occupation be commissioned to conduct a nation-wide study of discrimination based on sex, both in the private sector and the Public Service, with a view to advising the Government on the development of national policy. 2. The major priority of such a study should be to determine a legally- enforceable definition of sexual harrassment. 3. The Minister for Employment and Industrial Relations should bring forward in Parliament legislation, arising from such a study, to outlaw discrimination and intimidation in employment based on sex. And your petitioners as in duty bound will ever pray. by Senator Robert Ray (from 17 citizens). To the Honourable the President and the Honourable Members of the Senate in the Parliament assembled. The humble petition of the undersigned electors of the Commonwealth of Australia respectfully showeth that: 1. We are completely satisfied with the design of the existing Australian national flag. 2. We are aware it properly reflects the immutable characteristics of Australia namely: The Union Jack-itself the creation of three Christian crosses-represents the nation's historical origin, and the source of its language and law. The Southern Cross on an azure blue background signifying its place in space. The large star depicting the advent of Federation in 1901. 3. We know the flag has been a source of inspiration to generations of Australians in peace and war. 4. We recall that millions of native-born Australians and newcomers to these shores from other parts of the world have become united under its proud symbolism. 5. We are certain that any change to the flag will produce division in the Australian community. Your petitioners therefore humbly pray that your honourable House will: Propose and pass a motion that 'the existing Australian national flag remains sacrosanct from change'. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 14 citizens). Petitions received. Senator MASON(New South Wales) —I give notice that, on the next day of sitting, I shall move: That, in view of the serious and chronic level of unemployment in Australia, the Senate is of the opinion that the Federal Government should, as a matter of urgency, legislate for optional early retirement of workers on the following bases: (1) An employer would be permitted to release an employee up to two years earlier than the normal retirement age and the full age pension would be paid, provided that- (a) the person thus retired was replaced by a person at present unemployed; and (b) the retiree was willing to be so retired. (2) Retirement at three years early would be available where it could be demonstrated that the cost of paying the pension to the retiree would be less than the cost of unemployment benefits to the person who would replace the retiree. (3) The legislation to take into account the experiences of other countries, such as West Germany, the Scandinavian countries and other European countries, where similar procedures are already working satisfactorily and have provided many thousands of jobs. Senator GRIMES(Tasmania-Acting Leader of the Government in the Senate) —Mr President, I table papers in accordance with the list circulated. With the concurrence of the Senate, I incorporate the list in Hansard. Leave granted. The list read as follows- 1. Committee on Overseas Professional Qualifications-Report 1983. 2. Prices and Incomes Policy-Report by the Advisory Committee on Prices and Incomes-Together with the Text of a Statement by the Minister for Employment and Industrial Relations relating to the report. 3. Joint Committee on Foreign Affairs and Defence-Text of a Statement made in the House of Representatives on 3 May by the Minister for Foreign Affairs on the Horn of Africa. The PRESIDENT —Those papers will be debated after Question Time and after the matter of public importance. Senator MESSNER —My question is directed to the Minister for Veterans' Affairs. I draw the Minister's attention to the speech that he made to the Vietnam Veterans Association in Sydney on Saturday and his criticism of suggestions that the Budget deficit should be of the order of $5 billion in 1984-85. Does the Minister agree with the Prime Minister, who said in Perth on 19 April: 'We will significantly reduce the deficit in this year's Budget'? If so, what level of deficit would be acceptable to the Minister? Did he urge the Vietnam veterans to campaign for extra spending? If so, does he believe that he can accommodate increased benefits by cutting other areas of this Department's expenditure? Senator GIETZELT —It is not for me to determine-although I hope I will be part of the process that will determine it-the level of the deficit. Certainly if there is to be a reduction in the deficit, it will not be at the expense of my Department. As I pointed out at the Vietnam Veterans Congress, $3 billion, which is the greatest proportion of my Budget allocation each year, is of a non- discretionary nature-that is to say, if veterans have an entitlement of a claim for disability and it is in accordance with the Repatriation Acts, the Government is obliged to pay such benefits. As there is a growth factor in every sector of my Department, there is no possibility of any savings being effected as far as this or any other Budget is concerned. Senator COATES —My question is directed to the Minister representing the the Acting Minister for Health. Has he seen the Australian Medical Association pamphlet seeking contributions to the AMA freedom fund? Is the AMA both insulting many doctors and obtaining funds under false pretences, since most of the so-called freedoms listed are not under attack, even if one allows for the emotionally and politically worded tone of the appeal? How many of the freedoms are under threat? Does the AMA mention its opposition to medical practitioners informing patients of such matters as their fees and whether or not they bulk bill, which severely restricts the freedom of some of its members and of patients? Senator GRIMES —Yes, I have had drawn to my attention the appeal by the Australian Medical Association to doctors throughout Australia asking doctors each to pledge at least $200 immediately and to guarantee to pledge further funds later to enable the AMA to defend the freedoms that it sees as important in the health system against attacks by governments or anyone else that it sees is going to attack these freedoms. The sorts of freedom listed are: The free and unrestricted choice of the doctor by the patient and likewise of the patient by the doctor, so that both parties retain their individuality and sense of responsibility, and no barrier is separating the patient from free choice of specialist or doctor. I point out to the honourable senator that, under the existing health system, those freedoms are not under attack, except to the extent that medical practitioners, in particular those in public hospitals, are against patients' capacity, other than fee paying patients, to make their choice of doctors in those hospitals. The AMA also suggests that under attack are the freedom of a doctor to choose the type and locality of his practice; the freedom and opportunity to practice on a fee for service basis without threat of coercion or compulsion-I defy any member of the medical profession to demonstrate where either of those freedoms is under attack; the freedom to preserve professional secrecy in the high standard of medical ethics; the freedom of doctors to treat their patients in hospital within the limits of their training, experience and demonstrated competence; and the freedom to prescribe what is best for the patient. Those freedoms are not under attack by this Government or the existing health insurance scheme. To suggest that the Federal Council of the Australian Medical Association should be able to receive the sums of money suggested and to use them at its discretion for political purposes is, as Senator Coates says, an insult to the intelligence of the doctors and of the electorate of this country. It is significant, as Senator Coates says, that among the freedoms not listed are the freedoms of a doctor to advertise just what he charges or the freedom of a doctor to advertise whether or not he bulk bills. The lack of this freedom inhibits the freedom of choice of many patients in this country to determine, before they are treated, what they will be charged and how they will be charged. That is an important freedom. Those members of the medical profession who are indulging in this activity should remember that freedom goes both ways-it applies to the patients as well as the doctors. I expect that these extravagant requests from the Federal Council of the AMA will not receive much support from most members of the medical profession. Senator Dame MARGARET GUILFOYLE — I refer the Minister for Resources and Energy to the document released by the Australian Mining Industry Council on Friday concerning the mining and export of Australia's uranium deposits for peaceful purposes in the generation of electricity. I ask the Minister whether he agrees with the study's finding: Advanced negotiations by owners/operators of existing and potential uranium mines have shown clearly the existence of market opportunities for their exports . I ask whether he further agrees: The state of the spot market is not properly representative of the prospects for term contract sales or prices. How confident is the Minister of persuading the Australian Labor Party National Conference in July to adopt a policy which will enable Australians to benefit from the almost 5,000 direct jobs and the thousands of millions of dollars in investment and export earnings which AMIC says will flow from the development of existing and potential uranium mines? Senator WALSH —A copy of the document arrived in my office this morning. I have not had a chance to read it or even open it, nor have I had a chance yet to read the summary which the Department has done and which was dropped on my desk about a quarter of an hour ago. So, I cannot respond in any detail because I am just not sure what is in that document. In particular, I am not sure of the context in which the reference to the market opportunity that Senator Dame Margaret Guilfoyle mentioned was made, in particular whether it is a market opportunity three years hence or a market opportunity perceived in the early or late 1990s. I will consider making a definitive response at some later stage if the Opposition so wishes. But I just have not had time at this stage to give that sort of response, obviously, since I have not read it. I will make one more comment on the spot market. It is self-evidently correct that the price available on the spot market at any time is not a particularly reliable indicator of the price that may be available, particularly, as is the case with uranium, when we are looking at supply contracts which extend up to 10 years with a total delivery period of up to 15 years after the contract has been signed. Such contracts are not uncommon in uranium supply. Therefore, with lead times of 10 to 15 years spot market prices for uranium are more unreliable than for most other metals. However, the Opposition does not always seem to have been particularly deterred by that fact because I remember that about six months ago, when the spot market price was of the order of $23 a pound, someone in the Opposition cited that fact as evidence that there was a clear hardening of the market. The last time I looked the price was $17 something a pound, but that has not been cited as a clear weakening of the market. I think the correct way to view it is to be consistent and to recognise that the spot market price, even with significant variations such as those between $23 and $17 a pound, is not a particularly reliable indicator of the prices that might actually be obtained from the commercial market 10 or 15 years hence, which is really the most relevant period which ought to be considered, for purely commercial reasons, by those who may be contemplating establishing new mines. Senator ELSTOB —Can the Minister representing the Minister for Employment and Industrial Relations advise the Senate whether the Koorie community youth support scheme research project into the needs of young unemployed Aboriginals has been completed? If so, what were the major recommendations? As part of the Government's response to the study will the Minister initiate methods to counteract the lack of liaison and co-ordination between Aboriginal CYSS projects? Senator WALSH —I am not aware of the specific study to which Senator Elstob referred. I will have to seek the information relating to that. However I do know, because I was deputising for Senator Button at the Estimates Committee A meeting last Friday, that a number of questions regarding Aboriginal employment and other employment initiatives were asked and that those questions also were taken on notice and replies to them will be provided. Pending a response to the question Senator Elstob asked today, I suggest that he may also find it worth while to look up those questions that were asked at the Estimates Committee A meeting and the responses to them when they ultimately come through. Senator CHIPP —I ask the Minister for Resources and Energy a question about Maralinga and indicate, according to my usual custom, that he has had notice of it for the last hour and a half. Is it true that the Government has a document concerning the Maralinga tests which indicates that 13 atomic tests took place at Maralinga during the period from 1 January 1960 to 31 December 1963, that eight of those atomic tests involved weapons containing plutonium and four contained uranium and thorium, that one test contained cobalt 60 and uranium, and that, in tests on casings, casings were fractured and then dropped and exploded to test radioactive fallout in the event of a plane crash? Why is the Government reluctant to expose publicly all the information it has about the Maralinga atomic tests? I further ask: Has the Government received advice from either the Department of Foreign Affairs or the Department of Defence that the British Government must not be offended at any cost? If not, why is the Government perpetuating what is rapidly appearing to be a cover-up on this issue ? Senator WALSH —I think the last phrase-the suggestion of a cover-up-was particularly ill-chosen. The first part of the question that Senator Chipp asked was about whether 13 atomic tests-I will say a bit more about what may be defined as an atomic test-did take place at Maralinga during the period from the beginning of 1960 to the end of 1963. Whether the Government has a document which shows they were, I think, they are the terms in which the question was put . The Government does have a document that shows that 13 tests were conducted in that period. The public also has had that document for about five years, so I think the reference to a cover-up in respect of that is particularly inopportune . As to whether they were atomic tests, they were not nuclear explosions. In at least some of those tests-I am not sure of the precise number and therefore I cannot respond to Senator Chipp's precise reference to eight allegedly containing plutonium and four containing uranium and thorium-uranium and plutonium, but I am not sure about thorium, were associated with the explosions which took place, were adjacent to the other explosive material, but the explosive material itself was non-nuclear. In response to the fifth part of Senator Chipp's question, I am not sure whether the devices in these tests with conventional explosives were dropped from aircraft or whether they were exploded on the ground, in towers or in other ways or whether, if they were dropped from aircraft, the objective was to test the radioactive fallout in the event of a plane crash. I will check that out. I recall that one of the tests was supposed to simulate whether a nuclear explosion was likely to be triggered if there was a nuclear weapon on an aircraft which had crashed. From the limited investigations I have made of this I understand that a nuclear explosion for that particular type of weapon that was being examined was not likely to take place. Senator Chipp asked whether the Government has received advice from the Department of Foreign Affairs to the effect that under no circumstances are the British to be offended and a couple of related questions. I do not know whether Foreign Affairs has given such advice. I have not received such advice from Foreign Affairs, and as far as I know nobody else in the Government has. I will have that checked out. Independently of what the opinion of the Department of Foreign Affairs might be -I think I mentioned this last week-there is a very good reason to show some respect for what the British regard as being confidential information, if only for the reason that it is believed that information relevant to personnel who were on site at the time of the test is still held by the British. Amongst other things, this is information which ultimately could be valuable to the Australian Government in determining its attitude to common law actions initiated for compensation. It seems to be beyond dispute that if the Australian Government showed no respect whatsoever for information derived from United Kingdom sources , which information that Government believes should be kept confidential, we would have no chance of obtaining additional information from the United Kingdom Government. Senator Chipp —That happened on Australian soil. Senator WALSH —I know it happened on Australian soil. However, again to be fair to the British, the Australian Government invited, one might even say begged, the British to come here to do the tests. Senator Chipp probably was not suggesting this, but I think it is unfair to blame the British for everything that happened there. I suggest that the Australian Government of the day was equally culpable. We are dealing with the 1980s and not the 1950s now. For the reason that I have explained, even if for no other reason, I believe there is some very considerable obligation on the Australian Government to be sensitive to the wishes of the British Government. Having said that, I want to commend the British Government and particularly the British High Commission in Canberra for the speed with which they responded to the request, issued as late as last Thursday afternoon, for British approval to release the full contents of the Pearce report. Within 16 hours we had a positive response to this request, and consequently the report was tabled on Friday. There is no intention by this Government to engage in a cover-up nor, I believe, in spite of some of the beat- ups that have appeared in the Press from time to time, including a number of newspapers in the last week, is there any evidence whatsoever that the Australian Government is interested in engaging in a cover-up. Senator CROWLEY —Has the attention of the Minister for Education been drawn to the statement from the Human Rights Commission referring to discrimination in Australian universities? Can the Minister comment on the claim that our universities 'far from being the leaders in good practice as one might expect, are in fact laggards'? Would the Minister agree that recent challenges to our universities with reference to racial discrimination, while very important, mask the continuing discrimination in regard to opportunities for women in higher academic posts in our universities? What steps has the Government taken to date to deal specifically with discrimination, especially against women in our universities? Senator RYAN —I am pleased to note that increasingly attention is being paid to discrimination that exists in our universities. It has been my view, and it is one which I have stated in several public forums, that universities of all places ought to be able to adopt non-discriminatory practices. One does expect a level of enlightenment and commitment to rational policies within our universities that one might not expect to achieve quite so readily is some other areas. However, the facts documenting discrimination against women in particular -but I think other forms of discrimination have existed from time to time-reveal a different picture. A number of statements recently have drawn attention to the very unbalanced pattern of employment within universities. By now it is probably quite well known, in this chamber at least, that only 2 per cent of professors are women. That pattern of imbalance persists through all levels of employment within universities. There can be no claim that this represents the capacities of women because women have had access to universities in this country for about a century and, where they have had equal opportunity have consistently performed at outstanding levels. There might be some social explanations to do with child- rearing and so forth that would explain a lower percentage of woman professors than men, but certainly there is no proper or rational explanation for the fact that only 2 per cent of our professors are women. I have been pleased to note that the Australian Vice-Chancellors Committee in a recent statement acknowledged this imbalance and expressed, in very general terms I might say, an intention to take some steps to rectify it. Similarly, the Human Rights Commission has drawn attention to it. I believe that we can look forward now to some changes. A series of changes will come about as a result of universities, along with all other areas of Commonwealth employment and higher education institutions, being covered by the Government's Sex Discrimination Act . That will mean that, in their hiring practices, their promotion practices and so on, universities will not be able to use irrelevant criteria in making decisions and they will not be able to use such irrelevant criteria as sex, material status or possible capacity to bear children. So we will see some improvements and some changes as a result of that. I think we will see more basic and widespread changes as a result of universities adopting equal employment opportunity plans. That will come about as a result of the Government's affirmative action policies. Because we are now awaiting the imminent announcement by the Prime Minister of the Government's intentions with regard to affirmative action I will not go into detail at this stage. I think the kinds of discrimination that have occurred in the past are now recognised by all parties, which is the first step, and that there will be an active and constructive approach to removing these discriminations and an active partnership between the Government, the Vice-Chancellors, the staff associations and the students themselves. Senator HILL —My question is directed to the Attorney-General. I refer the Attorney to the answer he gave Senator Durack on 30 March, when he said he would consider making public, as an exposure draft, the proposed legislation for a national Bill of Rights. Despite the Government's obvious desire to keep this and other contentious issues off the political agenda until the premature early election, has the Attorney yet decided whether he will let the Australian people see, before the election, what the Government has in mind for them? Senator GARETH EVANS —The honourable senator will just have to curb his racing hormones. No decision has been made in this respect. The Government is not in a position to make any announcement as to the content of this Bill. Senator COOK —Can the Minister for Resources and Energy advise the Senate whether the Government is satisfied that, in view of various statements from the Opposition, there are good prospects for the development and implementation of a bipartisan resources rent tax policy? Senator WALSH —I and the Government had hoped that we might be able to secure at least a wide degree of bipartisan support for a resources rent tax and the taxation of the mining or resources industry in general. I still have some hopes that we might be able to achieve some bipartisan policy, but I am afraid that a truly bipartisan policy no longer appears to be possible. Indeed, one could go beyond that and say that, on the evidence that is available on the public record , there is no indication that the Liberal Party of Australia has a unilateral policy on resource taxation, let alone the Government and the Liberal Party having a bipartisan policy. The Liberal Party seems to have a great deal of difficulty in deciding just what its policy is on this question, let alone what its judgment vis-a-vis the Government policy is. At the Australian Petroleum Exploration Association Conference in Hobart on 10 April, Senator Chaney said: If after the consultative process the Government in fact put in new tax measures-- the tax measures he was referring to were the ones which were ultimately announced a week or so later- which have the support of the industry, I would not automatically say that these policies should be changed just because there has been a change of government. But the next day, at the National Press Club in Canberra, Mr Peacock was asked this question by a Business Review Weekly journalist: Could you explain please your intentions with regard to the taxation of new oil . Firstly, would you repeal the proposed levy which the Labor Party is going to impose on the Fortescue oil field in Bass Strait? And secondly would you also repeal the proposed resources rent taxation which the Labor Party intends to impose on Greenfields? Mr Peacock's reply, which was very short, was: 'Yes, Yes'. Mr Peacock said that both of those measures would be repealed by a Liberal government or a coalition government, notwithstanding the fact that only the day before Senator Chaney had said that such measures would not necessarily be repealed. So the Liberal Party cannot make up its own mind what its policy is on this question. Even if the Liberal Party could make up its own mind, whether the Liberal Party in coalition with the National Party would be allowed to implement that policy would still remain a matter for wide-eyed conjecture. Indeed, experience of coalition governments, particularly during the Fraser period, suggested that the Liberal Party was not allowed to implement any of its policies unless it had approval from the National Party to do so. So we have two levels of confusion here: Confusion within the Liberal Party and doubt as to whether Liberal Party policy, if it had one, would be able to be implemented by a coalition government. But unfortunately in neither case does it seem likely that the sort of wide area, at least of bipartisan support, exists for the very sensible policies the Government has introduced. Nevertheless, I retain some hope that the more responsible and more rational people in the Liberal Party will come to recognise that the policies the Government has announced are sound and ought to be continued even under a future government and that the more courageous people in the Liberal Party, in their next term of office if they have one, will have the courage to do what they did not do last time; that is, stand up to the National Party and implement Liberal Party policy instead of National Party policy. Senator WATSON —My question is directed to the Minister representing the Treasurer. The Government continues to remind the electorate of its determination to fight tax avoidance. But now that it is armed with anti- avoidance Part IVA instituted by former Treasurer John Howard, could the Minister advise the Senate how many cases are before the courts where the Commissioner of Taxation has applied Part IVA? Further, how many cases does the Commissioner have in the pipeline awaiting a hearing, using this anti-avoidance provision? Senator WALSH —Senator Watson has asked: How many cases pursuant to Part IVA are either before the courts or are in the pipeline before the Commissioner of Taxation? I think that was the substance of his question. The short answer is: I do not know how many there are. I will endeavour to obtain that information. However, if one shared the views and stated beliefs of the former Government on this question there should not be any such cases. As I recall Mr Howard's statement at the time he was saying: 'Once Part IVA has been passed there will be no more tax avoidance or evasion of that type'. If Mr Howard's judgment was correct, there should be no such cases nor should there be any possibility of such cases being brought. The Government, though, of course, does not have explicit powers of direction over the Commissioner on matters such as this. The Labor Party's view, when in opposition, and it remains its view in Government, is that the most effective way-indeed one could say the only failsafe way-of dealing with blatant tax avoiders and tax evaders is the credible threat of retrospective legislation so that tax avoiders and evaders know that even if they can fool the Commissioner for a while, even if they manage to get a favourable judgment from an eccentric, or worse, High Court of Australia, providing a government of the day has the determination to do so they will still ultimately have to pay their tax obligations. Therefore, there is no point in devising or implementing artificial, contrived tax evasion or avoidance schemes. Unfortunately, there is no such credible threat because people such as Senator Watson insist on voting against legislation that would make such a threat and such a policy credible. Therefore, hope lingers on in the breasts of potential or actual tax evaders and avoiders that they will be allowed to get away with their anti-social activities in the future as they have, to a substantial degree, in the past. Senator RICHARDSON —Is the Minister representing the Minister for Health aware of the recent decision by Ciba-Geigy Australia Ltd to close down its pharmaceutical manufacturing plant at Smithfield in Sydney by 1 October 1984 at a loss of some 80 jobs? One of the reasons listed by Ciba-Geigy for that decision was its concern over the Government's generic policy. Is there any basis in its claim that the extremely low selling prices for its products under the pharmaceutical benefits scheme and the second stage of the Government's generic policy were major factors in the decision to close down its Smithfield manufacturing operations? Does the Government know of any other companies in the pharmaceutical industry which are facing similar difficulties? Will the Government negotiate with Ciba-Geigy to ensure that no hardship is caused either to those people who reply on the drugs formerly produced by the company or to the retrenched employees of the company? Senator GRIMES —I am aware that Ciba-Geigy intends to close its Smithfield operation. I think the job loss involved is about 80. Ciba-Geigy's close-down is part of a reconstruction of its pharmaceutical manufacturing operations in this country and, one could say, part of a general restructuring of pharmaceutical operations by such companies in this country. This is not surprising in view of the fact that most informed people in the area, including I hope Senator Townley , would accept the fact that there was a considerable over-expansion in this area in the 1960s and 1970s. Senator Peter Baume —Do you mean that manufacturing has over expanded in this country? Senator GRIMES —Yes. Senator Baume does not accept that that is so. The pharmaceutical industry does. I assume that Senator Baume is arguing that we should maintain an artificially high price for the pharmaceuticals we are purchasing through the national pharmaceutical system in order to maintain companies like Ciba-Geigy at the scale at which they are operating. One of the problems which, interestingly enough, arose on a well-known television program last night has been the operations of companies such as the Ciba-Geigy and Roche companies throughout the world which have indulged in transfer pricing and artificial pricing arrangements in countries such as Australia. They maintain their operations in countries at this level at the expense of patients and governments. Ciba-Geigy, if I remember rightly, had problems in this country with the price of hydralazine-I may be incorrect in naming that substance-and other drugs. It claimed that the prices offered in this country were too low whereas, in fact, it was selling them at much lower prices in other countries. The pricing of pharmaceuticals in this country is the result of negotiations between the companies and the Government. This Government has, and I believe the previous government had, no intention of being ripped off by large multinational companies indulging in transfer pricing of this type to the detriment of the patients and the government. I believe that Ciba-Geigy's close-down is part of a general restructuring of that company. There is no evidence I believe-I will seek further information from the Minister for Health-that any patient in this country will suffer from the lack of drugs produced at the Smithfield operation. All I can say is that Ciba-Geigy's operations in this country have been under a process of reconstruction for some time. I will certainly seek information from both the Minister for Health and the Minister for Employment and Industrial Relations as to the likelihood of the people who have lost their jobs in this area receiving similar work in the industry in Australia. Senator MARTIN —My question is directed to the Minister for Education and Youth Affairs in her capacity as both the Minister representing the Minister for Home Affairs and Environment and the Minister representing the Minister for Science and Technology. Can the Minister confirm reports that the Australian Conservation Foundation, through Dr Mosley, has complained to the Minister for Science and Technology that a Commonwealth Scientific and Industrial Research Organisation representative supported a resolution at the Australian Timber Industry Stabilisation Conference criticising the Australian Conservation Foundation's forestry policy as being in conflict with the national conservation strategy for Australia, in direct opposition to sound forestry practice, and posing a real threat to the future of Australia's forests, forest industries and the community? Does the Minister share Dr Mosley's description of this person-an employee of CSIRO-as a government officer? Does the Minister agree that it would be entirely inappropriate for the Government to direct CSIRO to dissociate itself publicly from the officer, in line with Dr Mosley's complaint? Does the Minister believe that a CSIRO expert has not only a right but also a duty to contribute to public debate on environmental issues, and at least as much right to do so as officers of the Australian Conservation Foundation which is also a substantially publicly funded organisation? Is the Government prepared to assert CSIRO's independence of political direction? Senator RYAN —I have no knowledge of the detailed matters covered in Senator Martin's question, so I will refer the matter to the Minister for Science and Technology and get a detailed reply. Senator MARTIN —Mr President, I ask a supplementary question. As a Cabinet Minister, the Minister would have a view on the Government's policy in relation to CSIRO, and the last part of my question was: Does the Government believe that CSIRO is independent of political direction? Senator RYAN —The matter covered by Senator Martin's question has not been a matter for Cabinet discussion. In general, obviously we support the independence of these organisations. But as I have no information about the particular matter which has led to some sort of charge about the Government undermining or eroding CSIRO's information, I think the best course of action is that which I have offered to undertake; that is, to refer the matter to the Minister for Science and Technology, Mr Barry Jones. Senator ROBERTSON —My question is directed to the Minister representing the Minister for Health. Has the Minister's attention been drawn to the recently published report of a survey of New South Wales school children's drug taking habits? Does the Minister agree that there is cause for alarm in the drug usage indicated by the report? What action is contemplated to co-operate with the States in taking steps to overcome this problem, particularly in the area of the sniffing of solvents and aerosols by teenagers? Senator GRIMES —I did read in a newspaper over the weekend about the survey conducted in New South Wales by, I think, the Education Department, which indicated that there was a further increase in the use and abuse of drugs, illicit and otherwise, by school children, particularly in that State. In particular, I remember that mention was made of the relatively high percentage of students who had indulged in the very dangerous practice of sniffing solvents and various aerosol products. I know honourable senators are aware of the very real problems in the Aboriginal community of people sniffing petroleum products. It is always disappointing when, given that there has been so much publicity in recent years about the use and abuse of drugs, this sort of survey indicates a problem is continuing to be present and is, in fact, getting worse. It is indicative, I believe, of a social problem which faces not only Australia but the whole world. Certainly this Government will co-operate with the Government of New South Wales or any of the State governments in trying to introduce an effective and efficient drug education program in an effort to cut down the amount of abuse of this type. A second approach would be to introduce safer products on the market to avoid exposure of young people to these substances and their abuse of these substances. I note that in Ireland recently a solvent for inclusion in glues was developed which is not volatile, as are the solvents that are used now. It will certainly be of assistance in this area. The basic problem is why young people-indeed, people of all ages-abuse drugs in this way. I will refer to the Minister for Health- Senator Kilgariff —Would you support the setting up of a select committee? Senator GRIMES —I was not aware that Senator Kilgariff wanted a select committee . But certainly, the problem the honourable senator has raised in this place in the past, that is, of petrol sniffing amongst Aborigines, is very serious. I will certainly convey to the Minister for Health Senator Robertson's concern in this area and find out what correspondence he has had, with the New South Wales Government in particular, in regard to this issue. Certainly, I accept the fact, as I did many years ago when I was a member of the Senate Standing Committee on Social Welfare looking into this matter, that we need a more effective Commonwealth-State Government program to attack this very serious problem. Senator CHANEY —Has the Minister for Resources and Energy received the interdepartmental committee report on the trade implications of any decision to cancel the shipment of yellowcake due to be made to France in October? Is it true that the report recommends against any such action on the basis that it would have serious repercussions for Australia's trade with members of the European Economic Community? Will the Government's decision on the shipment be made before or after the Australian Labor Party National Conference in July? Senator WALSH —Senator Chaney referred in his question to an interdepartmental committee report. As I recall it, there was an interdepartmental committee report on the question of uranium exports which was received around six months ago, although the honourable senator should not take that as a precise date. Again, as I recall it, that report was not confined to the question of the effects of terminating supplies to France-of placing a continuing embargo on the supplies to France while it continues to test atomic weapons. No interdepartmental committee report on France has been received since. However, I have received an opinion from the Department of Resources and Energy. Two other departments, I think, are also putting in an opinion-or may have already put one in-to the Department of Resources and Energy, or their own Ministers may have done so. I am not sure which is the case. Senator Chaney —Trade and Foreign Affairs? Senator WALSH —Yes. I will not give an undertaking on whether the contents of those departmental reports will be released or whether the contents of them will be discussed in the Senate because, although I will consider this again, I think they probably ought to be regarded as internal government working policy documents. The final question concerned when a decision will be made as to whether there will be any exports to France after the present suspension, which expires in October of this year, has finished. I do not know what the position will be beyond that period. It is not a decision which I administratively make. It is a decision which will be made by the Minister for Trade, although I expect that he will take the matter to Cabinet to get Cabinet approval for whatever recommendation he has regarding it. I do not expect that such a decision will be made prior to July of this year-in other words, prior to the Labor Party National Conference. Senator CHANEY —Mr President, I ask a supplementary question. I thank the Minister for his answer and, in particular, for the fairly definite statement he made at the end of it. I also ask him: Will he confirm that position with the Minister for Trade? Will he mind confirming whether that view is also the view of the Minister for Trade whom he represents in this place? Senator WALSH —I am the Acting Minister for Trade today; so I suppose I can confirm that view here and now. Since I do not expect to have that exalted position for very much longer, when Mr Lionel Bowen returns I will seek his views on the matter. Senator TATE —My question is directed to the Minister representing the Minister for Aviation. What is the current situation regarding the Tasmanian Government's offer of $3m to upgrade Hobart Airport? Has it been decided what the money will be spent on? Has any comparison been made between the benefits of spending the money at Hobart or spending it at Launceston? Senator GIETZELT —Senator Tate indicated that he wanted to ask a question about the allocation of funds in respect of aviation matters in Tasmania. I sought a response from the Minister for Aviation, whom I represent in this place. Mr Beazley has provided me with the following information. In commenting upon the Commonwealth's Gordon below Franklin offset package, Mr Gray advised that he intended to spend $3m of State funds on the upgrading of Hobart Airport. Discussions between the Commonwealth and State officials have identified the alternatives as either the lengthening of the runway from 1,980 metres to 2,480 metres, or extending the terminal to provide for two-way B767 loading and carpark improvements. This proposed expenditure by Mr Gray is in addition to $3m provided by the Commonwealth for the upgrading of Hobart Airport as part of the Gordon below Franklin offset package. The Commonwealth funds will cover pavement works consisting of runway turning nodes, taxiway fillets and apron extensions, costing $2.4m; and technical capital works consisting of provision of taxiing lights, apron floodlighting and distance measuring equipment costing $0.2m, which will leave $0.4m for other works. This could be used to enlarge the terminal building to cater for two-way flow of B727 loads. In response to interest from the Launceston community, Mr Beazley advises that he has had the potential for upgrading of that airport investigated and that it is indicated that the upgrading of Launceston to international standards would cost between $40m and $55m, and that that is currently out of the question. However, as some interest has been expressed in flying wide-bodied aircraft into Launceston, which has advantages as a point of entry for domestic tourists, he indicates that for about $3m, say, a turning node at the end of the runway, an apron at one end of the terminal and a short taxiway connecting the apron to the runway could be provided. These improvements would enable the domestic airlines to fly B767s or Airbuses to Launceston if they believed that the market justified the expansion in capacity. So it appears that the Premier has decided that further upgrading of Hobart has top priority and the final decision, as the Federal Government accepts, is his. Whatever the Premier decides, the Department of Aviation and the Government will continue to give every assistance in the administration of that expenditure. Senator MacGIBBON —I direct my question to the Minister for Education. Is the Minister aware that a very sizable and increasing number of Australian parents from all socio-economic backgrounds are sending their children to private schools because they see that they get a better education from private as opposed to government schools? Will the Minister, therefore, cease the Labor campaign against private schools and tackle the heart of the problem, which is the teachers' union and its members in government schools, who are more interested in teaching radical and rabid political theories, thereby enhancing their chances as candidates, as Labor Party representatives, than teaching legitimate academic subjects? Senator RYAN —I suppose that I have to take that question seriously and try to give some sort of answer to it, even though it was obviously a dreadful bit of anti-teacher rhetoric. Senator MacGibbon's questions touched on a couple of issues of general interest, so I shall make a couple of comments. The facts about the movement in some States at some times of some children from the government school system to the non-government school system have been thoroughly documented by the Commonwealth Schools Commission. I refer Senator MacGibbon to its most recent report, which sets out those figures in some detail . From that he will see that although overall there has been a statistical shift , in some cases it has been a shift in the other direction. Quite clearly when parents have the opportunity to make these sorts of choices, that opportunity is presented through government funding of many different kinds of schools throughout Australia. Some parents are also in the financial circumstances to make those sorts of choices, and they make them. That is the situation which our Government recognises and indeed assists in many ways. I certainly do not think one can infer from the fact that parents make different kinds of choices that the kinds of outrageous claims that Senator MacGibbon made about teachers are to be in any way taken seriously. Senator MacGibbon also referred gratuitously and grossly incorrectly to the Labor Government's campaign against private schools. I simply point out to Senator MacGibbon again that in our first Budget, our 1984 Budget, the Hawke Labor Government spent more money on non-government schools than has ever been spent by any previous government in this country and, in doing so, gave real increases to the vast majority of non-government schools. In excess of 90 per cent of non-government schools got more funding under the Hawke Labor Government 's first Budget than under the previous Government's Budgets or under the previous Government's formula for assisting schools. The change that we made with respect to our support for the non-government sector was to redirect assistance to those schools most in need, and that strategy by and large has been endorsed throughout the non-government schools sector. Finally, I must comment on the gratuitous and insulting remarks that Senate MacGibbon made about teachers. It has been my experience, having now spent 12 months visiting schools of all kinds in all parts of Australia, that the various teaching services which Australian children have to serve them are made up of highly qualified and committed people. As in any profession, there are some people whose capacities are greater than others and there are some people whose commitment is greater than others. Senator Gareth Evans —Not to mention politicans. Senator RYAN —It is true, as the Attorney-General remarks by way of interjection , that this is true even of politicians. Senator Gareth Evans —And dentists. Senator RYAN —And dentists. Some work harder than others; some have more ability than others; and some have more commitment than others. But by and large, I would say that Australian school children, be they in government systems in our six States and two Territories or in the variety of non-government schools which our Government funds and will continue to fund, are well served by their teachers. Senator MacGIBBON —Mr President, I have a supplementary question. Is the Minister disputing the fact that an increasing number of students are going to private schools as opposed to public schools? Senator RYAN —The supplementary question certainly has to be answered with the word no. There are not more children going to private schools than to public schools. On a national average about 75 per cent of children are in government schools and about 25 per cent are in non-government schools. That varies from State to State. In Tasmania, for example, only 15 per cent of children are in non-government schools. If we look at national statistics we will see that in the last few years, since the inception of the very free way of funding the development of new places in non-government schools, there has been a percentage increase nationally, but not in every State or at every level of schooling, towards private schooling. That, I might say, is counter to the direction in the late 1960s and early 1970s when the trend was the other way. Obviously there are changes in social attitudes. There are slight movements. But by and large three- quarters of our children are in government schools and a quarter are in the vast variety of non-government schools. I expect that situation will continue more or less as the average with which our Government has to cope and for which we will develop policies which are both equitable to both sectors and rational in the economic use of the resources that the taxpayer provides. Senator PRIMMER —My question is directed to the Attorney-General. Bearing in mind the close interest expressed in the issue by several honourable senators, can the Attorney-General advise whether there has been any development over the past month in the consideration by the Director of Public Prosecutions, Mr Temby , of the prosecution of Foreign Affairs officer Don Witheford which, as far back as 16 March, was criticised by the Acting Chief Magistrate as being conceived in prejudice and born in bias on the part of some Foreign Affairs officers? Senator GARETH EVANS —I have no further information to give the Senate as to the progress the Director of Public Prosecutions may be making in his consideration of the question of appeal from Mr Dobson's decisions and also whether the remaining two charges should proceed. It is some time since I had my last brief on this matter though and I will inform Senator Primmer as soon as I can what the outcome is. However, in the meantime I remind him and the Senate that Mr Witheford continues to be suspended from duty on full pay. Senator DURACK —I refer to the Government's proposed changes to the Trade Practices Act which were the subject of election undertakings, a Green Paper and exposure draft legislation. Such changes would be very valuable. It is a pity the Government is not proceeding in the same way in relation to a Bill of Rights . I refer in particular to the Government's proposal to repeal sections 45D and 45E, which provide for outlawing secondary boycotts. I ask the Attorney: Is it the Government's intention to proceed immediately or in the near future with the abolition of section 45D and 45E, certainly before the premature early election it is planning, or will this promise join other contentious issues on the back burner? Senator GARETH EVANS —The timetable governing the Government's introduction of the legislation specifically to repeal sections 45D and 45E of the Trade Practices Act, to which we are committed, will be governed by our consideration of the responses to the Green Paper, and in particular the discussion paper, as to the relationship between trade practices law and the trade unions so far as it affects the question of alternative means of dispute resolution in this area. As the Government has clearly and quite explicitly acknowledged in that discussion paper, it is accepted that there is a need, whether through the conciliation and arbitration machinery or otherwise, to have some effective method for resolving the problems that have arisen and will continue to arise in this area. It is certainly not the Government's intention to leave the field completely open in this respect. But as I say, the timetable will be governed by the responses when they are received. The responses were due this week. A number of business and other organisations have requested extensions of time within which to lodge responses to the Green Paper. I am not able to give any firmer indication than that as to the timetable. Senator DURACK —Mr President, I ask a supplementary question. Will the Government's legislative response to implementing its policy in relation to sections 45D and 45E of the Trade Practices Act be according to the same timetable as that for its response to its proposals for the whole of the legislation? Senator GARETH EVANS —I have nothing further to add to the answer I just gave to the question, Mr President. It is not possible at this stage to be precise as to what that timetable will be. Senator ZAKHAROV —Is the Minister representing the Minister for Foreign Affairs aware that the previous Liberal-National Party Government ceased to provide public toilet facilities at Australia House in London and, more importantly, ceased the publication of a regular news bulletin which was a valuable resource both for Australian travellers and overseas business people? Does the Government intend to restore these services and, if so, when? Senator GARETH EVANS —Senator Zakharov gave some advance notice of her concern about the situation in respect of public conveniences at Australia House. As a result I am able to say that I am well briefed on the matter by the Department of Foreign Affairs. Extraordinarily and perhaps appropriately enough, that brief comes to me in the form of a cablegram classified restricted. I am able to advise the honourable senator that the toilet facilities previously available to the public were located in the lower basement of Australia House but that following the introduction of revised security arrangements in Australia House in October 1975 they were no longer accessible from the ground floor public areas. In August 1982, when the Migration Branch moved from Canberra House to Australia House, new toilet facilities were installed in a self-contained upper basement area for use by the public attending migration interviews. For reasons of security other members of the public must be escorted-- Senator Chaney —Mr President, I rise to a point of order. Several Opposition senators are seeking the call for a question. I suggest that the Minister incorporate his answer in Hansard. We might then be able to get on with the business of the place. The PRESIDENT —There is no point of order. Senator GARETH EVANS —I was in the course of telling the Senate that for reasons of security other members of the public must be escorted to and from the toilet facilities in the lower basement. I cannot forbear but to seek leave to incorporate the rest of this answer in Hansard. Leave not granted. Senator GARETH EVANS —More generally, however, they are directed to public toilets about 100 yards from the front of Australia House and at the rear of St Clement Danes Church. There are architectural as well as functional reasons-- Senator Chaney —Mr President, I raise a point of order. First of all I make it clear that it was not the Opposition which denied leave for the incorporation of the rest of the answer. The fact of the matter is that Ministers can treat Question Time with contempt in a number of ways. Giving long answers is the usual way. Mr President, I suggest to you that there are honourable senators on this side who wish to ask questions and that they should be given the opportunity. The Minister should be sat down. The PRESIDENT —Order! There is no point of order. The Attorney-General sought leave to have the rest of the answer incorporated and leave was not given. I ask the Attorney-General to conclude the answer. Senator GARETH EVANS —Mr President, I will endeavour to compose myself. There are architectural as well as functional reasons which preclude the installation of toilets in the ground floor public areas of Australia House. Restoration of access to such facilities elsewhere in the building has security implications necessitating the use of escorts, which has undesirable practical and social consequences. As to the latter part of the question, which deals with bulletins and which, as Senator Zakharov says, is perhaps a matter of rather greater substance, until early 1981 an edited version of the Radio Australia news transcription was given wide circulation. The Australian Information Service's cabled summary of extracts from the Australian daily Press then became the basis of a daily news sheet entitled Australia News. It is circulated by mail to the United Kingdom Press and a selected list of Australians resident in Britain. Copies are also available at Australia House. Postage costs were the reason for restricting the mailing list. There do not appear to be any plans afoot to repair the depredations of the former Government in respect of these matters of the location of toilets and information newsletters, but the situation clearly will be kept under review as a result of the interest shown in the matter by Senator Zakharov and other honourable senators. Senator Sir JOHN CARRICK —I direct my question to the Minister for Resources and Energy. My question concerns the British nuclear tests at Maralinga and elsewhere. I ask: Was there in existence throughout the Maralinga, Emu and Monte Bello testings an Australian committee known as the Atomic Weapons Testing Advisory Committee or a similar name? Secondly, did the Committee include expert scientists and senior public servants? Thirdly, did the Committee have continuous liaison with the British personnel managing the tests and did the Committee advise the Australian Government of the day of the safety, timing, weather and other factors? Fourthly, are the relevant documents of the Committee and of other sources available in the Australian Archives? Fifthly, are some of the Committee members still alive? Finally, over the years and in the face of a number of allegations of carelessness or injury in the tests, has any evidence of such carelessness or injury emerged from the approaches by the governments of the day to the existing sources, both human and record? Senator WALSH —I believe there was a Committee with the same or similar name to that which Senator Sir John Carrick mentioned. Whether it was in existence throughout the entire period of atomic testing, I do not know. I will have that checked out. Likewise I will have it checked out whether the Committee reported regularly to governments and did the sorts of things contained in the question. I had decided before Senator Sir John Carrick asked his question, having been prompted by reports which have appeared in the last few weeks concerning readings of radioactive fallout, to collect information on the readings. It is worth making a distinction, I think, between radioactive fallout and total radiation. Reports, even if correct-I think some of them have been correct-that there was a hundred-fold increase in radioactive fallout at a particular site following a test, as is reported in today's Age, do not mean that there was a hundred-fold increase in total radioactivity because the fallout increased from a negligible figure to something which was 100 times a negligible figure and the background radioactivity was very much greater than the increased fallout level, let alone the pre-existing fallout level. I think that ought to be seen in perspective. I have decided to collect, if it can be done, all the readings of radioactive fallout which were taken in Australia during that period. As to whether there is any evidence of carelessness, I think one could say, with the wisdom of hindsight, that it was pretty careless and irresponsible to conduct the program at all. But the perceptions of the 1950s were different from the perceptions of the 1980s. I am aware of a couple of other specific happenings that I think could be regarded as careless, but an opinion on whether or not they are careless is rather subjective. Senator Sir JOHN CARRICK —Mr President, I ask a supplementary question. In making his inquiries, will the Minister contact those members of the Committee who are still alive? Will he seek from them and from the Australian Archives the more broad answers to the questions that have been raised in recent days? Senator WALSH —Yes. Senator GARETH EVANS —On 3 May Senator Primmer asked me a series of questions about the Witheford case. He asked: Is it a fact that a private Sydney barrister by the name of Hastings has been retained for the past several months at a cost of tens of thousands of dollars to assist Foreign Affairs officers working on Mr Witheford's prosecution? Is that barrister still working out of the Department of Foreign Affairs? If so, will the Attorney provide full details of Mr Hasting's hiring, including the costs involved and the level of security clearance-- I am able to advise him, on behalf of both myself and the Minister for Foreign Affairs, as follows: The question is in three parts. As to the first and second parts, the answer is no. In the circumstances, the third part of the question does not arise. I would add for the record, however, that Mr Hastings was briefed through the Deputy Crown Solicitor's office in the matter of the proceedings against Mr Witheford at a daily rate of $500 plus a loading of $250 for any day on which he was required to travel to Canberra and of $150 a day for any day on which he remained in Canberra. His account in an amount of $3,590 has been received. That amount covers all work done other than two short advices which might have involved a further half day's work. Senator GARETH EVANS —Also on 3 May, Senator Scott asked a question about the school cadet corps. I seek leave to incorporate an answer in Hansard. Leave granted. The answer reads as follows- On 1 March, 1984 the Minister for Defence announced that the Australian Army Cadet Corps was being restructured after full consideration of a large number of submissions from schools. The new scheme will begin operating from 1 July 1984. The scheme will be based on regional units, open to the community. This will ensure that they are open to all eligible young people. Units will be centred on Army Reserve depots rather than at schools. Those units already operating on a community-based system with full Army support will continue to receive that support. A number of economically disadvantaged schools will also continue to receive full Army support for their cadet units. These units are expected to be opened to the community in due course. All other schools wishing to retain affiliation with the Australian Army Cadet Corps will receive only limited support from the Army. Limited support will include the training but not payment of officers of cadets. Uniforms and equipment will be provided, but the schools will have to pay for them. While the Government accepts that the cadet corps, like the Boy Scouts and similar organizations, have social value, they have little or no military value and expenditure from the defence vote must be directed towards priorities for defence preparedness. Otherwise the taxpayer will not receive the maximum for each defence dollar. The cost of the present scheme in 1983-84 is $11m. Senator GARETH EVANS —Mr Deputy President, on 29 March you asked me a question about the Queen's capacity when she made a speech in Jordan. Again, I seek leave to incorporate that answer in Hansard. Leave granted. The answer reads as follows- The Queen is Head of State of 17 Commonwealth countries including the United Kingdom and Australia. When the Queen visits one of these countries she does so as Head of State of the country concerned. I take the honourable senator's question to be directed at visits by the Queen to countries outside the Commonwealth. The position is governed largely by practice and convention and depends upon the basis on which the invitation to visit a particular country is made and accepted. In most cases the Queen will have been invited to visit the country concerned in her capacity as Head of State of the United Kingdom. The visit will therefore be undertaken in that capacity and she will speak in that capacity, acting on the advice of the United Kingdom Government. This would be understood and appreciated by the host Government. The DEPUTY PRESIDENT —The President has received a letter from Senator Messner proposing that a matter of public importance be submitted to the Senate for discussion, namely: The destruction of security in retirement for Australians by the Hawke Labor Government. I call upon those senators who approve of the proposed discussion to rise in their places. More than the number of senators required by the Standing Orders having risen in their places- Senator MESSNER(South Australia) 3.14)-The matter of public importance before the Senate is: The destruction of security in retirement for Australians by the Hawke Labor Government. I believe this is a matter of the highest level of concern in Australia today. Perhaps this matter of public importance could not have been brought on at a better time with the return of the Minister for Social Security (Senator Grimes) fresh from his recent trip overseas where, no doubt, he has found new ideas with which to assail the pensioners of Australia. Of course, he will have the immediate opportunity of setting people's minds at rest with his new intentions and, therefore, will be able to take them into his fullest confidence. We hope that he will be able to engender that confidence in people in those circumstances. His absence has brought joy to some of these people already. The Hawke Labor Government has brought great confusion to the aging in our community and has created a political divide where there existed broad bipartisan understanding in the past. Its actions, which I would like to deal with a little later in detail, have destroyed the system and the confidence which Australians have shown in it for many years and have undermined the future ability of governments to provide for the aging. Far from ensuring security in old age, the Hawke Labor Government is creating an ever-widening pool of Australians who are now worried, concerned and, in many cases terrified, at the proposals which Mr Hawke and Senator Grimes have in store for them as they approach old age. Without doubt the twin policy lines of encouragement to provide for oneself through tax incentives and the underpinning of that system with a government pension have served Australia well in the past. Some commentators would have us believe that this system is inequitable, inadequate and unable to distribute assistance to the most needy. I shall now seek to demonstrate that this is not true and that such a dual system, which encourages thrift and independence, is vastly superior in all respects from one which seeks to make Australians totally dependent on government handouts. This Government has brought about three major changes in the area of retirement income policy: Firstly, the reintroduction of both an income test and an assets test for the over 70-year-olds; secondly, the announcement and the bringing forward of legislation on an assets test for all pensioners; and thirdly, although we have not seen any legislation yet, nearly 12 months on from the date when the first announcement was made, there is to be taxation on lump sum superannuation payments. In respect of the over 70-year-olds, an income test has been imposed since 1 November last year. As a consequence of that policy 55,000 people have had their pensions stopped. So 55,000 people are worse off under the Hawke Labor Government. The introduction of the assets test, announced in the August Budget, has brought confusion right from its very start. The Minister for Social Security and the Minister for Veterans' Affairs (Senator Gietzelt) embarked upon an alleged consultative program whereby they met with all those groups and organisations that were supposed to be involved. This left very little time for those groups to grasp the concept and make any thoughtful comments on it. In its original form the assets test included many anomalies which we do not need to reiterate. Suffice it to say that it obviously favoured the wealthier people in the community, while it tended to penalise those of modest means who, through thrift, had saved during their working lives. Legislation for this assets test was not sighted until December 1983. Initially the Government sought to drive it through Parliament as fast as it could. The action of the Opposition , in conjunction with the Australian Democrats, brought about a delay in that legislation, at least until February. However, a conference was held in February , sponsored by the Australian Council of Social Services, which represented many organisations right across the country. This conference lambasted the assets test proposal and noted in its report: The strong sentiment, virtually unanimous among pensioner groups, was that the Government might better institute a review of the income security system in conjunction with its review of the taxation system. That path of change should yield fewer anomalies than the one chosen. Mr Deputy President, this statement endorses the Opposition's position on this matter right from day one. In fact, as you would know, in September 1983 the Opposition sought, and successfully had carried, a reference to the Senate Standing Committee on Social Welfare on the question of retirement income generally. As a consequence of these matters and growing public criticism of the assets test, the Prime Minister (Mr Hawke) announced in February, without consulting the Minister, Senator Grimes, that Cabinet would review the decision. In announcing Cabinet's review of the assets test policy the Prime Minister again endorsed the Opposition's attitude by stating: It has become clear that there is continuing and justifiable concern about whether the Government has yet found the best way to implement legislation on an assets test in a fair and equitable way. If ever there was masterpiece of understatement it was that statement. Cabinet has established an independent panel to review the assets test. This panel, we believe, is due to announce its decision by 30 June. As a consequence of this Government's mishandling of the whole assets test an estimated $11m was spent by the Department of Social Security alonw in anticipation of the program. More than 1,500 employees were put on in anticipation of the test. Let us leave aside that disaster and turn to another-the changes to lump sum superannuations. I remind the Senate that it is now almost 12 months since the Government announced that it was about to introduce taxation on lump sum superanuation payments. After all that time we have still seen no legislation. We do not know whether the Government has determined its final attitude in that respect and in what way it will impact on peoples' lives. In fact, people are forced to go on making decisions in the light of this most unreasonable situation which any person would abhor. The original proposals in July, which have been changed from the May proposals, were to make tax payable at 30 per cent on all lump sums. Other changes have been made in respect of Defence Force personnel and the amounts they will receive. I make the point that the tax is purely confiscatory and has behind it only an ideological bent which has been so badly thought out. I will demonstrate that more clearly in a moment. The Australian Labor Party is opposed to lump sum payments because they make people independent from government and such an outcome is incompatible with its policy objectives of making people dependent on government. Labor's rhetoric in all these changes has been that it wishes to assist those in greatest need. But the present system already does that and that has been admitted by Senator Grimes in his own publications-I refer to Labor Essays 1983. By seeking to lower people's independence greater demands will be made upon government resources and this can only reduce its capacity to assist those in greatest need. In justifying the Government's superannuation changes the Government has, on many occasions, referred to $2,500m in so-called taxation expenditures in respect of occupational superannuation. This large amount of money breaks down into two main elements. The first is about $1,500m. Its results from the tax free treatment of employer and employee contributions to superannuation schemes. The second element of about $1,200m comes from the lack of taxation on the earnings of superannuation fund benefits. Is the Government tying to tell us that the first element of $1,500m, if entirely wiped out, would not be exceeded by the effect of increased drawings on the social security system by people who would then become dependent upon government? I think that is the point it is trying to make, that is, that it would be cheaper for the Government to make everybody dependent. Plainly, that is a nonsense and it is at direct variance with the Opposition's policy in this area. We will not support that policy in forthcoming legislation. The second element of about $1,200m comes from the reduction of revenue resulting from the non-taxation of the incomes of superannuation funds. Of course, this relates to the ability of superannuation funds to provide future benefits in retirement. If that income is severely reduced superannuation funds will be unable to meet their obligations to pay benefits to employees upon their retirement. As a result of that, people will increasingly become reliant and dependent upon the government pension. The point I make is this: It has been stated by actuaries and by people who are expert in the kind of calculations that this entails that if taxation is applied to the income of superannuation funds at or around the level presently applicable in special circumstancs-that is, about 50 per cent-the ability of superannuation funds to provide benefits will be reduced by up to nine-tenths of the final benefit over a period of 40 years. That means the ability of a superannuation fund to meet its obligation to its members will be absolutely destroyed. I believe that that very significantly draws the point that the Government is on the wrong track in its policy of seeking to tax lump sums and also is very much-as it has already acknowledged-on the wrong track in terms of applying an assets test to pensioners. The Government does not have to rely on me to make that point. I will quote from some evidence given recently to the Senate Standing Committee on Social Welfare by Mr Daryl Dixon, who is the director of the social welfare policy secretariat within the Minister's Department. On page 78 of the transcript of the meeting of that Committee, in reply to one of my questions with regard to economic growth being a major factor in meeting the future costs of welfare, he is reported as having said: That is why I think that options that attempt to change the relative emphasis on occupational superannuation are doomed to failure. I repeat, doomed to failure- I think that if you were to decide that we are not to rely on occupational superannuation you would then have to work out where else that $20 billion of funds with an additional $1.5 billion per year in savings, or whatever it is, would come from. I think that growth is going to be the key to all this. I do not think any truer words can be spoken about the nature of the problem and the direction of the solution that must be found than what has been said in public evidence by Mr Daryl Dixon, who is well known to many of us as an expert in this area. Mr Daryl Dixon's remarks are well supported by other commentators in this area. I refer to a table of a survey in the report of the Australian Bureau of Statistics. It was included in a recent article on income and housing. The survey shows in its results that the number of people who are dependent upon government cash benefits as their principal source of income decreases with the amount received as lump sum superannuation. The proportion reliant on government cash benefits as their principle source of income declines from 84 per cent of those with lump sums of less than $5,000 to only 28 per cent, 8,600 people, of those with lump sums of over $50,000. Mr Acting Deputy President, I am sorry that I have not asked the Minister about this, but I seek leave to have that table incorporated in Hansard. It is an ABS reference. Leave granted. The table read as follows- Table 7. Persons aged 60 or over who received a lump sum superannuation payment after turning 50: amount received by age and principal source of income, Australia, 1982 Persons aged 60 to 69 Persons aged 70 or over Total persons aged 60 or over Principal source Principal source Principal source Amount of of income is of income is of income is lump sum received govt cash benefits Other sources govt cash benefits Other sources govt cash benefits Other sources No. % No. % No. % No. % No. % No. % Under $5,000 43,900 80 11,100 20 42,200 90 4,800 10 86,100 84 15,800 16 $5,000 to under $10, 000 28,400 67 14,200 33 16,700 94 . . 45,100 75 15,200 25 $10,000 to under $20, 000 23,900 57 18,300 43 8,800 57 6,700 43 32,700 57 25,100 43 $20,000 to under $30,000 8,800 50 8,700 50 10,600 46 12,700 54 $30,000 to under $40,000 6, 800 53 6,000 47 4,300 39 6,800 61 9,200 51 8,800 49 $40,000 to under $50,000 . . 4,000 51 . . 5,100 45 6,200 55 $50,000 and over 8,200 30 18,800 70 . . 5, 000 75 8,600 28 21,700 72 Total 123,900 60 81,100 40 73,700 75 24,300 25 197,600 65 105,400 35 * Estimates subject to sampling variability too high for most purposes. Note: Percentages refer to the specific age/lump sum groups, for example, 80 per cent of persons aged 60 to 69 who received a lump sum superannuation payment of under $5000 have government cash benefits as their principal source of income. Columns and rows may not sum due to rounding. Senator MESSNER —The outcome of this is clear. The ability of people to remain independent will be seriously imperilled by the actions of this Government. Some of the actions, of course, have been badly thought out and certainly have been badly accepted in the electorate. The strange thing about all of this is that the Government has singled out the aged for attack. It has not had the guts to introduce a capital gains tax or death duties. It has even backed off from the assets test, merely because it felt the heat of voter disapproval. It has failed over 12 months to introduce legislation for the new tax on lump sum superannuation. The conclusion from those duckings and weavings is clear: There is to be an election this year and the Government does not want any issues around which might put it in any kind of bad light. I am amazed that the media has not picked up that point more clealy and said so. Naturally enough, the Prime Minister does not want anything to trip him up on his road to his destiny. In particular, he does not want his loyal Corporal Grimes to get in his way, not the least Senator Grimes. The Grimes who introduced the assets test, having promised to increase benefits to pensioners, was the one who was struck down by his own Prime Minister in recent weeks by a blow from the back-not by a Brutus, who at least came from the front to stab his leader, but rather by one from the back. That is obvious and very clear evidence of the lack of stomach on the part of the Prime Minister for the electoral battle. He runs away from issues such as lump sum superannuation and the assets test. Quite frankly, he appears unable to test his arm. Far from being courageous, as he loves to be painted, he is obviously a coward who runs out on each fight at any sign of public disapproval. He obviously has all the principle of a mercenary and in that sense is perhaps better called Mad Mike Hoare. Worst of all in the way that the Hawke Government, this Prime Minister and this Minister have deceived the Australian public is that they have generated such widespread concern, not just confusion and concern amongst pensioners and their families. Insecurity has been generated amongst all groups-blue collar workers, white collar workers, workers of all collars. The problems that they feel are creeping into the income security system augur disastrous futures for them. They know that this Government cannot be relied upon. It is obviously just waiting to get another election notch under its belt before it lands Australians with a capital gains tax, with an assets test, with more death duties and with more penal legislation, thereby reducing the ability of people to look after themselves. The Government should be warned that the Australian public now knows that. Mr Hawke should beware lest his sleazy ambitions should overtake the trust which was given to him last March. Senator GRIMES(Tasmania-Minister for Social Security)(3.33) —Senator Messner referred to the fact that I have been overseas. I admit that that is so. I have just returned and am a bit jetlagged. I tell the Senate, however that Senator Messner has, in fact, been overseas longer than I. He has been to Thredbo for the weekend. We have just heard an extraordinary speech which in the end seemed to reach some sort of strange anatomical level. Senator Messner was talking about people being stabbed from the back and the front, having no stomach, and not being willing to chance their arms. He referred to Brutus and God knows who else in his speech. I suggest that what Senator Messner has demonstrated-whether it is due to jet lag, overseas trips or what-is that any confusion in this area is, in fact, in the minds of Senator Messner and his colleagues and is not in the Government or the electorate. As I said, Senator Messner made great point of the fact that I had been overeas and said that he hoped I would get up and give some answers to the sorts of problems that he raised. I remind him again that he also has been overseas and was overseas longer than I. He made no reference to his trip because, I dare say , he found that people overseas are also experiencing problems concerning how they should deal with the question of retirement income in their communities. One thing I noticed when I was overseas-I talked to various people at all levels of government and bureaucracy who are dealing with retirement income-was that people view with amazement and wonder the situation which exists in this country whereby we have a superannuation system which provides for tax deductions for superannuation contributions, which provides for tax exemptions for the companies which provide those contributions and which then provides for taxation on only 5 per cent of a lump sum which is paid at the end. They view that with great wonder. Senator Messner —Did you talk to the people in the United Kingdom? Senator GRIMES —Of course I talked to the people in the United Kingdom. Senator Messner knows what the people in the United Kingdom think. I suggest that the problem faced by the people in the United Kingdom is the same as the problem we face. The problem that the conservative Minister in the United Kingdom faces at the moment is a rough equivalent to what Senator Messner and I are talking about ; that is, the very large-sometimes #40,000 or more-severance payments which are made to some people in that country are also, as they are in this country, able to be converted so that they are not considered as income. Those people then receive full pensions, full fringe benefits and the full rate reductions that other people receive in England. My conservative equivalent in England is trying to do something about that. The aim of this Government is not, as Senator Messner suggested, to wipe out occupational superannuation. It is not to wipe out people's capacity to contribute during their working life to their retirement. It is to provide for the existence of superannuation schemes which do what superannuation schemes are supposed to do and which they do in every other country; that is, provide a weekly income on retirement to people. The aim of the taxation deductions for superannuation payments and the aim of the special treatment, as far as taxation is concerned, of firms which provide occupational superannuation has been and is always stated to be, as Senator Messner will see if he looks at the debates in the past, to encourage people to enter into private superannuation payments so that when they retire they will not be a burden on the age pension system and on the welfare bill in this community. Quite clearly, what has been happening with many of these people, as is well known to Senator Messner and to those involved and those knowledgeable in the area, is that people have been able to take advantage of our system because of lump sum payments and because of the concessional treatment of lump sum payments. They are not only able to receive the full benefits of those superannuation schemes, of those tax deductions and the non-taxation of firms, but are also able then to receive full pensions and full fringe benefits. That is the problem. Senator Messner knows it is the problem. That is what it is all about. Senator Messner —So it is all about double dipping? Senator GRIMES —It is not all about that. It is about providing a fair and equitable system. Senator Messner knows it. Let us say that we have two people who are neighbours. One is in, say, a Public Service superannuation scheme and receives his or her benefit as weekly payments and therefore loses fringe benefits and part or all of his or her pension. Let us say that next door is a person who has contributed the same amount in superannuation and received the same taxation benefits but who receives a lump sum payment and is able to be taxed on only five per cent of it and then, through some device-those devices have blossomed in this community since the assets test was removed-is able to receive, as well as the benefits of that lump sum payment, the full pension and fringe benefits. There is no way that that system is fair. There are two ways out of it. The first is to provide everyone with a full pension and full fringe benefits. The second is to overcome the situation by encouraging superannuation schemes through lump sum taxation or however else to provide weekly superannuation payments. If we go down the first track, which is the inevitable result of the sorts of policies that Senator Messner and the Opposition have talked about and provide everyone with full fringe benefits and full pensions, we can do it in only two ways. The first way is by increasing taxation, because the pensions of today are paid for by the taxpayer of today, and I do not hear anyone from the other side ever advocating that. The second way leads to what inevitably happens in a system such as ours when we try to provide pensions to everyone regardless of need. Those pensions are at inadequate levels, particularly for the low income people who need them most. I welcome a debate on retirement policy in this country. We should have more such debates. But I do not welcome the sort of debate that we always seem to have on the few occasions when this matter arises. What the present Government decided to do was, first, as has been recommended by many people, including all the national superannuation inquiries, to encourage the development of private superannuation schemes which paid people a weekly income on retirement. One way to do that is to provide for more equitable taxation on lump sums unless people turn those sums into annuitites or other forms of weekly income payments. Another way to do it, as Senator Messner has pointed out, would be to increase the taxation on receipt of those funds. But Senator Messner is opposed to that. The members of the Opposition are opposed to every suggestion which has been made to make our retirement system fairer. They are opposed to changing the system of taxation on lump sum superannuation. They are opposed to increasing the taxation on the superannuation funds at the point of those funds being paid in. They are opposed to tackling the system in any other way, as I understand it , through, say, capital gains taxes, wealth taxes or any of the methods that are used. Senator Messner —Are you bringing in a capital gains tax? Senator GRIMES —No, I am just saying that the Opposition members are opposed to those sorts of methods, which are used in every country which I suggest that Senator Messner visited. Senator Walters —He has been proposing such a tax for ages. Senator GRIMES —If members of the Opposition, including Senator Walters and Senator Messner, are opposed to all those things, and opposed to the very generous means test which has been introduced on the over-70s pension, which is only an extension of the means test that they introduced-by that stage one is getting to over $1,000m-it is about time that they said what they are in favour of. After all, they have been in government for seven years, and before that they were in government for 23 years. For all that time they administered the pension scheme. For the period of the 23 years before 1976, they administered an assets test. Minister after Minister, including Mr Sinclair and others who are still in this Parliament, administered an assets test. Even Senator Dame Margaret Guilfoyle for a short time administered the assets test. It was administered, and then, suddenly out of the blue, for reasons which have been admitted by Senator Withers, the assets test was removed because of pressure and problems from the Country Party. When the assets test was removed, the justification given in this place was that Professor Henderson and the Commission of Inquiry into Poverty had recommended it. But Professor Henderson said that although the removal of the assets test would simplify the application of the means test, it would not be fair and would create all sorts of anomalies unless some method was introduced to stop people abusing that absence of an assets test. He recommended the introduction of a capital gains test at that time. When that assets test was removed, we saw, as I have said, a great blossoming of schemes which were invented by some of the inventive companies in this county to enable people to avoid the income test, to receive the full benefits of their lump sum superannuation payment or whatever assets they had and still to receive full pensions and full fringe benefits, to the detriment of those on low incomes or those with no incomes, who, as a result of that, have seen the real value of their pensions drop from 24.4 per cent of average weekly earnings in 1975, when the previous Liberal Government came to power, to 22.2 per cent later. The simple fact of the matter is that no conservative or Labor government in this country can perpetuate a system like that. They particularly cannot perpetuate that system, as Mr Daryl Dixon says in the paper he gave to the Committee that Senator Messner was partly instrumental in establishing, if we are to have an aging population as we are going to have in our community as in other Western communities. I do not over-estimate the problems we will face from that aging population in the way some people do. In fact, it will not hit this community as much as it will hit other communities. But it certainly will be a factor, and we cannot persist in providing inadequate pensions and services to those who need them most while those who have the capacity to do so, through our imperfect existing system can get the full benefits of the system when they quite patently do not need them. It is for that reason that the Government announced that it would introduce an assets test; it was for that reason that the Government wishes to amend the superannuation legislation; and it is for that reason that the Government introduced the income test on the over-70s and an income test which is far more generous than that which is provided for people aged 65 to 69. Senator Messner says that great political difficulties have arisen out of this; people do not like it. Of course, some people in the community do not like it because they are advantaged by the imperfections of the existing system over their brothers and sisters. Of course people do not like it if they can receive the sort of lump sum payments or have the sort of asset levels that Senator Gietzelt pointed out some people have, and yet still get the full benefit of our pensions and our health services, et cetera, without contributing to them. I accept that those who do well out of the existing system will always resist change of that type. Of course the airline pilots, who were working 36 hours a month, and who in some cases received lump payments of $500,000 opposed it to the extent of going on strike. Imagine what would have happened if another group in the community had gone on strike over an issue like that. The howls from Opposition members would have been loud and long. Of course they oppose it, but still they will not be affected retrospectively. They will still be able to convert either their superannuation entitlements or their lump sums into annuities and not have to put up with that tax. What they will not be able to do is what they should not be able to do-that is, to convert that lump sum into property trusts or whatever and take the full pension and the fringe benefits that go with it. That is what they will not be able to do and that is how the system will become fair. The sort of changes we are continuing to advocate are not the whole answer to the problem. Senator Walters —You have two bob each way. Senator GRIMES —Senator Walters is the one who has two bob each way. If anyone has created distress and confusion amongst a small group of people in this community, it is Senator Walters, by the letters she has written to the paper and by the advice she and her office have quite wrongly and incorrectly given to people who have rung her. I think that her behaviour on this issue is absolutely outrageous. The advice she gave to people that they could not sell anything or that they could not spend their money otherwise the Government would penalise them when they retired was outrageous advice. She ought to be ashamed of herself for giving it. Senator Walters —I have never ever given that advice. Senator GRIMES —She did so, and more than one of her constituents has informed me of that. That was outrageous advice, and I dare say that we will have the usual personal explanation from Senator Walters. Senator Walters —You bet you will. Senator GRIMES —Of course we will. That explanation, as usual, will demonstrate the confusion she has caused. She has written letters to newspapers, outrageous letters talking about pensioners who sold their assets because they were confused by what I said or what this Government said when it turned out that they were confused by what she and her office had said. It is one of the most disgraceful things to have happened in this Parliament in recent times. I believe that, quite simply, we need the development of a system which is fair and which does what the existing system is supposed to do, that is, to provide the people of this country with an adequate retirement income by a fair distribution of the funds available to governments in this country to people who have retired so that an unfair burden is not placed on the existing taxpayer and so as not to cause unfair discrimination amongst those relying on the retirement income. What Senator Messner says about the existing dual system, which provides for encouragement by tax incentives and for an underpinning of that by the provision of pensions, quite clearly is not so. The examples given in this place and in the newspapers of this country of people who have taken those generous tax concessions, who have provided themselves with very large capital and asset holdings and who at the same time, on retirement have been able to take advantage of a full pension and full fringe benefits, quite simply cannot continue. If we have some adequate explanations from the Opposition of how we can overcome the inequities in the existing system and can produce an affordable system which distributes funds on the basis of need to those people who have retired, I will listen to it, but we have not heard that today or in the last 12 months, and I dare say that we will not hear it in the future. At the moment the Opposition is engaging in party political rhetoric in an endeavour to do what Senator Messner accuses the Government of doing, that is, to frighten people to make them resist change for the sake of resisting change. We will not be moved by that sort of rhetoric or political tactic. We will move towards a fair and decent system in this community to provide adequate retirement incomes for all. Senator HAINES(South Australia)(3.53) —We are debating today a matter of public importance brought forward by the Opposition which accuses the Hawke Labor Government of destroying security in retirement for Australians. I think it really ought to say that the Hawke Labor Government is making a jolly good attempt to finish the destruction of security in retirement for Australians that started under the previous Government. We have heard a lot today about what does and does not make up security for retirees in this country. What it amounts to is that for most people there are two sorts of security. One, of course, is financial security. For retirees that is the knowledge that, because of their own planning or because of government legislation and provision, they will have enough money to live on or will have enough income from one source or another to get by on for the rest of their lives. The second sort of security that most people of that age group, or indeed of any age group, require is mental and emotional security, that is, the knowledge that they will continue to be able to receive at least enough income to maintain a minimum standard of living, no matter what happens to them and to their assets. Thanks to various statements made by the Treasurer (Mr Keating) in both May and August last year, there is no question that confusion existed all last year in a significant number of minds in the community. The withdrawal, or alleged withdrawal, of the assets and income test legislation by the Prime Minister (Mr Hawke) at the National Press Club, which actually turned into putting it on the backburner, did not help those people who were confused, whether or not with any assistance from Opposition senators, about what they could or could not own and what they could or could not do with what they did own if the legislation finally brought before the Parliament was passed and proclaimed. One of the worst aspects of the Govenrment's assets and income test legislation was that it was retrospective. People who had made plans according to a known set of criteria were placed in a position, at least as at August of last year, in which there was a strong likelihood that that set of criteria was no longer to be valid. In other words, the conditions of eligibility for a pension were totally changed, or the change was threatened. It did not make any difference which it was, although perhaps in a way the fact that the change was threatened rather than implemented straightaway left many people up in the air about what their real position was. In fact people found or suspected that the plans they had made in 40 or 45 years of working life were for nought. Even worse, of course, people of pensionable age or within 12 months of pensionable age had a moratorium or a number of restrictions placed on what they could or could not do with existing assets from about the middle of 1983, and found that that moratorium was going to exist until 1 November 1984 or, presumably now, until the introduction of the new legislation. So there is no doubt in my mind, any more than there is any doubt in the minds of many other senators and members, that many retired people are very worried indeed about what lies ahead of them; and that sort of emotional insecurity is something that no one should have to face in the last years of their lives. Those people currently on pensions, of course, have had added to the worry that they may lose the pension or have it reduced the unpalatable fact that, thanks to the Medicare sleight of hand, they will not receive in their November pension increase even a real consumer price index component increase, much less of course the promised 25 per cent of average weekly earnings that was dangled in front of them during the last election campaign. I acknowledge a lot of what the Minister for Social Security (Senator Grimes) had to say about the welfare cake having to go to the people most in need and about the fact that there were people who, under the existing system, through double dipping or some other form of managing their affairs, were able to get money that they did not really need. However, it seems to me that changes to the taxation system rather than changes to the social security system would be the way to cure that. Having said that the welfare cake should go to those most in need, one would then be forced to the conclusion that, whilst the old system did not necessarily achieve that, an assets and income test system with exempt and non-exempt assets , one which shows a preference for one lifestyle over another, or one of the complexity of the Bill introduced into the House of Representatives in December of last year, would merely replace one set of anomalies with another and cause vast confusion in the minds of most elderly people. If the Government is to ensure financial and emotional security for retirees it has to make a realistic assessment of the needs of those people, that is, it has to make some sort of investigation of what people need when they retire and, of course, it should take into account both those with and without assets. Having done that, it should legislate accordingly. In an attempt to come up with some assessment of this situation myself, I undertook, I admit in what must be a reasonably superficial way as I do not have by any means the resources that a government has, an investigation of the sorts of costs that would be faced by people from their time of retirement. I was interested in the amount of money a couple would need for an average retirement period of 14 1/2 years merely to maintain an average car and home throughout that period. I took figures from the Australian Bureau of Statistics starting with a base age of 65 and adding to that an average life expectancy for both males and females of 14 1/2 years. I realise that the average female life span is more than that but for the purposes of the exercise I took 14 1/2 years from retirement as being the figure to work on. In looking at the costs facing a married couple retiring at 65 and with an average life expectancy of 14 1/2 years, I had to obtain figures from a single source. Clearly they vary from State to State. I chose Queensland as the base State simply because it was about the most average of the States. I will not go into any great detail on why I picked Queensland. For house maintenance costs and car costs I used the Housing Commission of Queensland data and the Royal Automobile Club of Queensland respectively. I took house contents depreciation costs from the Australian Taxation Office. I have some very extensive details if any honourable senator would like to see them at some future stage; I do not have time to read them now. However, what it amounted to was that average car costs for oil, petrol, tyres, registration, insurance and depreciation are in the vicinity of $2,171 per year. House content depreciation amounts to $730 per year. That takes into account items such as depreciation and replacement, if necessary, of things such as refrigerators, radios, various soft furnishings and so on. The actual maintenance on the house itself was taken on an average 12-square home which we priced at around $55,000. That is a modest home at a modest price in almost any part of Australia. The maintenance covers factors such as painting, replacing various elements of the home that are attached to it such as guttering, spouting , roofing, fencing and so on. That amounted to an additional $350 per year. All of that meant that over a 14 1/2-year period a retired couple had to have $47, 000 in a 10 per cent interest bearing account simply to be able to maintain their asset. At the end of that time they would not have a cent left in the account. I must stress that they would have been able to pay for nothing more than necessary maintenance of a modest home and car from that $47,000 over the specified 14 1/2-year period. It does not take into account day to day living costs such as food, health care requirements and so on, or allow for any leisure activities, unless one includes driving around in one's car looking at various caravan parks or a day trip to the beach. I also stress that if the Government wishes to subject all liquid assets for a couple over and above the allowable amount of $28,500 for a married couple to a 10 per cent assets test, the couple is going to have to have not $47,000 but $60,000. Again I must say that at the end of that 14 1/2-year period the couple would not have a cent left. There is no doubt in my mind that wittingly or unwittingly the present Government has replaced one form of financial insecurity for retirees, that is a pension that was rapidly becoming far too low and which existed under the present Government, with another form of financial insecurity and added to it the burden of emotional insecurity as well because of the confusion surrounding the introduction of the proposed assets and income test legislation. This situation can be improved only if the Government is prepared to look at the real minimum needs of retirees, both those with and those without assets, and to come up in the future with pension eligibility criteria which acknowledge and provide for those needs. That means, of course, confronting the problem of indexation. Until the Government does this, until it comes up with a fair and equitable system for pensions-the sort of fair and equitable system that the Minister for Social Security has been talking about but which I do not believe is likely to be achieved under the proposed assets and income system any more than it is being achieved under the present system-and a system which has broad acceptability across the political and social spectrum then I think the insecurity that exists at the moment will continue to exist. Senator WALTERS(Tasmania)(4.06) —There is no doubt, I am sure, that had the Minister for Social Security (Senator Grimes) remained in the Senate while we debate the matter of public importance which is within his portfolio he would end up agreeing that pensioners are feeling extremely insecure. If he denies that in this place, indeed if he tries to blame Opposition senators, the Australian Democrats and members of the Liberal Party of Australia, for creating that feeling of insecurity he is worse off than I thought he was because he has not gained anything from the public meetings that were held in the Sydney Town Hall and other places. He has not learned, he has not listened and he has not gained anything from them. Let us look at whether the pensioners have a concern. A headline in the Mercury stated: 'Ministers told to put off difficult decisions'. That statement is substantiated. I do not have time to read into Hansard the article in the Mercury but it substantiates that headline. Pensioners around the country are concerned. They are wondering what will happen after the election because they are fully aware that the Ministers have been told to put off difficult decisions . They have no idea what they are going to cop once the election is over. Let me look at the record of the Prime Minister, Mr Hawke. He tells us repeatedly and we are told by others that he has such a wonderful popularity poll that he does not have to worry. He does do all the popular things. He makes the popular announcements every time and he leaves it to his Ministers to cop the flak. I will go through just a few of the decisions that show how right I am . I will explain the first one. On 16 February the Prime Minister in his policy speech said, when referring to how he intended to stimulate the economy, that the stimulation of the economy could not take place if he took money out of the pensioners' cheques. In his policy speech he assured the pensioners that that would not occur. Who was it left to to break the sad tidings to the over-70s and indeed to the other pensioners? Let us look at the over-70s. The Treasurer, Mr Keating, took the flak. He was the one to whom the Prime Minister said: 'You will go and tell them the bad news. I have told them the good news in the policy speech; I have told them I will not touch their cheques'. However, he left it to Mr Keating to say in his economic statement on 19 May that he intended to introduce an income test for the over-70s. Let us remember that he said in his policy speech that he would not be taking money out of the pensioners' cheques. To whom did he leave the next announcement? He left that announcement to Senator Grimes, the Minister for Social Security. On 29 November, Senator Grimes broke the sad tidings that yes, we could have an assets test. It was not until 25 January that Mr Hawke showed his hand on that issue. At a Press conference, in front of television cameras and all the assembled Press, he broke the good news- because he is the popular Prime Minister. He said that Senator Grimes had made a terrible mistake and that he would not allow Senator Grimes to introduce that sort of assets test. He allowed Senator Grimes to cop the flak and he stayed the nice, popular Prime Minister. What is the next one on the list? It concerns superannuation. On, I think, 15 April he told the Australian Council of Trade Unions and the airline pilots that there was no way he would tax superannuation. Indeed, the airline pilots sent us a copy of his letter. He said he would not be touching superannuation. The big, popular Prime Minister made that announcement and wrote those letters. To whom did he leave it to do the dirty work? On 19 May he left it to Mr Keating to break the sad tidings. This is how Mr Keating broke the news: . . . lump sum payments received after tonight for services after tonight will be subject to taxation. That is lovely, is it not? The popular Prime Minister had made the popular announcements and left it to his Treasurer to break the sad tidings. What else have we got? We have the Prime Minister again in his policy speech making perhaps the happiest announcement of all-the one which, I believe, really won the election for him. It concerned tax reductions. He said of the tax package: Its key elements include immediate reduction in income tax for almost six million Australian taxpayers. Would that be popular stuff? You bet it would. To whom did he leave it to break the sad news? It was left to Keating at the National Economic Summit Conference and the Summit took the blame. We really have to look at the reason why the pensioners are not happy and not secure under this Government. The pensioners were not at the Summit. Honourable senators might remember this from Mr Hawke: And the first pledge I now make,-- this is good, popular stuff- a commitment which embraces every other undertaking, is that everything we do as a Government will have the one great goal-to reunite this great community of ours to bring out the best we are truly capable of, together, as a nation, and bring Australia together to win our way through the crises in to which the policies of the past and the men of the past have plunged our country. Mr Hawke made that beautiful emotive speech. He held a summit, but the pensioners were not at the Summit. The pensioners were told of the sad tidings only as the Summit progressed. What else did Mr Hawke promise-in particular to the pensioners? He promised he would lift to $5,893 the tax threshold for pensioners so they could earn their additional bit of money and would not be taxed. What happened? Absolutely nothing happened. Again it was left to the Treasurer, not the popular Prime Minister, in his Budget Speech to say that that was not quite on. Mr Hawke did not mutter a word about it. Now we have pensioners who earn a very small amount paying income tax. Single pensioners are allowed to earn $30 a week before their pension is interfered with, but now they are paying tax. That is because the Prime Minister gave the dirty work to his Treasurer to break the promise that he had made. What happened about the office of aged care? As honourable senators would know, pensioners do not believe that they are welfare recipients. Pensioners want a separate department of their own. They were promised that. We have not heard much about that. We have heard nothing about the office of aged care. Senator Messner —Except there is a big yike on between Health and Social Security. Senator WALTERS —Yes. There is a great big fight on. What is happening? The Minister is not making any decisions. He does not want to be dumped again by the Prime Minister, so he is keeping out of it to see whether the Prime Minister will do anything. Perhaps that will happen after the election. Senator Crowley is nodding her head. We should look forward to these things after the election, not before. Let us look at indirect tax. We know that the Prime Minister was very against taxes. He said not so long ago: Rather than further squeezing the average consumer by increasing beer taxes, Labor believes that taxes should be reduced. That is good, popular stuff from a very popular Prime Minister. However, he leaves it to his Treasurer again, at Budget time, to introduce taxes on beer and cigarettes. Do not tell me that pensioners do not feel that, because they certainly do. What about the Medicare levy, what is happening with that? We are all paying it. The pensioners have not had to pay it to date. Married pensioners should be getting $3.90 and single pensioners $2.40. They have not heard much about that. We will see what happens about that and whether it is backdated in the Budget. We will see about that when the time comes. Of course, in this place we have heard regularly from the Minister for Industry and Commerce (Senator Button) about the need for a capital gains tax. He likes it. We have also had floated the idea of the reintroduction of death duties. Mr Hawke is not talking about it. He leaves that to his Ministers and his back benchers. They do the dirty work because the popular Prime Minister cannot tarnish his hands with unpopular stuff. I have a very interesting letter, written by Senator Grimes on 6 January 1982 to a constituent. I will not name the constituent. Senator Grimes said: Your letter . . . has been referred to me as shadow Minister for Social Security. He continued: As you know, Labor introduced the means test free pensions for those 70 years and over . . . The restoration of this pension remains our policy. I repeat: 'The restoration of this pension remains our policy'. That was just before the election. Senator Grimes continued: What we need is consistent treatment of the disadvantaged . . . This consistency, the ALP can promise you. That is lovely stuff. Unfortunately for the pensioners, it is not the truth. Let us look at what the Government has done. The over 70-year olds-we have a lot of people over 70 years-have been denied what Senator Crowley says is a large amount, $51. She said that last time. I believe it is a paltry $51. People had arranged their finances and now have to rearrange them. The old assets test included items such as jewellery, antiques, two cars, a boat, a home, works of art and all sorts of other things. That did not work out quite right. We then had a new assets test with a holiday package. The Prime Minister dumped Senator Grimes and said 'No, he's done it all wrong. It's all been a great mistake'. The Prime Minister has now referred the matter to a committee. That committee will not be reporting until after the election is called. There will be no assets test before the election is called. Senator Grimes claimed that I had advised pensioners incorrectly on the Government's assets test. I declare here and now that I have never advised a pensioner incorrectly. I have told pensioners on every occasion: 'The Government's assets test is not complete. Do not do anything because I don't know, you don't know and no one else does, but it cannot be done until the Senate passes it'. Senator Grimes, in typical fashion, tried to intimidate me but I will not be intimidated. He has picked the wrong person. There is no way in the world that he can come into this place and show that I have advised anyone incorrectly. If he can give me one name-of course he will not because he cannot; he makes up this fictitious nonsense-I will approach that pensioner and ask him to give a signed affidavit that my staff or myself gave incorrect information. The DEPUTY PRESIDENT —Order! The honourable senator's time has expired. Senator COATES(Tasmania)(4.22) —Before Senator Walters began speaking, Senator Crowley and I entered into a pact that we would avoid responding to the provocations of Senator Walters and not interject. I am proud to say that we have both survived that challenge, although Senator Crowley did nod her head on one occasion in agreeing with Senator Walters's prediction that the Australian Labor Party would win the next election. I am pleased to be able to confirm Senator Walters's prediction. As Senator Crowley will agree, it was a strain not to respond to Senator Walters by way of interjection. I want to respond now to several matters that have been raised by Senator Walters. A few moments ago Senator Walters said that the assets test review panel would not be reporting until after the election. At this stage, there has never been any suggestion at all that that is the case. As I understand it, the panel will be reporting very soon. Senator Messner's assertions that there was still no sign of any legislation- Senator Robertson —The shadow Minister for misinformation. Senator COATES —The shadow Minister for misinformation may well be an apt description of him. Senator Messner said that the tax Bill dealing with lump sum superannuation has not appeared. I suggest he hold his breath just a little longer. The other matter that I want to cover was raised by Senator Haines and Senator Walters. They referred to pensioners not receiving the appropriate consumer price index adjustment to pensions because of the introduction of Medicare and its effect on the CPI. As they well know, last week Dr Blewett, as the Acting Minister for Social Security, responded to this matter by pointing out that the Government was well aware of the effect of the CPI on the November pension adjustment and that the Government was considering the matter and will be-- Senator Walters —Considering; looking at. Senator COATES —The honourable senator should just wait and see. It is none of her business. If there is not an adequate adjustment in the Budget, the honourable senator will be free to say what she said in her speech today. The matter of public importance was brought on by the parties which brought about the removal of six-monthly pension adjustments in 1977. That was a dastardly act , if ever I saw one. The Liberal and National parties saw the error of their way -a way which produced great insecurity and confusion for pensioners at the time. That action in 1977-78 left pensioners permanently worse off to the extent of something like $60 or $100. If members of those parties are right in accusing us of destroying security in retirement, they would certainly have to plead guilty to the effect of that action when they were in government. I point out as well that they were responsible for the freezing of the means test for those over 70 years of age. An assets test is needed because the Liberal-National Party Government did not face the facts at the time and abolished the then means test and converted it to an income test only. We are now having to explain the reasons for the reintroduction of an assets test because of its abolition in 1976. The whole Liberal-National Party rhetoric ever since has encouraged people to be as avaricious as possible. One might also point to the actions of the Opposition recently. How much security is there for an employee approaching retirement who is the victim of the cherry picker tax avoidance scheme and the other mock superannuation schemes set up by the friends of those in Opposition, who by their vote in blocking the legislation to outlaw such tax avoidance, have ensured the continuation of no security for such employees? There is no security for such employees despite the Opposition's suggestion that they are protected by a superannuation scheme. The expressions of concern by members of the Opposition for people in or approaching retirement are very hollow. They are not concerned about those people who have only income; they concentrate their concern on the people with property, those who are able to receive lump sums and those with the ability to manipulate their affairs for tax and social security purposes. It would be good to have bilateral support for policies which would make the system fairer. One might expect that that would be possible of one had read the report of the Liberal Party committee of review entitled: 'Facing the Facts', written by Mr Valder of the Sydney Stock Exchange. I will give honourable senators some quotes which are supposed to be the background of members of the Liberal Party opposite. Page 52 states: The principle of community requires a fostering of the recognition of Australians obligations to each other-a recognition of community obligations as well as individual rights. It means a rejection of the selfish pursuit of institutional and individual interests at the expense of the public interest. Page 53 states: One of the great strengths of community in Australia has been the preparedness to help those in genuine need or suffering from disadvantage. Page 54 states: The principal constraints in the development of the system of income support is the extension of benefits to many who are not in financial need. Mr Valder talks about principal constraints. Again, he states: The party- this is the Liberal Party- has emphasised the importance of concentrating welfare benefits on those in need . Senator Messner should cringe with embarrassment at being reminded of those comments. It is about time the Liberal Party opposite faced the facts. In his speech earlier, Senator Messner had the effrontery to suggest that lump sum payments make people independent of the Government. What utter rubbish! The whole point of this debate about the need for an assets test is that people with lump sums can put them into assets and avoid the income test. That is why there is a need to reintroduce a broader means test which includes the assessment of assets-a very fair assessment, if I may say so. The treatment of lump sums at present means that the receipt of lump sums by a person retiring is not neutral, despite what Senator Messner has tried to suggest. Liberal platitudes about freedom for the individual have led to this whole matter of double-dipping, the stashing of assets and avoiding the income test and income tax. Honourable senators opposite stand condemned for their pandering to the greed of the wealthy who want to maintain their wealth. Let me just quote a few recent commentaries from respected newspaper columnists. In the Sun Herald of February, Peter Robinson pointed out: But conservative parties always make a big song-and-dance about the need to reduce government spending-particularly in social welfare areas. In electoral terms, the conservative parties can hardly pursue with any credibility their campaign against 'big government' while opposing any rationalisation of social welfare spending-by far the biggest component of 'big government'. * * * The Peacock-Sinclair Opposition are now busily engaged in locking themselves into positions which make them ready prey to the single-interest pressure groups . They appear to oppose any tightening of the pension scheme aimed at giving better relief to the truly needy; they are mindlessly opposed to Medicare; they have conducted a scare campaign on taxation. The incoherence of all this is glaringly obvious. Again, late last year in the Sun Herald the same commentator, Peter Robinson, pointed out: In a very modest kind of way, Senator Grimes and the Hawke Government have tried to inject some sense into this situation by re-introducing what must be described as a feather-duster means test-one that will affect no-one in any genuine need and hardly anyone else. Towards the end of last year, on 28 November, Kenneth Davidson of the Age said: I would have thought that if the so-called economic 'dries' of the Liberal Party had just one shred of intellectual honesty they would be the Government's strongest supporters in the campaign to reintroduce some sort of means test qualification for the old age pension. They want smaller government, lower taxes and more effectively targeted expenditure. But how can they believe these things, and still want to allow the aged rich to adjust their financial affairs so they get a pension? There is now silence and no interjections from honourable senators on the Opposition benches. Unfortunately, there is no bilateral support for a reasonable, fair and equitable pension policy. Instead we have an Opposition which has continued to stir up trouble about the matter, misrepresenting our policies and confusing those who are likely to be affected and those who will not be affected despite the quite definite announcements by the Government. There should not have been misunderstanding. There was misunderstanding because of the confusion engendered by the Opposition causing a lack of security in the minds of those in retirement and those approaching retirement. We are proposing to tax lump sum superannuation payments, to reintroduce the means test for those over 70, although, of course, on a more generous basis than the standard means test and to reintroduce the assets test so that there is more to redistribute to those in greater need. We want a fairer system. Apparently the Opposition wants a system which is even less fair than it is now. As I have said, that confusion and the insecurity have been caused by the Opposition. I despise its actions. It has deliberately upset those people least able to cope, most of whom will not actually be affected. The Liberals are responsible for the need to redirect income support away from the wealthy to the needy because of their actions in the past. The Opposition's legacy to the needy aged when it was in government was years of neglect which we are now having to deal with. I wish to give the Senate some examples of the things the Government has done to improve the position of the aged. The introduction of Medicare will remove concern about illness and medical bills from all people in Australia, including those on pensions and, in particular, those who because of the test on fringe benefits missed out on receiving the benefits of the then existing pensioner medical services. We are increasing grants for housing. We are taking much more care of the aged in the domicilliary care area and that sort of area. We are talking about national superannuation. If the previous Government had done something about this, in response to the 1976 report initiated by the Whitlam Government, once again we would not be in a position of still only talking about it; some action might have been taken before this. There is a lasting benefit to all Australians, including those who have retired, from the continuing drop in inflation. In conclusion, it is quite irresponsible of the Opposition to be suggesting that the Government is responsible for the destruction of security in retirement for Australians. The Opposition must accept this responsibility. Of course, it will never have to face the electorate as a government to answer for this. The DEPUTY PRESIDENT —Order! The honourable senator's time has expired. Senator Sir JOHN CARRICK(New South Wales)(4.36) —The Senate is debating a matter of public importance in the following terms: The destruction of security in retirement for Australians by the Hawke Labor Government. It is demonstrable that that destruction of security has occurred. It is demonstrable that it has occurred for more than two million people of retiring age in Australia today. I propose to demonstrate that fact step by step. The Prime Minister, Mr Hawke, gave a clear promise to the people of Australia that there would be no tampering with the means test. The first point I want to make is that in February and March last year he led the people of Australia to believe that those people over 70 would not have their pensions abolished or a means test applied. There are some 120,000 of those people. They have been radically affected. I am not talking about a handful, but a large cross-section of people of that age. Mr Hawke made it clear that there would be no tampering wtih the means test as such. The present Minister for Social Security (Senator Grimes), who is now not in the chamber, on 10 March, only two months ago, said: Of around two million pensioners, fewer than 400,000 will lose some or all of the pension-- He said this as though it did not matter that some 400,000 people will lose some or all of the pension. A small number of people. Some 120,000 of those who are over 70 and 400,000 others will lose some or all of their pensions. That is not a figure given by the Opposition; that was a statement made by the Minister himself. We are now talking about hundreds of thousands of people. Mr Hawke and the Australian Labor Party said that there would be no dabbling with superannuation. He said this a few days before the Government dabbled. There are 1.8 million Australians in superannuation schemes. We are not talking about airline pilots or the wealthy. They are the waterside workers, the iron workers, the clerks and the nurses-1.8 million of them-in private superannuation funds, 83 per cent of whom cannot take ordinary superannuation payments but must take lump sum superannuation payments. Senator Grimes has said that these are the wealthy people. No wonder that Mr Jennings of the Waterside Workers Federation-scarcely an airline pilots' union-said: Hawke and his Government have ratted on the working class. If we go a little further, as we are talking about the 'destruction of security in retirement for Australians', we find that Mr Cotter of the Clerical Officers Association-scarcely an airline pilots' association-said that this has: . . . severely damaged the trust that had been placed in the Hawke Government. Miss Haines, of the New South Wales Nurses Association-I take it that that is scarcely an airline pilots' association-said: It's just mad. If Hawke's stupid enough to introduce it, he can take the consequences when the Government falls. It is particularly disgusting from a Federal Labor Government--- These are the statements made by ordinary spokesmen and women from the ordinary unions. There are 1.8 million people involved; 120,000 people over 70 and at least 400,000 of the two million pensioners. No one knows which 400,000 it will be or whether it will be more. Certainly it will be at least 400,000, because Senator Grimes said so. I will move further than that. Medicare, in its application, attacks everyone. It attacks all the people who are over retiring age-the 60-year old women and the 65-year-old males. Medicare forces two things. To the pensioners the Government says: 'We will fiddle the consumer price index and artificially debase your pensions. We will take away from a married couple $3.90 a week and from a single person $2.40 a week.' The destruction of security in retirement is demonstrable. Of course, Medicare goes to the very heart of it. The very same people are caught up in the indexing of excises on the petrol they must use in their humble lifestyle, and on tobacco and alcohol. Excise on all these things impinge upon those people. The commodities are snidely indexed so that it will not appear that any allowance has to be made. Those who are not pensioners have to pay one per cent of their income as a Medicare levy, and they are not allowed gap insurance. I know of nowhere in the world where the freedom to insure oneself voluntarily is denied by law. It is the destruction of security in retirement. It is a deliberate act by this Government, its Ministers and members, to deny a person, whether a younger person or a retired person, the right to go to a health fund and to insure for the gap-the difference between what he gets back from Medicare and what the hospital or doctor charges. What an outrage that that should be so. Of course, the very failure to allow gap insurance is the destruction of security in retirement. People do not have the right freely to have the specialist of their choice and the hospital of their choice because their security is threatened. It gets worse than that. The Government that said it would maintain the purchasing power of the retired person did nothing in its Budget to make an adjustment for inflation in the taxation threshold. The taxation threshold, from memory, is $4,533. The Government said in its policy statements: 'We will lift that to $5,000.' It did not do so. Senator Walsh —We did not know how big the deficit was. You were not coming clean about it. Senator Sir JOHN CARRICK —Every one of the points I have made is a cold fact. Senator Walsh interjects, but the fact is that by not doing so he and his Government-he must take personal responsibility too-have forced tens of thousands of ordinary people who are outside the taxation threshold into paying tax, the destruction of security in retirement for Australians. The Government is doing it patiently, step by step. 'Oh,' said the Hawke Labor Party 'put us in and we will alter the taxation scales. We will make 12 scales so that people on low incomes will not pay as much tax.' Nothing was done. By the erosion of inflation people pay more, not less. Those in retirement on meagre incomes have experienced the destruction of security in retirement. I will take it one step further. The Labor Party said: 'Put us in and we will raise the percentage the pension bears to the average weekly wage from the existing 22 per cent to 25 per cent.' Not a move has been made. The Government intends to go to the people at the end of this year. It will not have done anything, in 90 to 95 per cent of the life of this Parliament, on any of those matters. Whatever it may pretend to do in the Budget will not be carried out in the ordinary lifetime of this Parliament. None of the alterations to the taxation scales will be made. The tax threshold will not be lifted. The pension will not move to 25 per cent of average weekly earnings. No doubt there will be some rhetoric in the Budget. If the Government were to take into account the adjustment of the pension to 25 per cent of average weekly earnings and the robbery of the Medicare fiddle, it would not be a matter of lifting the pension by $2.40 a week for a single person or $3.90 for a married couple. It would have to add another $5 to compensate. A gesture will be made, certainly, and a claim will be made that the Government has done something in dollars to lift things, but the reality will be that the Government will have participated in the destruction of security in retirement. First of all, 120,000 people over 70 will be affected. The assets test will affect at least 400,000 people. Taxation of lump sum superannuation payments will affect 1.8 million people. Medicare will affect the 2 million people in retirement. There has been an attack on the threshold of the tax scale. The Government's promises have failed. There has been a blatant destruction of people's living standards. Now there is the movement, through the taxation on lump sum superannuation payments and the assets test, to venture on a path of confiscation of savings, nothing less. Taxation on lump sum superannuation payments is in fact the compulsory confiscation of savings. What nonsense it is for a Minister to say that there is no retrospectivity. Those 1.8 million people who entered into a superannuation scheme did so in the knowledge and belief that upon their retirement their savings would attract only 5 per cent taxation when paid in lump sums. That was their understanding. The journey for some of them has been 20 years, for others it has been 30. They entered into the scheme with that belief. To say there is no retrospectivity because their contributions in the past will not be touched and the Government will tax only their contributions in the future is an illusion. The Government is saying that people cannot take advantage of the scheme in to which they entered for the whole of their working lives; they can take advantage of it for only part of their working lives and then a different one will be forced upon them. If there is one fundamental in this world it is that people strive to retain their dignity if they can be encouraged into voluntary providence by incentives. The Minister for Social Security attacked the incentive taxation allowance to superannuants. He attacked the allowances to the companies that provide superannuation. He said that 5 per cent is not enough for people to pay at the end. If a system of providence can be created in this country which enables people to save and invest, God bless that system. The aim of the present system-this has been repeated today by Senator Grimes-is to force people into purchasing an annuity. In other words, they must surrender their capital and take a weekly pension. He is determined, as all socialists are , to institutionalise savings. No one will be allowed to invest where he wants to invest. The great investment institutions will make those decisions and nobody else. People will have to purchase annuities with their savings. In future it will not be the decision of parents to save during their lifetimes, pay off their mortgages upon retirement, set up little businesses, give something to their children to support them, or even, in an old-fashioned way, when they die leave a little for their children. Not at all. The Labor scheme is to get at the very heart of people's capital and confiscate it. That is the basis of the scheme. The Labor Government cannot stop at taxing lump sum superannuation payments. It has to impose, step by step, a capital gains tax on every individual who does not use an orthodox scheme but some other form of capital accretion. A simple thing for a person to do, instead of paying superannuation week by week, is to buy a large elaborate home and sweat to pay it off over a lifetime so that it has a large resale value. Of course, that cannot be resisted. In the end the socialist Government will get its hot and clammy hands on it as a capital gain. There is no doubt in the world that once a government says: 'We will not let people become voluntarily provident and acquire capital for whatever purpose', it is imposing a capital gains tax. Of course, the next step is the reinstitution of probate. Patently, what has happened is that, demonstrably on at least six or seven fronts, there has been a massive attack upon the security of all retired people in Australia. Indeed, it has been a vast attack upon the needy, attacking them where it hurts the most and, indeed, impinging on every person. I commend this matter of public importance to the attention of the Senate. Senator CROWLEY(South Australia)(4.51) —Once again the Government defends a quite remarkable topic for debate: The destruction of security in retirement for Australians by the Hawke Labor Government. One would think that the Opposition has never been in government and one would certainly not think that it was the previous Government. One would not think that it was the Government which had left this Government with the Budget deficit that it found when it came to office-a Budget deficit of some $9 billion. Senator Walsh —It was 9.6. Senator CROWLEY —I thank Senator Walsh; I stand corrected. It was more than twice what the previous Government claimed it was. As I say, one would never think that members of the Opposition had ever been in government. They certainly do not like to own what happened before the Hawke Government came to office and, as I will say later, they have quite clearly stated again and again in this debate that they do not expect ever to be in government. I am quite happy to say that that is the one expectation that they have got right. Into this environment came the Labor Government. Within the huge constraints of that Federal Budget deficit, the Government set out to implement its policies for the betterment of the Australian people. Before Senator Messner leaves the chamber, I think it is important, for the record, to welcome him back from overseas. He was at pains to welcome back the Minister for Social Security ( Senator Grimes), so we welcome back Senator Messner. I think the Senate should know that any talk of cover-up does not match the cover-up of Senator Messner's beard. The more important point, I suppose, is the reportage in the paper today of the gathering in Thredbo of members of the Opposition-no doubt to lob snowballs at each other. But the Leader of the Opposition, Mr Peacock, is reported to have said: It is not possible to gaze at your navel while looking up. I suggest to Mr Peacock that he simply does not understand the perspective that happens if we stand on our heads. It is quite clear that it is easy to gaze at our navels while looking up if we are standing on our heads. I think that that upside down view of the world is exactly what members of the Opposition have when they come into this debate. They have this whole argument round the wrong way. They do not own what they are responsible for; that is, the errors that this Government has to redress in facing up to and implementing its policies. They have no policies, and I will refer to that later. The only thing they can criticise is what the Government is proposing. They have no policies, but again they do not need any policies, because they know that the outcome of the next election, as they constantly tell us, is that we will reintroduce legislation after the election. So clearly they do not need a policy, because they do not expect to even try to convince people to vote for them. They are as upside down as Mr Peacock clearly is. The only thing they can do is to carp about and bleat against the policies and the proposals of this Government. I might say that they have a lot to complain about, because this Government gives them lots of policies to examine and appraise. Of course, they are so busy carping and complaining that they have no time to go away and think seriously about themselves and their policies. It is also very interesting to note how short their memories are. What we have heard today was an endless series of criticisms about the proposed assets test. It is as though they have not read what the Leader of the Opposition, Senator Fred Chaney, has had to say about these proposals. I will quote to the Senate what Senator Chaney did say in September 1981: On reflection we must surely question the extent to which this rising expenditure is economically and socially productive, and whether it meets genuine social need. So much of government spending goes to people who demonstrably do not need government assistance. Honourable senators should remember that he was talking about a time when the current Opposition was the Government. The then Government had that to say about its own government spending. He went on to say that he was convinced that a needs-based approach to welfare was fundamentally sound. He also said: The government-- that is, the then Liberal Government- is concerned that . . . Income rigging practices are circumventing the intent of the laws and throwing undue burdens on taxpayers generally. My colleague Senator Coates has pointed out that the biggest problem we have in reintroducing the assets test is the problem of having had it taken away by the previous Government. The previous Government then set out in its own period of office to say it was a good thing to put it back in again, but it never quite got around to doing it, and we wonder why. I can imagine the debates in the Opposition's party rooms during its time in government by those members who were for the reintroduction of the assets test and those who were protesting desperately that it could not be reintroduced, because if it was, they would have to listen to Senator Sir John Carrick, as I am sure that everything that he said in the Senate today he has also said in the party room. It would be terrible, would it not, if a Liberal government captured the savings of the people who had savings in this country. It is a crazy argument; it is one which half the members of the Opposition do not believe, but they are hoist with their own rhetoric and stuck with it. It is very interesting that the Opposition-as I have said a couple of times and I will be delighted to say it again-has reminded us on a number of occasions that it will be the Government which will reintroduce the assets test. Senator Walters —Mr Acting Deputy President, I raise a point of order. I draw your attention to standing order 406 which states that no senator shall read his speech. Senator Crowley is reading her speech. The ACTING DEPUTY PRESIDENT(Senator Townley) —There is no point of order. I am sure Senator Crowley is using copious notes. Senator CROWLEY —I thank Senator Walters. I can say that I have become remarked by being the senator who is interjected on every time by the honourable senator and other members of the Opposition. I do not much mind whether it is done by calling a quorum or by references to written speeches. But I say to Senator Walters that I have learned such a lot in 12 months, that I am not reading my speech. However, it was a good try. Is it that Senator Walters does not like knowing that in her speech, as Senator Coates said, and Senator Messner in his speech, as we both alluded to, pointed out that this Government will introduce the assets test legislation after the next election-a clear admission from the Opposition that we will be in government and that they do no expect to win? As I said before, members of the Opposition do not even have a policy, because why try to sell it to people who will not vote for them. Government senators thank the Opposition for that affirmation of faith in the results of the next election , whenever we get round to calling it. Senator Messner —Don't be so sure of that. Senator CROWLEY —I am not saying that we are so sure about it, but it is certainly clear that Senator Messner is so sure. The interesting thing, if I can move on, is that the Opposition has raised this matter of public importance as though it were a single issue. I refer again to the quote referred to by Senator Coates, from Peter Robinson in the Sun Herald. Peter Robinson stated: The Peacock-Sinclair Opposition are now busily engaged in locking themselves into positions which make them ready prey to the single-interest pressure groups . They appear to oppose any tightening of the pension scheme aimed at giving better relief to the truly needy; they are mindlessly opposed to Medicare; they have conducted a scare campaign on taxation. The incoherence of all this is glaringly obvious. The other very important consequence of all of that is that the Opposition tackles everything as though it were a single issue. It has not only bought the debate; it has bought the lobbying. It does treat it as a single issue. It does not appreciate that one of the constraints on government-one would think it would know, from its time in government-is the size of a Budget deficit. Another constraint is the size of unemployment, and the number of people unemployed when this Government was elected was totally terrible. It is interesting to report that over the 15 months of this Government unemployment has dropped by over one per cent. It is now down to 9.3 per cent, which is still horribly high, but a dramatic improvement on the figure of over 10 per cent which was the case when we came into government. The other important thing about which the Opposition is tangled up is the inflation rate, which has now dramatically fallen. Opposition senators are about to interject about how the Medicare arrangements have made some difference to that rate. Apart from the Medicare contribution, inflation is falling anyhow, although it still remains high and this Government still has much work to do. I assure the Opposition that it will continue to do it. But there is absolutely no point in talking about security of retirement income if we do not look at the constraints of government, which has to deal with the provisions of retired people, when it has a huge Budget deficit and huge unemployment. Let us face the consequences of the unemployment the Opposition ran this country into: Firstly, a huge reduction in income tax from people who are no longer able to work-- Senator Sibraa —Seven and a half years of Fraser. Senator CROWLEY —Exactly, as Senator Sibraa says, seven and a half years of Fraser. The other consequence of unemployment is a huge payout of unemployment benefit. The more we can reduce unemployment-and this Government has-the more we will increase the amount of tax returned to the Treasury coffers and thus reduce the amount the Government has to spend through social security on its pensions, its unemployment benefit. It is within those kinds of provisions that this Government is much better placed to deal with security for retired people. It already has. It has, for example, increased the pension-albeit by only a small amount. It is well on its way towards its aim of having the pension at the value of 25 per cent of average weekly earnings within three years of government. It has also increased from $20 to $30 the amount a person can earn before losing any of his or her pension. While Senator Walters claimed that those figures were true, she failed to tell us when they became true. They became true under this period of government. They show a certain increase and a small assistance to the security of elderly people in their retirement. Of course the Government is insisting most strongly that that is insufficient, that there is much more to do . But at least we are doing things and are proposing to do more. It is within the constraints of a Budget deficit, of demands on social security and the Government Treasury coffers, and of a falling amount of money coming into the coffers because of the increasing level of unemployment and inflation rate, that this Government set about its proposals for security for people in retirement. It has already made quite some gains. But as I say, the Opposition argues the issue as though it were a single issue. It does not deal with those other very important economic measurements that will enormously affect what the Government can do. One of the Government's steps was to attempt some redistribution of the money that can be distributed to pensioners. It has proposed the taxation of lump sums of superannuation. The legislation is not yet before the House, but the argument is certainly under consideration. In fact, although the Opposition says it is a terrible thing, any number of people in the community admit the rightness of the argument that those people on smaller superannuation do not need to be disadvantaged compared with those people who take huge lump sum superannuation payments. As Senator Grimes said, until recently the superannuation funds were a case in point of double dipping-the sort of thing that this Government is trying to change. Another change that the Government has made has been to reduce the age pension for people over 70 years of age. It has reduced the pension in respect of only those people who can provide evidence of income which shows that they will not be enormously disabled by the reduction of their pensions. For many people over 70 years of age the collection of the pension meant that they were, by and large , accruing inherited or unearned wealth for their children. I do not believe that it is for the government of the day to be putting taxpayers' dollars into inherited or unearned wealth for the next generation. The Government has tackled that as a matter of serious consideration. Any number of pensioner groups to which I and other Government members have spoken do not hear serious complaints from pensioner groups. We have to realise that some 85 per cent of pensioners are very accepting of the changes that are occurring because those 85 per cent of pensioners have no means other than the pension. Pensioners without any other means are saying that they are very grateful and accepting of the Government's proposed changes to redistribute some of the pension dollar from people who have other means besides the pension to pensioners most in need. It is quite silly of Senator Messner to come in here and to claim that we have reduced the security of Australian people in retirement. That is not true. We have reduced some of the income of those who can well afford a reduction. Senator Messner is one of those who have been going around reducing security. He has been arguing lots of nonsense in all sorts of places and whipping up all sorts of steam and heat but avoiding the facts like mad. If he wants to tackle the facts he might take on Senator Grimes in a proper debate. He could argue the Opposition's policy with Senator Grimes. But he cannot do that because the Opposition does not have a policy. It is Senator Messner and his colleagues who have been provoking the unrest around the country. We have heard some complaints about the consumer price index artificially affecting pensions by seemingly being reduced, yet expenditure not being reduced . In the short term there is no doubt that there will be some of that effect. However the Government is moving very quickly to address the problem, of the direct effect on pensioners. It has already made some effort to do so by increasing the pension and indexing it six-monthly. But at the same time the fall in the consumer price index means that, inflation being down, there will be less push for wages. There will be less of an increase in the costs of services, of fruit and vegetables and of the maintenance of supports in the community. All of the gains from a falling consumer price index-that is, from a falling inflation rate-will be of benefit to pensioners. Senator Messner —You really misunderstand the point, don't you? Senator CROWLEY —I understand the point very well. Senator Messner fails to see a pluralist approach to these arguments. He has a single-minded approach and a single issue approach to a very complex issue. If he really wants to follow up this issue, which he says is a matter of seriousness for the Australian people, he should take on the challenge of Senator Grimes, the Minister, who has asked for a considered debate on the topic, for a policy against his policy, not carping complaints about Government policy. I move: That the Business of the Day be called on. Question resolved in the affirmative. Senator GRIMES(Tasmania-Minister for Social Security)(5.07) —Item No. 3 of today's list of papers is a Government response to the report by the Joint Committee on Foreign Affairs and Defence on the Horn of Africa. It would be appropriate for the text of such a statement to be incorporated in Hansard. I seek leave for the statement to be so incorporated. Leave granted. The statement read as follows- I commend the Committee for the preparation of this report. It documents many important matters concerning the recent use of aid in the countries of the Horn of Africa. The report has been referred by the Committee to the Jackson Aid Review for its consideration of the issues raised in the broader context of Australia's global aid policy. The primary focus of the report concerns allegations about corruption, misuse and mismanagement of humanitarian aid, from several donor sources, in the Horn of Africa. In responding, I propose to similarly confine my remarks to these specific issues. Matters relating to broader policy questions, I believe, should be taken up in the context of consideration of the recommendations of the Jackson review. Development assistance is an important part of Australia's bilateral relations with countries in the Horn of Africa, particularly Ethiopia and Somalia. Both these countries have low per capita income and are also net importers of food. Therefore, there is a very important role to be played by aid in assisting the development process in these countries. However, I place very great importance on the efficient and effective use of the Australian taxpayers' money in the provision of overseas aid and claims that our aid is being misused need to be treated very seriously. I welcome the efforts of the Joint Committee to investigate such allegations in regard to the countries of the Horn of Africa and accept its findings. I am pleased that the Committee was able to convey its comments on these matters and also with respect to Australia's aid monitoring capacities in that region of Africa to the Jackson review. Food aid is the principal component of our aid to the Horn and I would like now to comment specifically on the Committee's findings on this type of aid. The Chairman of the Joint Committee, the honourable member for St George (Mr Morrison), in presenting the Committee's report to the House on 1 March 1984, made reference to Australian food aid and drew attention to page 114 of the report which notes 'Australia's food aid contributions have increased significantly over the years. It is necessary on humanitarian grounds in view of the recent droughts and continuing refugee problem that relief aid be provided. Relief aid is justified where there is an urgent problem requiring attention, but its usefulness is only short-term'. The Chairman also drew attention to the Committee's finding that 'there is a danger in the long-term provision of food aid only. Once established, unless there is potential or incentive for recipients of aid to produce their own food, aid becomes self-perpetuating and is very difficult to cut off'. I agree with this viewpoint. I think it is worth noting a few points about Australian food aid and its use as a development tool. All recipients of Australian food aid are food deficit countries and most are also low income countries with limited capacity to import food to feed their populations. Even under circumstances where there is a concerted effort by the country to eliminate the root causes of food insecurity, many of Australia's food aid recipients will have a continuning need for food aid for some time. Australia, as a major food producer and exporter will continue to receive requests to provide food aid to these countries and there will be a continuing need for Australia to respond, particularly to emergency situations. In those cases where Australian food aid is used in other than emergency feeding situations, we are endeavouring to improve its development impact. Our preference is that the food aid be used directly as food for work in development projects. Where the food is sold we require, wherever feasible, that it be sold at cost plus freight prices in order to decrease the disincentive effects of subsidised food sales on local food producers. The funds generated from the sale are then directed to deveolopment projects, preferably food security projects, in the recipient country. As I have already noted, claims have been made about the misuse of aid from several donor sources in the Horn countries, namely misappropriation of food aid ; food aid not reaching those in need; inadequate monitoring and the ineffectiveness of long term relief aid. In this regard honourable members may be interested to know the arrangements for this year's Australian food aid program to Ethiopia and Somalia. In the 1983-84 financial year Australia will provide Ethiopia with 16000 tonnes of wheat. 11,600 tonnes of this wheat will be used in a food for work development project involving land reclamation and reafforestation. This project is an extension of a similar successful world food programme project and aims to restore degraded land to productivity. The World Food Programme has been contracted to monitor and supervise the use of this food and it is expected that the project will help to eliminate Ethiopia's chronic food shortage situation. The remaining 4,400 tonnes of wheat is to be used in projects more immediately associated with the current emergency. These projects will have developmental as well as purely relief components. It has been decided after consultation with the Ethiopian Relief and Rehabilitation Commission that the food will go through the counterpart organisations of Australian non-government organisations operating in Ethiopia. In addition to the 16,000 tonnes of wheat going directly to Ethiopia I have for the first time this year approved a food aid gift to three Australian non- government organisations for use by the Eritrean Relief Association in Eritrea. This assistance, which comprises 1,000 tonnes of wheat, 20 tonnes of high protein biscuits and 20 tonnes of whole milk powder, is provided on a humanitarian basis to assist those people suffering from drought and conflict in areas not controlled by the Government of Ethiopia. A cash contribution of $300, 000 has also been made through Australian NGOs for other projects of the Eritrean Relief Association to benefit disaster and drought affected people. In Somalia, Australia has been supporting an international effort to assist some 500,000 to 700,000 refugees resulting from the conflict between Ethiopia and Somalia. In 1983-84, we will provide 3,000 tonnes of flour, 3,000 tonnes of rice and 100 tonnes of high protein biscuits. These commodities have been requested by the United Nations High Commissioner for Refugees and their use will be supervised by the World Food Programme. Australia has encouraged UNHCR to use this food in supporting long-term solutions to the resettlement of these refugees rather than relying on continuing relief support. We understand that the Government of Somalia has recently agreed to the resettlement of these refugees in Somalia and are planning development projects for this purpose. In addition to this support for refugees, I have also approved a further gift of 1,000 tonnes of wheat to Somalia. The honourable member for Wentworth (Mr Coleman), who spoke on the need for self help projects when the Committee's report was tabled in the House, will be interested to know that this wheat will be sold in Somalia at cost plus freight prices with the proceeds being directed to the community aid abroad primary health care project to which he referred and which was recommended as worthy of support by the Committee. This project is funded by the Australian Government and will involve an expenditure of approximately $3m over five years. In concluding, I would like to again welcome the Committee's report and the discussion it has encouraged concerning the effective utilisation of overseas aid resources in a part of the globe little known by the Australian community. I am particularly pleased that the Committee was able to complete the report in time for it to be referred to the Jackson review. Senator MACKLIN(Queensland)(5.08) —I move: That the Senate take note of the paper. The fifteenth report by the Committee on Overseas Professional Qualifications is an interesting document. When one reads the report the ongoing nature of the work, despite the slight wind down in the number of migrants coming to Australia , becomes evident. The problems that the Committee is faced with do not seem to decrease but rather to increase over the years. Of course, the Committee on Overseas Professional Qualifications tends to concern itself with the professions: Dentistry, engineering, medicine, pharmacy and the like. However, a very large range of problems is currently emerging in the various trades which tend to come under State regulations and which, I think, are increasingly creating difficulties for many people. I refer to such trades as bricklaying. Bricklayers coming, for example, from South Africa have difficulties with employment in Australia because of the difference between the trade qualifications which are required in Australia and in South Africa. One case I have in mind has resulted in an extraordinary catch-22 situation. Unless a migrant has worked for 12 months he or she is not allowed to get a ticket which entitles him or her to work. He or she cannot work unless he or she has that ticket, yet he or she is not allowed to get a ticket until he or she has worked for 12 months. Of course, that absurdity within the professions led to the establishment of this Committee, which has worked so well over the 15 or 16 years it has been established. One item of this report which I think is extremely interesting is the discussion revolving around the multiple choice questions which must be answered by applicants in the various professions in overseas embassies and their applicability to Australia. One of the major difficulties in this area has always been the non-acceptance within the professions of those multiple choice questions and the generation of a sufficient data bank of those questions to enable the examinations that are taken in that area to be sufficiently varied so as not to allow cribbing or even not to allow, as is currently the case in some of those professional areas, the students who are going to take them the chance to look at previous questions in the area so that they may prepare themselves for the examination, as is only fair. It is of interest, however, that despite that, the professions of physiotherapy, pharmacy, dentistry, medicine, nursing, occupational therapy and veterinary science have now been able to generate sufficient of those to enable this to take place. That has been of extreme benefit to many of the migrants coming to Australia in easing the way for the acceptance of their professional qualifications and hence in easing the way for them to again work in the Australian community, work which is often of the sort that Australia needs and requires from its migrants. Obviously the Committee will continue in its work. I hope that it will provide, not only in the area of professional qualifications but also in other areas, the guidelines which it so obviously is now capable of generating, so that the rather haphazard operation in areas outside the professions might be dealt with in the extremely competent way that the professions are being dealt with. Question resolved in the affirmative. Senator CHANEY(Western Australia-Leader of the Opposition)(5.12) —I move: That the Senate take note of the paper. I should like to make a number of preliminary statements. I make them without having had the benefit of a study of the report and the statement, but I shall have an opportunity to do that before the debate on this matter is resumed. I draw the Senate's attention to the fact that we are here dealing with one of the really critical areas of policy which goes to the question of employment and the future of employment in Australia. There is a sense about that the employment position has eased and that there has been a rise in employment, with some of it being in the private sector and the bulk of it being in the sector which is affected by government, the government sector. But it remains true that unemployment in Australia is still high, and that there are a very large number of economic predictions that unemployment will worsen. I recall that one of the more recent public statements to that effect was the submission of the Merchant Bankers Association to the Government's advisory body , the Economic Planning Advisory Council, when the Association suggested that, given current policies, there is likely to be an unemployment rate of about 11.6 per cent in 1986. Given the sorts of patterns that we have at present, that indicates a situation which all of us would regard as totally unsatisfactory and , in particular, when one applies it to youth unemployment, which is often twice as high as the general rate of unemployment which is demonstrated, obviously we face a very significant, severe and continuing social problem. There is a great deal of politics in this debate. We are in an election year, we are told, and of course the Government makes the most of the positive factors to which it can point since it came to office. But I think that even Government spokesmen on occasions are prepared to admit that there are continuing difficulties. I have been struck by the caution that Senator Button, for example , has shown about what the future holds in any comments that he has made on employment. Even Mr Dawkins, on 13 March, made a statement which bears out the sort of caution that has been evidenced in this chamber. On the national Today show, Mr Dawkins was asked: Do you agree with Mr Keating's view that our economic recovery is patchy? Mr Dawkins said: I think it is certainly true in the point that he was particularly emphasising, that the recovery up to this point has been very largely due to a number of one- off factors, not only the breaking of the drought but the particular stimulus that the Government has been able to give the economy in such areas as housing and so on, and that that kind of increased activity will have to be overtaken in the future by private investment pick-up if the recovery is going to continue and endure over the years to come. Again, we have had debate in this place about the predictions about private investment. It has fallen very steeply this year, in both manufacturing and mining. It is thought that there may be a very small recovery in manufacturing next year, but there is a forecast of a continuing decline in the mining sector. A number of factors give rise to a great deal of concern. Capital investment is down. It is likely to continue to go down or, at best, to remain in its extremely subdued situation. All of the concerns which have been expressed by the Government about the need for greater capital investment if we are to get recovery and to maintain growth in employment are shared by the Opposition. As I have said, it is a debate which tends to become highly charged and very political because of the fact that we are in an election year. I just wish, in these preliminary comments on the prices and incomes policy, to remind the Senate that we are looking at policy which is being operated in the context of serious risks being present in a situation in which there may well be economic decline ahead, and in which the Opposition has the deepest possible reservations about the correctness of the Government's prices and incomes policy. We say that simply because there is so much evidence about that notwithstanding the rise in employment over recent months, a rise that we very much welcome, there are very great risks ahead, and we think that the policies that the Government is pursuing in this area are not appropriate. Senator COOK(Western Australia)(5.17) —This report by the Advisory Committee on Prices and Incomes is the second progress report on the Government's initiatives . That Advisory Committee is a tripartite body, consistent with the view of this Government that all sectors of industry should be playing a key role in advising the Government and being consulted on the management of its central policies. As has been said, the prices and incomes accord, the Australian Labor Party- Australian Council of Trade Unions accord, is the linchpin of the Government's economic policy. This report is, therefore, vital in providing a means of assessing how the policy is proceeding and the soundness of the initiative in the first place. It is pleasing that there are 100 pages of initiatives reported in this report that cover all aspects of what constitute living standards. It is further pleasing that on 4 May, when the Minister for Employment and Industrial Relations, Mr Willis, tabled this report in the House of Representatives, he was able to conclude by putting down a statement which finished with this paragraph: Australia can now be said to be at the forefront of economic policy development with an economic policy which is performing with the essential dual function of promoting short term recovery and providing the basis for sustained long term growth. That is a fair summary of what the policy has thus far been able to achieve. Many aspects are coverned in this report, but I shall concentrate on just one of them-the question of wages policy. What this Government has been able to achieve in wages policy is revolutionary. In the past, the Australian Conciliation and Arbitration Commission has played a central role in wages, and under the mechanisms of that Commission trade unions were encouraged to file ambit claims, claims which asked for the sky in the hope that what would be settled would be something closer to the earth. In the negotiations which followed the ambit claims, unions were encouraged, knowing that there was no regulatory authority or no control or surveillance over prices or taxes, or a social wage, to try to maximise their bargaining power in the work place, to go for as much as they possibly could and to argue an extreme case before the Commission, asking the Commission, with the wisdom of Solomon, to choose the right course. The prices and incomes policy has changed wages policy to the extent that now workers in the community can look forward with great certainty to wages moving according to movements in the consumer price index. The Government was able last year to persuade the Conciliation and Arbitration Commission to adopt that as its central approach to wage fixation, and so far wages have moved in that way. This has meant that the uncertainty about the economic future for wage and salary earners has been removed. They know that if prices move their wages will move to compensate. At long last the union movement in this country can take its eyes off the paper chase after artificial wages that are eroded by price increases or are cut back by the tax claw-back, because now workers understand that they have a government with which they can negotiate and, instead of chasing wages, for the first time they can talk about the matter that really concerns them-living standards. Under the accord living standards are identified as being made up of wages, taxes, prices and the social wage provided by the Government. On all of those fronts certainty has been given to wage and salary earners, which certainty, in my view, lies at the foot of the statistics on strike activity over the last 12 months in this country. In the first year of the Labor Government, 1983, strikes fell by 25 per cent over 1982 and in January strikes were at a six-year low. That has to be contrasted absolutely, I believe, with the policy of the Opposition, which would increase inflation by causing a wage blow-out and encouraging expansion in that area. Consistent with our wages policy, inflation has come down and unemployment figures have dropped. I think that stands as an enduring testimony to the effectiveness of the prices and incomes policy and I believe that in the longer term the policy will convince even the Opposition which is alone in Australia at this time in not supporting the approach. Senator WATSON(Tasmania)(5.22) —The presentation of this report by the Advisory Committee on Prices and Incomes gives us the opportunity to demonstrate that the rhetoric of the Hawke Government, as manifested even in this document, instead of bringing Australia together is really taking it further apart. It is a pity that the rhetoric is not matched by equivalent deeds or action. Let us look at a couple of areas. First, many actions in the trade practices area reflect a government interested in intruding into business activity at a fairly sensitive time. On the one hand, we have legislation intended to bow to the wishes of miltant trade unionists by removing sections 45D and 45E of the Trade Practices Act, which have worked remarkably well, by taking this question out of the trade practices area on the score that it is more appropriate to industrial legislation, but we see no intent of bringing this sort of cover into industrial legislation. That is a capitulation to militant left-wing unions. They have acknowledged that these sections, instituted by the Fraser Government, actually worked and had some teeth, yet the Hawke Government has capitulated to the Left. Even the newsletter of the Australian Federation of Consumer Associations referred to the draft amendments as tame. The Government continues to attack business at all levels, and this is manifested in the trade practices intentions of the Government. The medical profession is on the receiving end of criticism more trenchant than any ever directed towards a profession in the history of this Parliament. Yet the Government meekly rebukes unionists who are threatening the very lifeblood of our major exports. It was suggested fairly recently that we should perhaps allow the new Parliament House to remain incomplete as a permanent monument-we have many monuments around Canberra-to the effectiveness of militant trade unions in Australia. On the other hand, the Minister for Science and Technology (Mr Barry Jones) is champing at the bit with imaginative ideas but is held back in the reins by Prime Minister Hawke and Treasurer Keating. Senator Cook —That is just not true. Senator WATSON —Just read the newspapers. Despite the so-called streamlining of the anti-dumping procedures sheep meat is being imported from New Zealand and dumped on the Australian market. This New Zealand meat is highly subsidised by what is known in New Zealand as a supplementary minimum price scheme. Lack of action by the Department of Industry and Commerce to impose countervailing duties is testimony to the lack of interest of this Government in adequately looking after Australia's interests. Pensioners continue to await the Government 's decision on the assets test, but we all know that there will be no decision until at least after the next election. Hundreds of Australians are already reeling under the cost of having to meet the gap between medical fees and what they recover from the Government under Medicare. Patients who, because of the nature of their illness, have to seek fairly continuous medical treatment find themselves faced with a financial burden that they have not had to meet for many years. This is one of the imposts of this sort of Government. Under the tertiary education assistance scheme students are receiving payments which in real terms are less than the rate of inflation. Support for residential student accommodation associated with universities and colleges of advanced education has been reduced-these students essentially come from non-metropolitan areas-on the score that these institutions are elitist bodies. What a lot of rubbish! The incentive to save has also been diminished. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator SIBRAA(New South Wales)(5.27) —I move: That the Senate take note of the paper. Members of the Joint Committee on Foreign Affairs and Defence and of the Sub- Committee on Middle Eastern and African Affairs, of which I was Chairman, appreciate the way in which the Minister for Foreign Affairs (Mr Hayden) has responded on behalf of the Government to the report on Australian aid to the Horn of Africa. As the Minister said, it was the Committee's intention that the report be considered by the Jackson Committee to Review the Australian Overseas Aid Program. One of the problems of Australia's aid has been that of setting priorities. These include the choices that have to be made between development assistance and emergency relief, between aid to our immediate region in South East Asia and the Pacific and countries further away from Australia, including Africa, and between multilateral aid and bilaterial aid. It was clear to the Committee that, because of its narrow focus on the Horn of Africa, it could not properly address these problems in the context of our overall aid program and that the Jackson Committee was in the best position to do so. One particularly welcome part of the Minister's speech is his reference to increased Australian aid to the Eritrean Relief Association. In its report the Committee documented the plight of the drought smitten and war affected population of Eritrea and noted that people who lived in areas not under Ethiopian Government control were not receiving adequate assistance. The Committee recommended that the Australian Government should determine the best method of providing food and medical aid to Eritrea and Eritrean refugees through sources other than the Ethiopian Government, where aid channelled through the Ethiopian Government cannot be provided to those in the greatest need. The decision to provide 1,000 tonnes of wheat, 20 tonnes of high protein biscuits and 20 tonnes of whole milk powder, together with $300,000 in cash contributed to the Eritrean Relief Association, deserves all our support. Another welcome development is the strong support the Government is giving to the Community Aid Abroad self-help primary health care program in Somalia. I am also impressed with the Government's acknowledgment of the valuable work carried out by non-government aid organisations generally in the region. As the Minister commented, the Committee addressed in detail the allegations that have been made in relation to the misuse and misappropriation of aid in Ethiopia. In times of relative economic difficulty in our own country it is sometimes a difficult job to convince the electorate that we should maintain a sizable overseas aid program. It is therefore heartening to see the emphasis placed by the Minister on the efficient use of taxpayers' money in the provision of overseas aid. Allegations of misuse and misappropriation of aid in Ethiopia have continued in the British Press since the Committee tabled its report last year, and the Australian Development Assistance Bureau and the Department of Foreign Affairs will have to continue to address this issue. It is an issue that worried the Committee; it is an issue that is very hard to monitor. Other matters referred to by the Minister are in line with the thrust of the Committee's report. The Committee expressed concern about the relief mentality that builds up among food aid recipients. The emphasis given to food for work projects involving land reclamation and reafforestation projects and decisions to sell food, where feasible, at cost plus freight prices in order to decrease the disincentive effects of subsidised sales on local food producers go some way to meeting the Committee's concerns. The Minister is to be commended for his early reply to the Committee's report and the Government is also to be commended for setting up the Jackson Committee to review Australia's aid program. The seriousness with which this Government is addressing aid and developmental issues and its determination to get value for the taxpayer's dollar is a welcome contrast to the ad hockery which characterised the previous Government's approach. We hope that the Committee's final report, which is the third in a series on the Horn of Africa, will be tabled in the Parliament in the near future. I am hopeful that at that stage the Goverment will be able to provide for a full debate, not only on that report but also on the two previous reports the Committee has put down, so that the Senate can spend some time-and not just the five minutes that are allowed to us on the presentation of papers-debating what is a serious issue. Senator CROWLEY(South Australia)(5.33) —I take this opportunity to speak briefly to another project in the Horn of Africa in Eritrea because it so well matches the comments made by the Minister for Foreign Affairs, Mr Hayden, in his answer to the report of the Joint Committee on Foreign Affairs and Defence on the provision of development assistance and humanitarian aid to the Horn of Africa. In the report the Minister refers to approaches or policies, or principles of this Government. That is, while we will give food and have a food program aimed at famine relief when that is necessary, the Government would prefer to have the food for a 'food for work' project that enables people to provide for themselves. So while countries that are food deficient do need assistance temporarily, the funding arrangements for that relief have built in the aim or objective of helping people to help themselves. I have recently become Vice-President of an organisation which has only recently been established-the Australian People for Health Education and Development Abroad, APFHEDA. It has as its aims and objectives to encourage and aid the people of Australia through the Australian trade union movement to assist people of economically developing countries and those in refugee situations throughout the world. It is the only non-government organisation that is fully supported and assisted by the Australian Council of Trade Unions. The trade union movement is very supportive of non-government organisation assistance to those people in the Third World and/or refugee situations. The other important aim of this organisation is to help local people help themselves . The principal aim of the trade union, non-government organisation, APFHEDA, is to provide training for people in Third World or refugee situations so that they can help themselves. We are providing skilled training and support for people so that at the end of the non-government organisation's intervention those people will be sufficiently skilled to better help themselves. One of the first projects of APFHEDA is the refugee situation in Eritrea. One quite appalling statistic, which I think speaks for the problem in Eritrea, is the maternal mortality rate. It is estimated that one in three women die in childbirth. It is not the death rate of the children, which is appallingly high, but the maternal mortality rate of one in three in the refugee population in Eritrea that shocks-and ought to shock-the rest of the world. The APFHEDA organisation has accepted a grant of $20,000 through the Australian Development Assistance Bureau to assist Eritrea in providing teacher training for the people in Eritrea. With the assistance of that teacher training they will be able to establish their own primary health care worker set-up in Eritrea. I seek leave to continue my remarks later. Leave granted; debate adjourned. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! The time allowed for the discussion of papers has expired. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Mr President has asked me to inform honourable senators that at his request the Joint Committee on the Broadcasting of Parliamentary Proceedings met this afternoon to consider the division of broadcasting time between the Senate and the House of Representatives. Mr President reports that the Committee has resolved that while the present pattern of sittings continues the Senate will be broadcast on Wednesday of the first sitting week and Monday and Wednesday of the second sitting week. The House of Representatives will be broadcast on Tuesday, Thursday and Friday of the first sitting week and Tuesday and Thursday of the second sitting week. This resolution is to take effect immediately. That is, the Senate will be broadcast this evening from 8 p.m. Debate resumed from 2 May, on motion by Senator Gareth Evans: That the Bill be now read a second time. Senator ARCHER(Tasmania)(5.39) —The Opposition will be opposing the Insurance Contracts Bill 1983 and moving the amendments which have been circulated. I think it would be interesting to look at the history of this Bill. It was introduced on 1 December 1983. The Government set it down for the second reading debate during March 1984 and at the Opposition's request it was adjourned until May. In April 1984 Government representatives of the Attorney-General (Senator Gareth Evans) and the Treasurer (Mr Keating) met with the Insurance Council of Australia Ltd to discuss certain amendments. Following those discussions the Government intimated that amendments would be made, but it would not indicate the precise nature of the changes it was contemplating. Finally, on Monday, 30 April 1984, 59 amendments were drafted and presented to the Opposition. The revised draft plus the explanatory memo was given to the Opposition on a confidential basis but consultation with industry groups was not allowed until 10 a.m. last Tuesday. Today three more amendments have come through. With all this conglomeration there is apparently no thought yet of providing a retyped consolidated Bill. So we must stagger on with this legislation and all the bits and pieces. The Opposition wishes to make it known that it gives credit to the Government and to the Attorney-General for arranging the interviews and having the discussions with the industry. It is pleasing that they called for the submissions and that they took as much notice of them as they did. One has only to look at the nature of the amendments and the stage they have reached to realise what an impossible mess we would have been in had the Government proceeded with the legislation at the time that it intended to do so, in March this year. Had that been the case the Bill would have been passed already. What a mess it would have been. Australia, like any other country, rests very heavily on the nature of its reserves and resources generally, and its ability to meet contingencies that will arise in the future. That applies to insurance as it does to work, superannuation, pensions and everything else. Insurance is the way in which we look forward to safeguarding for these future contingencies. In the years ahead it will be necessary that Australia be able to depend more and more on the reserves it establishes now. We need to ensure that our reserves are operated in a careful and appropriate manner. I suppose that I have had an association with insurance in one way or another for something over 30 years. I think it pays us all to remember that insurance, at all levels, is a contract, and that a contract requires two sides. Put simply , both parties are entitled to the benefits and both sides are entitled to safeguarding the obligations. I think that point is where I come into difficulty with this legislation. In Australia we have a situation where there is both private insurance and Government insurance. It is fair to say, as one would expect, that the Government has failed really to demonstrate at any point that it can operate either more efficiently or more profitably than the private sector, wherever they might be in competition. This brings me back to the Campbell Committee of Inquiry into the Australian Financial System which was adamant that the most efficient way to organise economic activity is through a competitive market system which is subject to a minimum of regulation and government intervention. We do not seem to learn from these statements but go on intervening more and more. Of course, totally free markets, at times, are imperfect. I can assure the Senate, however, that totally regulated markets are almost invariably imperfect. As I have said before insurance is a two-party operation; the insurer and the insured. As we tend to look at alterations to the system, we have a duty to see that the emphasis is placed on both parties and not on just one, as a scapegoat. Clearly consumers should suffer penalties as well as insurers, and probably more than insurers. I see the legislation as being an absolute interventionist monument. To me it is counter productive, unwarranted, unjustifiable and expensive. It is incorrectly founded and it will certainly be divisive. The Law Reform Commission suddenly bought into this argument, a participation which was never sought by industry. It has never been justified. Clearly it was a whim of Mr Justice Kirby who has never taken any notice of what the companies felt about that. In the report Mr Justice Kirby states that he interviewed and had discussions with the industry. As I understand it, it was an extremely one- sided discussion; he took no notice of the industry whatsoever and clearly, went away and wrote up what he intended to carry on with in years ahead. I think that the figures that are available speak for themselves. The records show that in the test period, 1976-77, 2.08 per cent of all claims were rejected. In other words, 98 per cent of all claims were accepted and paid. Some 78 per cent of the claims that were rejected were rejected because the insurance contract was not even in relation to the claims made. In other words, 0.58 of one per cent of claims were contested by the insurers. When we consider the sorts of frauds such as arson, misrepresentation and so on concerning insurance, 0.58 of one per cent is a very small proportion. I cannot understand why it would be thought necessary to mess up the whole system for the purpose of trying to cover 0.58 of one per cent of claims over which there may have been some disagreement. The fact that 0.58 per cent of claims was held to be reasonable does not indicate that in all those cases the insurance companies were wrong; far from it. That is the basis on which the Government has decided to make all the alterations through the Insurance Contracts Bill 1983. The other thing that I find completely impossible is that without any discussions and negotiations with the States we are now setting up an insurance system which, for the first time in history, will create two entirely individual classes of business-State insurance and non-State insurance. We will have two insurance laws, two lots of costs, two interpretations of claims and two contracts. Everybody will be very happy, I am sure. It is important to remember that over a third-normally regarded as between 36 per cent and 40 per cent-of this sort of insurance is undertaken with State insurers, the balance being with private companies. Is this sort of mess what the legislation seeks to impose? Will we, as private individuals, know what the differences are between the State insurers and the private insurer? Who will regulate the costs between the two insurers? Who will see that the contracts are similar, or that the claims are dealt with in a like or similar manner? Of course, although 36 per cent to 40 per cent of all insurance in Australia is done through State insurers, this Bill will not apply to that. In no way will this Bill apply. Will we just rely on the States saying: 'We will follow you. We believe what you are doing is right'? Or are we just going to hope that it is right? I am not sure whether the drafters and the instigators of the legislation believe that it is just going to happen, because I am fairly sure that it is not . I believe there is a long way to go in getting the two types of insurers to adopt a similar attitude. For the private insurers there will now be considerably greater bureacracy. There will be considerably more form filling and higher costs, and higher costs mean higher premiums. Higher premiums mean that more people in the community will insure less. I am not sure that that is what we need. I am not sure that that is what we should be trying to encourage. I believe it is desirable that we should be encouraging people to seek better insurance. I do not like the thought of having people covered less against the risks that will follow. However, that is the obvious corollary with rising costs. I am fascinated by fraud, as I am sure is Senator Evans. We are now talking about introducing legislation which will make fraud legal. We are also going to have small fraud and partial fraud, even non-criminal fraud. We are going to have acceptable admitted fraud and fraud condoned, even insurance recovery of admitted fraud claims. I find this absolutely extraordinary. I do not know of anything which could do more to encourage fraudulent practices. It is a case of saying: 'Well, we can try with a little bit of fraud in the first place and if we get away with it we will carry on'. I ask you! Are we trying to protect the 99.42 per cent of insurers whose claims were made and paid without argument, or are we going to do all this just to try to protect the 0.58 per cent of insurers who had arguments about their claims? All this can only make insurance more expensive and less affordable; there will be less cover and more risk. Why are we seeking to protect the people who, on the wording of the Bill, seek to induce some element of fraud? Is it the policy of the Government to look after the crooks in the insurance game? I am sure I do see it as being so. I do not think that we should be giving any people who endeavour fradulently to obtain money any protection of any description. I do not see that it is reasonable to ignore the difference that exists between domestic and commercial insurance. From discussions that I have had with the insurance people, they do not understand that either. I do not see why the Government has refused to accept that there is this sort of difference. I applaud the deletion of the ridiculous reference to 'the reasonable man'. I thank Senator Evans that we have at least got that far because it is very hard in a place like this to assess- apart from him and me!-what 'reasonable man' involves. Insurance needs tighter legislation in order to cope with fraud and, in particular, arson. The Insurance Contracts Bill does not take any steps of any sort to eliminate fraud at any level. It is my intention to speak in the near future on arson. Without making the speech now, I will say that the best estimate of what arson is costing in Australia at present is about $820m a year. With an enormous loss and cost in the community of that level it appears to me far more appropriate to devote our time to trying to protect people from that kind of loss. It is also interesting to note that the payment of $820m a year for arson doubles the cost of all fire and householder insurance in Australia. I believe it would have been far more appropriate to try to eliminate that $820m crime. We should be ensuring that the insurers of Australia are able to halve the cost of their insurance. This legislation is really nothing more than nuisance legislation. It totally ignores the real problems of insurance and makes crime easier. I am also interested to see the incorporation of the standard contract. Really, it makes me laugh because in the days when I was involved in insurance we had an insurance tariff and we used standard contracts. The only reason that we do not use standard contracts now is that that other great architect of interference, the Trade Practices Act, outlawed it as a restraint of trade. As soon as we get it outlawed, sure enough, here comes Mr Justice Kirby saying: 'We need a standard contract; we want one back again'. I cannot see that the insurance industry will object to having the standard contract back because it has worked with standard contracts for a lot longer than it has worked without them. This is a typical case of government interference and intervention by people who do not really understand-it takes, the medal. I am interested to see whose move it will be now. I am not sure whether the trade practices people will come in and override the Law Reform Commission and the legislation or vice versa, but I guess the matter has not finished here. We will see what occurs as the tug of war proceeds. I cannot see that the Bill in its present form is necessary or desirable in any way. It does nothing to fight the real problems of insurance; it makes it more attractive for crooks to explore and engage in fraud; it makes it more expensive for small insurers; and it creates this extraordinary division between State and private insurers. I oppose the Bill. At the appropriate time I will introduce amendments on behalf of the Opposition. Senator WATSON(Tasmania)(5.57) —I think we all acknowledge-the Government, the Opposition, people in the industry and insurers-that the Government has indeed had the opportunity of getting a wide range of input into its proposed legislation, the Insurance Contracts Bill. With that knowledge it is very disturbing to find that in the short space of time since the Bill was presented to the Senate 59 amendments have been presented. As late as today, on our desks this afernoon, were some further amendments. I think that reflects the ad hoc attitude this Government takes towards legislation. It reflects the fact that it does not really listen and does not properly analyse what it receives. It does not consider the impact that it will have on the insurers or the insurance industry. However, at the midnight hour, one minute to midnight, along comes a whole host of amendments. The Attorney-General (Senator Gareth Evans) acknowledges that we are now consulting people and that is why we are making the amendments. I submit that the Government should have considered these matters much earlier in the piece. I believe the Government still has an incomplete and very unsatisfactory Bill. When this Government came to power there were a lot of lofty notions of how it would protect the consumer. It was going to do that despite all the trenchant opposition from established and vested interests. But what do we find? We find that most of these 59 amendments represent a buckling under. If we look at it from the ordinary consumer's point of view, the Government has let the consumer down. The Government came in with lofty ideals and the consumers applauded it but when the test came, yes, it consulted; it buckled under pressure. From a consumer's point of view, it is most disappointing to see a government with such lofty ideals cave in to this sort of last minute pressure. This Government says that it determined to stand for what it believes in-looking after the small man- but when the test comes the Government buckles under. What has happened to the pension test? The Government has changed its mind. The pensions test has been put in a state of abeyance. I am surprised that we have this Bill before us today. I thought it might have been put on the back burner, as has the assets test and the final treatment of lump sum superannuation payments. If the Government is dinkum I presume that, within a short time, we will see another spate of amendments. Even in my own humble way I can see that some changes are needed as far as the ordinary person is concerned. I think the provisions in the area of solvency are quite inadequate. Therefore, I take this opportunity of welcoming the appointment of Mr Warren Tickle as the new Insurance Commissioner. Even the ICA Bulletin of 8 March 1984 acknowledges that he will be an asset to industry. I was particularly interested in his comments. The article in the ICA Bulletin states: He suggested that any measures designed to strengthen the solvency margins should be welcomed and supported but at the same time he is a firm believer in the industry being self regulatory. From the outset Mr Tickle was anxious to assure us he would consult closely with industry and would welcome input from ICA and its member companies. I think that is a nice approach. This man has had experience in working for Sun Alliance Insurance Ltd, a prominent company, university work and teaching. It appears to me that he is eminently qualified and has the right approach to tackle this job. Let us look at the 59 amendments to this legislation. I apologise that I have not had an opportunity of examining the impact of the amendments which were introduced this afternoon. I do not know how the Government expects us to appreciate what is involved when it brings this debate on at such short notice and under these circumstances. As I have said, most of these amendments appear to be designed to assist the insurer and not the insured. Who is looking after the so-called consumer interests? Again, the Australian Labor Party, in its amendments, appears to have fallen from its lofty rhetoric about the Bill being a Bill designed to give real help to small policy holders. It is my understanding that, ironically, before business could be placed with an overseas insurance company a client had to be informed of this before the contract was entered into. That was the previous situation. Alas, as a result of at least one of these amendments what I think is a pretty vital provision is being removed. Let us imagine that I am a small policy holder and know nothing about insurance and along comes an insurance agent representing a South American insurance company in Buenos Aires. He could be the only representative of that company visiting my State. He could knock on my door and say: 'I represent a beaut insurance company. Will you take out this policy?' But now he does not have to tell the policy holder that his head office is in South America or Timbuktu. What a let down for ordinary policy holders! This is one of the Government's amendments. I thought the Government was trying to help the small policy holder. As I understand it, the Government's amendment removes this requirement. Unbeknown to an Australian policy holder, a policy could be effectively written by a person who is representing a company anywhere in the world. But what happens when a claim is made? Will the policy holder be able to find this man who has been knocking on his door? No. The policy holder will have to look at the small print. I have a fear of what could be put in the regulations. Anything could happen. While we might all agree that standard contract clauses are very desirable, if one includes too much in a standard contract clause there is a big danger that one will effectively increase the price of the premium. A lot of the features written into the standard contract clause may not be wanted by the ordinary person who is insuring. Let us take a simple case. Let us assume that I live in a flood prone area and my neighbour lives up on a hill and there is a standard clause in insurance policies which provides for flood insurance. If that is a standard clause, the fellow on the hill will not be interested in having his premium inflated for that reason. He will have to go along to the insurance company and ask for a special exclusion and try to negotiate a reduction in his premium. I admit that that is the sort of problem that could arise from a well- intentioned standard contract clause. People do not want a whole lot of technical information. I am concerned that this Bill will result in a tremendous amount of highly technical information being put on the standard insurance contract form and will be gobbledegook to the ordinary policy holder. The ordinary policy holder wants the extent of his coverage written in simple terms so that he knows whether he can claim against a broken window, malicious damage to property in his house and so on. This is not difficult. But, as I have seen in company law legislation and many other areas, once one starts getting technical one finds that the understanding of the ordinary person tends to diminish. How many stockholders of companies understand a present day balance sheet? If it were not for the directors' reports, which in fairly simple terms outline whether they have made a profit or a loss or whether they are paying a dividend, et cetera, they would not have a clue. I can see the same situation occurring in insurance law. We are trying to complicate the matter for the ordinary policy holder whom we are trying to protect. So often with legislation nowadays the intention is good but the delivery leaves a heck of a lot to be desired. I think it is unfortunate that this Insurance Contracts Bill which is before us tonight is not 100 per cent complete or right. Representations are still being made and changes are still needed to overcome some of the problems. This Government, which is devoid of legislation, has brought this incomplete legislation before the House of Representatives and the Senate. It is reported that both Houses could be rising earlier than intended simply because not enough legislation is coming through. We are asked to consider, at the last minute, a new set of amendments which, quite frankly, the majority of the honourable senators on the Opposition benches certainly have not had time to consider. I think this is important. I have just mentioned some of the problems that I have picked up relating to a few of the 59 amendments. If there is further capitulation I wonder what sort of Bill we will finish up with. I believe that no legislation is better than bad legislation. What we are certainly getting at present is bad legislation. While I admire the Government's intention of trying to get the methodology and wording of this legislation right, I believe that it is quite inappropriate. We are likely to get a Bill which will impose further costs on policy holders. We will see a whole lot of technical information on clauses. They will be highly technical and legalistic and when they are legalistic it means more money for those wicked lawyers. We will find a lot more documentation. This extra documentation will confuse the issues rather than clarify them. What does this Bill try to do? It tries to reform substantially and modernise insurance contract law on a national basis-a lofty ideal. But the bulk of insurance is State insurance which effectively is not within that scope. Within the insurance industry there have been unfortunately a number of collapses. The most prominent firms are Palmdale Insurance Ltd and Bishopsgate Insurance Australia Ltd. Regulation in any industry may in certain circumstances be desirable but, in my view, this is not such a case, given the present wording of this Bill and the amendments that we are asked to agree to. This Bill cannot really be said to be a codification of existing law. Rather, it deals with only some aspects of the law and is therefore superimposed on to the existing law. The Commonwealth cannot legislate with respect to State insurance conducted solely within the limits of the State. I echo the hope of the present Attorney- General (Senator Gareth Evans) that the State and Northern Territory Attorneys- General will agree to the application of Commonwealth legislation to intra-State and extra-State insurance activities. I think it is unfortunate for Australians generally that we cannot have a uniform law relating to insurance. This is one of the problems we are facing at present. If we really get back to laws, the crux of the problem of the insurance industry in recent years can be sheeted home to two main areas. The first is the Insurance Act. The Insurance Commission has operated largely as a toothless tiger. In addition, until recently there has been no attempt to regulate brokerage operations within the industry. The main thrust of the Insurance Commissioner towards the general insurance industry has been that, firstly, the lodgment of returns appears to have been delayed in certain circumstances and, secondly, when those returns are received by the Commissioner the ability of his office to interpret the financial thrust of each of the companies seems to be delayed to such an extent that remedial action cannot be enforced at a suitable time. I submit that if the Government is sincere in its desire to stabilise the insurance industry for the benefit of the consumer it must be able to analyse and detect where these faults arise. To its credit, the Government intends to take some steps in this regard, particularly in relation to the Insurance (Agents and Brokers) Bill. But we are told that there are a number of amendments. If the amendments are of the same order and have the same force as the amendments to the Insurance Contracts Bill, there will be a big capitulation. Where will the ordinary person finish up? It would have been desirable for us to have debated cognately the Insurance Contracts Bill and the Insurance Brokers Bill. But no; we were first going to look at the Insurance (Agents and Brokers) Bill and it was withdrawn for further amendments. I am aware that amendments are needed to clauses 12 and 14 of that Bill. The Bill was submitted but it has now been withdrawn. I understand it will be listed for debate tomorrow. I presume that the Senate will be expected to discuss and analyse the impact of further amendments. If there are no amendments the Government will create problems for itself. If the Bill is submitted tomorrow we will not have the opportunity of analysing the impact of those amendments. Whilst the rhetoric is there the action is lacking. I think this is somewhat regrettable. No one would deny that the law of insurance requires some clarification and simplification. But I am sure that this Bill does not seek to simplify. It simply seeks to impose a whole lot of technical jargon. My colleague, Senator Archer, referred to all the different sorts of fraud that could be perpetrated. Yet, in most circumstances, the insurance industry had to honour a contract. What sort of legal position will a small policy holder find himself in when, through no fault of his own, he gets involved with a fellow who knocks at the door and presents what he thinks is a good policy. It could be written in South Africa or South America. The fellow does not have to be told this. The company may not even need to have a representative in the State in which the policy holder resides. That is not much help to the ordinary person. We need clarification. We need the Bill to be simple. We need a Bill to protect the ordinary policy holders. I do not know whether the Bill went to the back bench members of Caucus. I fail to see how ordinary Labor members could accept all these amendments. It surprises me. Senator Hill —They have to take it on the run as well. Senator WATSON —As Senator Hill said, maybe they have to take it on the run. In taking it on the run there are dangers, some of which I am trying to clarify tonight. But I think it is clear that rapidly changing technology, not only in the insurance industry but also in commerce has been required to adapt to changes. But it is not enough on its own to clarify the law of insurance to clear up issues regarding policy wording and contracts for the benefit of insurers. The whole financial structure of the industry must be streamlined in order that people's interests are protected at all times and that company collapses are minimised. The main concern of the insurance industry and the Government should be financial stability so that, as I mentioned, the client is protected at all times and is not faced with the prospect of his policy being worthless. I realise that some honourable senators may wonder why I have mentioned these things when the points that I am raising should have come from the Government side. I believe, as a representative of the people, that if Government members are not prepared to speak up somebody has to do so. It is often said that I have a certain sympathy with the business element. Whilst this may be so I have a duty to protect the ordinary small policy holder from what has been imposed upon him by the very representatives who should not be putting forward this sort of legislation. While one may applaud the intentions of the Attorney-General in these matters- it sounds very nice to have a standard contract clause and a standard insurance from, which we believe could be beneficial-I do not think the Government should rest on its laurels. Unfortunately for many in the community, it has backpedalled. For example, I believe there should be, in addition to the annual returns submitted by companies to the Commissioner, provision for quarterly returns by companies, which would be easy to analyse and would allow the Insurance Commissioner to see the financial breakdown, if that is the case, which the company is following, or which must inevitably result. Quarterly returns would not make it difficult for the Insurance Commissioner to assess the health of a company and, in so doing, the collapse of such firms as Bishopsgate would be avoided. The collapse of the Bishopsgate Insurance Company illustrates in a very graphic manner the failure of the Commissioner's office and the disastrous economic consequences for policy holders. While it may be seen to be desirable to introduce a number of measures to bring the Insurance Act and the insurance industry a little more up to date and to streamline it, the Government has gone about it in a haphazard, offhand manner. It circulated 59 amendments last week and further amendments today, before we have had time to consider this matter. That illustrates the problems the insurance industry faces . Let us look at some statistics. We know that this Bill is largely the result of recommendations by the Law Reform Commission. There has been widespread dissatisfaction with contracts by insured people. But when the matters were put to the test, how many claims were rejected? About 2 per cent. Of the claims that have been rejected, 78 per cent were rejected because the policy document did not cover the item in dispute. A standard form of insurance would not necessarily overcome that sort of problem. What is needed is clarity or simplicity of wording. We will not get that from this Bill, which will require highly technical, verbose language in particular forms. I am afraid of what could happen in an area which has many different interpretations, or in circumstances in which fraud may or may not void a contract. I think this situation is most undesirable, and I therefore call upon the Government to withdraw its Bill and draw up one that will be satisfactory for the needs of a modern industry, and to keep it up to date. One of the problems in the insurance industry has been that, with regard to the trade practices legislation, the insurance companies panicked. They withdrew standard clauses, standard ideas. Then we had the advent of overseas insurance companies in the Australian market. The Insurance Company of North America ( Australia) Ltd was one company which came in with the intention of skimming the cream off the industry and cutting premiums disastrously. It had very little structure with regard to servicing the small domestic policy holders. Unfortunately, a price war ensued. The short term result was some discounted premiums to policy holders. The long term result, I believe, in opening up this worldwide competition, which essentially skimmed the cream off the market, has been quite disastrous for the insurance industry. I hope the Government can learn from this situation, and that before it allows the entry of foreign banks into Australia it considers the ramifications that the entry of foreign-owned insurance companies has had on the Australian scene today. The long term ramifications, I believe, will be quite disastrous for Australia. Senator JACK EVANS(Western Australia)(6.26) —I commence by congratulating the Attorney-General (Senator Gareth Evans), not so much on the Insurance Contracts Bill 1983, but because he has made a genuine attempt to reach a degree of consensus between the conflicting demands on the insurers and the insured. We will probably be debating whether or not he has been successful for the rest of this evening. There are a number of areas where it is quite obvious that he has had to come down on one side or the other, indicating that consensus has not been achieved. I think it is fair to say that there has been a high degree of consultation. Certainly over the last few days it has been at a rate of knots, as the two previous speakers, Senator Watson and Senator Archer, have indicated. We have all been taking amendments on the run. Not only have amendments been put forward in voluminous quantities, but amendments have been made to the amendments. They are not necessarily a bad thing, because it is an indication of the willingness of the Government, through the Attorney-General, to consider further endeavours by the insurance industry or the consumers to resolve the problems that have come about as a result of the first attempt at the legislation. The fact that we had a delay in the debate has been helpful and, having thrown a bouquet, I will now throw a brickbat. I was disappointed that the Attorney- General wanted to rush through this legislation. It has certainly become evident from my point of view, and obviously from the point of view of the speakers on behalf of the Opposition, that we have needed practically every minute we have had in the intervening few says to catch up not only with the amendments that are perceived to be necessary by the Attorney-General and his officers, but also with the views of the industry representatives, the consumers on those amendments. They very definitely did not have time to put those views to us prior to the break to give us time to consider this legislation and its amendments. When we look at this Bill we recognise that it is a dramatic change in the Government's handling of the insurance industry. It is an industry in transition . It is an industry trying to take into account the shrinking world in which it exists and the fact that it has to communicate very quickly around that shrinking world. It is helped by modern technology, which in itself, of course, is quite a barrier to the development of an understanding of the changes that are necessary in that insurance world. The changing risks and the changing responsibilities are there for both the insurers and the insured. I think that both the Australian Law Reform Commission in its report and the Attorney-General have recognised that these changing risks and changing responsibilities on both sides need to be taken on board in considering appropriate legislation. The reforms were, in my opinion, absolutely necessary and overdue. I therefore do not have any quarrel with the endeavours to get the Bill up and running, and to get the amendments through, even on the run, as we are handling them tonight, because there is an urgent need for the insurance industry-as well as the consumer-to be able to stablise its position and to know where it is going. Sitting suspended from 6.30 to 8 p.m. Senator JACK EVANS —Tonight we are considering the Insurance Contracts Bill 1983 , a Bill which, in the normal course of events, would be considered by most people to be a rather dull, uninteresting and unexciting piece of legislation because it deals with a great number of clauses, contracts and machinery items which will completely change the insurance industry. Most people see the insurance industry as being people in large buildings in main streets, where many very complicated things take place but which do not have much relevance to the millions of people outside. In fact, this piece of legislation will have a great impact on millions of Australians because it redresses the imbalance between the insurer and the insured. It sets out, in accordance with recommendations made by the Australian Law Reform Commission, to tilt the scales the other way, to ensure that the consumer of insurance gets a fair go. By that I do not mean to imply that all insurance companies have been harsh in their treatment of insured people, but, because of the way the legislation has been framed in the past, the opportunity has been present for some unscrupulous insurance companies to take advantage of that legislation and to give insured people a raw deal. This Bill will change that. I am delighted to say that, in the main, the changes which will be made have the support of the insurance industry. I do not say that it was done willingly. I am certainly not suggesting that it was done without some trepidation because of the potential impact on the industry. The industry has been willing to consult with the Minister concerned, the Attorney- General. It has been willing to concede that there was a need to redress the imbalance. It has been willing to accept a number of changes to the principles of insurance as well as a number of amendments that have been put forward by the representatives of the consumer organisations and the Law Council of Australia to ensure that this legislation will work, as far as practicable, and will have the desired effect on the insurance industry and all those who have to take out insurance policies. Let me repeat, if I may, a comment that I made before the suspension of the sitting for dinner, which was that the Attorney-General is to be congratulated for the Bill and particularly for the amendments that have flowed on from discussion once the Bill's import was recognised-some of the problem areas needed to be redressed-and following that consultation, for his acceptance of proposals from a wide variety of sources, including other political parties, to modify the legislation so that it would work for the industry as well as for the insurance consumers. The industry is in a state of massive transition. It is dealing with new technology. That in itself is not easy for industry. It has had to recognise that new technology has to be taken on board to make each of the insurance companies more and more competitive. That has caused massive retrenchments in the industry which, when one knows and deals with the individuals responsible for those decisions, must have been a very difficult time for the people in the industry, not the least, of course, for those employees who were retrenched as a result of the introduction of new technology. The arrival of new technology should have brought about fairly dramatic reductions in insurance premiums. That has come about in some areas but, in my view, is not sufficient to meet the demands of people who have to make that crunch decision as to whether or not they will insure. That is not just as individuals but as corporate bodies also. Obviously, the lower the cost of handling insurance policies, the lower the premium can be in a competitive market and the more people will be able to insure those things that may be at risk. That is a desirable goal but it is one which may be in conflict with some of the things that this legislation sets out to achieve because, in fact, in redressing some of the imbalances, the insurers will be at higher risk. That means quite simply that increased premiums will be charged to consumers, to cater for that increased risk. The insurance companies, recognising that, have said nevertheless that they are willing to live with this legislation, that they are willing to try it. It is to be hoped that, following a period of trial, the Minister and the Government will be willing to accept recommended modifications to the legislation as and when those modifications are required. I think that it needs to be recognised that the Bill is based on the Australian Law Reform Commission report which made it quite clear that there is an urgent need for reform and rearrangements within the insurance industry. In particular, there needs to be a redress of the power imbalance between the insurers and the insured. This Bill certainly sets out to achieve that redress of the power in balance. It gives those who are insured much greater powers vis-a-vis the insurance companies. I expect this Government and any future Government to recognise that this Bill is only the first of a number of reforms that are necessary in this area. The insurance contracts with which this Bill deals are probably an appropriate first step. But a number of discrepancies still have to be addressed. One which we will be looking at shortly in this parliamentary session, it is to be hoped, is the insurance agents and brokers legislation dealing with the intermediaries between the insurance companies and the insured. Senator Hill —Will we have 60 amendments to that? Senator JACK EVANS —We may indeed have a number of amendments to that legislation as well, because that is probably the way major reform legislation should be handled. It should be brought down as proposed legislation but subject to a number of amendments once the concerns of the industry people and those who are affected are taken into account. Senator Hill —After a reasonable time for consideration of the amendments. Senator JACK EVANS —As Senator Hill says, it is most important that we, the legislators-not only the Government but also the legislators on both sides of this Parliament-have the time to consult with the representatives of all of the interested groups to ensure that the legislation goes through in a proper and workable form and is not just raced through with only one person being convinced that it will work, that person being the Minister at the table. Other areas need to be looked at-as I said, it is to be hoped that this will follow-such as reinsurance because of the discrepancies that flow from this legislation between the requirements of Australian insurance companies and the ways that off-shore reinsurers operate and the provisions that they may or may not accept in this legislation. Another vital area which needs to be looked at by the Government and this Parliament is the provisions for ensuring the solvency of insurers, the solvency of those insurance companies in whom we place our trust each time we take out an insurance policy. I am sure that the Government is conscious of the fact that this legislation will probably bring about changes in both the size and the composition of the insurance market. There may be major changes in the number of companies and the size of companies that exist, in the Australian control and ownership of those companies, and in the very complex area of competition between State government insurance offices and private insurance companies. These are matters that need to be addressed and are virtually ignored by this piece of legislation. It also needs to be borne in mind that insurance companies are responsible not only for providing insurance cover. They are amongst Australia's biggest investors, and they need a degree of regulation, along with the banks, building societies, friendly societies, credit unions and many other institutions involved in the financial markets, to ensure that they do not get an inordinate degree of control over the financial system and have an impact on this nation's economy which could be to our detriment. There are a number of quite logical reforms in this Bill. The provision for the use of standard contracts is established by law for the first time. That is a very desirable achievement, because it means that people do not have to read through every insurance policy to ensure that there is not a missing clause or to ensure that there is not something else in it that no other insurance company includes which provides for an exclusion for their particular policy. I believe that the standard contracts approach is supported by the industry. It is probably something that had to be legislated for, because it would have taken decades for the industry to arrive at that point of agreement, simply because of the tremendous pressures on the various companies around Australia from their proprietors overseas. The other major reform in the legislation is that there is a degree of consumer protection which has never been seen in insurance legislation in this country. There have been a number of problems associated with the creation and the development of this Bill. At one stage it was suggested that to help in the interpretation of the Bill we should go behind the Bill to the Australian Law Reform Commission report No. 20 to get the Commission's meaning of the words which were included in the legislation. That is not to be part of the Bill, as the Government has agreed to an amendment removing that provision. I would have envisaged that that would have resulted in very costly and lengthy litigation and argument, because much of the current legislation, as a result of the acceptance of alternatives and amendments, will be quite different from the draft legislation which was included in the Law Reform Commission's report. In any case, the Acts Interpretation Act probably makes that provision unnecessary, as where appropriate the power is there in existing legislation to use that method of interpreting the Bill. One of the matters that needs to be looked at is the concept of the 'reasonable man'. I believe that the Government has accepted the view that the clause which provides that what a person in the insured's circumstances would reasonably be expected to know that an insurer would regard as relevant, left to a very subjective judgement the interpretation of what a person should know. There is case law which interprets what a reasonable man should be expected to know. That has now been included in the amendments to the Bill, and I believe that it is a much more acceptable approach but, nevertheless, a very contentious approach to this kind of legislation and an approach that is difficult to interpret; but at least there is case law on which interpretation can be based on the reasonable man principle. The clause to which I have just referred would have, in fact, words something along the lines of what a reasonable person could reasonably be expected to know an insurer would regard as relevant. That will be easier to adapt in this kind of legislation. There is a cause of great concern both within the insurance industry and within honourable senators on this side of the Senate. That is that there is no inclusion of State government insurance offices in this legislation. I am willing to accept that it is not constitutionally possible for this Parliament to legislate for State government insurance offices. They have been so established that they escape any legislative provisions of this Parliament. Nevertheless, it places private insurance companies at a distinct disadvantage in competing in the areas in which they compete with State government insurance offices. I would have hoped that it would have been possible, before this legislation was introduced, for the Government to have been able to announce that the State governments had accepted the principles contained in this legislation and had agreed to legislate uniformly along the lines of this legislation to remove the advantage that will flow on to State government insurance offices as a result of this legislation being passed for all private insurance companies throughout Australia at stage one-that is, from the proclamation of this Bill-and not for State government insurance offices at the same time. It may well be that the Attorney-General and the Government will be able to persuade State governments to legislate uniformly along these lines, but it will leave that advantage over a period for State government offices, even given that the State governments are all willing to legislate along similar lines. I ask the Attorney-General to give an assurance in his reply to the debate that there will be a continuing endeavour on the part of this Government to have State governments cover State government insurance offices along lines that are identical to the way in which private insurance offices have had to be covered and their consumers given the protection of this legislation. The Government, insurance companies, the consumers and parliamentarians who have looked at this legislation have all had difficulty with two clauses, clauses 32 and 56, which deal with fraudulent misrepresentation by a person who is insured. The provisions seem, at first glance, to be impractical. There is the use of the terms that the court may disregard the avoidance of a contract for fraudulent misrepresentation or fraudulent non-disclosure if it would be harsh and unfair. Harsh and unfair to whom? Presumably, to the insured, but it may just as easily be interpreted to mean harsh and unfair to the insurer. But what flows on from that provision is that if we open the doors to a little bit of fraudulent misrepresentation or fraudulent non-disclosure, are we not opening them to deliberate fraud and making it legal under this legislation? It is certainly an innovative concept to be introduced into legislation of this type. It throws the balance very much in favour of the insured. I guess that the reasoning is quite sound: Where a person makes a misrepresentation which does not affect the total insurance coverage he or she should not lose the total insurance and the total claim on such insurance as a result of having made a minor misrepresentation, even though it be fraudulent. That is probably the principle behind the proposal. I am not suggesting that that is a good principle , but if we want to push the balance back towards the consumer and away from the insurance companies one way of doing so is to say: 'We are not prepared to let the insurance companies be judge and jury of what is fraudulent misrepresentation. We will leave it to the courts to make that decision'. It does leave it to the courts to determine whether it is harsh and unfair and, therefore, whether they are willing to allow a little fraudulent misrepresentation or fraudulent non-disclosure. But I repeat: I believe it lets a little water escape from the dam and one finger may not be enough to stop the flow. Once we start to make fraudulent misrepresentation and fraudulent non- disclosure legally acceptable at any level we may not be able to stop the flood. This situation needs to be kept under the microscope and I would expect the insurance industry, the Law Reform Commission and any others interested in justice and in ensuring that outright cheats do not get away with it to come back to the Government if it looks like getting out of hand, because in the end we, the rest of the insured people of Australia, the 99 per cent who do not fraudulently misrepresent, will pay the additional premium if these people open the flood gates. There are some amendments to be moved by the Opposition, some of which the Australian Democrats will be supporting. We will deal with those as we get to them. I raise one other point. Although in general the Australian Democrats support the thrust of this Bill, in the main because it moves the balance towards the consumer, towards those people who take out insurance policies in innocence expecting to be protected by an insurance company which until now has been the party against which the action is taken and the judge and jury taking a decision on that action, and because it gives the insured a better go in insurance, I believe it is important in debating this Bill to recognise that it will be an expensive change. The administrative costs of private insurance companies will be increased as a result, and that will flow on to consumers. That will result in increased premiums. It is impossible to calculate the amount , but we need to know that, as we pass this Bill, we are passing a Bill which will increase the cost of insurance but which will at the same time increase the certainty under which every person and every corporate body takes out that insurance. There may be an increase as a result of increased litigation and legal advice, but I guess that was inevitable whenever this reforming legislation came through. One of the difficulties I referred to earlier was the possibility that re- insurance may not be possible with off-shore companies because the legislation cannot extend to re-insurance. We may find that foreign re-insurers may not indemnify some Australian insurers in certain areas, but it is my understanding that both the United States and the United Kingdom experiences of legislation along similar lines have not encountered that problem. Let me stress in conclusion that the Democrats are happy. The consumers will get a much higher degree of protection. As a result, they may pay slightly increased premiums, but they will do that with much greater certainty that their interests are protected by a reforming piece of legislation aimed at looking after the millions of people who take out insurance in the hope that the company with which they are insuring will do the right thing. Senator HILL(South Australia)(8.25) —The Insurance Contracts Bill which the Senate is debating tonight is a result of the Law Reform Commission's report No. 20 about insurance contracts. I remind the Senate that the reference was given to the Commission by a former Liberal Attorney-General, Mr R. J. Ellicott, QC. The reference generally sought a report on the adequacy of the law governing contracts of insurance-excluding marine insurance, workers compensation and compulsory third party insurance-having regard to the interests of the insurer, the insured and the public. I remind the Senate that the Commission was asked to consider in particular whether the terms and conditions presently found in contracts of insurance operate unfairly; whether certain and, if so, what terms and conditions should be mandatory in contracts of insurance; whether certain and, if so, what terms now found in contracts of insurance should be prohibited; whether the practice of incorporating statements made in proposal forms into contracts of insurance provides an equitable basis of contracts between the insurer and the insured; whether it should be mandatory for an insurer to supply to a person seeking insurance written information as to that person's rights and obligations under the proposed contract; whether arbitration clauses in contracts of insurance are operating unfairly to the parties or are otherwise undesirable; and whether the principles of the law of agency in pre-contractual negotiations should be modified to provide greater fairness to the insured. The Commission was then asked to advise what legislative or other matters, if any, are required to ensure a fair balance between the interests of the insurer and the insured. I commend the Commission both upon the diligent way in which it went about meeting this challenge and upon the comprehensive nature of its report. In particular, I commend the commissioner in charge, Professor David St Leger Kelly of the University of Adelaide. I was impressed by the number and stature of the honorary consultants who assisted the Commission, and I think it important that the contribution of such voluntary consultants to law reform and the legislative process be given proper recognition. The Commission also received a very large number of submissions, both written and oral, and the contributions of these individuals, associations, companies, departments, et cetera, should be acknowledged. The Bill that the Attorney-General (Senator Gareth Evans) presented was more or less taken directly from the Law Reform Commission's report. It is a document produced by the co-operative endeavours of many within the community who have a particular interest or expertise in this subject. Whilst that does not in any way allow this Parliament to abdicate its responsibility to the Commission, it does mean at the very least that the Bill deserves respect and careful attention . That is the least we owe to those who contributed so much to its development. It is not one of the current Attorney-General's 'it seemed like a good idea at the time' proposals. The subject matter with which we are concerned is of major importance. Insurance, both general and life, provides protection against economic disruption to society and often extensive personal hardship. As the report noted , the industry, and through it, premiums, play a vitally important role in the financial system of this country as a whole. Also, of course, we are concerned with an industry within which a large number of Australians are employed. The Commission adopted what I think is a good practice, that of preparing discussion papers which were put down for public consumption. It did this in 1978 therefore allowing a further level of community participation. The Government put down the Bill, which I said is basically the Law Reform Commission's Bill, and then called for public submissions. It has received about 40 submissions and I acknowledge that the Attorney-General has been prepared to make such admissions available to the Opposition. After all that process of consultation, it is of great regret that after such a painstaking step by step approach from 1976, the time of the giving of the original reference, through to 1983 when the Government introduced the Commission's Bill, that the Parliament was treated to absolute disdain by the Attorney-General. He called on the Bill for debate and contemporaneously introduced some 59 amendments all of which were unseen by the Opposition, except for the shadow Minister who was given the amendments on a confidential basis. What is the point of giving amendments to the Opposition for consideration and allowing only one member to have them on a confidential basis? The Attorney-General then expected the matter to come on for debate. In other words, he expected this Senate to debate not only the Bill with which we were very familiar because it was taken from the Commission's report but also some 59 separate amendments that we had not had the opportunity either to see or consider. I regret that when the Attorney-General was told by the Opposition and the Australian Democrats on that occasion a few days ago that we were not prepared to tolerate such a practice, we were subjected to a barrage of accusations of holding up Government business. It does nothing for the reputation of the Attorney-General that because he is unable, with all of his resources to get his affairs in proper order, he should then treat the Senate and also those whom I have mentioned who have contributed so much to the process of the development of this Bill to such disrespect by expecting the Bill to be treated in that way. I move on to some of the general matters concerning the Bill, the rationale for the recommendation that was included in the Commission's report, the direction the Commission recommended that the Parliament should take, the style of the Bill and matters of that nature. I accept, as is stated in the report, that insurance contracts are subject to a bewildering variety of laws not only as they are developed by judges but also statutes of the imperial State and Commonwealth parliaments. I accept the need for reform in this field, the need for updating the law and clarifying areas of conflict. I think this part might be reasonably headed 'simplifying and modernising the law of insurance'. From my experience I have no doubt as to the merit of such a goal. I think a case can be made out without the need to resort to finding public dissatisfaction. However, the Commission did attempt to substantiate its case for reform by finding: . . . widespread dissatisfaction existing among insured who had made claims under their contracts, only to have them rejected. This appeared to me to be one of the more disappointing aspects of the report because the evidence found that only 2.08 per cent of claims failed on the basis of objections. To reach a fair and balanced conclusion on those rejections some qualitative analysis would have had to be made and that was not done. However, I do not regard this aspect to be of great importance because as I have said I think a case can be made out for law reform without having to prove dissatisfaction on the part of a sizeable number of insurants. However, I think it is a point that ought to be made in passing because I do not think it is good practice for the Commission to adopt to look further to try to substantiate its recommendations by evidence that is not sufficiently strong when a case can be made out without it. A more difficult question with which I have had to wrestle is whether the reform of insurance contracts is necessary only in relation to non-business insurance. Much of the Bill that appears before the Senate tonight can fairly be described as consumer protection type legislation. It has that style. The language is familiar to us, particularly those of us from South Australia from our consumer credit legislation, consumer transactions legislation and other similar enactments. Obligations to inform, the duty of disclosure, provisions that protect against ambiguous questions being asked and the failure of questions to be answered, provisions to prohibit arbitration, clauses to give notification of expiration, clauses to provide cooling off periods, legibility of writing and matters of that nature might all fairly be said to be included in contracts to protect the interests of what we might generally call the layman. It has been said to us that this reform is not required by business and therefore a dividing line should be drawn. In other words, this legislation should be simply and strictly limited to consumers and should not cover business that is able theoretically to look after its own affairs. Such a dividing line does exist in some of the South Australian consumer protection legislation. For example, companies are excluded. Particular transactions above a certain value are excluded. I looked to the report to see the Commission's rationale for not separating the two. In paragraph 26 the Commission states: The Commission has concluded that a general distinction between different classes of insured should not be made. Distinctions of that type are often arbitrary. In some cases they are based on the dollar cost of individual transactions. That would be a particularly difficult criterion to apply in the case of insurance. A little further on the Commission stated: A distinction based on areas of insurance-- that is, areas of insurance as opposed to a dollar cost- would avoid these difficulties. However it might inhibit the development of a composite policy straddling different areas of insurance. The Commission also stated: The cost to business of employing solicitors and brokers to avoid the difficulties to which existing law gives rise might well be reduced by simpler and a fairer set of rules applying to all insurance contracts. It could be added to by the creation of two sets of rules and by attendant difficulties of demarcation. I have satisfied myself that the Bill should not be strictly limited to consumer transactions and I have done so principally for two reasons. The first is that all business cannot fairly be classified within a common net. A large corporation with in-house insurance experts is not in the same position as, say, a husband and wife plumbing team or a team in some other trade. Where is the distinction to be drawn in this regard? It is interesting to note that the fact that there is a distinction was recognised by the Treasury in its submission to the Commission in which it argued that perhaps the protection should be extended to certain classes of small business but perhaps not to corporations in general. I remind the Senate that there are small corporations as well as large ones. In the same way as an efficient taxation system should not lead one to a particular business vehicle being used, neither should insurance law. The second reason is that there are worthwhile reforms. For example, I mention one in relation to insurable interests to which all those insured should be entitled. On balance, I support the blend reached by the Commission. It gives all the benefits of certain reforms and protections which in practice might be more valuable to some than to others who are less skilled or experienced in this area, but not at any significant cost to those for whom such protections may be unnecessary. Some will argue that there is a loss, and that is the additional cost to the community. The Minister says that the Bill will not have any impact on Government revenue which may be so. However, it will no doubt have an effect on administration costs to insurers, which will be passed on in the form of premiums to those insured. I note that the Insurance Council of Australia Ltd in its letter to the Attorney-General dated 6 February said: If the Bill is passed, it will introduce procedures, which will substantially increase costs of delivery of the product to policy owners. The Council added: I should emphasise that the question of affordability is one that concerns all insurers and any additional costs which are not directly concerned with covering risks, tend to put insurance out of the reach of those who need it most. The Council called for a critical cost-benefit analysis. Will the cost of meeting the obligations under this Bill be balanced by a benefit to the consumer public? The Council asked itself that question and concluded: It is our objective assessment that in the circumstances which will be created by the legislation, the cost will almost certainly outweigh the benefit. However, no cost-benefit analysis is included within the submission of the Council, and I suspect that is because it is really impossible. No doubt the additional costs can be assessed, but on the other hand the benefits remain a value judgment. However, I believe it would have been of help to the Senate tonight if either the Commission or the Council had made an effort to estimate the cost of implementing the Bill we are here debating. The Commission did not do so. It stated the balancing of economic costs against benefits to be the first of its guiding principles. As I said, it then did not go on to analyse such costs. Rather it took the simple alternative of saying that the reforms will improve the operation of the market by enabling respective insurers to be better informed and that that therefore would result in cost savings. I do not find particularly persuasive that part of the report which tends to argue that the recommendations will result in greater market efficiencies. As I indicated, I would have liked more information as to the industry's assessment of the increased costs. However, with those deficiencies I, and no doubt other senators who have been carefully through the Bill, am satisfied that the information- giving requirements are no more than is reasonable. Any additional regulation involves additional costs. Not surpisingly, I am therefore always reluctant to endorse such a spiral. However, legislators have a responsibility to ensure reasonable safeguards for the public, and my balancing exercise-I regret without too much to balance on the other side-has therefore come down in favour of the obligations within the Bill. That leads me to the next question. It was argued that the insurance industry was capable of solving many of the problems identified by the Commission and could do so at less cost than legislative change. In other words, further self- regulation was argued. It seems to me that self-regulation resulting in the same obligations as provided under the Act would result in much the same costs in any event. Whereas I support as much as possible self-regulation of professional bodies in their behaviour, I think that the Government and the Parliament have a responsibility to set down on behalf of the weaker sections of the community at least basic minimum protections. I do not see that the Bill-I am speaking generally; I will get to some specific concerns in a moment-imposes additional obligations more often than what I would describe as basic minimum protections. I briefly mention the argument that has been put that life insurance should be treated quite separately and distinctly from general insurance. This apparently was based on the different practices, traditions and problems of the two branches of the industry. Of course, the Bill does in part separate the two. However, I think it should be said that it reflects what appears to be a trend towards blurring the distinctions. Insurance packages now cover, for example, both life insurance and disability insurance. I think separate Acts would offer as many complications as they would resolve. The matter that causes me particular concern is the very large sector of the insurance industry that will not be covered by this Bill. It will not cover friendly societies, funeral funds, health insurance funds or reinsurance. More importantly, because, I concede, of constitutional restrictions, it will not cover State insurance. I have been led to believe that State insurance amounts to at least one-third of all insurance policies issued. It appears to me that to have two set standards would be obviously undesirable. Furthermore, to allow the State offices a competitive advantage by adopting stringent information provisions would be particularly undesirable. I regret that this matter has not been adequately dealt with by the Government. I believe it to be so important that, as far as I am concerned, it would be fatal to my support of the Bill. The Attorney-General in his speech covering the 59 amendments, which might be described as his afterthought speech, said to us that the Standing Committee of Attorneys-General was in general agreement that the same legal rules and constraints should apply. He further said that the Victorian Government was preparing legislation to that effect. I find that position astonishing. That speech was made at the same time as he was introducing a further 59 amendments to his own Bill. Today he has presented three further amendments to the Bill. So it appears to be almost impossible that he could represent to the Senate that the Victorian Government is in the process of legislating to put into effect what he himself is proposing to put into effect. It is obvious, at least to those of us on this side of the Senate, that until a few days ago the Commonwealth Attorney-General was not sure what he was intending to implement. Until this Parliament can be certain that each of the States and the Northern Territory-I add that in the amendments the Northern Territory has been treated by the Attorney-General as being in the same position as the States; I think that is important-will implement similar legislation, that there is a definite agreement so that we will not have two levels of the insurance law in this country, I believe it would be unwise for the Senate to pass the Bill. I am relieved, although a little surprised, that we are not being faced with provisions making certain forms of insurance compulsory, for example, third party property or householders- house owners' insurance, as is the wont of this Government. Fortunately the Commission did not feel entitled to examine such matters in detail in the current report. No doubt we will face such questions in due course if this Government remains in office. Perhaps the Government is concentrating more on its national scheme of general accident compensation with, of course, compulsory levies. However, in general there is a lot in this Bill that I would like to support. I support the intention to reform and update certain parts of insurance law that obtains. In the short time remaining I will make a few comments on specific provisions. I understand the need for the duty of utmost good faith in insurance contracts. Part II appears to be a clarification of that duty and I support that provision. Part III alters the law of insurable interests and, again, I think soundly so. Part IV deals with disclosures and misrepresentations. In regard to that Part and particularly clause 22, the Commission took a somewhat compassionate view in that it wanted the particular circumstances of an individual to be taken into account; for example, his position in life, mental condition, and ability in education, before determining whether he should have made disclosure. It might be said that that is a somewhat novel position for the law but, as I said, it is a compassionate position and one which commends itself to me. The industry wished to return to the standard provision of a duty upon a prudent insurer. The Government, in its amendments, appears to have looked for a compromise. It has found what it regards as the compromise of 'a reasonable person in the circumstances'. I understand in law what is meant by 'a reasonable person' but, in this case, I am unsure what 'a reasonable person in the circumstances' means. I am unsure whether the Government is in fact trying to return to what was the original spirit of the Law Reform Commission. I suspect it is not. It has tried to find a half-way house. I suspect what it has come up with is unsatisfactory. I believe there was room for a compromise. I think the compromise came out of the dealings of the fraud provisions that have been mentioned by others tonight; that is, clauses 32 and 56. It is those provisions that also would have made this Bill in its present form fatal as far as my vote is concerned. I do not believe the Senate can be asked to condone fraud as this Government is asking us to do tonight. The compromise that I think was open was that the Government would wipe that idea that it would allow fraud or a level of fraud to be tolerable and upheld the Law Reform Commission's position with regard to a somewhat compassionate provision under clause 22 in relation to disclosure. I think it would have found a compromise that may have appealed more to the industry and I think it would have been a proper compromise, whereas the compromise that is being put to the Parliament tonight I regard to be improper. Part V deals with the contract and provides for standard cover. I support the concept of standard minimum cover. However, I regret that we are going to be in the dark until we see the regulations. We do not know what the Minister intends in this regard. This point was made strongly by Senator Watson earlier in the debate tonight. I trust that in due course the Minister will put down his ideas for consideration and debate before we suddenly see the regulations appearing. My concern is the amendment to clause 38 which appears to me to defeat the purposes of bringing unusual clauses to the attention of the insurers. As I understand the amendment, it says that it is sufficient simply to provide the contract. As I read the report of the Commission, that is the type of situation that it was trying to avoid, so that those who were not skilled in insurance matters would have unusual terms specifically brought to their attention. Why the Government has decided to desert the small insured in that matter I do not know. I would have thought that would be something that would particularly concern the Australian Democrats tonight, but they do not seem to have mentioned it. I might say, with respect to the Democrats, that I was disappointed in their attitude to the fraud provisions. To say that they do not really like the way the Government is bringing in the legislation-and to quote them-but they hope that after it is implemented they expect the industry to come back to the Government if it is getting out of hand, I regard as entirely unsatisfactory. The rationale was that otherwise insurance premiums will go up. I would have thought the concept-I am not of the mind to preach morals to the Senate-of whether this Senate should be passing legislation that condones fraudulent activity would be of greater consequence. I am also disappointed with the second amendment to clause 47 concerning pre- existing conditions which again revert to 'a reasonable person in the circumstances'. I think that is in conflict with the spirit of the Commission's report. I am disappointed with the amendment to clause 40 concerning instalment contracts which reduces the time for cancellation from one month to 14 days after the premium has in fact been paid. I would have thought that one month was not unreasonable in those circumstances. My time is all but up. I applaud the movement away from privity of contract in clause 48. Part VI deals with claims and I have mentioned my concern with provisions regarding fraudulent claims. Had I the time I would have liked to deal with the question of subrogation which I think is also important. I hope that will be taken up at the Committee stage. In conclusion, I think there is much in this Bill that should be supported. I regret only that because a comprehensive package for Australia has not been put forward tonight and that fraud has been retained I will find it impossible to support the Bill. Senator DURACK(Western Australia)(8.57) —The Insurance Contracts Bill was introduced by the Government to give effect to the report of the Law Reform Commission dealing with insurance contracts; that is, the law relating to the terms and conditions between people who are wanting to insure various items against certain contingencies, and insurance companies. That report was submitted in 1982. It has two primary objectives: Firstly, to provide a uniform set of rules to govern the law of contract between the insured person and the insurance company, and secondly, to improve the flow of information to prospective policy holders so that they can be more informed about the choice they wish to make. Those are the arguments that are presented in favour of this legislation. The legislation has certain benefits. It provides for certain standard forms of insurance and for better notification than applies at present on aspects of the proposal. However, it falls into the category of legislation which, although on the face of it is designed to improve information, the end result is largely greater expense for those who have to provide the information and little prospect that those who receive the information will read it, understand it or make any valuable use of it. A standard form of insurance contract might be in itself beneficial, nevertheless it fails to take into account that this area covers a great variety of circumstances and different forms of cover are required for various businesses and the various contingencies that arise. Although in theory it sounds very nice to have a standard form of insurance, it is just not a practical proposition because one has to have special forms of contract for special purposes, indeed even for individual purposes and problems. As I said, it is one of the pieces of law reform which are a matter of great appeal to the Law Reform Commission, to people who have great pretence as law reformers, such as the Attorney-General (Senator Gareth Evans), consumer organisations and others who believe that simply by passing legislation all problems can be resolved. As I said, although the Bill has superficial attractions, it has very many problems as well. I propose to deal with these problems in the course of my speech this evening. I should say at this stage that, for reasons which I will outline, the Opposition is opposed to the Bill and will vote against it. It appears that the Australian Democrats, who have already indicated their point of view, will support the Bill. Therefore, on the numbers in this place, the Bill will be passed despite the opposition to it by the Liberal and National parties. In that event we hope that, at the Committee stage, honourable senators will consider and will pass a number of amendments to the Bill which at least will improve it. Although the Bill purports to be a Bill to provide a code of law for insurance contracts in fact it will in no way cover the whole field of insurance contracts . Indeed, there is a threshold question as to whether we want a separate law of contract covering insurance. We have a very well developed law of contract in this country which provides basic rules and principles governing contractual relations between people in whatever field of endeavour they may apply. Yet we have here a claim that there should be some special rules for insurance and, in particular, contracts relating to insurance-a relationship which is only one of a vast range of contractual relationships into which people enter. Even if we assume that it is beneficial to have some special rules relating to insurance contracts, this proposal will in no way cover the field of insurance contracts. In the first place it does not apply to contracts entered into with State government insurance offices. Everybody is familiar with the fact that in, I think, every State there are State or government-owned insurance offices that do a great range of business-in fact, they do one-third of all the insurance business in Australia-yet they are not touched in any shape or form by this legislation. The Attorney-General has come into this place and has said that he proposes to open up some discussions with the States to try to get some uniform laws with the States consistent with the principles of this legislation. What a sloppy way of legislating. This is consistent, of course, with the usual bull-at-the-gate methods of the Attorney-General. Instead of doing his homework, the groundwork and the difficult work first, because of his great obsession with satisfying his pretensions as a law reformer, he rushes in with legislation before he has a reasonably consistent proposition to put to this chamber which will apply to the insurance arrangements which people wish to make with State government insurance offices as well as with every other private insurance office throughout Australia. So the Bill's first great deficiency is that it applies only to two-thirds of the insurance business, at the most. Honourable senators will see in a moment that it does not apply even to that. It does not apply to various forms of insurance, such as marine insurance, workers compensation insurance and medical insurance. It does not attempt to cover, nor can it cover, the problems of reinsurance. The reinsurance market is a very important one for Australian insurance companies. Because of the very large risks that they assume in many of their contracts they want, in betting parlance, to lay off the bets that they have made. I think that term is probably more understandable to Australians than talking about reinsurance. These companies enter into these arrangements with larger insurance companies overseas. That is what is meant by reinsurance. The Bill cannot apply to those arrangements, yet that is a very important part of the business conducted by Australian insurance companies. The Government, having decided more or less to give the green light to the recommendations of the Law Reform Commission, introduced this Bill which is more or less along the lines of the Bill recommended by the Law Reform Commission. That, as I have said, is a very premature way of proceeding. I have pointed this out to the Attorney-General on a number of occasions in other debates. It is important that any report of the Law Reform Commission should be closely studied and its recommendations closely tested by those in the industry who are affected by it. The need for that is clearly emphasised by the history of this Bill after it was introduced by the Government several months ago. There have been considerable criticisms of it by the industry and many submissions pointing out its deficiencies, despite the fact that it is a subject that has been under lenghty study by the Law Reform Commission. This is a pattern. Recommendations of the Law Reform Commission are constantly shown to be defective in many ways once the deficiencies are unveiled. This Bill is no exception. As a result of the Government seeking the views of the industry after it introduced the Bill-it should have done so before it introduced the Bill-it has introduced no fewer than 59 amendments to this Bill. When we go to the Committee stage the Bill that we now have before us will be virtually emasculated. The Minister for Education and Youth Affairs, Senator Ryan, will be familiar with that because she followed the same principles with the Sex Discrimination Bill and introduced over 50 amendments to that legislation. The Government will be introducing 59 amendments to this legislation when we go to the Committee stage in a short time. But I have to give some credit where credit is due, as the Opposition did even to Senator Ryan, as she will remember, in the debate on the Sex Discrimination Bill. We gave her full recognition for the valuable amendments she made, even though she should have thought of them long before she did. Even the Attorney-General, somewhat to my surprise and the surprise of other honourable senators, has seen the light and will be introducing 59 amendments to this legislation, that is, if he is in the chamber, which he does not seem to have been for most of this debate. The Opposition believes that these amendments will be useful if we have to be saddled with a Bill such as this. Because the Democrats will support this legislation it seems as though we will be saddled with it, the insurance companies will be saddled with it and the insured people will be saddled with it and will have to pay higher premiums. That fact does not worry the Democrats; they will still support this legislation. They have some theoretical views about legislation solving everybody's problems. However, the amendments that the Government will move do not really cover the Opposition's concerns about this Bill. We believe that this Bill is a further example of anti-competitive regulation which is foisted upon the business community with little regard for the cost of that regulation. There is no doubt whatsoever-everybody who has looked at this legislation concedes-that this Bill will result in increased costs to the insurance industry. These increased costs to the industry will simply mean higher premiums. The consumers, the people who want insurance, will have to pay for it. It is time that people realised that when governments bring in regulations somebody has to pay for it. In the end it is usually the poor old consumer that has to do so. This Bill is no exception to that principle. It will result in higher premiums, as surely as we are in the Senate chamber this evening debating it. These costs, however, will have to be borne by the private insurance industry. In many cases small businessmen seeking insurance will have to pay. I hope that those in the small business community will remember that the Australian Democrats, by supporting this Bill, will impose higher costs on them. The State government insurance offices will not have to pay those premiums because they are not affected by this legislation, as I have said. This will be a benefit to the State government insurance offices and will enable them to offer more attractive terms in the market place. The effect of this Bill will be at the expense of the private insurance industry and will assist the State government insurance industries. It also has major implications as to the share of the market between the public and the private sector. For a Bill that has such important consequences one may well ask why it is necessary. Of course, that does not trouble the Attorney-General very much in his pursuit of a reputation as a law reformer. He wants to be able to implement as many reports of the Law Reform Commission as he possibly can without regard to anybody's costs or their necessity in the theoretical pursuit of law reform. It is very interesting to find out what is the argument in favour of this legislation. It seemed to me that the best place to turn for some justification was the Law Reform Commission itself. It has recommended this reform. Presumably , it gave the grounds on which it recommended it. The Law Reform Commission, headed by Justice Kirby, justifies the need for this reform upon what it says is widespread dissatisfaction which exists amongst insured people who make claims. It gives statistics on the subject. It did a test on the subject in 1977 when it was first starting on the reference. Those statistics show that during the testing period in 1977, 2.08 per cent of all claims were rejected. Just over 2 per cent of all claims were rejected. That is is not a bad record for insured people, I would have thought. Ninety-eight per cent of claims are paid without dispute by the insurance industry. That might have been thought to be a commendation of the insurance industry in this country but that did not satisfy the Law Reform Commission, Mr Justice Kirby or the Attorney-General. Let us look at the matter more closely. Of the little over 2 per cent of the claims that were rejected, approximately 78.5 per cent were rejected because the loss was not even covered by the policy. In other words, people had made claims for losses which were simply not covered by their contracts. Is it any wonder at all that those claims were rejected? But apparently that is some ground-it could be the only ground-for this widespread dissatisfaction. Are we to legislate for people who are so uninformed or who for other less worthy reasons are prepared to make such claims? That leaves only 0.5 per cent of claims rejected upon grounds related to the substance of the policies. There may have been some genuine disputes about those claims, and that is understandable. But the number is very small indeed. So it must be concluded that only a minute proportion of the claims is unfairly or improperly rejected. In those cases there are mechanisms for their resolution. The one and only reason given by the Law Reform Commission is widespread dissatisfaction. On its own research, its own statistics, it has lamentably failed to establish that claim. I regret to say that this is a classic case of law reform for its own sake-what I call theoretical law reform. When we give the Law Reform Commission a reference, of course it will come up with recommendations that something be reformed. Whoever recommends anything to put itself out of business? The Attorney-General, we know, is a professional law reformer who is determined to have some statistics of his own to show the number of law reforms he has introduced. He brings forward this proposal for the same theoretical reasons. Senator Jack Evans —Who gave them the reference? Senator DURACK —I certainly did not. Senator Gareth Evans —Your Liberal predecessor, Mr Ellicott, did. Senator DURACK —If he wanted to give the Law Reform Commission the reference, that is fair enough. Presumably he thought it may discover some good reasons for making a recommendation. The Law Reform Commission did not come up with any statistics which established the need for reform. Because a reference is given to a law reform commission does not mean to say that it has to come up with reform. It could say that it is not necessary. The Commission did not say that. This is something we have learned about the Law Reform Commission. It seems that if we give it a reference it will recommend reform, whether it is for its own sake or for good reasons. The Law Reform Commission in this case has not come up with any statistics which justify the major reforms it proposes in this case. I have already said that this proposal applies to only two-thirds of the insurance business. It does not apply to State insurance. Another important point to remember is that the State Government insurance offices have a predominant part of the consumer type of insurance, such as motor vehicle and household insurance. These are the types of policies that are the target of the Bill. Yet those offices will not be affected unless the Attorney-General manages in the future to come to some agreement with the States that they will pass complementary legislation. I have already dealt with that matter. He has not embarked upon that exercise. I would like him to tell us what hope he thinks he has of getting the States to agree to complementary legislation of that kind. As I have already said, the private insurers will be substantially disadvantaged as against State insurers. Another problem with the legislation-I think I foreshadowed it earlier-is that the class of insurance business which it covers is diverse. State insurance is excluded as well as other forms of insurance, such as marine insurance and medical insurance. Probably not much more than 50 per cent of the insurance business of this country will be covered by this Bill. But that section of the market itself is diverse. Certainly a lot of it deals with consumer insurance. Senator Hill has indicated that some small businesses and even corporations will be covered. Perhaps they need a little protection by legislation of this kind. But the fact of the matter is that it also applies to large businesses which have some particular insurance requirements which require special treatment. They certainly do not need the sort of protection that this Bill provides which, by and large, is directed to consumer needs. I concede that there are problems in trying to divide it and to make it apply only to consumers. But generally speaking, it is only consumers who really may be thought to require this type of assistance. As I said, there are many large consumers in this field. For example , the insurers of Broken Hill Proprietary Co. Ltd and other large companies will still be affected by this legislation. They will all be affected by higher costs of insurance for something they simply do not need. I have also indicated that the Australian insurance market is not an entity unto itself. It relies heavily on reinsurance. At present Australian insurance law is similar to the law in other countries where major reinsurance is undertaken. It is easy to find reinsurance for Australian policies at competitive prices because of that fact. That will be changed and that, again, will add to the costs that people seeking insurance will have to pay. So the Australian insurance law will be radically altered and as a result there will be costs for everybody who seeks insurance. Indeed, the question of reinsurance has been found to be a problem in New Zealand, which has enacted the same sort of amendments. For all of the reasons which I have outlined, the Opposition will oppose this measure and will vote against the second reading of it. We do not think that the small benefits which it may have will justify this exercise, that they are outweighed by the costs to people who seek insurance. For those reasons we believe the legislation should be opposed. It is largely theoretical; it is reform for reform's sake. If, unfortunately, as appears to be the case from the attitude of the Democrats, this legislation is passed, it needs to be extensively amended. Although the Government has proposed 59 amendments, there are still other major amendments which should be made to it. Senator GARETH EVANS(Victoria-Attorney-General)(9.23) —in reply-It has been a very nostalgic half hour listening to Senator Durack speaking on the Insurance Contracts Bill 1983. It reminds one compellingly and acutely of all the desolate lethargy that so characterised the performance of the previous Government in the law reform area; that profound apathy to social ills that it confronted; that profound indifference to the available solutions; that profound inability to move from a perception of solutions, on those rare occasions they did arise, to actual implementation in action. What we have heard tonight is an apologia for exactly the sequence of events and exactly the kind of attitudes that brought down the previous Government and will ensure that that previous Government is never, in the lifetime of any of the incumbents occupying its present front bench, likely to secure another period in office. This Government makes no apology for its conviction and belief that not all reform is dangerous. We make no apology for taking the view-resisting the kinds of propositions put forward by Senator Durack-that nothing should ever be done for the first time, the doctrine of the dangerous precedent, as espoused by the greatest philosopher of inertia that this Parliament has produced for many years . We confront these social problems, economic problems and community problems as they arise. We look at the sorts of solutions that are advanced and we do something about them. If that exposes us to the labels of 'reformers' and, worst of all 'law reformers', they are lables, once again as is so often the case, we will wear with pride. We do acknowledge that not all is for the best in the best of all possible worlds so far as the present situation of the law, and particularly the law as it relates to consumers, is concerned. The need for revision of the law, the need for fundamental and substantial changes to the law in this area, was amply acknowledged by Senator Durack's predecessor in that high office of Attorney-General, Mr Ellicott, in 1976 when he referred to the Law Reform Commission the whole subject of insurance law; that reference has borne fruit in this particular Bill, based as it is on the report of the Commission of 1982 and the companion Bill, to be debated in the House of Representatives shortly and then to come back into this place, on insurance agents and brokers. Such is the command of the propositions advanced by the Law Reform Commission and the legislation that is before this chamber tonight that I noticed at least one Opposition speaker, Senator Watson, totally confusing the subject matter of the two Bills and treating us for at least five minutes of his speech to an account of the deficiencies of the agents' and brokers' proposals, rather than those which bore upon the law of insurance contracts which is addressed in this legislation. Maybe he was just being discursive, as a second reading debate allows him to be. But it was indicative, I think, of the prejudiced and ideological way in which the Opposition has approached this Bill, rather than in terms of looking very carefully at its merits. The need for legislation in the area of insurance contracts was amply demonstrated by the Law Reform Commission. It pointed to the archaic quality of insurance law and the bewildering variety of sources of that law-common law, imperial law, federal law in places, State law-filling up the gaps. It referred to the utter inability of any consumer in particular, but also small business people, entering into insurance contracts in situations of unequal bargaining power, quite unable to get civilised and sensible protection from that law- lopsided in its application so far as consumers are concerned; not particularly helpful even, in many instances, to insurance companies which faced, as did the consumer, a legal regime governing this area of the law which, as I say, was bewildering in its complexity, wildly out of date and varying, what is more, quite substantially as between the various jurisdictions in Australia. That is a situation of no help at all to those insurance companies which are and will continue to operate nationally. The kind of raw statistics- Senator Archer —So why make it worse? Senator GARETH EVANS —Senator Archer is one of the great proponents, of course, of the proposition that all reform is dangerous and that nothing should ever be done for the first time. We hear his neanderthal ramblings to that effect periodically from the back bench. The voice from the cave will not be heard on this occasion by the Government nor, I hope, by the Australian Democrats, who have appreciated the necessity for doing something in this area of the law. The raw statistics, such as they are and as available as they are, on the number of claims that are actually rejected by insurance companies, do not bear testimony fully to the problems in the law from the point of view, in particular, of consumers and policy holders as they presently exist, not least because one of the fundamental problems is the bewildering varieties of cover that are provided in insurance contracts offered by different companies purporting to cover the same sorts of risks. There is not much point in making a claim when one discovers that one does not have protection for the particular kind of risk against which one thought one was covered, because one might have had that same protection in another policy that one might previously have held. This is one of the problems, of course, that is sought to be addressed by this legislation in its provision, in particular, for a standard minimum cover to be provided. It is one of the reasons why this legislation will work very desirable changes. Indeed, that is a state of affairs that is recognised, despite all the huffing and puffing we have heard from the other side, by the insurance industry , an industry which has not been anxious to prostrate itself in its enthusiasm to embrace this legislation, but which has, nonetheless, appreciated a number of the limitations in the existing law, a number of the deficiencies and the need, in a number of areas, to get the law right in everybody's interests not only on the insured side of the contractual equation, but also on the part of the insurers. I notice with some considerable pleasure that the representative of the Insurance Council of Australia in the gallery tonight is nodding his head sagely, if not with enormous enthusiasm, at the force of what I am saying. I make the point that what is involved in this legislation is the objective of providing for Australia a code of insurance contracts law that is comprehensive, uniform and national in its coverage. It is not designed, of course, to get into the areas of health insurance and workers compensation insurance which, although bearing the title of insurance, are constructed quite differently so far as their legal regimes are concerned and give rise to quite different policy problems. The legislation is intended to apply nation-wide. Why then, the parrot cry rises from the other side, did we exclude the States, a point that was made by every speaker, I think, on the other side of this chamber. We did so for the obvious reason that the Constitution, as it is presently constructed, does not allow the Commonwealth to legislate with respect to State insurance. There is a power vested in the Commonwealth Government to legislate with respect to insurance, but that is immediately qualified by a provision which says that we cannot legislate with respect to State insurance. Exactly the same provision exists in the area of banking and excludes State banking from what is otherwise a comprehensive legislative power vested in the Commonwealth. What we can do, and all we can do, is pass legislation governing the private insurance sector and the situation in the Territories, in particular the Australian Capital Territory. What we cannot do is make this new law stick so far as the State Government insurance offices are concerned, and I readily acknowledge that they occupy a massive proportion of the market, particularly so far as consumer contracts are concerned. Senator Archer —Thirty to forty per cent. Senator GARETH EVANS —However, I draw to Senator Archer's cynical attention-if the intelligent input he has given this legislation is such as to justify the description of cynicism-and to Senator Durack's attention and to the attention of every other speaker on the other side who has made galumphingly this point about the absence of application to State legislation, that of course it is the Government's intention to have the Bill picked up and applied with complementary State legislation. That has been our intention from the outset. That is the basis upon which we have been discussing this legislation quite extensively and over a long period with the States. That is the basis on which it has been before the Standing Committee of Attorneys-General on a couple of occasions. That is the basis on which the States themselves have been keen to co-operate in the legislative process we are now undergoing. That is the basis on which we engaged in consultation with the specific State Government insurance offices themselves, in particular, I am able to say, from South Australia, Queensland, New South Wales and Victoria. Specific consultations have been held between officers of my Department and, in some instances, Treasury to follow up the submissions that have been made by those offices and by those State companies. I can say with some confidence that, despite particular reservations which are held by those offices in exactly the same way as reservations are held and will continue to be held by various areas of the private sector, by and large the State offices are now happy with the terms of the legislation in which it comes forward. They were not completely happy with the legislation in the form in which we first brought it down last December. They wanted further consultation and further input, in exactly the same way as did the private insurance industry and, in particular, general insurance. Life insurance seems to have been much more relaxed about this all along. The State offices wanted that consultation. We have been through that consultative process. We are still going through it and will continue to so far as the States are concerned. We are as confident and as optimistic as we can be that, on the rate of progress so far, we will have in due course-I hope sooner rather than later-a genuinely national, comprehensive, uniform system of law governing insurance contracts in both the public and the private sectors. It is very difficult indeed to justify an insurance law regime which differs in its application as between the private and public sectors. I do not begin to offer such a justification. I simply offer the hope and the expectation that co-operation will come forward from the States and the insurance offices within those State systems because they recognise, as we all do-except the neanderthals opposite-the necessity for rationalisation, modernisation and clarification of this area of the law. We have been charged with introducing legislation which will add dramatically to the cost burdens that are borne by the industry and which will flow through to higher premiums for the consumers. That is not a position we expect to apply on any significant scale at all. I think a particular cost concern of the industry which might well have flowed through in that respect was the proposed procedure governing the issue of cover notes. A direct and immediate cost implication could be seen in the additional obligations that were proposed for insurers in the draft legislation put down last December. The way in which those provisions have been rewritten in the light of the consultations that have occurred will, I think, take a lot of the pressure off in that respect. Indeed, one can imagine that, with the move toward standard cover that we hope will be in many ways the central and most lasting achievement of this legislation, it will be possible in the future to imagine the situation of reduced cost burdens upon the industry. Maybe that is being too optimistic, but certainly there is no ground for the gloom, pessimism and general atmosphere of negation and hostility which the Opposition has brought to its contribution to this legislation. Finally, let me say something more general about the consultative process that we have engaged in so far as this legislation is concerned. We have been criticised, and criticised roundly and noisily, by those opposite for the way in which the legislation has been handled and, in particular, for the number of amendments that have now been brought forward. I remind the Senate that the Bill did not just simply spring out of the clear blue sky. It was very much the product of the recommendations of the Australian Law Reform Commission. The Law Reform Commission's recommendations, in turn, were based on a very long and extensive period of consultation with industry. Although it must be said that the industry was not totally happy with the product of the Law Reform Commission in every respect and made its voice clear in that regard, the industry did acknowledge and has continued to acknowledge that the Law Reform Commission did not do just some sort of academic pie in the sky job in relation to this legislation, of which it has been accused by Senator Durack and others, but that by and large it was a careful, thorough and sensitive job which reflected not only the need to redress some of the imbalance which has traditionally applied in insurance law as between policy holders and the companies but which also did a great deal to get that law right, in everybody's interest. That process of consultation did not simply stop with the production of the report and the acceptance of the basic thrust of that report by the Government. The Bill was forshadowed widely in the latter part of last year as likely to be based on the Law Reform Commission's report. Discussions took place with relevant interests at that time. The Bill was then introduced into this place on 1 December 1983, just over six months ago. That is how long this Bill has been lying around. It is a very large and complex Bill with many different clauses. That is how long the Opposition has had to get its act together. That is how long the insurance industry has had to react to it. We gave a period for responses and further submissions after the initial legislation was put down-a period expiring, I think, in February. Since then there has been a very active process of consultation involving discussions both with officers and at a ministerial level, consuming many hours in both respects. What we have come up with in the 59 basic amendments that were circulated the other day is a series of proposals which do not significantly weaken the Bill so far as consumers are concerned. I do not think Senator Watson's suggestions in this respect, emerging, as he did, as the triumphal defender of the consumers alone among his own back bench, or his aspersions on the Bill as having abandoned its commitments to consumers are justified. While not abandoning that basic commitment, what the Government has done as a result of that further consultative process is try to meet to the extent we possibly could the legitimate and practical concerns of the insurance industry. As I am sure will be acknowledged by the insurance industry representatives here tonight-I am sure their representatives are not keen any longer to not their heads, shake them or do anything else for fear of ending up in Hansard-the Government has bent over backwards to try to accommodate the general concerns insurance companies have. The impression that I have certainly had is that while, like all good lobby groups and good representatives of industries, they will fight the battle up until the last body in sight in order to secure the optimal position for their side of the argument, there is an acknowledgement that what we have is a basically fair and balanced product which reflects the very real concerns that were felt by the insurance industry about the unworkability and, indeed, the over-reach of certain clauses of the Bill. There are many amendments, on any view-59 of them. Many of those are of a slight, technical, drafting or repetitive kind. There are only half a dozen areas of the legislation which have been subjected to any really significant change, and it is appropriate to debate those in the Committee stage rather than now. However, what I would seek to do, Mr Acting Deputy President, is to incorporate in Hansard a statement in the nature of an outline of the amendments to be moved on behalf of the Government. It has been circulated to those honourable senators opposite who last week indicated an interest in this debate, which I believe deserves a wider immortalisation in Hansard for those who might be tempted at some stage to follow what the rest of the debate is about. So I seek leave, Mr Acting Deputy President, to incorporate an explanation of the subject matter of those 59 amendments in Hansard. Leave granted. The document read as follows- Outline of Amendments to be Moved on Behalf of the Government In introducing the Insurance Contracts Bill 1983 last December, I invited public submission to be made on its detailed provisions and indicated that consultations would be held with insurance industry and consumer and other relevant groups. A considerable number of detailed written submissions have been received from both private and State insurers, as well as from insurance industry representative groups and consumer organisations. Consultations have also been held with a wide cross section of such bodies. On the basis of these submissions and consultations and after a review of the legislation generally, the Government proposes to make a number of amendments to the Bill. I believe that these amendments, which I will outline for Honourable Senators, will go a long way towards reassuring members of the insurance industry that the proposed legislation will not promote faudulent conduct and will not protect unscrupulous insureds from the consequences of their conduct. I also believe that these amendments will strengthen one of the underlying principles of the Bill which is to strike a fair balance between the interests of insurers and insureds. There is, at this point, an important matter concerning the scope of the operation of the Bill which requires mention. The Bill does not apply to State insurance, even to the extent possible under the Constitution. An amendment now proposed by the Government will also exclude Northern Territory insurance from its scope-on the basis that the Northern Territory should be treated in the same way as a State. Nevertheless, I am very firmly of the view that private and Government insurance offices should, in competing for business, be subject to the same legal rules and constraints. Any other situation could result in unfair advantages to one or other group of insurers. For this reason I have been pursuing, through the Standing Committee of Attorneys-General, the question of complementary State and Northern Territory legislation to apply the provisions of this Bill to State and Territory insurance. Those discussions have revealed general agreement with the principle of equality I have just stated. This is, in fact, already the position in Victoria by virtue of the State Insurance Office ( Extension of Franchise) Act 1983. In addition, the Victorian Government is taking steps to prepare State legislation applying the Commonwealth Bill ( together with any subsequent amendments) to the State Insurance Office. With regard to the remaining State and Northern Territory insurers, I can report that progress is being made and I am confident that there will be agreement to apply the Bill to their insurance offices. I will now outline briefly the effect of the major amendments to the Bill. REASONABLE PERSON IN THE CIRCUMSTANCES In ascertaining what it is reasonable to expect the insured to know or believe, certain provisions of the Bill require the question to be judged by reference to what a ''person in the circumstances of the insured could reasonably be expected '' to believe or to know to be a matter so relevant. Insurers have expressed concern that this is a subjective test and that they will be required to ascertain what the insured actually knew or believed on each occasion. While I consider that some of the insurers' fears are not entirely justified, the amendment now proposed will clarify the operation of the test. In clause 22, for example, the test will provide that the insured will be required to disclose those matters which he knows to be relevant to an insurer in his decision whether to accept the risk as well as those facts which ''a reasonable person in the circumstances could be expected to know to be a matter so relevant''. Of course, an examination of what a reasonable person would know cannot take place in a vacuum and a court would not be precluded from considering an insured's position and circumstances in applying the test. Amendments in similar terms will be made to clauses 24 (Ambiguous questions), 27 (Certain statements not misrepresentations), 36 (Notification of certain provisions which provide less cover than required by Standard Cover Regulations) , 47 (Pre-existing condition) and 47A (Pre-existing sickness or disability). POWER OF COURTS TO AMELIORATE EFFECT OF FRAUDULENT MISREPRESENTATION BY INSURED Where an insured fraudulently fails to comply with the duty of disclosure or has made a fraudulent misrepresentation before the contract is entered into, the insurer may avoid the contract. Alternatively, it may choose to reduce its liability in respect of a claim to the amount that would place the insured in the position he would have been in if the breach had not occurred or the misrepresentation not been made. Where the insurer chooses to avoid the contract , a court would be empowered under the existing clause 32 to disregard that avoidance if it would be harsh and unfair not to do so. In order to ensure that clause 32 does meet the ''hard case'' and will not, as some insurers have claimed, encourage fraudulent conduct by insureds, the limits of the power and the circumstances in which it may be exercised have been set out in greater detail. Under the amended clause 32, a court will have power to: disregard avoidance of a contract of insurance for fraudulent non-disclosure or misrepresentation when it would be harsh and unfair not to do so; and allow the insured to recover the whole, or such part as the court thinks just and equitable in the circumstances, of the amount that he would have recovered had the contract not been avoided. These powers may only be exercised where the court finds that, in respect of the loss that is the reason for the matter coming before the court, the insurer has not been prejudiced by the fraud or, if prejudiced, the prejudice is minimal or insignificant. It must also balance the culpability of the insured in his fraudulent conduct against the loss he would suffer if the court were not to disregard the avoidance. Application of this test should ensure that the insured suffers for his fraudulent actions but not to an extent which is entirely inappropriate or excessive. Consequently, for example, an insured who fraudulently failed to disclose that he had been fined for speeding could ask the court to disregard any avoidance of the contract if he were to suffer a loss (totally unrelated to his fraud) by having his vehicle written off while parked. Clause 56, which applies where an insured has made a fraudulent claim, empowers a court to disregard an insurer's failure to pay the claim and order the insurer to pay the insured such amount of the claim as it considers just and equitable. Again, it is recognised that, like clause 32, the court's power should be defined more carefully. The amended clause 56 provides that the court may exercise its power only if a minimal or insignificant part of the claim is made fraudulently and non-payment of the remainder of the claim would be harch and unfair. In exercising the power, the court must have regard to the need to deter fraudulent conduct as well as any other relevant matter. COVER NOTES Insurers have expressed concern that the provisions of the Bill such as clauses 23 (duty of disclosure), 38 (insurance terms) and 45 (average provisions) requiring information to be given to the insured will impose an unduly onerous burden upon them in so far as interim contracts of insurance (cover notes) are concerned. This, they say, is because cover notes are usually issued over the telephone and with the minimum of formality. Even if, as is permitted by clause 69, insurers give the information over the telephone and follow it up with written notice, they argue that their administrative costs will be increased considerably. It has been suggested that not only will premiums increase but that cover notes may, in many cases, be withdrawn altogether. In view of the fact that cover notes fulfil an important social need in providing readily available short term cover, it is proposed to delete most of the present requirements that the insurer give information to the insured before the cover note is entered into. However, the requirement that the insurer inform the insured of the duty of disclosure under clause 23 will be retained in view of the serious consequences the insured may suffer if he does not make full disclosure. Insurers should not be unduly burdened by this requirement. Of course, insurers will have to comply with all provisions requiring the provision of information before the replacement contract is entered. AVERAGE PROVISIONS The amendments will take account of the current practice in the insurance industry not to rely on average provisions in a contract of insurance unless the sum insured is less than 80% of the value of the property. Consequently, clause 45 will be amended to provide that an average provision (if included in a contract of insurance at all) will only come into operation where the sum insured is less than 80% (rather than 70% as clause 45 presently provides) of the value of the property at the time the contract was entered into. POWER TO EXCLUDE CERTAIN CONTRACTS FROM OPERATION OF BILL In discussions with the insurance industry, it has become apparent that the operation of clauses 47 and 53 may not be appropriate in respect of all types of insurance contract. It may not, for example, be appropriate that an insurer should, under a contract of commercial insurance, be liable under clause 47 for pre-existing defects in materials used by an insured who is a building contractor. The insured may, in those circumstances, have rights to proceed separately against the supplier of faulty goods. Similarly, an insurer may wish to vary a contract of commercial insurance where the risk changes, e.g. an insured changes his warehouse to a manufacturing workshop. To take account of these situations, clauses 47 (insofar as it applies to pre-existing defects or imperfections) and 53 have been amended to enable certain classes of contract to be excluded from the operation of the clauses. EXCLUSION OF EXPORT FINANCE AND INSURANCE CORPORATION AND FRIENDLY SOCIETIES The amendments will exclude the Export Finance and Insurance Corporation (EFIC) and friendly societies from the operation of the Bill. EFIC has been involved in the provision of export credit and investment insurance, but its business does not involve competition with private insurers and does not embrace life and general insurance which were examined by the Law Reform Commission. Friendly societies differ from other insurers in that they are non-profit making organisations offering insurance for their own members only. The benefits of that insurance are determined by the society's rules. Friendly societies have been the subject of specific legislation in the States. This has been tailored for societies and, in some respects, is inconsistent with the Bill. I believe that the Bill as amended should substantially allay fears expressed by insurers. It will, nevertheless, operate as a major reform, to bring a large measure of equity and equality to the process of entering into insurance contracts-a field that has sadly lacked these traits for over a century. Senator GARETH EVANS —The further three amendments which were circulated today, although they attracted some further indignation from various speakers, represent really very minor changes designed primarily to accommodate the Queensland Government, with which consultations took place as late as Thursday of last week. One of the amendments to clause 10 is simply designed to insert the correct name of health organisations, instead of medical benefits organisations, in order to reflect the changes worked by recent Medicare legislation. The amendment to clause 36 is designed to further accommodate the interests of the insurance industry in having reasonable time to react to legislative change by extending the period of notice before standard cover regulations come into effect, from 28 days to 60 days, to ensure, as it were, the insurers have adequate opportunity to gear up for new provisions. It is certainly an approach that has been sought by the Insurance Council of Australia and by private insurers as well as the government bodies. The amendment to clause 58, the last of the three amendments moved today, is really just to clarify the situation about whether or not premiums are payable in those circumstances in which a contract is deemed to continue in force because a notice of expiration has not been sent as required by legislation but a claim is then made and paid out on. It is an acknowledgement of the fact that if a claim is paid out in those circumstances, at least the insurance company should in equity have the benefit of its premium or such proportion of the premium as is attributable to the period for which the contract has been allowed in that way to run on. So they are essentially very minor matters. They are the only ones which are new and to which the Senate has had to accommodate itself today. The other amendments, far reaching as they were, were circulated and fully explained in the accompanying documentation which was distributed last week. Although I apologise, as always, for burdening the Senate with complex legislation and with complex amendments to complex legislation, at relatively short notice, the legislative process has to move on. We feel that in the course of this legislative process, we have been as flexible and as responsible as we could be. That in turn contributes to the number of amendments with which the Senate must now deal, simply because we have been responsive. We believe that it is not unfair to ask the Senate, given the lapse of time, to deal with this very important reforming legislation in such a period as to enable it to get on the statute books before we rise for the winter recess. I am disappointed that the Opposition has not seen fit to support this measure in principle, not least since one of its own Attorneys-General was in many ways its founding father-not its only begetter, but certainly a very important begetter of it. It is a great disappointment that the Opposition should have adopted this dog in the manger attitude. It is a familiar response, though, and I guess that it will be familiar for many years yet to come, if Opposition members continue adopting this approach in opposition to legislation, in the same way as they did when in government. I am grateful to the Australian Democrats for their support of this measure. They at least, on this occasion, have been far-sighted enough and clear-sighted enough to appreciate the significance of this legislation. With their help, if not that of those opposite, I wish the Bill a speedy passage. Senator WATSON(Tasmania) —Mr Acting Deputy President, I claim to have been misrepresented by the Attorney-General (Senator Gareth Evans). The Attorney- General accused me of indulging in a discursive debate by confusing the issues before the Senate with another matter, the Insurance (Agents and Brokers) Bill. Had the Attorney-General listened, or even at least been in the chamber, he would be aware that my part of the criticism was directed to the back-down from his earlier lofty ideals of protecting the insured, the small policy holders, and backing down to the whims of the insurers' interests. My reference to the Insurance (Agents and Brokers) Bill was to the effect that I hoped that its withdrawal from the earlier debate was not to take out some of its effectiveness , as the Attorney-General has done as a result of the numerous amendments to the Insurance Contracts Bill. Question put: That the Bill be now read a second time. The Senate divided. (The Deputy President-Senator D. J. Hamer) Ayes . . . . . . . . . . . 27 Noes . . . . . . . . . . . 22 —— Majority . . . . . . . . . 5 —— Bolkus, N. Jones, G. N. Coates, J. McIntosh, G. D. Coleman, R. N. Macklin, M. J. Colston, M. A. Mason, C. V. J. Cook, P. F. S. Primmer, C. G. Crowley, R. A. Ray, RobertElstob, R. C. Richardson, G. F. Evans, Gareth Robertson, E. A. (Teller)Evans, Jack Ryan, S. M. Georges, G. Sibraa, K. W. Giles, P. J. Tate, M. C. Grimes, D. J. Walsh, P. A. Haines, J Zakharov, A. O. Hearn, J. M. Archer, B. R. MacGibbon, D. J. Baume, Peter Martin, K. J. Bjelke-Petersen, F. I. Messner, A. J. Boswell, R. L. D. Rae, PeterCollard, S. J. Reid, M. E. (Teller)Durack, P. D. Scott, D. B. Guilfoyle, Dame Margaret Teague, B. C. Hamer, D. J. Townley, M. Hill, R. Walters, M. S. Jessop, D. S. Watson, J. O. W. Lajovic, M. E. Withers, R. G. Button, J. N. Crichton-Brown, N. A. Childs, B. K. Chaney, F. M. Reynolds, M. Kilgariff, B. F. Foreman, D. J. Lewis, A. W. R. Maguire, G. R. Carrick, Sir JohnMcClelland, Douglas Missen, A. J. Question so resolved in the affirmative. Bill read a second time. Clauses 1 to 31-by leave-taken together. Senator GARETH EVANS(Victoria-Attorney-General)(9.55) —by leave-I move: (1) Page 2, clause 3, lines 1 to 10, leave out the clause. (2) Page 3, clause 8, line 8, after 'common law', insert '(including the law merchant)'. (3) Page 3, clause 10, after paragraph (b) of sub-clause (1), insert the following paragraph: '(ba) of insurance entered into, or proposed to be entered into, by a friendly society or by the Export Finance and Insurance Corporation;'. (4) Page 3, clause 10, lines 35 to 38, leave out sub-clause (2), insert the following sub-clause: '(2) This Act does not apply to or in relation to contracts and proposed contracts of insurance entered into, or proposed to be entered into, in the course of State insurance or Northern Territory insurance, including contracts and proposed contracts entered into, or proposed to be entered into, by- (a) a State or the Northern Territory; and (b) some other insurer, as joint insurers.'. (5) Page 4, clause 11, sub-clause (2), line 2, leave out 'by way'. (6) Page 4, clause 12, after the definition of 'binder' in sub-clause (1), insert the following definition: ' ''broker's placing slip'' means a document that- (a) is evidence of a contract of insurance; and (b) bears a notation by an insurer setting out the extent of the insurance cover that the insurer agrees to provide under the contract;'. (7) Page 4, clause 12, after the definition of 'duty of the utmost good faith' in sub-clause (1), insert the following definitions: ' ''friendly society'' means a society registered under a State Act or a law of a Territory providing for the registration of friendly or benefit societies; ''guardian'', in relation to a person who has not attained the age of 18 years, means a person who acts in the place of a parent of the person but does not include a person who so acts only for limited or particular purposes or periods; '. (8) Page 4, clause 12, sub-clause (1), lines 32 to 36, leave out the definition of 'policy document', insert the following definition: ' ''policy document'', in relation to a contract of insurance, means- (a) a document prepared by the insurer as evidence or the contract; or (b) a broker's placing slip that constitutes evidence of the contract, and includes, in relation to an interim contract of insurance, a document of the kind usually known as a cover note prepared by the insurer or by an insurance intermediary with the authority of the insurer;'. (9) Page 4, clause 12, at the end of sub-clause (1), add the following definition: ' ''writing'' means writing in the English language or in another language agreed between the insurer and the insured;'. (10) Page 5, clause 12, at the end of the clause, add the following sub-clause: '(9) A reference in this Act to the entering into of a contract of insurance includes a reference to- (a) the making of an agreement by the parties to a contract of insurance to renew, extend or vary that contract; or (b) the reinstating of a previous contract of insurance.'. (11) Page 6, clause 15, at the end of the clause, add the following sub-clause: '(3) In deciding whether reliance by an insurer on a provision of the contract of insurance would be to fail to act with the utmost good faith, the court shall have regard to any notification of the provision that was given to the insured, whether a notification of a kind mentioned in section 38 or otherwise.'. (12) Page 6, clause 16, before paragraph (a) of sub-clause (1), insert the following paragraph: '(aa) any other Act;'. (13) Page 6, clause 16, lines 24 and 25, leave out sub-clause (2), insert the following sub-clause: '(2) Without limiting the generality of sub-section (1)- (a) that sub-section extends to relief from the consequences in law of making a misrepresentation; and (b) the nature of the relief to which that sub-section applies includes relief by way of variation, avoidance or termination of a contract.'. (14) Page 8, clause 22, lines 9 and 10, leave out paragraph (b) of sub-clause ( 1), insert the following paragraph: '(b) a reasonable person in the circumstances could be expected to know to be a matter so relevant.'. (15) Page 8, clause 23, after sub-clause (1), insert the following sub-clause: '(1A) If the regulations prescribe a form of writing to be used for informing an insured of the matters referred to in sub-section (1), the writing to be used may be in accordance with the form so prescribed.'. (16) Page 8, clause 24, paragraph (b), lines 38 and 39, leave out 'it would have been reasonable for a person in the circumstances of the person answering the question to have understood', insert 'a reasonable person in the circumstances would have understood'. (17) Page 9, clause 27, sub-clause (1), lines 20 and 21, leave out 'a belief that it was reasonable for a person in his circumstances to hold', insert 'a belief that a reasonable person in the circumstances would have held'. (18) Page 9, clause 27, sub-clause (2), lines 25 and 26, leave out 'a person in the circumstances of that person could reasonably be expected to have known', insert 'a reasonable person in the circumstances could be expected to have known '. (19) Page 10, clause 29, sub-clause (1), line 3, after 'contract', insert, 'for the same premium and on the same terms and conditions,'. (20) Page 11, clause 31, lines 29 to 32, leave out paragraph (b) of sub-clause (2), insert the following paragraph: '(b) where the sum insured (including any bonuses) is less than the amount so ascertained, the insurer shall either- (i) reduce, as from the date on which the contract was entered into, the premium payable to the amount that would have been payable if the contract had been based on the correct date of birth or correct dates of birth and repay the amount of overpayments of premium (less any amount that has been paid as the cash value of bonuses in excess of the cash value that would have been paid if the contract had been based on the correct date of birth or correct dates of birth) together with interest on that amount at the prescribed rate computed from the date on which the contract was entered into: or (ii) vary the contract by substituting for the sum insured (including any bonuses) the amount in dollars so ascertained.'. (1) Page 3, clause 10, line 25, leave out 'medical benefits organization or a registered hospital', insert 'health'. The amendments are amendments Nos (1) to (20 of the original amendments circulated by the Government and amendment (1) of the supplementary amendments circulated today by the Government. I believe all these amendments are uncontroversial. Amendments agreed to. Clauses, as amended, agreed to. Clause 32 (Court may disregard avoidance in certain circumstances). Senator GARETH EVANS(Victoria-Attorney-General)(9.57) —I move: (21) Page 11, lines 39 to 41, and page 12, lines 1 to 8, clause 32, leave out the clause, insert the following clause: Court may disregard avoidance in certain circumstances '32. (1) In any proceedings by the insured in respect of a contract of insurance that has been avoided on the ground of fraudulent failure to comply with the duty of disclosure or fraudulent misrepresentation, the court may, if it would be harsh and unfair not to do so, but subject to this section, disregard the avoidance and, if it does so, shall allow the insured to recover the whole, or such part as the court thinks just and equitable in the circumstances, of the amount that would have been payable if the contract has not been avoided. '(2) The power conferred by sub-section (1) may be exercised only where the court is of the opinion that, in respect of the loss that is the subject of the proceedings before the court, the insurer has not been prejudiced by the failure or misrepresentation or, if the insurer has been so prejudiced, the prejudice is minimal or insignificant. '(3) In exercising the power conferred by sub-section (1), the court- (a) shall have regard to the need to deter fraudulent conduct in relation to insurance; and (b) shall weigh the extent of the culpability of the insured in the fraudulent conduct against the magnitude of the loss that would be suffered by the insured if the avoidance were not disregarded. but may also have regard to any other relevant matter. '(4) The power conferred by sub-section (1) applies only in relation to the loss that is the subject of the proceedings before the court, and any disregard by the court of the avoidance does not otherwise operate to reinstate the contract.'. This represents a modification of the fraud provision as it affected contracts in their originally being entered into. A further fraud provision arises under clause 56 which is subject to exactly the same kind of amendment by the Government and will be greeted, I understand, with exactly the same opposition from the other side. In the original draft of clause 32 we had an attempt to come to grips with the practically rather devastating situation of an insurer being able to avoid a contract entirely and escape any obligation to meet a claim arising under it if it can establish that there has been a degree of fraud , however minute, in the information given by the insured to the insurance company in the original entering into of the contract. Clause 32 sought to implement a recommendation of the Law Reform Commission to enable the court, in circumstances where it would be harsh and unfair not to do so, to disregard an avoidance of the contract made under these circumstances and to reduce the amount of damages that would otherwise be awarded to the amount that the court thought just and equitable in the circumstances. This has been characterised, maybe even caricatured, by some in the Opposition as giving aid and encouragement to fraud, giving a statutory recognition of the legitimacy of fraud, even though the Bill in its original draft went on to refer to the need for the court, in exercising that power, to have regard in turn to 'the need to deter fraudulent conduct in relation to insurance'. Anyway, the Government had regard to continuing opposition of the insurance companies to this and took the view that there was a sense in which the legislation as we had originally drafted it gave insufficient weight to the need to deter fraudulent conduct of any kind and insufficient emphasis to the necessity for the fraudulent aspect of the original statement by the insured being very minute in its overall significance. What we have tried to do in this amendment is to introduce that quantitative dimension to it. What we have sought in particular is to rewrite the section in such a way-I will not try to read it fully into the record-as to throw the onus pretty squarely on the insured to establish that in all the circumstances he is being pretty hardly done by. In particular, the provision is now written in such a way that the court not only has to have regard to the need to deter fraudulent conduct but also-this is a further edition-'shall weigh the extent of the culpability of the insured in the fraudulent conduct against the magnitude of the loss that would be suffered by the insured if the avoidance were not disregarded'. There are a number of particular linguistic variations here which are designed to achieve the same result; that is, without resiling completely from the protections given to the consumer or those on the purchasing end of an insurance cover as contained in the original Bill, to redress the balance in a way that would make it more acceptable to insurance companies and also perhaps reflect a little more clearly and carefully our desire and that of the law not to give any aid or nourishment at all to fraudulent conduct. The Government thinks it has now got the balance right. It was arguable that the balance was tilted the wrong way in the original draft. Although the Opposition has foreshadowed some concern with this clause, the Government hopes it will agree to it in its amended form. Senator DURACK(Western Australia)(10.02) —The Opposition is implacably opposed to the whole principle enshrined in clause 32 of the Insurance Contracts Bill because it is a condonation of fraud. The object of it is to change the existing principle that where there is fraudulent misrepresentation or a fraudulent failure to disclose by any insured person the insurer may rescind the contract and dispose of the relationship between him and the person who has fraudulently induced him to enter into this contract of insurance. The Opposition thinks that is very fundamental to any contractual relationship. Certainly the insurance industry sees it in that light. As I have said, the Opposition is opposed to the existing clause in the Bill. It is true that the Attorney-General (Senator Gareth Evans) has proposed an amendment to that which involves some further proof by the insured person that there will not be any prejudice to the insurer as a result of the fraud that has been perpetuated. The amendment does not seem to understand that the presence of fraud completely sours any relationship. By giving the Attorney's amendment any comfort at all and encouraging fraud in a relationship, we are only going to provide for people to give it a try whereas they may not be prepared to do so if the risks are as tough as they are at the present time. The Opposition sees this attempt by the Government either in the shape of the existing clause or in its amendment, as still a condonation to some extent of fraud and thereby an encouragement to fraud and one which runs completely counter to ordinarily contractual relationships. There seems to be no reason whatever why it should be countenanced in any way in a contract of insurance. It is clearly a situation in which people will be prepared to try these things and they should not get any benefit whatever if they do so. Senator ARCHER(Tasmania)(10.05) —I too wish to express my surprise, disappointment and disapproval of the attempt to set up a contractual arrangement which is so naturally outside the normal contractual law. I do not see how it is possible to set up a reasonable working arrangement whereby one party can admit to fraud against the other. I do not see how we will be able to go along with the sort of proposition that says that one can be a little fraudulent in one's dealings and that one should be able to seek to take advantage of the person with whom one has a contractual relationship so long as one thinks one can get away with it. I would like to know whether it is the intention of the Attorney-General ( Senator Gareth Evans) to write this sort of clause into all other legislation or whether this legislation has been singled out because the insurance companies look like being an easy milking cow. I find it so extraordinary that it is even contemplated that a proper legal working relationship can exist when such an arrangement and balance exists between the parties. I ask the Attorney-General to explain to us where this piece of new law which is attractive to him has come from, why he feels it is appropriate and why he feels it is necessary for the rest of the insurance industry to incur this obvious cost so that people who have fraudulent intent may be paid at the expense of others. Perhaps the Attorney will give us some advice on that. Senator JACK EVANS(Western Australia)(10.07) —It would be wonderful if the world were painted in black and white, as one could very easily come down then on the side of-- Senator Archer —We would have no Democrats. Senator JACK EVANS —Exactly. The honourable senator has hit the nail right on the head. There would be no need for anybody to work out the difference between the two alternates, the two extremes. This is what we are endeavouring to do with this piece of legislation. There are two extreme positions. I say with commendation that the insurance industry is willing to accept what the Attorney- General (Senator Gareth Evans) has amended this clause to be and is willing to endeavour to make it work bearing in mind that the alternative is to come down on one side or the other. Under the old legislation an insurance company was always right; it was 100 per cent right and the consumer was 100 per cent wrong and had no remedy. In the case of many areas in which this clause will apply that was the situation. Senator Archer —It has been for the courts. Senator JACK EVANS —That is the point I am making. Under the old legislation the insured was 100 per cent wrong in every case. Under the new legislation it is not going to be the insured who is 100 per cent right all the time or the insurer who is 100 per cent right all the time. The courts will determine which of them is right and to what degree. Perhaps when that is taken into consideration, it is not going to be a matter of this law determining who is right and who is wrong. There will be redress to courts to determine which party is right and which party is wrong and because of that fact the Australian Democrats are willing to live with this provision, as is the insurance industry and as are the consumers. In fact, it would seem that all parties inside and outside this Parliament are willing to live with it except the Liberal Party of Australia. I am referring to all parties inside and outside this Parliament. Let us try it; let us see how it works; let us see how the courts handle it. As Senator Archer just implied, it is reformist legislation. It is breaking new ground. As I understand it, it is part of the function of the Australian Law Reform Commission to endeavour to see where new ground can be broken to the benefit of all Australians and to take away the 100 per cent benefit of just a few Australians that may exist under existing legislation. The Democrats will support this clause in the Bill. Senator GARETH EVANS(Victoria-Attorney-General)(10.11) —I do not want to prolong the debate. However, a further point should be made in response to Senator Archer's challenge to provide further and better argument. Essentially it comes, in its most succinct form, from paragraph 196 of the Australian Law Reform Commission report when the argument was put in these terms: Fraud certainly constitutes a serious breach of the duty of utmost good faith. But where that breach has not caused substantial harm, an attempt by the insurer to impose a much heavier loss on the insured would not necessarily demonstrate utmost good faith on its own part. Penalties are not normally imposed in other branches of the civil law. It is true that a party may avoid a contract for fraud, but, in areas other than insurance, that does not usually involve a penalty which far exceeds the harm caused by the fraud. The Commission goes on to discuss the principle of proportionality which it in fact is urging here. It states that the court, only in situations where it would be harsh and unjust not to do so, does have a capacity to readjust the balance. I add that there is precedent for this sort of thing already in insurance legislation. Persons are not normally in the habit of innocently mistaking their age when they make application for insurance contracts. However, section 83 of the Life Insurance Act does now, and has for many years, allowed misrepresentations to be made, whether innocent or fraudulent-most in fact would be fraudulent-but substitutes for the principle of avoidance of that contract a principle of proportionality when the mistake, fraudulent or otherwise, becomes known. Therefore, there has been an attempt earlier in insurance legislation to recognise that there are some contexts in which the rights of the parties should be readjusted so as not to denude completely insured persons of any redress whatsoever if they have been fraudulent to even the smallest degree. Against that sort of background and particulatly given the way the clause is proposed to be rewritten by the Government's amendment, there is not quite the justification for all the anxiety that has been expressed on this part by the Opposition. Senator ARCHER(Tasmania)(10.13) —I ask the Attorney-General (Senator Gareth Evans) whether that means we have three shades of fraud: One that is quite okay; one of which involves being guilty of misrepresentation and suffering the penalty that has been normal in the past; and the third, a stage further, where a person may be charged with doing it wilfully and knowingly and being committed under a criminal offence? Do we have three shades of fraud now? Senator GARETH EVANS(Victoria-Attorney-General)(10.13) —Life is a little more complex than some honourable senators of the Opposition would occasionally wish to acknowledge. The reality is that from an insurance company's point of view what it is concerned to be able to do is to avoid contracts where, had it known of the fraud involved, it would not have accepted the risk. That has always been the touchstone in practice that has been applied by reputable insurance companies in the only circumstances in which they have really relied in their rights when fraud comes to light. What we are trying to do really is to build that kind of quantitative principle into this. I know it makes it difficult to be absolutely precise when building in a weighing and balancing principle of this kind. The real world does demand flexible solutions to what are in fact legitimate problems. Amendment agreed to. Clause, as amended, agreed to. Clauses 33 to 37-by leave-taken together. Senator GARETH EVANS(Victoria-Attorney-General)(10.15) —In relation to these clauses the Government moves four amendments; amendments Nos 22 to 24 on sheet 37 and amendment No. 2 on sheet 38. The effect of the amendments, I think, has been sufficiently explained in my second reading reply. I move: (22) Page 12, clause 33, lines 9 to 18, leave out the clause, insert the following clause: Non-disclosure or misrepresentation by member of scheme '33. This Division extends to the case where there was a failure to comply with the duty of disclosure, or a misrepresentation was made, to the insurer under a blanket superannuation contract in respect of a proposed member of the relevant superannuation or retirement scheme as though- (a) the insurance cover provided by that contract in respect of that member were provided by an individual superannuation contract between the insurer as insurer and the trustee for the purposes of the scheme as the insured; and (b) that contract had been entered into at the time when the proposed member became a member of the scheme.'. (23) Page 13, clause 36, lines 12 and 13, leave out 'a person in the circumstances of the insured could reasonably be expected to have known', insert 'a reasonable person in the circumstances could be expected to have known'. (24) Page 13, clause 37, line 30, leave out 'a risk is a prescribed risk', insert 'an event is a prescribed event'. (2) Page 13, clause 36, line 24, leave out '28', substitute '60'. Amendments agreed to. Clauses, as amended, agreed to. Clause 38 (Notification of unusual terms). Senator GARETH EVANS(Victoria-Attorney-General)(10.16) —I think the Opposition and the Government are both trying to do similar things with clause 38. However, we like our amendment better. The point in issue here is covered by clause 71. We do not want any further amendment other than the one we are proposing to clause 71, which in our view will have the same effect as the proposed amendment to clause 38. What we are trying to achieve is a situation where a document, including a policy document, is given to a broker not acting under a binder; that is to say, a broker who is the insured's agent only. The insurer under those circumstances need not give a copy to the insured. We say that giving information or a document to the insured's agent is sufficient. We acknowledge that but we think we have achieved it by clause 71. We would like to do it in that way. I move: (25) Page 13, clause 38, lines 38 and 39, leave out paragraph (a), insert the following paragraph: '(a) the insurer gave to the insured a copy of the policy document or of the provision; or'. Amendment agreed to. Senator DURACK(Western Australia)(10.17) —I now move the Opposition's amendment to clause 38. I move: (2) Page 13, clause 38, after paragraph (b), insert the following new paragraph : '(c) the contract was arranged by a broker acting as the agent of the insured.' . Clause 38 prescribes that an insurer will not rely upon an unusual term in a policy unless notice of it was provided at the time the policy was effected. The object of this is to extend it to where the policy was effected by a broker acting for the insured so that in those circumstances the broker would be responsible to notify the client of anything unusual. That is a simple extension of that particular benefit to where there is a broker. Senator JACK EVANS(Western Australia)(10.18) —The Australian Democrats are concerned about this amendment because we feel that neither the insurer nor the broker would necessarily be deemed liable. I would appreciate comment from Senator Durack on that matter. Senator GARETH EVANS(Victoria-Attorney-General)(10.19) —While the shadow Attorney-General, Senator Durack, is getting his thoughts together, I repeat that we regard this provision as redundant in the event that, as we hope, our further amendment to clause 71 (2) is accepted. We need an amendment later on to fix up, as a drafting matter, an inconsistency that presently exists between clause 71 (2) and clause 71 (3) of the Bill. We have to tuck the later matter in , whether we have it here or not. If we tuck it in later, we do not need it here . There is a sense in which most of this whole provision would in fact be redundant once the Insurance (Agents and Brokers) Bill is passed because that will clarify the whole situation as to who the broker is acting for and remove some of the present obscurity as to who was whose agent, which causes confusion and a degree of unfairness in this instance. Pending that particular millennium, this matter does need attention for the reasons I have indicated but we are giving it attention later on. Senator DURACK(Western Australia)(10.20) —The effect of this amendment is simply to add another situation to those that are set out in clause 38, which states: An insurer may not rely on a provision included in a contract . . . of a kind that is not usually included in contracts of insurance that provide similar insurance cover unless, before the loss occurred- (a) the insurer gave . . . a statement in writing that set out all the provisions of the contract; or (b) the insurer clearly informed the insured . . . Or the contract was arranged by a broker acting as the agent of the insured. I think Senator Evans is concerned as to what would be the liability of the broker in those circumstances. I presume that was his question? Senator Jack Evans —Whether both of them can avoid their obligations if that clause is inserted. Senator DURACK —In that case, I think the broker would have liability if he gave those provisions or made negligent statements in relation to those conditions. Amendment negatived. Clause, as amended, agreed to. Clause 39 (Interim contracts of insurance). The CHAIRMAN —Senator Evans, I think it would be more convenient if you moved amendments 26 and 27 together and amendment 28 separately because there is an amendment to the Government's amendment 28. Senator GARETH EVANS(Victoria-Attorney-General)(10.22) —by leave-I am happy to do that. I move: (26) Page 14, clause 39, line 13, leave out 'earlier', insert 'earliest'. (27) Page 14, clause 39, at the end of sub-clause (2), add the following paragraph: '(e) if the insured withdraws the proposal-the time of withdrawal.'. Amendments agreed to. Senator GARETH EVANS(Victoria-Attorney-General)(10.22) —I move: (28) Page 14, clause 39, at the end of the clause, add the following sub-clause ; '(3) Sub-section 36 (2), sections 38, 41 and 45 and sub-section 68 (1) do not apply in relation to interim contracts of insurance.'. This amendment deals with provisions governing time limits and related matters. Senator DURACK(Western Australia)(10.23) —I move: (3) page 14, clause 39-Amendment to be moved to Government amendment No. 28 (to add a new sub-clause (3)): Leave out 'Sub-section 36 (2)'. The Government proposes to exempt the operation of the Insurance Contracts Bill in regard to cover rates. This appears to be removing an existing exemption. Senator GARETH EVANS(Victoria-Attorney-General)(10.24) —This is all pretty gripping stuff. I am only just beginning to come to grips with it myself. What we all seem to have done in our various ways is identify a problem with this clause. We are trying to solve it in different ways. In our amendment No. 28, instead of referring to sub-section 36 (2) I will move it in a form that reads: Sections 36, 38, 41 and 45 and sub-section 68 (1) do not apply in relation to interim contracts of insurance. If we do it in this way we achieve a result that I think the Opposition and the Government are trying to achieve. My capacity to articulate that result is somewhat limited. I think the difficulty about referring to section 36 (2), as we did in the original form in which we moved our amendment, is that we achieved the result that the insurer would, on interim contracts, never be able to offer less than standard cover. That was certainly not the intended result, and that is the result we have all been trying to avoid. The CHAIRMAN —Order! What you are moving now is different from the circulated document? Senator GARETH EVANS —Yes, I am seeking leave to modify the form in which I moved the amendment in order to make it clear that I am trying to meet the point that the Opposition has been concerned with. The CHAIRMAN —Is leave granted to revise the amendment? Leave granted. Senator GARETH EVANS —I remove the revised part of the amendment as follows: '(3) Sections 36, 38, 41 and 45 and sub-section 68 (1) do not apply in relation to interim contracts of insurance.'. I am doing this in order to rationalise the position in relation to derogation notices for interim contracts. The Opposition amendment, as I understand it, means that the insurer would be required to give derogation notices if offering less cover than standard. We do not think that is appropriate and we are moving in order to substitute section 36 in the way that I have sought to describe it. I will sit down now in the hope that I can make some more sense of that than I have been able to communicate to the Senate. I hope that by now Senator Durack is able to articulate what it is that is concerning him that is not addressed by the amendment in that form. Senator DURACK(Western Australia)(10.27) —I think the further amendment the Attorney-General (Senator Gareth Evans) has now made covers our problem. In the light of that, we accept that amendment. I seek leave to withdraw the Opposition 's amendment No. 3. Leave granted; amendment withdrawn. Amendment agreed to. Clause, as amended, agreed to. Clauses 40 to 55-by leave-taken together. Senator GARETH EVANS(Victoria-Attorney-General)(10.28) —I move: (29) Page 14, clause 40, line 27, leave out 'one month', insert '14 days'. (30) Page 15, clause 41, lines 1 and 2, leave out 'the insured may be able to obtain such cover under another contract with the insurer or with some other insurer', insert 'the contract does not provide such cover'. (31) Page 15, clause 43, line 36, after 'terms' insert 'and in respect of the same subject-matter and risk'. (32) Page 16, clause 45, lines 15 and 16, leave out 'for residential purposes' insert 'as a residence for the insured, for persons with whom the insured has a family or personal relationship, or for both the insured and such persons'. (33) Page 16, clause 45, line 17, leave out '70%', insert '80%'. (34) Page 16, clause 45, line 22, leave out '70%', insert '80%'. (35) Page 16, clause 45, line 30, leave out '70%', insert '80%'. (36) Page 17, clause 47, lines 5 to 18, leave out the clause, insert the following clauses: Pre-existing defect or imperfection '47. (1) This section applies where a claim under a contract of insurance ( other than a contract of insurance that is included in a class of contracts declared by the regulations to be a class of contracts in relation to which this section does not apply) is made in respect of a loss that occurred as a result, in whole or in part, of a defect or imperfection in a thing. '(2) Where, at the time when the contract was entered into, the insured was not aware of, and a reasonable person in the circumstances could not be expected to have been aware of, the defect or imperfection, the insurer may not rely on a provision included in the contract that has the effect of limiting or excluding his liability under the contract by reference to the condition, at a time before the contract was entered into, of the thing. Pre-existing sickness or disability '47A. (1) This section applies where a claim under a contract of insurance is made in respect of a loss that occurred as a result, in whole or in part, of a sickness or disability to which a person was subject or had at any time been subject. '(2) Where, at the time when the contract was entered into, the insured was not aware of, and a reasonable person in the circumstances could not be expected to have been aware of, the sickness or disability, the insurer may not rely on a provision included in the contract that has the effect of limiting or excluding his liability under the contract by reference to a sickness or disability to which the insured was subject at a time before the contract was entered into.'. (37) Page 19, clause 52, lines 28 to 30, leave out sub-clause (1), insert the following sub-clause: '(a) the insurer gave to the insured a copy of the policy document or of the provision; or'. '(1) Where a provision of a contract of insurance (including a provision that is not set out in the contract but is incorporated in the contract by another provision of the contract) purports to exclude, restrict or modify, or would, but for this sub-section, have the effect of excluding, restricting or modifying , to the prejudice of a person other than the insurer, the operation of this Act , the provision is void.'. (38) Page 19, clause 53, line 34, after 'insurance', insert '(other than a contract of insurance that is included in a class of contracts declared by the regulations to be a class of contracts in relation to which this section does not apply)'. Again, I understand there is no controversy over these amendments. Amendments agreed to. Clauses, as amended, agreed to. Consideration interrupted. The CHAIRMAN —Order! It being 10.30 p.m., under sessional order I formally put the question: That the Chairman do now leave the Chair and report to the Senate. Question resolved in the affirmative. The Chairman having reported accordingly- The ACTING DEPUTY PRESIDENT(Senator Elstob) —It being after 10.30 p.m., I put the question: That the Senate do now adjourn. Senator ROBERTSON(Northern Territory)(10.31) —I wish to make a statement in respect of the division held during the second reading stage of the Insurance Contracts Bill 1983. I am advised that the bells did not ring in the Parliamentary Library and Senator Gietzelt missed the division. I simply want to record that in Hansard. Senator MACKLIN(Queensland)(10.31) —I rise again during the adjournment debate, as I have done on a number of occasions over the last few years, to address a continuing problem concerning Kenneth Dax, the naval cadet who was killed aboard HMAS Tobruk. I wish to refer to two items only tonight. One is a letter which the Minister for Defence (Mr Scholes) circulated to a number of honourable senators in response to issues which have been raised recently on this matter. That letter contains the following paragraph: I can assure you that Mr and Mrs Dax have been informed of all relevant facts. Following the accident, the Deputy Chief of Naval Staff personally wrote explaining the circumstances of Kenneth's death. Senior Naval Officers also visited the family and, at Mrs Dax's request, copies of official reports were provided. While a misunderstanding about the provision of these reports did occur, I do not believe that any material facts about the accident were withheld from Mr and Mrs Dax. I would have thought that, by now, the facts of the matter have been sufficiently detailed and made sufficiently clear that a letter of that kind would not have been written. I wish simply to make five comments in relation to that paragraph. Firstly I deal with the statement that the parents have been informed of all relevant facts and that the Deputy Chief of Naval Staff personally wrote explaining the circumstances. It has been established beyond question that explanations received during the first 12 months were woefully inadequate and evaded the truth on a number of occasions. I would have thought that that matter has now been sufficiently detailed as to warrant the type of comment that was made in that letter not being repeated. Secondly, I deal with the statement that senior naval officers also visited the family to answer their questions. I think it has also been clearly established that, while the officers who visited Mr and Mrs Dax were sympathetic-the parents have stated that publicly on a number of occasions-those naval officers were not able to answer any questions. It was only after the persistence of Mr and Mrs Dax over a number of months that their questions were forwarded to Canberra; hence the whole issue moved into the public arena. Thirdly, there is the comment that copies of official reports of the incident were provided. That seems to suggest that only some mild problems were involved. Anybody who knows anything about this matter would know that this required a number of official representations over 11 months before a review of the report was obtained. That was 12 months after the release of the report. Fourthly, there is the statement that these were essentially technical reports. On 26 August 1982 the Deputy Chief of Naval Staff told Mr and Mrs Dax that he would not release the review and that it was too technical for them to understand. In other words, the statement contained in the Minister's letter is not correct. Fifthly, the point has been made that no material facts were withheld. Undoubtedly the parents have suffered an enormous amount of added anguish and distress over the last 2 1/2 years because of the reluctance and the slowness of the Department of Defence to tell the whole story of what has occurred. That fact has been clearly established in a report of the Joint Parliamentary Committee of Public Accounts to this chamber. I hope that the Minister's office and the person who obviously composed that letter for the Minister will look again at the copious records in this regard and not repeat those types of unsubstantiated propositions which have taken a lot of people's time to put to rest and have caused an enormous amount of anguish to the parents. I hope that in further letters the accurate representation of what has been established on the public record is adhered to so we do not have to go back to square one to correct the record yet again. The second issue that I wish to raise with the Minister refers to another case that I believe shows how governments can act in this regard. I refer to the $300 ,000 compensation payment to the managers of the Sheraton Hotel as a result of the Australian Secret Intelligence Service raid. It was stated at the time that that was compensation for damages to the hotel and to its reputation as well as for the ordeal suffered by 15 staff members who had been bailed up at gunpoint. I have no idea how much it cost to repair the door but I cannot imagine that it would be a great deal. I do not know how much of that compensation was considered necessary to restore the reputation of the hotel. But in whatever way one looks at it, the amount left over for the 15 staff members must be in the order of $10,000. Let us look at the alacrity with which the Government moved in this regard. Compensation was paid to each individual who suffered that anguish, which in many ways may have been terrifying at the time but was soon over and, doubtless, left those employees with a very good story to recount at dinner parties and the like. Presumably no permanent damage was suffered by those employees. On the other hand, if we look at the parents of Kenneth Dax, who so far have been offered $3,500 after 2 1/2 years battle and we compare those issues we discover that there is an enormous discrepancy in the way in which the Government has opted to treat compensation for individual Australian citizens. The Minister for Social Security (Senator Grimes) has said that there are likely to be changes to the law. They have not appeared. He has said that adequate compensation will be provided. That has not occurred. What has occurred since that last offer was made public on the record is nil. How much longer does the Government intend that this issue drag on before justice is done? Senator ARCHER(Tasmania)(10.37) —I would like to take a few minutes tonight, following the earlier debate, to talk about the crime of arson. Arson now occurs world-wide on a very massive scale. The Insurance Council of Australia suggests that the incidence of arson, mostly occurring without convictions or without the offenders even being charged, has reached the stage where it amounts to in the order of $820m a year and, of course, it is growing at a very rapid rate. I have had a considerably long term interest in the matter of arson. I have been involved with insurance people over many years where this had been a fact of life, both in the selling of insurance and in the handling of claims. The insurance industry is very concerned that Australia is still without legislation of any nature designed to combat arson and without any assistance to provide the necessary courses and instruction on how to stamp it out. We are in a society where great scorn is poured on insurers who query or contest claims where arson is suspected or probable. Certainly, the almost total absence of convictions for the crime of arson must and does act as a spur for those who contemplate burning something down illegally for personal gain. However, the present predicament in which the insurance industry and the community are heavily involved because of the great losses borne by insurers is forcing fire protection premiums up. This is what we are dealing with in the existing legislation. The private sector is in very serious trouble as a result of the way in which arson has got completely out of hand. The annual report for 1982-83 of the Insurance Commissioner shows that for the private sector direct underwriters there was a loss of $430m for the year ended 31 December 1982, $429m was recorded for the year ended 31 December 1981 and it was $227m for the year before that. The accumulated deficit over three years is $1,086m. The deficit for reinsurers deteriorated to $81m and the public sector deficit deteriorated to $325m in 1982 from $123m in 1981. That is the nature of the losses now occasioned in insurance which are very largely due to the enormous incidence of arson. Total premiums, according to the same report, for fire and householders and house owners insurance amount to $1,182m, say $1,200m. I am advised by the insurance industry that those costs double the insurance premiums to every insurer in those classes in Australia. If it is not worth doing something about trying to halve the insurance premiums instead of making all sorts of confectionary fiddles to the insurance legislation of the sort we have been debating tonight I do not know what is. I have been in close touch with Miss Jane Evans of the Melbourne office of the Insurance Council of Australia, who has been waging the Council's campaign to bring arson under control for several years. As a result of her work, together with the efforts of State fire brigades and police, we are now seeing what can be done to slow down the snowballing effect on the community and the Government generally. The first national conference on arson was staged by the Australian Institute of Criminology and the ICA in mid-1983. As a follow-up a national standing committee on arson is currently being formed. The office bearers have not yet been elected but the membership to date is building up as follows: Victoria, Queensland, South Australia and Western Australia, representatives of the fire authorities executive committee, the Chairman of the Insurance Resource Committee on Arson, the Institute of Loss Adjusters, the Association of Risk and Insurance Managers of Australia, specialist investigators and the insurance solicitors. It is anticipated that nominations will be received in due course from the New South Wales Standing Committee on Arson and the Department of Defence. Whilst this is excellent progress from a standing start last year, I for one expect that all States and Territories will add their presence so that this new and important committee can be as solid as necessary to handle the rotten problem of arson. I have discussed the matter with the Premier of my State, who says that the State will establish a standing committee on arson in the very near future but that already arson investigation courses are being conducted at the Police Academy. They are attended by officers of the State fire service, the Telecom Australia investigation section, insurance loss assessors, representatives of the Victorian metropolitan and country fire services, Victorian police and Australian Federal Police and the New South Wales insurance industry. I quote from a summary of the national conference as provided in a background paper for a meeting of Ministers on 9 March 1984. The summary states: SUMMARY Resolutions of the national conference on arson are still under examination by fire authorities, and a general viewpoint has not yet emerged. It is likely that considerable further investigation will be required before soundly based recommendations can be placed before Ministers. However, there is general support for a national approach to the problem of arson, augmented by effective liaison and co-operation between police and fire authorities at State/ Territory level. The attention of Ministers is particularly directed to the following resolutions passed at the national conference on arson. Resolution 1. That a national body be established and funded by the Federal Government to be the co-ordinating body for a federally funded counter-arson plan. Resolution 2. The national arson seminar calls on Federal and State governments to acknowledge the enormous costs to the Australian community and economy of deliberately lit fires and asks that the Federal Government accepts its responsibility for this national problem in at least the following ways: (A) The Australian Bureau of Statistics to be responsible for producing meaningful fire statistics from information supplied by State fire authorities through the national fire incident reporting scheme. (B) The resources of the A.C.T. Fire Brigade and the Federal Police be made available for the establishment of a national fire investigation course based in Canberra and open to fire brigade, police, insurance and other component bodies. (C) To fund the national body referred to in Resolution 1. (D) To fund the research into forensic technology. Resolution 4. That a recognised training facility for fire investigators, insurers and self- insurers, be established. Resolution 6. That Ministers for police and emergency services in each State be asked to reject proposed moves by the Federal Attorney-General to ease the non-disclosure and misrepresentation factors in favour of the policyholders in insurance contracts. Resolution 11. That Federal and State legislators recognise the need to formulate uniform, effective laws and regulations throughout Australia, relating to arson. Since the national conference the national standing committee has met to give further consideration to the conference resolutions, but no new initiatives have yet been announced. I urge all in responsibility to take a big interest in combating this crime by giving the new national standing committee on arson their full backing and support to wipe out arson in Australia. I stress the overdue need for legislation relating to insurance. The need is to attack criminal arson, defend honest insurers and halve the fire insurance premiums now being paid. I believe that such legislation should be beneficial to Australia. Certainly it is necessary and attention to criminal arson is long overdue. I urge that there be an appropriate conference of State and Federal authorities, insurance and other interests specifically to consider the legislative procedures that may be desirable and that may promote awareness and training in giving attention to and defeating this horrible crime. I seek leave to incorporate in Hansard a one-page document, which I copied from an American publication, setting out the details of arson reporting immunity laws. Leave granted. The document read as follows- ARSON REPORTING IMMUNITY LAWS Background A key element in detection and prosecution of arson is the exchange of information between insurance companies and public officials. One of the problems insurers have faced in sharing information with law enforcement authorities has been the threat of civil suit. Arson reporting immunity laws are designed to protect insurance companies from suits when they share arson-related information with law enforcement officials. By encouraging the exchange of information, such laws increase the number of fraud arson claims denied and increase the number of arrests and convictions. In 1976, the Ohio Legislature enacted what is believed to be the first law granting insurance companies immunity from suit when they share arson-related information with law enforcement officials. In 1977, the alliance of American insurers drafted model legislation entitled, 'Arson Reporting-Immunity Bill'. This model is supported by the National Association of Independent Insurers, the American Insurance Association, and other members of the Insurance Committee for Arson Control. The major purpose of this model law is to increase the flow of vital investigative information between insurance companies and law enforcement agencies. The law requires insurers to inform the state fire marshal or other authorized persons of fires that appear to be suspicious in origin. It permits insurers and arson investigators to exchange information developed during their separate investigations. Senator GARETH EVANS(Victoria-Attorney-General)(10.49) —I simply put on the record my acknowledgment on behalf of the Government of the points that were made with some vigour by Senator Macklin about compensation and assure him that as the Minister responsible for a good many of the policy matters to which he adverted I am fully conscious of the need to get some more rationality and equity into our compensation law. I will not comment specifically on the Dax case because that is on my desk at the moment following, as I indicated in Parliament the other day, a request from the Prime Minister (Mr Hawke) that I advise on what principles, if any, might be applied to ensure on the face of it some more equitable return than the family of the seaman received. The matters raised by Senator Archer are of very considerable interest not only to the insurance industry but also to the community as a whole. I assure him that I will take them on board to the extent that I have responsibility for insurance law but, more particularly, insofar as they impinge upon other areas of ministerial responsibility, I will ensure that his remarks are appropriately directed. Senate adjourned at 10.50 p.m. The following papers were presented: Defence Amendment Act-Interim Determinations-Statutory Rules 1984 Nos 70, 71, 72. Homeless Persons Assistance Act-Regulation-Statutory Rules 1984 No. 69. Seat of Government (Administration) Act-Ordinances 1984-No. 7-Health Commission (Charges) (Amendment) The following answers to questions were circulated: (Question No. 40) Senator Bolkus asked the Minister representing the Treasurer, upon notice, on 22 April 1983: (1) What moneys have been expended since 1 January 1976 in the Minister's areas of responsibility and what moneys are being planned to be expended in the following areas: (a) computer hardware and software; and (b) repairs and servicing of computers. (2) When was expenditure incurred in each of the above categories. (3) Which items purchased above are now obsolete or will be so in the next five years. Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: (1) and (2) Moneys expended in the Treasurer's area of responsibility since 1 January 1976 and planned to be expended in 1983-84 are as follows: Computer Repairs and hardware servicing Financial year and software of computers $'000 $'000 1975-76 749 1,934 1976-77 5,971 2,856 1977-78 5,895 2,029 1978-79 4,535 3,147 1979-80 2,981 3,884 1980-81 26,765 4,769 1981-82 10,917 5,810 1982-83 32,109 7,971 1983-84 33,056 13,986 (3) Items purchased in the above period which are now obsolete or will be so in the next five years are- Department of the Treasury: Nil Australian Bureau of Statistics: ICL Central Processing Unit CDC Cyber Central Processing Unit CDC Tape Drives Australian Taxation Office: 6 CMAD CM 202 Minicomputers CDC Cyber 173 Central Processing Unit Commonwealth Banking Corporation: 2 IBM 3138/J Central Processing Units IBM 3135/100 Central Processing Unit IBM 3135/5 Central Processing Unit 3 IBM 3158/-U35 Central Processing Units IBM 3158/KJO Central Processing Unit Reserve Bank of Australia: Computer node to Commonwealth Scientific Industrial Research Organisation, Canberra, consisting of a digital Equipment Corporation PDP 11/10 computer. IBM system 360-30 Central Processing Unit. (Question No. 407) Senator Maguire asked the Minister representing the Treasurer, upon notice, on 5 October 1983: (1) What controls presently exist to control the movement of capital into and out of the country. (2) Does the Government have plans to implement more effective controls over the movement of capital between Australia and other countries in view of the large capital movements from Australia prior to the last Federal election; if so , what is the Government's intention. Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: (1) On 9 December 1983 I announced the Government's decision-with effect from 12 December-to allow the value of the Australian dollar to float and to abolish a major part of the existing exchange controls. For the time being, exchange control approval is still required for the bulk of overseas transactions; this is to take account of the Government's tax screening and foreign investment policies. However, approval is normally readily given. Exchange control restrictions have been retained on interest bearing investments in Australia by governments, government agencies and foreign banks. (2) The new arrangements I announced on 9 December 1983 will allow the exchange rate to respond more readily to market forces and should mean that external transactions will no longer be a major aberrant factor in determining monetary growth. (Question No. 503) Senator Kilgariff asked the Minister representing the Treasurer, upon notice, on 10 November 1983: (1) Has the Treasurer given instructions that the Northern Territory be included in the review of State relativities being undertaken in the lead up to the termination of the State tax sharing arrangements in June 1985. (2) Does the Treasurer realise that a change in the funding arrangements will cost the Northern Territory millions of dollars and will put a brake on the rapid growth that has occurred in the Territory since self government. (3) Will the Treasurer move to ensure no change is made to the funding arrangements, as set out in the memorandum of understanding for the Northern Territory. Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: (1) Terms of reference for a review of the distribution of tax sharing grants were transmitted to the Commonwealth Grants Commission in a letter of 10 February 1984 from the Special Minister of State. To facilitate consideration of the tax sharing arrangements which should apply after 1984-85, the Commission has been asked to make its assessments and to report on alternative bases in certain areas. One example of this is the request to the Commission to report on both a distribution of tax sharing grants among the States only and on a distribution of the grants among the States and the Northern Territory with the latter being treated on the same basis as the States. (2) The Commission has been asked to base its assessments on the application of the principle that the respective tax sharing grants to which the States, and the Territory, are entitled should enable them to provide, without having to impose taxes and charges at levels appreciably different from the levels imposed in the other States, and the Territory's government services at standards not appreciably different from the standards provided by the other States and the Territory. That principle is basically the same as that set out in the Memorandum of Understanding for application by the Grants Commission in assessing the special grants which have been paid to the Territory in recent years. (3) The Memorandum of Understanding states that 'The arrangements may have to be changed from time to time in the light of changing arrangements between the Commonwealth and the States'. Any decision on the funding arrangements for the Northern Territory to apply after 1984-85 will only be taken closer to the time for implementation of the tax sharing arrangements to apply after 1984-85 and after discussion with all the parties involved. (Question No. 587) Senator Watson asked the Minister representing the Treasurer, upon notice, on 9 December 1983: Will the Government carefully consider the consequences of damage to our principal export industries before a decision is taken to revalue the Australian dollar and using the exchange rate as a means of controlling money supply growth . Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: In its previous management of the Australian exchange rate the Government has always given careful consideration to the interests of all sectors of the Australian economy, including export industries. The decision taken on 9 December 1983 to allow the Australian dollar to float will allow its value to be more responsive to prevailing market forces, including those relating to the international competitiveness of our export industries. (Question No. 619) Senator Messner asked the Minister representing the Treasurer, upon notice, on 15 December 1983: (1) Has the Treasury employed any new recruits as part of the proposed assets test program; if so, what are the details of the new appointments. (2) How many of the new recruits are to be: (a) permanent; and (b) temporary officers. (3) From what funds are they being paid. Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: (1) No. (2) Not applicable. (3) Not applicable. (Question No. 633) Senator Kilgariff asked the Minister representing the Treasurer, upon notice, on 16 December 1983: (1) Does the Treasurer consider that there is no longer any requirement for: (a ) the one cent coin; and (b) the two cent coin, given the depreciation of the Australian currency. (2) Has the Government considered the issue of a $100 note; if so, what action, if any, is contemplated. Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: (1) No. The diminution in the purchasing power of the currency caused by inflation does of course bring into question over time the usefulness of the smallest units of the currency, and this is a matter which will be kept under review. (2) Yes. The $100 note was introduced into circulation on 26 March 1984. (Question No. 657) Senator Bolkus asked the Minister representing the Minister for Aviation, upon notice, on 28 February 1984: (1) Has an agreement been reached between the Commonwealth Department of Aviation and the Kingscote Council at Kangaroo Island in South Australia as to the running of the Kingscote Airport. (2) Did such agreement entail the promise of upgrading work on the Airport; if so, who was to do such work. (3) Will the Minister for Aviation say whether the complaints made by the Mayor of Kingscote Council, Mr Neville Cordes, that the Council may experience delays on the completion of such work are justified; if so, when will it be completed. Senator Gietzelt —The Minister for Aviation has provided the following answer to the honourable senator's question: (1) Yes. (2) Yes. The transfer agreement included a Commonwealth undertaking to provide grants for aerodrome development works proposed and costed by the Council, and to be carried out by the Council. (3) Delays such as those which concern the Mayor of Kingscote Council are not normal. However, because Council's estimate of cost for works increased considerably, some delays are inevitable to allow consideration of the increases . My Department anticipates that the review of estimates will be completed by mid 1984 and Council will be consulted as to the next phase. (Question No. 658) Senator Bolkus asked the Minister representing the Treasurer, upon notice, on 29 February 1984: (1) How much and in what form is statistical information kept on the degree of foreign ownership and control of the Australian private sector. (2) Will the Treasurer provide sufficient funds for the Australian Bureau of Statistics to conduct a comprehensive study of the degree of such ownership and control in the private sector in Australia. (3) Can the Treasurer indicate the nature and extent of such problems if it is claimed that there are methodological problems involved in such a survey. Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: (1) Statistical information on the degree of foreign ownership and control of selected industries and activities in the private sector is available in publications issued by the Australian Bureau of Statistics (ABS). Publications have been produced for the following industries and economic activities: (a) Finance companies-1973 and 1976 (b) Registered financial corporations-1976 (c) General insurance-1972-73 and 1975-76 (d) Life insurance-1973 and 1976 (e) Tourist accommodation-1973-74 (f) Advertising agencies-1974-75 (g) Research and development-1976-77 (h) Mineral exploration-1975-76 (i) Manufacturing-1962-63 to 1966-67, 1972-73 and 1975-76 (j) Mining-1963 to 1968, 1971-72 to 1974-75, 1976-77 (k) Mining and selected mineral processing industries-1981-82. The range of data items included in these publications is determined by the availability of data from the relevant source collections. For example, the most recent publication, Foreign Ownership and Control of the Mining Industry and Selected Mineral Processing Industries, Australia, 1981-82 (Catalogue No. 5317.0 ) contains information on employment, wages and salaries, turnover, value added and fixed capital expenditure of mining and selected mineral processing establishments: (a) apportioned to ownership by type and country of ownership, State of location and industry; and (b) allocated to control by type and country of control, industry, State of location and degree of influence of largest foreign investor. (2) A Foreign Participation Section has been established in the ABS and will progressively compile foreign ownership and control statistics for a wide range of industries and activities, including agriculture, mining, manufacturing, construction, retail trade, transport and finance industries. A review of users' requirements conducted prior to the re-establishment of the Section showed some support for a study of the private sector as a whole but it did not rate highly in users' priorities and there are no plans to conduct such a study in the near future. (3) A comprehensive study of the degree of foreign ownership and control in the private sector in Australia would involve a number of conceptual and practical problems. On the conceptual level, there would be problems in determining how the degree of foreign ownership or control in one industry should be added to that for other industries in order to produce a figure for all industries combined. Different data items would give significantly different results when used as a measure across all industries. As a consequence it would probably be necessary to produce results using various measures and leave users to make their own judgments about the relative usefulness of the different figures. Practical problems would also arise as much of the data required for the various measures would not be available from existing ABS collections, or would only be available in respect of different reference periods. A comprehensive study covering all industries in the private sector would therefore involve additional data collection, with substantial associated costs and increased respondent burden. (Question No. 667) Senator Maguire asked the Minister representing the Treasurer, upon notice, on 29 February 1984: (1) Is the 1974-75 Australian Bureau of Statistics' (ABS) survey of household income the most recent official study into the distribution of income in Australia; if not, what is the latest official study. (2) Were the ABS surveys of household income originally intended to be conducted every 5 years to enable income trends to be identified. (3) Were the ABS surveys of household income suspended during the 1970s by the Fraser Government; if so, what reasons were given by that Government for its actions. (4) Will the present Government re-introduce regular surveys of household income by the ABS. Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: (1) The survey undertaken by the ABS in respect of 1974-75 was a survey of household expenditure in which a number of questions were also asked about usual household income to enable an analysis to be made of household expenditure according to household income. The most recent full-scale income distribution survey conducted by the ABS was in respect of 1981-82. (2) and (3) No. Full-scale income distribution surveys were conducted in respect of the years 1973-74, 1978-79 and 1981-82. (4) Income data will continue to be collected in income distribution surveys. In addition, some information on income will usually be available from other surveys such as those relating to expenditure, family composition and the labour force. (Question No. 669) Senator Bolkus asked the Minister representing the Treasurer, upon notice, on 1 March 1984: When will the Treasurer answer my Question No. 40 dated 21 April 1983 in respect to purchasing of computer equipment. Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: I refer the honourable senator to the answer provided in today's Hansard. (Question No. 671) Senator Chipp asked the Minister representing the Treasurer, upon notice, on 1 March 1984: (1) Is the Treasurer aware that whereas in 1959 there were only two foreign owned advertising agencies, today some 20 foreign owned advertising agencies control 85 per cent of all Australian advertising. (2) What action does the Treasurer intend to take to rectify this lamentable state of affairs in such a key industry. (3) Is the Government prepared to use its market power to increase the proportion of Australian ownership and control of the advertising industry in this country, since the Government through public authorities and statutory authorities is the largest advertiser in the country. Senator Walsh —The Treasurer has provided the following answer to the honourable senator's question: (1) The Australian Bureau of Statistics surveys of foreign ownership and control covering accredited advertising agencies showed that in 1974-75 foreign ownership, measured in terms of turnover, was 43 per cent while foreign control accounted for 51 per cent of total turnover. While there are no more recent official statistics available, data available from advertising industry journals and industry sources indicate that in 1982 the top 20 advertising agencies with foreign ownership of 15 per cent or more accounted for about 65 per cent of the total billings of the top 150 agencies in Australia. Foreign controlled agencies amongst these top 20 agencies accounted for about 48 per cent of the total billings of the top 150 agencies. (2) Given the high level of foreign ownership and control in the advertising industry, all foreign investment proposals are closely examined on a case-by- case basis under the Government's foreign investment policy. (3) I am informed that the selection of advertising agencies for Commonwealth business follows the principle, as with the purchase of other similar services, of seeking the most efficient and effective service. There is, therefore, no policy in existence, or contemplated, to exclude agencies with foreign ownership interests from performing Commonwealth advertising. However, I am also informed that, as far as is practicable, the Australian Government Advertising Service ( AGAS)-which of course comes within the portfolio responsibilities of the Special Minister of State-now includes Australian-owned agencies, of adequate capacity and resources, in all panels of agencies invited to submit for government advertising business. In practice, Australian-owned agencies are well represented in the agencies which are engaged by AGAS. The figures provided to me show that in 1982-83, 51 agencies participated in Commonwealth advertising and associated work arranged by AGAS. Of these, 31 were fully Australian-owned and 3 others had majority Australian ownership; these 34 predominantly Australian owned advertising agencies accounted for about 70 per cent of the total payments made in respect of all advertising and associated work arranged by AGAS. To date in 1983-84, 28 of the 41 agencies involved with AGAS work were fully Australian-owned and three had majority Australian ownership; these 28 agencies received about 76 per cent of the total payments so far recorded in 1983-84 as having been received by all agencies for services to the Commonwealth through AGAS. (Question No. 703) Senator Bolkus asked the Minister representing the Minister for Aviation, upon notice, on 6 March 1984: Can the Minister for Aviation supply the names of all the Australian made and internationally produced films shown by Qantas in the financial year July 1982 to June 1983 further to my question No. 563 (see Hansard, 28 February 1984, page 102). Senator Gietzelt —The Minister for Aviation has provided the following answer to the honourable senator's question: Qantas has advised that the following Australian made and internationally produced films were shown on board the Company's aircraft between July 1982 and June 1983: Australian Films Star Struck Gallipoli The Pirate Movie The Man from Snowy River Lonely Hearts Fighting Back We of the Never Never Internationally Produced Films Victor Victoria I Ought to be in Pictures Absence of Malice Author Author Deathtrap Firefox Evil under the Sun Rocky III Safari 3000 Yes Giorgio Escape Artist The Verdict First Blood If You Could See What I Hear High Road to China Lovesick Sting II (Question No. 722) Senator MacGibbon asked the Minister representing the Minister for Transport, upon notice, on 8 March 1984: (1) How many of the States are using the services of private contractors to build their roads in relation to the use of consultants for survey work done under the Australian bicentennial road development program, and in which states are they. (2) How much work, if any, is being given to private consultants for design and survey work, and what areas of the construction process are involved. (3) What checks is the Government making on how these funds are used. Senator Gietzelt —The Minister for Transport has provided the following answer to the honourable senator's question: (1) to (3) Survey, investigation and design of roads are not subject to the tendering requirements laid down under the Federal roads legislation. Whether works relating to these aspects of road building are put to tender is at the discretion of the relevant State road authority. The States are not required to provide the Federal Government with information concerning the use of private contractors in this area of activity and do not do so. Therefore, the Federal Government cannot supply the information sought. (Question No. 751) Senator Kilgariff asked the Minister for Resources and Energy, upon notice, on 28 March 1984: (1) Is the Minister for Resources and Energy aware of a report tabled by the Minister for Home Affairs and Environment in the Federal Parliament on 7 December 1983, which resulted from expressions of doubt that radiation safety standards, practices and procedures for product drying and packing operations at Ranger uranium mine were adequate to protect workers in the plant. (2) Does the Minister intend to respond to the report and provide any information which could allay the fear that there may be inadequate worker protection from radiation hazards at Ranger, in view of the serious implications of such accusations. Senator Walsh —The answer to the honourable senator's question is as follows: (1) Yes. (2) No. The report concludes that radiation protection has been adequate to keep worker exposures from exceeding regulatory dose limits. Nevertheless it has been clear that improvements could be made and in this respect the report sets out changes made and proposed by the operators of the Ranger mine to achieve improvements in relation to radiation protection in the product drying and packing areas at Ranger. Senator Walsh —On 25 and 26 May 1983 (Hansard, pages 755 and 889 respectively) Senator Dame Margaret Guilfoyle addressed questions without notice to the Leader of the Government in the Senate, concerning the income tax rebate, now withdrawn , in respect of contributions for basic health and medical insurance. The questions were referred to the Treasurer who apologises for the delay in replying and has supplied the following answer to the honourable senator's questions: The Government's election health policy statement made it clear that the income tax rebate for basic health insurance premiums would be abolished in order to help finance the Medicare arrangement. I am unable to locate, however, any statement that would provide a basis for the honourable senator's suggestion that the Government gave a pre-election undertaking not to remove the rebate prior to the introduction of Medicare. As to the second part of the honourable senator's questions, there is no immediate impact on families resulting from the removal of the rebate for health insurance contributions made in respect of the period 1 July, 1983 to 31 January , 1984, that is, the period prior to the introduction of Medicare, because the rebate for health insurance contributions is not reflected in the tax instalments deducted from the salaries or wages of employees. The cost to families of denying the rebate for health insurance contributions in respect of the period 1 July, 1983 to 31 January, 1984 is put at about $333m. Of this amount, only the provisional tax component of about $55m, which is not payable before 31 March, 1984, will impact on revenue in 1983-84. Senator Walsh —On 6 December 1983 (Hansard, page 3277) Senator Bjelke-Petersen asked me, as Minister representing the Treasurer, a question without notice concerning the new Australian dollar coin. The Treasurer has provided the following information in answer to the honourable senator's question: On August 1983, I announced that the obverse side of the new $1 coin will carry the traditional effigy of Her Majesty, Queen Elizabeth II. The reverse side design will feature a representation of five kangaroos, consistent with the native fauna series on the decimal currency. Mr Stuart Devlin, designer of the existing fauna series, has been commissioned for the $1 coin design. Senator Ryan —On 2 April 1984 (Hansard, pages 1018-19) Senator Missen asked me, as Minister representing the Minister for Home Affairs and Environment, a question without notice concerning the Film Australia program The Human Face of Russia. The Minister for Home Affairs and Environment has provided me with the following answer to the honourable senator's question: The Australian Film Commission has advised that: The 90-minute program The Human Face of Russia recently screened by the 10- network in Melbourne and Sydney, was based on material shot for a three-part series called The Russians which was made by Film Australia in 1977 and broadcast in 1979 by Channel 7. The program forms part of Film Australia's continuing and highly successful Human Face series. The Human Faces of China, Japan and the Pacific are other programs in this series. The Human Face series focuses on individuals, not systems or ideologies. It is designed to equate ordinary Australians with counterparts in other countries. The 90-minute format obviously imposes some constraints and does not permit for indepth coverage or analysis of a country as broad and diverse as the Union of Soviet Socialist Republics. Indeed, the opening commentary in the film makes the point that there are 100 different ethnic groups and 100 different languages in the Union of Soviet Socialist Republics. The Minister for Home Affairs and Environment has also advised that he has not seen the film and that Australian and overseas distribution of this program is a matter for Film Australia and the Commission. Under sub-section 8 (1) of the Australian Film Commission Act 1975, the Minister may give directions to the Commission with respect to the exercise of its powers or the performance of its functions but shall not give such a direction with respect to a particular project.