Wednesday, 20 March 1985 The PRESIDENT (Senator the Hon. Douglas McClelland) took the chair at 10 a.m., and read prayers. The Clerk-Petitions have been lodged for presentation as follows: Tertiary Education Assistance To the Honourable the President and members of the Senate in the Parliament assembled. The petition of the undersigned Australian citizens respectfully showeth that: (i) The financial situation of students enrolled at Australian post-secondary institutions is already extremely difficult and any increase in the financial commitments of students would gravely worsen their financial difficulties. (ii) The imposition of post-secondary tuition fees of comparable levels to those imposed prior to 1971 would force many currently enrolled students to discontinue their studies and deter many persons willing and able at present to undertake post-secondary study from doing so. (iii) Those students and potential students from social groups currently under-represented and disadvantaged in the education system would be most severely affected by the reintroduction of fees for post-secondary education. Your petitioners therefore pray that: 1. Post-secondary tuition fees not be re-introduced for any category of students. 2. Any form of Stamp Duty or similar system of the 'user pays' principle in education not be introduced. 3. Emphasis should be on increasing access to education by, among other things, increasing student financial assistance. 4. The visa charges upon private overseas students be removed immediately. 5. The Minister for Education and Youth Affairs immediately clarify the government's attitude to the reintroduction of post-secondary tuition fees. And your petitioners as in duty bound will ever pray. by Senators Bjelke-Petersen (from six citizens), Boswell (from 15 citizens), Colston (from three citizens), Hamer (from 11 citizens), MacGibbon (from six citizens), Macklin (from eight citizens) and Reynolds (from 17 citizens). To the Honourable the President and members of the Senate in the Parliament assembled. The petition of the undersigned shows: That we condemn that Australia should assist the United States of America by participating in the testing of MX Peacemaker missiles, or any similar weapons, from Australian shores. Your petitioners request that the Senate, in Parliament assembled, should: 1. Seek to reverse this deplorable decision and, 2. Ensure that Australia's commitment to a Nuclear Free Zone in the South Pacific be maintained. And your petitioners as in duty bound will ever pray. by Senator Reynolds (from 19 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of certain citizens of South Australia respectfully showeth: That the Australian flag symbolises the continuity between Australia's past, its present and its future; That the presence of the Union Jack on the flag represents not a subservience to Britain, but a reminder of our inheritance of the fruits of hundreds of years of struggle for individual liberty against the forces of tyranny and oppression; Nonetheless recognises the rights of Australians should they so wish to change the design of their flag. Your petitioners humbly pray that no change be made to the Australian flag except with the consent of the people in a referendum. And your petitioners as in duty bound will ever pray. by Senator Messner (from 19 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth: That we strongly oppose the 'A.C.T. Smoking and Tobacco Products Advertisements Prohibition Bill' introduced by Senator Jack Evans, because it will adversely affect sporting organisations and small businesses in the A.C.T., it reverses the onus of proof, and represents an unnecessary intrusion by Government into the private affairs of individuals and other groups. Your petitioners most humbly pray that the Senate, in Parliament assembled, should reject this Bill. And your petitioners as in duty bound will ever pray. by Senator Reid (from 46 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That in November 1978 more than sixty two per cent of the voters of the Australian Capital Territory in a Referendum rejected the introduction of Territorial Government or Local Government in the Australian Capital Territory. That until the findings of the Commonwealth Grants Commission Inquiry into Australian Capital Territory finances have been made public and there has been a Referendum of the voters of the Australian Capital Territory as to their attitude to Territorial or Local Government. Your petitioners most humbly pray that the Government take no further action or legislation in respect of Territorial or Local Government in the Australian Capital Territory. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 119 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That we the undersigned, having great concern because of the spread of moral pollution in our nation call upon the Government to introduce immediate legislation: 1. To provide strict controls over importation, production, sale, hire or mailing of video-cassettes with the open sale of only G, PG, and M rated video-cassettes; and the total prohibition of the sale of R rated video-cassettes so that R rated films can only be viewed in an adult theatre by persons over 18 years. We totally reject the concept of 'X' rated video-cassettes which would allow the legal sale of hard-core pornographic films for screening in the homes of our nation, which endanger our children. 2. To dramatically improve the Federal Attorney-General's Guidelines for Classification of Video tapes/discs which restrict the importation, production, sale or hire, screening in private homes and mailing by Australia Post so as to include the total prohibition of any pornographic, obscene or blasphemous video cassette, or film containing child pornography, bestiality, sodomy, group sex, violent sex acts with women, such as rape and pack rape, sadism and torture, etc. Your petitioners therefore humbly pray that your Honourable House will protect our society, especially women and children from moral pollution and its harmful effects. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 130 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned, citizens of the Commonwealth of Australia respectfully showeth: That in the light of the Labor Governments failure to act to correct the anomalies in the Assets Test on pensions bring to its notice and due to have effect from the 21 March, 1985 the Labor Government's legislation should be repealed before it has an unduly unfair impact on pensioners, and calls upon the Australian Democrats to support Senator Messner's Bill for the abolition of the Assets Test. Your petitioners most humbly pray that the Senate in Parliament assembled should immediately seek the passage of the Social Security and Repatriation Assets Test Abolition Bill to repeal the Labor Governments iniquitous and unfair Assets Test. And your petitioners as in duty bound will ever pray. by Senator Messner (from 131 citizens). To the Honourable the President and members of the Senate assembled. The petition of the undersigned respectfully showeth that: 1. Amendments to the Customs Regulations have removed legal barriers to the importation of hard core pornography into Australia; 2. The introduction of X classification in the ACT, by the Prohibited Publications Ordinance, has removed legal barriers to the sale of hard core pornography within the ACT; and 3. The distribution of pornography degrades women, injures children and undermines family life. Your petitioners most humbly pray that the Senate, in Parliament assembled, should: 1. Disallow the Prohibited Publications Ordinance and the amendments to the Customs Regulations; and 2. Introduce legislation which adequately reflects community standards. And your petitioners as in duty bound will ever pray. by Senator Reid (from 29 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned taxpayers of Australia, respectfully show that we deplore the use of taxation funds to allow privileges and travel entitlements for homosexual staff members of the Australian Broadcasting Corporation on the same basis as legally married couples. As taxpayers, we humbly request that this decision be reversed immediately and our taxation contribution be used for more urgent needs, such as defence, housing, education, roads and transport. And your petitioners as in duty bound will ever pray. by Senator Boswell (from 23 citizens). To the Honourable the President and members of the Senate in Parliament assembled. We the undersigned citizens of the Commonwealth do humbly pray that the Commonwealth government: 1. Uphold the principle that the seeds and cuttings of plants are a public resource and a common heritage to all and that accordingly seeds should be freely available to all, freely multipliable, able to be sold, exchanged, exported and imported by anyone who wishes. This is seen as a matter of national food security. 2. Recognise that plant breeding is a highly co-operative venture often involving private enterprise at the very last stages after basic seed collection, storage, and research has been publicly funded. 3. In view of the aforementioned paragraphs, recognise that any system giving 'property' or ownership rights over seeds to individuals, organisations or enterprises is inappropriate and unjust. 4. Recognise that legislation establishing plant patenting schemes overseas has had serious adverse effects namely: i. a slowing-down of scientific information exchange and exchanges in basic plant breeding materials, that is, germ plasm, ii. subordination and/or curtailment of public breeding programmes, iii. farmer unrest at seed prices, iv. monopoly control of seed production and sales has passed into the hands of giant petrochemical and drug corporations also marketing crop chemicals, v. increased uniformity of crop varieties leading to a vulnerability to pest and disease attack. 5. Reject any proposal to legislate for any system such as the drafted Plant Variety Rights Act, which gives exclusive ownership rights over seeds to individuals, organisations or enterprises. And your petitioners as in duty bound will ever pray. by Senator Zakharov (from 41 citizens). Petitions received. Senator JACK EVANS(Western Australia) —I give notice that, on the next day of sitting, I shall move: That leave be given to introduce a Bill for an Act to provide for the preparation of legislation for the reform of the Australian taxation system and the introduction of that legislation into the Parliament. Senator MACKLIN(Queensland) —I give notice that, on the next day of sitting, I shall move: That there be laid on the Table the whole of the following document, including the matter deleted from the copy which was provided to the Wilderness Society in response to a request by that society under the Freedom of Information Act 1982: Department of Home Affairs and Environment Minute, dated 21 June 1984, reference 84/42, from D. C. Griffiths to Mr Thompson, headed 'Proposed Road from Cape Tribulation to Bloomfield'. Senator REID(Australian Capital Territory) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes with concern the continuing delay in the appointment of a Chief Magistrate for the Australian Capital Territory Court of Petty Sessions and calls upon the Government to redress the situation without further delay, noting that the former Chief Magistrate retired on 29 February 1984; and (b) calls on the Government to make an appointment of a new Chief Justice to the A.C.T. Supreme Court without delay in view of the present Chief Justice's announced retirement on 29 March 1985. Senator GRIMES(Tasmania-Manager of Government Business) —I table papers in accordance with the list circulated to honourable senators. With the concurrence of the Senate, I incorporate the list in Hansard. Leave granted. The list read as follows- 1. ACT Fire Brigade-Annual Report 1983-84. 2. Norfolk Island-Annual Report 1983-84. 3. ACT Registrar of Motor Vehicle Dealers-Annual Report 1983-84. 4. ACT Statement of Receipts and Expenditure-Report 1983. 5. Empty Gelatin Capsules-IAC Report. 6. Rougher Headed Timber-IAC Report. 7. Vegetables and Vegetable Products-Interim Report on Frozen Peas-IAC Report. 8. Australian Children's Television Foundation-Annual Report 1983-84. 9. Computer-related Technologies in the Metal Trades Industry Report. 10. Victoria Grants Commission-Annual Report 1984-Pursuant to section 10 of the Local Government (Personal Income Tax Sharing) Act 1976. 11. Queensland Local Government Grants Commission-Annual Report 1984-Pursuant to section 10 of the Local Government (Personal Income Tax Sharing) Act 1976. 12. International Labour Conference-69th Session 1983-Report. 13. South Australian Local Government Grants Commission-Annual Report 1984-Pursuant to section 10 of the Local Government (Personal Income Tax) Act 1976. 14. Tasmania State Grants Commission-Annual Report 1984-85-Pursuant to section 10 of the Local Government (Personal Income Tax) Act 1976. 15. Government response to the report of the Committee of Inquiry into Safety Standards at the CSIRO Applied Organic Chemistry and Advanced Materials Laboratories at Fishermens Bend, Melbourne and the death of CSIRO employee, Dr R. Bergamasco -Statement. 16. Financial Assistance-Amending agreement between the Commonwealth and N.S.W.-Pursuant to Section 8 of the Urban and Regional Development (Financial Assistance) Act 1974. 17. The Australian Shippers' Council-Annual Report 1983-84. 18. Urban Expansion and Redevelopment (Albury-Wodonga)-Agreement between Commonwealth, NSW and Victoria-Pursuant to section 8 of the Urban and Regional Development (Financial Assistance) Act 1974. 19. Department of Sport, Recreation and Tourism-Annual Report 1983-84. 20. Australian War Memorial-Annual Report 1983-84-Pursuant to section 36 of the Australian War Memorial Act 1980. 21. National Energy Research Development and Demonstration Council-Annual Report 1983-84-Pursuant to section 9 of the Coal Research Assistance Act 1977. 22. Advance to the Minister for Finance-Statements on expenditure for October, November, December 1984 and January 1985. Senator GRIMES(Tasmania-Minister for Community Services) —The Senate Standing Committee on Finance and Government Operations tabled its interim report on non-statutory bodies of the Commonwealth in October 1984. The Government has noted the information presented in the report and the Committee's comments. The interim report contains a recommendation that each department include in its annual report a list of all non-statutory bodies in the respective portfolios and indicate which non-statutory bodies have been created or abolished during the year under review. It is recommended that the list should include at least basic information regarding the principal activities of each non-statutory body, its membership, the terms of appointment and its staffing. The Government accepts the Committee's recommendation. The attention of all departments will be drawn to the additional requirements to be met in the preparation of their annual reports. The Government has noted the further investigations in the area of non-statutory bodies which the Committee intends to pursue. While recognising the difficulties associated with the disparate nature of the bodies and their often short lifespan, the Government welcomes the planned work. Senator PETER RAE(Tasmania)(10.08) —by leave-I move: That the Senate take note of the statement. I welcome, on behalf of the Opposition, the Government's response to the report of the Senate Standing Committee on Finance and Government Operations. I would like to speak briefly in relation to that. I note that the Committee, in its report, said that there are several issues it intends to investigate further. These include the guidelines for the creation, structure and operations of non-statutory bodies, including such matters as the nature and terms of appointments, mechanisms for the review of existing non-statutory bodies, their functions, responsibilities and performance, and the need for each of them to continue to exist. The Senate Committee also said that it intended to examine further the accountability of non-statutory bodies, including the requirement for them to report to Parliament, and the detailed information required. The Committee referred to the fact that it would look at financial arrangements for non-statutory bodies, including their detailed presentation in departmental estimates; the means by which they are funded and their cost effectiveness; the categorisation of non-statutory bodies and the relationship of this categorisation to that of statutory authorities, especially the categorisation of incorporated bodies. The Committee said that it intends to embark upon a more detailed survey of all non-statutory bodies by questionnaire and that the proposed questionnaire will seek more information on finance and expenditure and will canvass the views of non-statutory body members on the operations of those bodies. The Committee also said that in the meantime it recommended that each department should include in its annual report a list summarising all non-statutory bodies in that portfolio and that the list should include at least as basic information the principal activities of the body, its membership and terms of appointment and its staffing, and an indication of those non-statutory bodies created or abolished during the year under review. This will at least make the task of monitoring non-statutory bodies a little easier in the future. I wish to commend the report of the Standing Committee on Finance and Government Operations, which follows the reports related to the statutory authorities of the Commonwealth. It is surprising that in the past so many bodies have been created which have not come within the purview of the Senate as a House of review in its scrutiny role. There have been varying aspects of the way in which funds are made available to such bodies, and the start that is being taken here is an important implementation of the attitudes which were adopted by the present Government in the policy it put forward on 9 February 1983 and which I assume it intends to continue. I refer to the policy entitled 'Labour and the Quality of Government', in which it indicated that it accepted the recommendations of the Senate Standing Committee on Finance and Government Operations in relation to statutory authorities generally. In particular, the following indication was given on page 21 of that policy document: That an Annual Reports Act be enacted along the lines recommended by the Senate Standing Committee on Finance and Government Operations, to provide for detailed parliamentary reporting requirements for public authorities. I believe that the recommendation of the Committee in relation to non-statutory bodies is consistent with the recommendations it has previously made, which generally have been accepted by successive Federal governments in this country. I believe this is an important step along the way but there is much further to go and I hope that in the very near future there will be some response from the Government in relation to what it is doing about an annual reports Act which, as I said, was one of the undertakings given in the policy paper published more than two years ago. I wish finally to indicate that the Royal Australian Institute of Public Administration has been awarding a prize for the best report by a department, in accordance with guidelines set down by the Institute. This award is now in its third year and we have seen a vast improvement take place in relation to the form, presentation and timeliness of reports from government departments. This is a welcome development and the Royal Australian Institute of Public Administration is to be congratulated for the initiative it has taken to improve the accountability of government to the Parliament and to the people. I am sure that the matters we have discussed will ment in the policy it put forward on 9 February 1983 and which I assume it intends to continue. I refer to the policy entitled 'Labour and the Quality of Government', in which it indicated that it accepted the recommendations of the Senate Standing Committee on Finance and Government Operations in relation to statutory authorities generally. In particular, the following indication was given on page 21 of that policy document: That an Annual Reports Act be enacted along the lines recommended by the Senate Standing Committee on Finance and Government Operations, to provide for detailed parliamentary reporting requirements for public authorities. I believe that the recommendation of the Committee in relation to non-statutory bodies is consistent with the recommendations it has previously made, which generally have been accepted by successive Federal governments in this country. I believe this is an important step along the way but there is much further to go and I hope that in the very near future there will be some response from the Government in relation to what it is doing about an annual reports Act which, as I said, was one of the undertakings given in the policy paper published more than two years ago. I wish finally to indicate that the Royal Australian Institute of Public Administration has been awarding a prize for the best report by a department, in accordance with guidelines set down by the Institute. This award is now in its third year and we have seen a vast improvement take place in relation to the form, presentation and timeliness of reports from government departments. This is a welcome development and the Royal Australian Institute of Public Administration is to be congratulated for the initiative it has taken to improve the accountability of government to the Parliament and to the people. I am sure that the matters we have discussed will form a further part of the guidelines established by the Institute, following the recommendations of the Senate Committee and the Government's acceptance of those recommendations. The net result of the whole lot is an improvement in the standard of accountability of sections of government to the Parliament and through Parliament to the people. It is to be welcomed, and the Opposition welcomes it. Question resolved in the affirmative. Senator GRIMES(Tasmania-Minister for Community Services) —by leave-This report sets out the findings and conclusions of a Department of Finance-Commonwealth Scientific and Industrial Research and Organisation Joint Working Party convened at the suggestion of the previous Minister for Finance, Mr Dawkins. Mr Dawkins took this initiative because of the level of public debate on the funding of scientific endeavours in Australia, and in particular the funds allocated to the CSIRO in the 1984-85 Budget. The joint working party addressed the 1984-85 Budget for CSIRO; financial management and control in CSIRO; communication and information flows between CSIRO and the Department of Finance; the allocation of resources in CSIRO; and other related matters. The working party concluded that the most appropriate measure for interpreting CSIRO's budget allocation is its overall level of ongoing activity abstracting from variation in non-recurring expenditures. On this basis the joint working party agreed that CSIRO received an increase of 6.6 per cent in Government funding in 1984-85, following increases of 17.2 per cent in 1982-83 and 6.9 per cent in 1983-84. Including funds provided by industry and other sources for sponsored research projects, the increases in ongoing funding are 7.8 per cent in 1984-85 following increases of 17 per cent in 1982-83 and 6.3 per cent in 1983-84. In addition, the report contains a description of CSIRO's management information and control systems and concludes that these are appropriate for the proper management and control of CSIRO's finances. The joint working party commended efforts made by CSIRO to develop efficient procedures for allocating and redeploying its resources. The joint working party also acknowledged the desirability of maintaining a balanced program of ongoing research activity and capital works and concluded that once its global budget has been decided the CSIRO should be free to determine the final allocation of that funding, provided the allocation does not lead to unacceptable budgetary commitments in future years. It was also agreed that funds from external sources should not be regarded as replacing appropriation funds on a dollar for dollar basis. I am tabling this report now so that any continuing debate on funding of CSIRO's activities may be better informed as to the facts of the matter. Senator PUPLICK(New South Wales)(10.15) —by leave-I move: That the Senate take note of the statement. The statement of the Minister for Community Services (Senator Grimes) concerns ongoing problems in the financial allocations made by the Government to support the Commonwealth Scientific and Industrial Research Organisation. In looking at the fairly bland form in which the statement has come down, as a comment on the report of the Department of Finance-CSIRO Joint Working Party, one would get the impression that everything is supposed to be rosy in the garden for the CSIRO, in particular in relation to the funding it receives from government. The Minister's statement that the joint working party agreed that CSIRO received an increase of 6.6 per cent in government funding in 1984-85, if allowed to pass, would appear as though some serious attempts were being made by the Government to provide adequate funding for Australia's premier scientific research institution. This is, of course, entirely incorrect. When one looks at the comments made by Dr Wild, the Chairman of the CSIRO, in regard to the 1984-85 Budget, as reported in the Weekend Australian of 25-26 August 1984, one sees this: Dr Wild maintained that the Budget was one of the worst on record, with the CSIRO suffering an effective cut in salary and operating funds for research of 3.2 per cent or $9.2m. Similarly one sees in the Courier-Mail, in the same month of 1984, that the chiefs of the 42 CSIRO divisions were writing to the Prime Minister (Mr Hawke) warning him that Budget cuts were eroding research and eroding the capacity of the CSIRO to get on with its significant national job. I cite another comment by the extremely well-informed science writer, Jane Ford, also in the Australian: Science and technology has suffered one of its worst Budgets on record with an overall increase in funding of only 1.6 per cent, allowing few new initiatives to get off the ground. It is simply true that this Government, largely motivated by the hostility which the previous Minister for Science and Technology, now demoted to Minister for Science, has towards the CSIRO, has been pursuing a policy which is leading to the attrition of the great work which that organisation ought to be doing. Similarly, enormous pressure is being placed on the CSIRO to encourage it to move away from some of the fundamental research which it ought to be doing. This is contrary to the practices that are being put in place by similar countries to our own in terms of their attitudes towards the importance of research and development. One notes, for instance, that in Japan the Ministry of International Trade and Industry has pointed out that the important shift in Japanese scientific research and funding should be towards basic research, with less emphasis on the way in which research and development is made something of a sacred cow in the operation of science support and science funding. An article in the Scientific American in November 1984 drew attention to the absolute key underpinning that fundamental science research has, and that has been one of the areas cut in the CSIRO, as indeed it has been cut in the whole scientific community by the activities of this Government. What the working party report does not address is the fundamental break-down in relationship between the Minister and the Government and the CSIRO. One knows that the relationship between Dr Wild and the Government-in particular, Mr Jones-has got to the stage where they publicly snipe at each other in the media and take the opportunity to criticise each other in the media. This does absolutely nothing to advance the position of the CSIRO or, indeed, to advance the cause of scientific research in Australia. One has even seen earlier this month reported in the Australian Press that there is an Australian Science and Technology Council report underway, or completed, on the reorganisation of science, technology and research funding. The report has gone to the Prime Minister. The Prime Minister is clearly annoyed at the attempts by the Minister for Science to pre-empt the Government's decision on this matter by announcing that he wants to change the structure of the CSIRO so that it more closely resembles the structure of the Australian Broadcasting Corporation. If anything were a recipe for disaster in Australian science, research and funding, it would be that. Moves announced by the Prime Minister in terms of the ASTEC inquiry are described in one newspaper report as follows: The move is seen as a major setback for the Minister for Science, Mr Jones, who wants to introduce legislation in this parliamentary session to revamp the CSIRO's upper echelon to allow a non-scientist to be chief executive. ASTEC has been urging the Prime Minister for months to set up an inquiry into the organisation, but the move was brought to a head by the discovery of Mr Jones' plans. The final comment I make is that the joint working party did not have the benefit of seeing the report of the Organisation for Economic Co-operation and Development Examiners who, in part, looked at CSIRO in its overall look at science research funding in Australia. We already know that, despite the significance of the OECD report, its major recommendations have been rejected by the Government, deliberately ignored and deliberately set at naught by the Government. Its comments on CSIRO funding, external funding and taxation arrangements all give rise to very serious concern about what the Government is doing in terms of scientific research in Australia. I conclude my remarks for the present by saying that this joint working party simply indicates two very clear things: By what it says it indicates how inadequate government funding for the CSIRO and for scientific research is, and by what it does not say it indicates, quite clearly, the damage that is being done to the CSIRO by the particular policies being pursued by the Minister for Science. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator GRIMES(Tasmania-Minister for Community Services) —Mr President, I table interim report No. 2 of the Royal Commission of Inquiry into the Activities of the Nugan Hand Group by the Hon. Mr Justice D. G. Stewart. Senator CHANEY(Western Australia-Leader of the Opposition)(10.22) —by leave-I move: That the Senate take note of the report. As the report has only just come into my hand and into the hands of the Minister for Community Services (Senator Grimes) I do not wish to speak on it now. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator GRIMES(Tasmania-Minister for Community Services)(10.23) —I move: That leave be given to introduce a Bill for an Act to amend the Bankruptcy Act 1966. By way of explanation I say that there has been a delay in printing the Bill and the further stages will be gone through later this day. Question resolved in the affirmative. Motion (by Senator Jack Evans) agreed to: That leave be given to introduce a Bill for an Act to establish a register of foreign corporations owning or controlling Australian property. Bill presented by Senator Jack Evans, and read a first time. Senator JACK EVANS(Western Australia)(10.24) —by leave-I move: That the Bill be now read a second time. I seek leave to incorporate my second reading speech in Hansard. Leave granted. The speech read as follows- No-one in Australia, not even the Government, knows how much of Australia is owned or controlled by overseas interests. This is particularly frightening when Australians realise that the present Government has a policy of allowing the Australian 'farm' to be sold off through relaxation or abandonment of FIRB controls. 1984 saw the Australian Labor Party national conference decide to alter its 51 per cent Australian equity policy. This change has now been put into practice. For example, the Government has acted to suspend foreign investment policy relating to merchant banks for a period of 12 months. Similarly FIRB decisions such as the approval for the Reckitt and Coleman take-over of Nicholas Kiwi, demonstrate this Government's relaxed stance on foreign investment. The decision to allow 16 foreign banks to enter the economy is a further example of how actions speak louder than words. (16 foreign banks is an over-kill compared to the Treasurer's earlier statements about the desirability of only half a dozen bank licences.) The current Government is actively pursuing a policy of allowing, even encouraging, the Australian 'farm' to be sold off. By doing so, it has broken its election promise of buying back the 'farm'. This Government, like its predecessor, is willing to allow our economy and our money markets to be guided by the decisions of foreign board rooms. Australia's enterprises and resources are being offered to all-comers. It will be interesting (and perhaps tragic) to see the effect upon Australian banking and financial institutions of the tidal-wave of foreign banks. Most merchant banks will be forced to drastically restructure and domestic non-bank financial institutions (such as building societies and credit unions) will be faced with new and unsettling forces. The future effects and changes are not predictable, and the Australian Democrats are concerned that our economy is increasingly guided and manipulated by trans-national organisations who owe allegiance to no-one but their own shareholders we are concerned that the Government's actions are reducing its ability to direct the Australian economy. Successive Australian governments have allowed the 'farm' to be sold off. The ALP's policies, however, will ensure that future Australian governments or investors will have difficulty buying it back. By allowing itself to be swayed by the multi-nationals, the ALP now runs in step with the Liberal Party: Both are prepared to squander Australia's heritage and sovereignty in return for short term gain. The problem facing Australians and future governments, is that no-one knows the extent of foreign ownership. Governments cannot be brought to account for denuding this nation of its assets if the people are kept oblivious of the extent of overseas ownership or control. Investors and governments can't buy back the farm if they don't know who owns it. At present, there is no way of finding out how much of Australia has been sold, leased, loaned, mortgaged or simply given away. This Bill will identify the 'big' foreign owners and will identify the value of those portions of Australia which they own or control. This Bill will establish a public register of foreign corporations which own or control major Australian properties or other assets. Foreign corporations with substantial assets or interests within Australia will be required to provide an annual statement to the Treasurer. That information will be used to compile a register which is to be available for public inspection. The form of the information required to be lodged is such that its preparation will incur very little additional time or expenditure. It virtually duplicates information which must now be lodged with the NCSC or the Commissioner of Taxation, or would be within existing corporate accounts. The Bill will only apply to foreign companies which own large amounts of Australian property. If a foreign company owns or controls more than $3m of Australian assets or an individual Australian asset worth more than $1m, then it would be obliged to lodge a form. It will not apply to individuals, nor will it apply to substantial foreign companies which do not own or control substantial Australian assets. Australians simply do not know how much of their country is in foreign hands. We are entitled to ask the question and this Bill will begin to give us the answers. The government of the day may still be able to sell off the 'farm', but now Australians will be aware of how much of it is sold and who is buying it. Australians elect ever increasing numbers of Australian Democrats as their watch-dogs of government. This Bill is yet another example of the Australian Democrats fulfilling that role on behalf of all Australians-now and in the future. I commend the Bill to the Senate. Debate (on motion by Senator Grimes) adjourned. 1985] Restoration to Notice Paper Motion (by Senator Harradine) agreed to: (1) That so much of the Standing Orders be suspended as would prevent the succeeding provision of this Resolution having effect. (2) That the following Bill be restored to the Notice Paper and that consideration of that Bill be resumed at the stage reached in the last session of Parliament: Remuneration and Allowances Amendment Bill 1984 (No. 2). The PRESIDENT —I have received letters from the Leader of the Government in the Senate, the Leader of the Opposition in the Senate, the Leader of the Australian Democrats and Senator Harradine nominating Senators Sir John Carrick, Harradine, Macklin, Robert Ray and Richardson to be members of the Joint Select Committee on Electoral Reform. Motion (by Senator Grimes)-by leave-agreed to: That the Senators nominated be appointed members of the Joint Select Committee on Electoral Reform. Message received from the House of Representatives notifying the Senate that the House of Representatives has agreed to the Senate's modification of the resolution appointing the Joint Select Committee on Video Material. The PRESIDENT —I have received letters from the Leader of the Government in the Senate, the Leader of the Opposition in the Senate and Senator Harradine nominating Senators Elstob, Harradine, Walters and Zakharov to be members of the Joint Select Committee on Video Material. Motion (by Senator Grimes)-by leave-agreed to: That the Senators nominated be appointed members of the Joint Select Committee on Video Material. Debate resumed from 19 March, on motion by Senator Aulich: That the following Address-in-Reply be agreed to: To His Excellency the Governor-General May it please Your Excellency- We, the Senate of the Commonwealth of Australia in Parliament assembled, desire to express our loyalty to our Most Gracious Sovereign, and to thank Your Excellency for the Speech which you have been pleased to address to Parliament. Senator CHILDS(New South Wales)(10.28) —Last night, before the adjournment of the Senate, I was speaking to the motion for the adoption of the Governor-General's Speech. I was praising the initiatives of the Labor Government on the issue of arms control. I was referring particularly to the Star Wars proposals of President Reagan of the United States of America. I was reading from an editorial in the New York Times which was highly critical of President Reagan's Star Wars scheme and the internal inconsistencies in the logic that President Reagan has used to advance that scheme. I have consulted with the Leader of the Opposition (Senator Chaney) and I seek leave to incorporate in Hansard the editorial headed 'Star Wars' so that the rest of it can be in the record. Leave granted. The document read as follows- 'STAR WARS' Mr Reagan saw even then that any defense, if paired with an offense, would be highly provocative to the Soviet Union, leaving it alone in danger of devastation. But Americans are not aggressive, he said. Besides, once the defense is completed, in 20 or 30 years, America would probably offer it to the Russians if they agreed to scrap most nuclear weapons. When the experts caught their breath, they proved even to the Pentagon's satisfaction that a leakproof, Berlin-to-Tokyo, all-cities defense is impossible. Even if it became possible one day, it would be so horrendously expensive that the Russians could easily damage, destroy or elude the defense at a fraction of the cost. Don't get excited, it's just research. So the Reagan loyalists who found it impossible to support the vision of an all-cities defense retreated to a new line. They concede that it is a pipe dream to think that there will ever be a better defense for New York than the certain threat of destroying Moscow, and vice versa. And they are satisfied that this certainly will last into their grandchildren's lifetimes. But what is wrong, they ask, with a lively search for alternatives? There is nothing wrong with modest research that can discourage the Russians from one day finding profit in renouncing the treaty against missile defense; indeed, the treaty envisions such search. But no program proclaimed with trumpets from the Oval Office, described as vital and funded with an initial budget of $30 billion, will be ''research'' in Soviet eyes. The mere pursuit of such vigorous planning and testing has to make the Kremlin fear a defense that might actually withstand a small attack. The pursuit of this research, in short, would provoke the Russians to pursue their own provocative defense and to rapidly expand their offense to guarantee penetration of any American shield. Well, not just research; we do need it now. Not just research is what another wing of the administration argues. These officials do not doubt that deterrence works, either. In fact they say they need ''star wars'' to preserve deterrence. What if the Russians keep building those big and accurate missiles, they ask, one day gaining the capacity to use only some of their missiles to knock out all U.S. land missiles and command centers in a single attack? America would still have all its missile submarines, but they are hard to communicate with, it is said. There are bombers and cruise missiles galore, but they are slow and most effective against cities. No Russian leader would be crazy enough to order such a surprise attack, these strategists concede, but a Soviet leader might threaten one as a way of trying to exact impossible demands. A wobbly future president might capitulate to the blackmail, believing that his only alternative was to attack Moscow-thus also dooming New York. That is the farfetched and unexamined theory that seems to be really driving ''star wars.'' It is the old, discredited ''window of vulnerability'' argument. ''Star wars'' is at best a scheme to defend land missiles, not people. It may also be an unadmitted scheme to make America the one that can threaten a surprise attack and benefit from ''nuclear blackmail.'' Well, what is wrong with that? One thing wrong is the calculation that the Russians could not keep up with America's defense technology. They surely would, at all costs, and would also build a sure-to-overwhelm offense. And that would drive America into an even more panicky weapons buildup. Some defense can conceivably bolster deterrence, but only after offenses are shrunken and frozen. And that requires co-ordinating with the Russians at the outset, not after they start building their own ''star wars.'' Meanwhile, there are vastly cheaper and less provocative ways to allay anxiety about vulnerable land missiles. Their warheads could be dispersed among more launchers, and launchers could be made mobile, impossible to find. Oh, really, it's just a bargaining chip after all. When the practical arguments start sounding overwhelming, the entire Reagan team reunites on a fourth justification: arms control. Americans may be unimpressed but the Russians are mightily impressed. Why else did they come back to the bargaining table? Why else do they insist that ''star wars'' be included in the talks that resume next month? If that is a serious question, there is a deadly serious answer. The Russians are indeed alarmed at being forced into a ruinously expensive new arms competition that they know will leave neither side safer and probably make the world riskier. They are scared of ''star wars'' for the same reasons that Americans should be. They must be desperate to learn whether it can be stopped at a tolerable price. Can it? Mr Reagan says no, ''star wars'' is not negotiable. He is committed, no matter what. But if it is unable to defend cities, unneeded for defending missiles, too grandiose to be just research and not a bargaining chip, what is it? Whatever he may call it, it is still ''star wars''-the most farfetched, least considered venture of the nuclear age. -THE NEW YORK TIMES. Senator CHILDS —I thank the Senate. I have referred to a number of articles that are critical of President Reagan. One article that took my attention which indicates the President's strong position is in the International Herald Tribune. It is headed: 'The Unshakable Reagan: Body Language Conveys His Deepest Convictions', and a sub-heading states: 'When He Talks of Space Defense, a Hand Gesture Can Be a Show of Force'. That article states: When President Ronald Reagan sits down face-to-face with four reporters by a roaring fire in his Oval Office . . . he seems more unshakable on certain pet ideas than he does on the television screen or in print. The force of his position comes across as much in his body language as in what he says. The article continues: He conveys a clear division between the issues forced on him by circumstances or the bureaucracy and those on which he has deep personal feelings. It states further: Consider the Strategic Defense Initiative, his proposal for a space-based defense against nuclear missiles. In a 30-minute interview that raised 27 questions, mostly on foreign policy, it was clear that this was the issue that moved him most deeply, the one on which he had the strongest convictions. The article, in another significant section, stated: But when the issues of strategic defense came up, his personal chemistry and his body language changed. He became totally engaged. He leaned his body into the discussion, moving forward in the chair and taking the conversational offensive. Words flowed with little prompting. I mention that because it indicates that the President of the United States is following a course. There is strong opposition in the Congress and in the Senate in America and, of course, strong controversy in the American public on this issue. I believe that the arms race is scandalous in its waste of material and human resources. The economic future of the whole world is imperilled by the Reagan Government's Star Wars initiative, but no country is in greater jeopardy than the United States itself. The whole world is now aware that the United States and the Soviet Union are each producing four or five nuclear weapons per day. Leaving aside the moral aspects of this mad escalation of the arms race, what are the economic implications? The new Budget announced by President Reagan reflects the biggest surge in military spending since World War II. The defence budget is now projected at $313.7 billion, which represents an increase of 12.7 per cent. Defence spending represents 28.5 per cent of the total budget. The interest on the mounting United States debt was estimated in November 1984 at $256m per day. As Walter Heller pointed out in the Wall Street Journal; the way things are going now, the United States will become the world's biggest debtor nation by 1986. Mr Heller went on to say: The combination of big deficits, escalating Federal interest costs and a Federal debt schedule to rise from $1.6 trillion today to $3.1 trillion in 1989 keeps the financial community uncertain, uneasy and in fear of a new outbreak of inflation. A country that doesn't earn its way puts its military capacity in jeopardy, says Alan W. Woolf in the Washington Post, in an article from which I will quote because he points out that every nation must pay for its defence. He states: Britain liquidated overseas assets, the investments of generations, and borrowed heavily to wage war against Germany. After the war it chose policies of current consumption rather than savings and investment. It did not earn its way in world trade and was quickly surpassed in economic strength and military potential by former adversaries. The United States is pursuing policies today not unlike Britain's after the war. He continues: America has embarked upon a military buildup without paying for it out of current revenue. Instead it is borrowing $2 billion a week from foreign countries. High U.S. interest rates, the direct result of not taxing to pay for spending, extract this capital from other countries. He concludes in one section: The manufacturing base is being eroded; the technological lead is being undermined; by curbing economic growth in Europe and Japan, relations with allies are being strained; in the Third World, the cause of democracy is receiving a severe setback. There we have an expert in the field reminding us of the danger to the American economy of the tremendous amount of money going into the arms race, particularly the Star Wars concept proposed by President Reagan. Another aspect of the economic distortion that is occurring in the United States was pointed out by John Kenneth Galbraith, one of the most distinguished American economists, in an article in the Bulletin of the Atomic Scientists entitled 'The Economics of the Arms Race-and After'. Senator Messner —Why don't you quote Milton Friedman rather than Galbraith? Senator CHILDS —I think Kenneth Galbraith is quite a respectable authority. What he is doing in the United States is drawing attention to the fact that, as he says, we have been using our capital for industrially sterile military purposes. I do not know whether Milton Friedman is also into the Star Wars concept. Nevertheless, Kenneth Galbraith is saying that it has resulted in the United States economy being left behind in regard to steel, automobiles, chemicals and a great range of other industries which have been weakened, especially in relation to Germany and Japan. In this rather lengthy article referring to America, Kenneth Galbraith points out: In 1977 . . our military spending was $441 per capita; that of Germany was $252; the Japanese spent a mere $47 per capita. It was from the capital so saved and invested that a substantial share of the civilian capital investment came back which brought these countries to the industrial eminence that now challenges so successfully our own. Galbraith pointed out that the investment in improvement of civilian plant was broadly the reciprocal of what went for weapons. The point I take from the Galbraith article is that high and escalating costs are certainly a great burden on the United States economy. Because it is the key economy in the world its high interest rates reflect on the whole world, including all the allies of the United States and particularly the Third World countries. An article which appeared in the Washington Post on 13 November, just after the American election, by the Associate Editor Robert G. Kaiser headed 'The Invisible 40 Million: America's Poor' stated: The United States is deeply divided along class lines. According to an ABC News exit poll, Americans earning more than $30,000 a year favoured President Reagan over Walter Mondale by more than 2-to-1. But those earning less than $10,000 a year favoured Mr Mondale by landslide proportions. The significance of this article lies in estimating how people voted. The article continues: Who are those people living in families with earnings of less than $10,000 a year-that is $192 a week, before taxes? Surely they constitute only a small part of the population? No more than 40 million Americans live in families with incomes of less than $10,000 a year. They are part of an America you did not see in those feel-good Reagan ads, an America of poverty and near-poverty that is amazingly large. In today's United States, one out of every four children lives in poverty. That is not a typographical error; one in four. The reason that is significant is that in the current United States Budget it has been necessary to cut welfare payments. We do not know how those payments will finally end up, but it seems that there is a certain agreement that United States welfare programs will be cut even further, adding to the number of Americans who face a great deal of discomfort and unhappiness. The human effects of the technological space race in armaments recall the words of President Eisenhower, also a Republican President: Every gun that is made, every warship launched, every rocket fired, signifies in a final sense, a theft from those who hunger and are not fed. Unfortunately, the tragedy is that neither President Eisenhower's own country nor others have heeded his words. I am confident that the debate in America will curb the President Reagan initiative regarding the Star Wars concept. I certainly have confidence in the American Congress, in the tremendous movement towards a freeze in nuclear weapons and in the fact that current negotiations might help us to curb the zeal of President Reagan to develop this very expensive weapons system. I was interested to read in an article appearing in the International Herald Tribune headed 'For Russia, Too, Guns or Butter' a reference to the Central Intelligence Agency. I am not the sort of person who usually quotes the CIA. However, this article is quite amazing. Stephen Rosenfeld points out in the article: It is this impression of relentless, implacable growth in Soviet military programs that provides the emotional fuel for the administration's own tremendous defense surge. That is the surge to which I have referred. It is the highest since the Second World War. Rosenfeld continues: The best estimates available come from the CIA, and the CIA has made public a new estimate suggesting that although there has recently been 'some acceleration in the rate of increase in Soviet military spending,' the rate remains near the 2-percent-a-year level that has been noted since 1975. The article also points out: But there are a couple of things to be said for the credibility of the CIA estimates. The CIA alone subjects its methods as well as its results in this field to criticism from outside as well as inside the government. And the CIA is currently run by one of the original Reaganites, William Casey, a partisan hard-liner who is just about the last person you would suspect of coming in low on Soviet military spending. The point is valid that the Reagan Administration is ignoring many of its friends in pushing ahead with this ill-judged and badly designed method that will destabilise the balance between the world nuclear powers and which will certainly threaten the Soviet Union, leading to a dangerous escalation on both sides. The authorities I have used, conservative authorities, express that concern. I certainly agree with it. I am proud of the position of the Australian Labor Party. At our national conference we took a position on this issue that was unequivocal, because we see the great danger of this development in outer space. Our resolution on this matter reads: Supports the use of space and all celestial bodies for peaceful purposes exclusively. It opposes any military bases, installations, fortifications or weapons in outer space. It also opposes the conduct of military manoeuvers in outer space. It also condemns the researching, testing or redeployment of anti-satellite (ASAT) weapons or space-based anti-ballistic missiles (AMB) weapon systems . . . That, of course, refers to the Star Wars concept I have mentioned. The resolution continued: Such military developments threaten to destabilise mutual nuclear deterrence between the two super powers, and thereby increase the risk of nuclear war. In conclusion, I turn briefly to a second matter for which the Government deserves great commendation. I refer to the fact that the Government proposes to have a review of taxation in this country. That review will allow discussion of all the perks and rorts that are the heritage of 35 years of conservative government. The Labor Party has had only five years to rule. I refer to situations that have allowed so many people in this country to be disadvantaged. The Government has been very bold to urge all Australians to look at the taxation system. I know that the Opposition will be hesitant to allow the Government to do that because we will find only that the Fraser years have led to tax avoidance and evasion on a grand scale. The Liberal Party, the National Party and the Australian Democrats will have the opportunity to face some of the problems that they have caused when we reintroduce legislation that will give the opportunity to take some ill-gotten gains from people who have been involved in tax avoidance. The taxation debate in this country will perhaps be the precursor of a more democratic approach to a whole range of issues. We can make sure that people get a fair go in this country only if we have information before us. Senator Walters smiles, but she has lived under the Fraser Government regime, when the only people who really knew the system were the lawyers and the accountants-and perhaps the doctors if we want to add some of the other highly placed people in the society who have known how to use the system. We are trying to make sure that people have the information so that ordinary people might realise, from the way in which the Australian taxation system has gone, that it is now on the verge of collapse in that equity has been lost and that this Government has the courage and the responsibility to carry through reforms which will bring equity back into the taxation system. Senator CHANEY(Western Australia-Leader of the Opposition)(10.45) —The Senate is debating the Address-in-Reply, and it is perhaps worth remembering just what we are debating and whose speech we are going to be talking about. The Senate has before it a motion for agreement to the Address-in-Reply which says many things that the Opposition believes. We are debating the proposition that we should deliver to the Governor-General a message in these terms: We, the Senate of the Commonwealth of Australia in Parliament assembled, desire to express our loyalty to our Most Gracious Sovereign . . . Of course, we are very happy to do that and to support that part of the motion. We are quite happy to go on, in accordance with the motion: . . . to thank Your Excellency for the Speech which you have been pleased to address to Parliament. We are thankful to the Governor-General for coming here to deliver it. It is not of course the Governor-General's speech. It is a speech prepared by Mr Hawke and his Ministers and we are not quite so pleased with its content. It is the view of the Opposition that the Governor-General's Speech is extremely defective as an outline of a program for Australia in 1985. On behalf of the Opposition, I move the amendment which has been circulated in my name and which seeks to add to the message of loyalty, which of course we accept, as follows: At end of motion, add: But the Senate is of the opinion that the Government's program outlined in the Governor-General's speech fails to address critical problems facing Australia in that (a) it fails to reassure the Australian people that the country's defence arrangements within the Western alliance will be preserved and strengthened following (i) the Prime Minister's capitulation to internal party pressures on the issue of Australia providing logistical assistance to the United States for its testing of the MX missile, and (ii) increasing uncertainty as to the future of the ANZUS Treaty fuelled by members of the Labor Government, including a Cabinet Minister; We object to the Governor-General's Speech and the Government message which it contains because as the amendment continues: (b) it contains no coherent economic strategy at a time when recovery is threatened by: (i) record government taxation and spending, (ii) continuing pressure within the Government for new taxes on assets, (iii) growing demands for higher wages and other extra cost burdens on industry, (iv) the level of public debt repayments, and (v) loss of value of the currency reflecting world concern about Australia's competitiveness and government instability; and Finally, we reject the message which the Government has put down in that, as the amendment continues: (c) it endorses a rigid, centralised wage determining structure which imposes the same cost burdens on commerce and industry regardless of ability to pay. The Governor-General's Speech is in fact a very interesting document. One can conclude after reading it only that it was written not in February 1985 but in November 1984. That is only a few months ago, but of course November 1984 was when the Government was dashing to its early election before the fragility of its hold on government in Australia and of its economic management became apparent. I do not need to burden the Senate with a long reminder of our explanation at that time of why the Government was rushing to an early election. We said that difficulties were facing the Government and it wished to have an election before those difficulties became apparent to the electorate. The Speech really reflects the sorts of bland assurances that the Government was offering the Australian people at that time-bland assurances on the basis of which it was re-elected to government in Australia with a rather narrower majority than it and many commentators expected. The Governor-General's message makes the most of a series of positives which the Government grasped then as it does now. Let me start by acknowledging that there are some positives. It is not the wish of the Opposition to see anything but progress and improvement in Australia and, where there is any sign of any progress and improvement, we will welcome it. If we look at the Governor-General's Speech and at the policy speeches put forward by Labor at the time of the election, I suppose we see that four positive points stand out. Over the last two years, there has been a useful increase in economic growth. There has been a respectable decrease in inflation, some growth in employment and, over that period, some decrease in industrial disputes. We are highly critical of the fact that opportunities presented to this Government have been wasted. We believe, and I think every commentator whose comments I have read agrees, that the good points that the Government was able to point to at the time of the election and in the Governor-General's Speech related largely to factors beyond the Government's control. They are the benefits of the wage pause put in place by the Fraser Government; the end of the drought, put in place by the Lord Almighty-or by physical occurrences beyond the control of man, if one is not religiously minded-something for which the Australian Labor Party cannot claim credit; the United States recovery, which has continued; and the Fraser Budget. In an address to the Economic Society in Canberra last week, the Prime Minister (Mr Hawke) acknowledged the role of the 1982-83 Budget in contributing to the recovery. What is puzzling about this document is the way it totally fails to acknowledge the extraordinary developments and changes which have occurred since last November and which clearly should have been addressed by this Government when it was saying what it would do in the time given to it to govern Australia. Since November 1984, we have seen the whole Australian defence policy and foreign policy under threat. We have seen a great deal of division and difficulty. We have seen decisions taken within the Government which have been determined, not by the senior Ministers' views as to what is in the best interests of Australia, but by the views of the Labor Left. We have had a great deal of debate in this place about the fragile condition of ANZUS and we have had endless quotation of the Government's own assessment of the way that the effectiveness and the operations of that Treaty have been diminished. The operations of the Treaty have effectively been condemned out of the Prime Minister's mouth. We know from him that the decision, not to test the MX missile in Australia but the decision to allow a few American aircraft to refuel in Australia while unarmed missiles were being tested in the Pacific, was forced on him, not because he believed it was in the national interest, but because of the concern and revolt within the left wing of his Party-a situation which he did not believe he could control. We have seen in the Government's meanderings through South East Asia, in policies that it has pursued with respect to Kampuchea and Vietnam, a most extraordinary confusion and condemnation emanating from senior spokesmen from countries in the region. Again, I do not need to labour that point. Let me contrast the attitude of the Government to Kampuchea and Vietnam with its attitude to its peacekeeping role in Israel. We have a government led by Mr Hawke at the moment, who is supposedly a great friend of Israel. He is a frequent visitor to that country and he has shown, by his words and his emotional displays, a deep attachment to Israel. For the last three years, Australia has been engaged in a practical peacekeeping operation with the support and co-operation of both Israel and Egypt. As part of the peace treaty between those countries, Australian troops have been participating in a multinational force, which is universally regarded as having been a successful element in maintaining peace in that part of the Middle East. This Government is now prepared to disengage itself and has made it clear that it intends to disengage itself from a peace keeping operation which is of enormous importance to Israel. Our continued involvement is supported not merely by Israel but also by Egypt. It is seen as important by the United States. New Zealand wishes to continue its involvement and its part in that constructive exercise of maintaining peace. Yet we are withdrawing. We have the spectacle of an Australian Foreign Minister wandering through Asia being misled by the Vietnamese and attracting condemnation of countries which are friendly to us, at the same time as we are ratting on the peace arrangements that were put in place under President Carter and in which we have played a constructive part. A group from this side of the House has recently returned from the Middle East. Some members were able to go to Israel and Egypt. I can say only that we came back utterly convinced that in our participation in the Sinai peace keeping force, we were performing a constructive, useful and appreciated role. Why is it that this Government withdraws from that sort of operation and indulges in the kind of nonsense we have seen in South East Asia over recent weeks? There is no suggestion of any of that in this Speech, this anodyne publication. This is a Speech for last year; it is certainly not a Speech for 1985 or 1986. There is no suggestion in this Speech that in the months before it was delivered there was a dramatic decline in the value of the Australian dollar. I do not know when the Speech was printed. Perhaps next year the Government might do us the favour of putting the date of printing on it. I suspect that the date was 1 December or 3 December 1984, because there is no suggestion in that Speech of the reality that Australia faced on 21 February 1985, the date on which that speech was delivered, that in the three weeks before the Australian dollar has declined from a United States dollar value of 81c to a value of 68.20c. There had been this decline in the three weeks leading up to the publication of that speech. Perhaps the Government does not think that matters. Perhaps it does not see the international market for our currency, and the international value of our currency, as any measure of international concern or any measure of the effectiveness of our economic policies. I say only that is not the view of the Opposition. I think it is extraordinary that the Government can lay down its program without reference to that extraordinary change in the value of the Australian dollar. That is not something that is totally outside the Government's control or concern. The Prime Minister has publicly conceded that the debacle over the MX missile testing and the Government's own failure to deal with its Public Service dispute and to control the flow of money in Australia were significant contributors to the difficulty faced over the Australia dollar. Nothing in this Speech draws attention to the fact that, since the improvement in industrial relations that we saw during the difficult economic times of the last two years, we have had an outbreak of industrial mayhem. What is the situation with respect to industrial relations when one looks at it from the vantage point of the Speech made on 21 February? The Speech talks in terms of great improvement. What was happening during the December-January period? Our major export industry, the coal industry, which returns the greatest value in exports today, was again being struck down by futile trade union activity in the Hunter Valley. That strike did not have the support of the Government, nor did it have the support of the New South Wales Labor Government. However, the Governor-General's Speech claims that this Government has skills in industrial relations. But we had, yet again, the cutting off of the flow of our major export, a further demonstration of our unreliability as a supplier, and a total failure of the governments concerned to deal with this serious industrial relations issue. At the Commonwealth level, Government senators have spent a lot of time telling us, the elected senators from the Liberal and National parties, that there could be no more heinous offence than that we should deny Supply. That would be an absolutely dreadful thing. Yet they let their own public servants cut off the supply of money to their own Government. They allowed public servants to bank up the moneys, to put the moneys that were being delivered to the Government into cupboards, and to deny that money to the Government. It is not good enough for the elected senators to be allowed to deny the Government Supply. But members of the Administrative and Clerical Officers Association may do so. They did it with impunity, and eventually the Government weakly resurrected some of the provisions it had taken out of the Act to control the actions of public servants-the illicit, unprincipled and anti-public interest actions of public servants. The Government took those provisions out of the legislation, so it was forced to go back to the Arbitration Commission to seek the power to stand down public servants, and then it weakly stood down a few. The Government let public servants get away with it after those public servants had had access to arbitration. Those public servants were striking because the Arbitration Commission had refused their demands. Now the Government is allowing them to go back to the Arbitration Commission to try again. Rumour has it that if the public servants are not satisfied, they will deny Supply to the Government again. Is that not some sort of crisis that might have warranted passing mention in the Governor-General's Speech? No mention is made of it. The list of problems that are ignored or skated over in this Speech is quite extensive, and I do not have time to deal with them all intensively. In terms of our long term health as a nation, we face a series of threats to our economic and social wellbeing beyond those I have mentioned. There are poor prospects for many of our export commodities. There is an extraordinarily difficult cost-price squeeze on the rural sector. I was in a wheat growing town in Western Australia a week ago and I was told by wheatgrowers that there was not a single budget submitted to the local banks that was not in deficit for that year-not one. That tells us something in a practical way about the cost-price squeeze facing the Australian rural sector. The Bureau of Agricultural Economics is predicting declines in rural incomes, declines in returns, an extraordinarily difficult market for wheat and other primary produce, and sugar is in a desperate situation. Where is the sense of any of that in this so-called blueprint for Australia, the Governor-General's Speech? The balance of trade problems which are resulting from the sorts of points I have been making meant that in the seven months ended January 1985 Australia's trade account had slumped into a deficit of $1.5 billion, compared with a $376m surplus for the equivalent period in the previous year. Our current account deficit had climbed to $6.8 billion compared with $3.8 billion in the previous year. We have an absolute disaster facing Australia in that area. Where is that dealt with in the Governor-General's Speech? Where is there mention of our lessening competitiveness? Where is there mention of the barriers to increased productivity? Where is there mention of the rigid labour market in both wages and work practices which is denying employers and employees the opportunity to create work? Where is there reference to the inefficient and costly statutory monopolies that are costing this country so much? Where is there any reflection of what the Minister for Communications (Mr Duffy) had to say about the Postal Commission in a very fine speech about a week ago? He pointed out that there is no future for the Postal Commission if it maintains the sort of work practices and attitudes it has now and the results it is achieving now. Where is there any sense in this Governor-General's Speech that Australia is being hampered by its transport and statutory monopolies, the cost of which has risen so much faster than inflation in the private sector in recent years? There is no mention of that and there is no prospect that those problems will be tackled. Where is there any mention of the turmoil on the tax front? Yesterday the Prime Minister had to get up in Caucus and ask Government members to stop talking about tax because of the confusion they were causing in the electorate-turmoil about what might or might not be done. Where is there any really serious attempt to come to grips with the fact that for the foreseeable future nearly one in four young Australians will remain out of work? The whole of this document stands as a disgrace to this Government, and there is no attempt at all to blueprint the next three years for Australia. What this Government has presented is a bland and pathetic non-program for real reform. I suppose it is unfair to say that there is no reference to employment; there is. I just say that it is totally inadequate. Let me touch quickly on the community employment program, which gets honourable mention as the creator of 57,000 jobs and something that will create 65,000 jobs this year. The Minister for Employment and Industrial Relations (Mr Willis) has said himself that if one tries to make these jobs permanent one will simply create more unemployment in the private sector. There are some useful things being done in the community employment program, but I would ask how many people think the Government is coming to grips with the real problems of Australia when they look through the Press releases put out by Mr Willis and note the jobs which are being created. Let me pick some really fine examples. There will be a $143,000 grant to the performing arts group Women on a Shoe String to provide seven jobs for long term unemployed women for 12 months to help present musical and theatrical performances, including free public performances, aimed at the general community. I do not think that many people would see that as a very serious attempt to come to grips with long term problems facing the Australian unemployed. We might be more attracted by the Royal Australian Ornithologists Union's promotion of public appreciation and awareness of birds in the Perth metropolitan area, one job for one year; or perhaps by five jobs for 26 weeks collecting urban stray cats in Western Australia. I am really sick of this sort of farce being presented as a serious attempt to come to grips with Australia's problems, and when I see the ability of Government members to slide past these facts, I can only say that they stand condemned. There is one solitary area of boldness in this whole program which gives a pointer to what the Government should be doing to come to grips with Australia's real, long term problems. We have the extraordinary aberration that in the financial area the Government has been prepared to move boldly and, in the view of the Opposition, correctly down the path of financial deregulation. We have supported the floating of the dollar, we have supported the deregulation of the financial system, and we have supported the admission of banks-we were advocating that in the teeth of Labor opposition when we were in government. The important point to note is that that is a splendid but isolated example of what is required in Australia today. In its isolation it is an important lesson to us. The fact is that elements of this Government know what is required. Somewhere, hidden away in the Government, there is a streak of economic rationalism that would like to burst out, but it has been able to burst out only in the financial sector. We welcome that. Let me repeat what Mr Howard said a week or two ago as economic spokesman for the Opposition: We wish that we could join in partnership with the Government in a similarly constructive effort to deregulate other sectors of the Australian economy, and particularly the labour market. The Opposition stands very ready to co-operate fully with the Government in anything that will ease and remove the long term problems we face, particularly the problem of long term unemployment, but the Government does not have either the conviction or the courage to make the related changes, particularly those to the labour market. I shall quickly touch on the labour market change. The easy political answer for Government members-sometimes the Australian Democrats may tend towards this argument too; I hope not-is that the Liberal Party and the National Party are arguing for lower wages. That is not our argument. Our argument is to have a flexible system that will permit economic growth and enable us all to be better off. The Labor Party can say that it is against cutting wages, but it has just seen the value of the Australian dollar-the dollar which is earned by Australian workers-decline from US81c to US70c. I would have thought that that was a cut in wages. The fact that the goods one wants to buy from overseas have become that much more expensive is clearly a cut in wages. What we are saying is that living standards are being destroyed in Australia, and that is only being hidden from sight by the fact that the burden is being borne by the unemployed. Those who are in work can protect themselves-or appear to protect themselves-in the short term on the backs of those who are unable to get work. The country goes down the chute. We go from being the richest country in the world to being the fifteenth richest. We drop, we drop, we drop, and we hear plaintive cries from the Labor Party that it is protecting living standards. That is an absurdity, and the sooner we have an honest debate about it the better. We have a country in which an assembly line can be stopped because the wrong man puts a screwdriver on to a machine. A factory can be stopped because the wrong man picks up a piece of paper off the floor. We have a country where a new way of producing things can be blocked because the trade union does not agree with it. We have a country that is capable of strangling itself in that sort of stupidity. There is no sense in this Governor-General's Speech that the Government is prepared to come to grips with that. The Governor-General's Speech really skates past the squandered opportunities that the first Hawke Government had. The major lost opportunity was to use the recovery and revenue surge that resulted from the ending of the drought and the wage pause to get the Government's house in order. Instead, the Government expanded expenditure and taxation to the highest levels ever. Now, when we are walking a knife edge on the path to recovery, the Government is facing all of the difficulties that that profligate action over the first year and a half of government is costing it. I conclude by saying that it is the Opposition's firm belief that this is still a time of opportunity for Australia. The day after the Governor-General made his speech on behalf of the Government, the views of 10 economists were published in Business Review Weekly. I would like to quote the reasons given by one of them as to why we can be optimistic about the prospects that Australia could have if it were governed properly and in the public interest. I refer to a report of what was said by the economist to CRA Ltd, John Macleod. Business Review Weekly states: The outlook for the international economy is 'probably the best we have seen in three decades' . . . Macleod forecasts further strong economic growth in the United States and Japan, the rising industrial nations of Asia and some Latin American countries such as Mexico and Brazil. However Europe-with its 20 million unemployed-is still lagging in the growth stakes. I do not have time to analyse why Europe is lagging and the other countries mentioned are not lagging but growing; however it is important to note that in the view of that commentator and many others this is the time of opportunity for Australia. I close by referring to what those 10 economists, including Mr Fraser, the head of the Treasury, thought was the problem for Australia. I quote again from Business Review Weekly, which brought together the views of these 10 people: Australia is walking an economic tightrope-one slip and it is the recession all over again-and the main hazard is another bout of wages-fired inflation. No one put it better than the new Treasury mandarin, Bernie Fraser, when he said a 5 per cent productivity-based wage rise would be 'disastrous' for the economy. Mr Fraser's final remark, as reported in this section, was: The best outcome would be no productivity rise at all. Mr Deputy President, there are opportunities for Australia at the moment. There are opportunities for us to capitalise on the reality of continuing economic recovery. There are still opportunities for us to do something about the long term unemployment problem and about the need for vigorous economic growth in Australia. The sad fact of the matter is that this Governor-General's Speech indicates that the Government will not have the courage to grasp the nettles that have to be grasped if we are to meet that challenge. There will be no total opposition to the sort of productivity rise which is demanded by the unions and which the head of the Treasury says will be so damaging to us. The Government shilly-shallies on issues such as whether it will discount rises in the consumer price index from wage rises to allow for the effects of devaluation. We have a government which has lost its nerve, lost its courage and lost its sense of direction. I think we will all keep the Governor-General's Speech of 21 February 1985 because it marks a milestone in the destruction and failure of the Hawke Government. The DEPUTY PRESIDENT —Before I call Senator Vigor, I draw the Senate's attention to the fact that this will be his first speech in this chamber. I ask honourable senators to afford him the usual courtesies. Senator VIGOR(South Australia)(11.14) — Thank you, Mr Deputy President. We live in a time of essential social change-change in technology, change in expectations and beliefs, and change in the global order of our world. The mass media bombard us daily with images we find harder and harder to comprehend. We all face the madness of the nuclear arms race; the madness of unemployment, which has a vice-like grip on many sectors of our community; the madness of massive destruction of the environment, including the Daintree area for short term gain, the Murray River as a result of salinity, insecticides and vandalism, the Victorian rainforests by fern poachers, and the Mallee through soil erosion, economic pressure on farmers, and ignorance; the madness of the senseless slaughter of children by allowing the sale of badly labelled or unsafe products, or the neglect of simple safety precautions; the madness of sitting and waiting for bushfires, droughts and floods to destroy people, animals, and whole ecosystems because we do not plan ahead; and the madness of an economic system which lets more than one in eight of our Australian people live in poverty, with no opportunity to contribute to the community in which we live. On the other side of the coin, exciting possibilities are offered by television, video, computers, databases and fibre optics, and by the development and use of renewable, low-impact energy sources using solar and wind power, sewage and waste energy. Now, more than ever, there are exciting alternatives: Alternative lifestyles to match new ways of viewing the world, alternative energy sources to conserve our natural heritage, and alternative technology to improve communication and understanding between people. However, these rapid changes-technological, scientific and social-are only vaguely understood by our Government, our Public Service and our parliamentarians. We are blind to the potential of our own technology and blind to the capacity of our own people. The process of rapid change is ignored in the Government's legislative program. Through this blindness, we are losing opportunities for the development of Australian industry, for the furthering of Australian science and for the nurturing of Australian culture. Through this blindness, the opportunity for real improvements in the 'Australian quality of life' is slipping away, with a whimper, not with a bang. Thanks to the Minister for Science, Barry Jones, we now have the Commission for the Future-possibly an exciting prospect, but could it be just another way of shelving our responsibility for acting now? We need to act now to confront the cancer of unemployment, the scourge of unfulfilled expectations given to our young people by our factory education system. We need to act now to find realistic alternatives to the important and central issues facing Australian society. We need to act right now, in this parliamentary session, to discover a practical pathway towards a strong, self-reliant Australia-in technology, in trade, in defence and in spirit. We need a strong, independent Australia-now! Parliamentary sessions are far too short to become bogged down hopelessly in debating moribund, retrospective tax Bills. The outcome of that debate is a foregone conclusion. I will not countenance retrospectivity, which brings our whole legal system into disrepute. Let us agree to process these Bills to their expected end as quickly as possible. As elected representatives of all Australians, let us set about confronting the real problems of establishing a new forward-looking tax and welfare structure-a structure fitted to our post-industrial economy. The first priority of a democratic parliament is to provide an economic and social environment in which we can develop the full potential of our people as individuals, as groups and as a nation. For this to happen, we need leadership and vision. Where is this vision? I thank those Australians who put me and my fellow Democrats into Parliament. We offered them the opportunity to 'change the world in which we all live'. I thank those South Australians who voted Democrat for their trust, for their hope and for their vision. The vision is out there; let us listen to it in here. I thank my Party members and supporters for their enthusiasm and dedication to this vision. I promise to pursue our common quest for a sustainable social and economic system, with less regulation, much less regulation. I thank my Australian Democrat colleagues in the Senate for their advice and support, which I value highly. I thank the staff of the Department of the Senate who have been so helpful in the past few weeks in leading me through the intricacies of this fascinating place. The introductory course, the personal conversations and the briefings have made my transition from 'Mr' to 'Senator', however new, a pleasant and a friendly one. The Governor-General's Speech and Senator Button's outline of the Government's program for this session of Parliament contain some much needed reforms. I applaud the assistance to 65,000 Australians through the community employment program. The scheme should be expanded to include long term opportunities for real and lasting job prospects in the community. In my region, Gawler, Elizabeth and Salisbury in the South Australian Riverland and in the Iron Triangle, we have made use of the scheme, but we still have almost 18 per cent of the community unemployed. I applaud the new enterprise initiatives scheme which will enable unemployed people with viable business propositions to receive income support to establish small enterprises. Such assistance ought to be longer term than just one year, to give the support necessary to establish properly such worthwhile enterprises. We need lasting jobs; we need long term hope. I applaud the Government's attempt to increase the competitiveness of Australian manufacturing industries by use of bounties and subsidies, rather than tariffs. We must, however, be prepared to draw the line. If the long term cost of the assistance in any form to a particular industry exceeds dramatically the total cost of paying unemployment benefits to all its workers, structural re-organisation of that industry may be required. We must be prepared to make the difficult decisions and opt to compensate adequately those who lose their jobs as a result of restructuring. We must be able to retrain them. This is surely a better alternative than continuing to sink public money into industries that cannot survive without permanent and expensive protection and assistance. Further, the importance of farmers and country people to the Australian economy and to our export earning capacity demands that the Government take immediate action to subsidise some rural industries, to ensure their survival and competitiveness on open world markets. The rural industries currently most in trouble are dairying, fishing, horticulture and beef, where the dumping of products like cheese, tinned fish, dried fruit, fruit concentrates and meat, both in Australia and in our traditional markets, threatens to close whole sectors of our economy. We have one of the most efficient farming communities in the world, but we will not stay that way unless we grasp the opportunities offered in agriculture by robotics, high technology, biotechnology and other low impact technologies. I applaud the Government's support for a South Pacific nuclear free zone. However, I might well question the credibility of the Government on this vital proposal. In the last sitting I and my fellow Democrats sat lonely on the Opposition benches while both Labor and coalition senators crammed together on the treasury benches to support nuclear-armed ships in the Pacific and in our ports. I applaud the concept of Australian defence self-reliance. There is, unfortunately, little evidence of any concrete Government commitment to this essential doctrine. Despite the staggering amount spent on overseas equipment, we are practically undefended, except for consultation with the United States of America in the case of an invasion. This is because of persistent neglect of local defence capabilities and treaties by both of the other two parties in Parliament. We must use the skills of our people-our scientists, our engineers and our strategists-to develop small scale, 'bee-sting defence systems' that we can maintain despite the tyranny of distance. I applaud the review of the Australian road transport industry. We must, however, include rail, sea, air and communications in such a review to get a balanced answer to Australia's infrastructure needs. I sincerely hope that the Government's land transport program will tackle the problems of travel and communication in my own State of South Australia. Most non-highway country roads are in tatters. The railways are being closed and lines ripped up. The Alice Springs to Darwin railway line was scuttled by a report which considered only so-called economic criteria and ignored the social and defence benefits accruing from such a link. We have only five bridges across the River Murray in South Australia in 639 kilometres of river. Communities like Berri and Loxton are separated by the Murray River. The river is not only a link, it can also divide. I shall move later in this session to establish a standing and legislative committee on Australia's infrastructure. In this I have the full support of my Party. We need an imaginative, co-ordinated and effective infrastructure to support decentralised, vibrant and dynamic industries. This is imperative if we are to survive as an economically developed people and sustain our quality of life. I applaud the Government's attempt to stamp out the scourge of organised crime and drug trafficking. We must make use of all available technology and imagination in this fight to stay just ahead. It is with real sorrow that I come to the serious holes in the Government's legislative program. In fact, in employment, technology, commerce and defence the Government's rear-guard action can be likened to that of a traveller pursued by wolves who has cut loose one of the horses drawing the sled every now and then in order momentarily to satisfy the wolves and to gain some respite in the chase. Those horses are the floating of the dollar, wiping the Medibank levy from the consumer Price Index, the assets test, sacrificing dairy farmers and horticulturists and admitting 16 foreign banks. What next? The draft Organisation for Economic Co-operation and Development examiners report, about which the Government has so far been silent, highlights many deficiencies inherent in our science and technology polices. One glaring example is that funds for the Australian research grants scheme in 1984, when measured in real terms, were actually less than those in 1974; a decrease in those 10 years. From 1979-80 to 1983-4 National Health and Medical Research Council grants rose from $14m to $38m, but over the same period the ARGS funding crept up from $13m to a paltry $22m. I seek leave to incorporate in Hansard a table, which I have presented to both the Government and the Opposition, to illustrate this point. Leave granted. The table reads as follows- DIFFERENCE IN GROWTH OF RESEARCH FUNDS Average CPI increase for period 1980-81 to 1983-84: 9.6% NATIONAL HEALTH AND MEDICAL RESEARCH COUNCIL 1979-80 1980-81 1981-82 1982-83 1983-84 1984-85 Expenditure (millions) 14.00 18.70 25.65 29.56 37.98 44.18 % Growth (nominal) 33.6 37.2 15.5 28.5 16.3 AUSTRALIAN RESEARCH GRANTS SCHEME These are approved on a calendar year basis 1980 1981 1982 1983 1984 1985 Expenditure (millions) 12.98 16.00 17.98 19.25 22.42 23.87 % Growth (nominal) 23.3 12.3 7.1 16.5 6.5 % Awarded to Engineering and Applied Sciences 14.2 12.7 14.1 13.7 13.1 13.4 Senator VIGOR —I thank the Senate. Large numbers of research proposals assessed as needing immediate support by the NHMRC have either not been funded or only partially funded. The same holds for its very poor cousin, the ARGS. The average size of ARGS grants has plummeted from 24,000 to 17,000 in the same 10-year period. How can scientists concentrate on the real work at hand if their jobs are in jeopardy? We, as parliamentarians, know the problem of unstable employment. What is needed now is a long term rolling plan which researchers can rely on to plan effective research programs and to be able to rely on having a job next week. We are among the most innovative nations in the world. Our mix of national backgrounds, the selection for individuality and drive and the spirit of adventure are an ideal formula for the development of new ideas and yet this can so easily be snuffed out by the lack of government responsiveness or flexibility, by a conservative banking system or by the pressures of imported economic stress. What is badly needed is a scheme to provide risk capital, without the ties of equity collateral, to allow inventions to be developed by the inventors themselves. We can learn from our own successes. Technology Park in South Australia at the Levels is an exciting and innovative attempt to promote and nurture Australian inventiveness. W are developing products for real markets, high speed vision processes, computer assistance to engineering, design and manufacture, optical sub-assemblies and a number of other things. I seek leave to incorporate in Hansard the list of companies and the breadth of their coverage. Leave granted. The document read as follows- CURRENT TENANTS AT TECHNOLOGY PARK AND THEIR SPECIALITIES Andrew Antennas Pty Ltd conducting research and development in the areas of defence and commercial telecommunications Austek Microsystems Pty Ltd international VLSI chip company providing computer-aided design and value-added manufacturing of high-end custom chips E.R.D. Pty Ltd developing new technology for low-voltage battery-charging Fast Forward Pty Ltd producing videos of scientific and technical products and matters and providing training in various aspects of media work Finite Development Pty Ltd production and mechanical engineering consultants taking a product concept to prototype stage using computer-aided design Menzel and Associates Pty Ltd carrying out innovative designs and research, mainly in industrial plastics Optimum Optics Pty Ltd providing consultancy in optics design and development Wylie and Associates Pty Ltd commercialising a piece of minerals processing equipment Computer Sciences of Australia Pty Ltd producing defence-related software Duntech International Pty Ltd manufacturing hi-fi system components as well as communications equipment South Australian Centre for Remote Sensing applying remote sensing and ground truthing technology in various situations Techsearch Incorporated doing consultancy work as the commercial arm of the Institute of Technology Adelaide Innovations Centre providing a comprehensive one-stop shop for corporate or individual inventors requiring assistance with commercialisation, business plans, seed capital or prototype development Several of these companies are in the process of expanding. In addition- Applied Research (Australia) Pty Ltd conducting solar research and undertaking contract research and development is establishing laboratories and a light-engineering workshop, while- British Aerospace (Australia) Pty Ltd developing complex hardware and software for space projects has announced its intention to relocate from the Salisbury Research Centre and has called tenders for the construction of extensive facilities on 3 1/2 hectares of land. Other developments are also in prospect. Source: Office of Technology Park Adelaide Corporation at Technology Park Senator VIGOR —A single building now houses most of these projects. Each tenant has a direct link with the Institute of Technology computer network. I am particularly pleased with this as I installed the first pilot computer network at the South Australian Institute of Technology some 12 years ago with exactly this in mind. Conference facilities are available without charge and secretarial work, including word processing, can be contracted out at rates that just cover the costs. The whole of this area is most exciting, but we need more technology parks both in South Australia and in the rest of Australia. In Whyalla, the Riverland and the south-east of South Australia this will further decentralise and develop our industrial capacity. The infrastructure is there. Let us use it. Japan has 14 technopolises or science cities. This has given its technology a sharp edge in world markets. Australia must be prepared to invest in new and existing technologies. Development must be tied more closely to the needs of industry. Research must be freed of the bonds of petty bureaucracy. Only then can we hope to give our top research workers a fair go. We must dare to create such environments for our scientists. I applaud Technology Park. As well as high technology we must consider low impact technology. We need to use off-peak solar water heating; efficient home insulation and other generating means, such as modern windmills, are necessary. Extra capacity in our power generation is not best fulfilled by having large generation facilities. These require enormous capital investment and, in the event of a serious grid breakdown will cripple industry and discomfort many people. We can make significant cost savings by using a variety of decentralised and local plants and stand-by facilities. We should use local products. If we can divert some of our defence expenditure locally and inject considerable hope and funds into our local industries we can tailor these defence capacities to handle some of our particular civil defence needs while also fulfilling our military defence aims. I would like to illustrate this by taking bushfires as an example. We are devastated annually by bushfires, yet a fire fighting aid developed by an Australian and sold in 37 countries overseas, which reduces the amount of water needed to extinguish fires, is ignored in Australia. In South Australia it is estimated that the 1983 Ash Wednesday fires caused $200m to $400m worth of damage. The size of this loss justifies fairly dramatic measures, yet we know nothing about the factors which spread bushfires. Bushfire control and suppression can only come from research into fire temperature, humidity, wind speed and direction, slope of terrain, aspect and type and quality of fuel. The Commonwealth Scientific and Industrial Research Organisation and other organisations need more funds for research on how to predict or convey rapid information about the movement of fire fronts and to study their prevention. We need speed and accuracy to pinpoint danger spots so that lives can be saved. A common grid description of the locations of houses, gates and key landmarks, with common maps for all emergency services, would give immediate and succinct directions to and from an accident, fire or other emergency. We should legislate federally for such a scheme, which would also decrease the traffic on emergency two-way radios during disaster control operations. The same arguments which apply to bushfires apply also to the need for research into droughts, cyclones, floods and all other 'natural' disasters. They are inevitable. We must plan for them and make certain that we have the facilities to be able to handle them. I would like to turn my attention to accidents, which are one of the major killers of Australians. The word 'accident' is a pernicious word. By using a word such as 'accident', we are emphasising the unpredictable, uncontrollable and unpreventable nature of an event. If we take positive steps towards preventing accidents, we should use language that describes the event in a sensible way, pointing towards a sensible solution. Accidents are foreseeable, controllable and preventable, but the word does not show it. Our language reflects how we think. So, rather than think about accidents, for which no one bears responsibility, we need to think about 'injury control', which describes our attitude and aims to avoid the event. Using 'injury control' instead of 'accident' in every government report would, I believe, help to prevent tragedies because it would make people think about what we are aiming to do to avoid the event, rather than just accepting it. Children are dying in Australia because we neglect to record and analyse their injuries nationally. Nine Australian children were disembowelled last year by vacuum filter systems for swimming pools. That happened before any action was taken to remove the product from the market. The reason was not that people did not want to have the product removed, but they thought it was just an isolated event in each case. We need to have good statistics. Where is it stated in the Governor-General's Speech that the Government is planning to prevent these accidents? Where is it planning to gather the information so that we know what accidents have to be prevented? Prevention is always better than cure. Nowhere is it more poignant than in the case of injury control in children. Nearly one in every two children receives medical treatment for injury each year. The estimated cost for this medical treatment is $200m. So-called accidental deaths account for the majority of deaths in children aged between one and 14. It is estimated that 60 per cent of all injuries to children involve common consumer products. Maybe the Government does not think it important enough to introduce legislation required for the proper labelling and packaging of consumer products. Dangerous pills and potions are not mandatorily packaged in child-proof containers. Diabetic children eat products with a high sugar content because of misleading labelling. Food additives which stimulate hyperactivity are not labelled. Children's accidents are neither random nor unexpected. Sweden has introduced a national data base to record children's injuries which identifies the common elements in accident situations and suggests how to prevent similar events occurring. In the short time available to me today I have only been able to take a few examples of the lack of planning which pervades the areas of science, technology, transport, communications, trade, defence and safety. These are just some of the massive holes in the Government's legislative program. I hope that the Australian Democrats can remedy these. We need more 'real' data collection for a better understanding of the world in which we live. Through the sensible use of computing, communications and data storage technology we can effectively plan ahead. Knowledge is power-power to change the world we live in for the better, if we care. I care. Senator MAGUIRE(South Australia)(11.43) —Today we are addressing ourselves to the Governor-General's Speech to Parliament on 21 February-a most excellent speech and a very comprehensive document covering a range of initiatives introduced by the present Labor Government. I took a particular note of the initiatives in regard to the reduction of poverty which the Governor-General outlined and also the improvements to the Australian economy which were documented by His Excellency. First, I congratulate those 13 new senators including one appointed senator who were elected to the Senate in December and who have already taken their places. I also congratulate those new senators taking their places in the Senate from 1 July. I hope that all those honourable senators in this Parliament who were elected in December are able to complete their six-year terms. It is becoming a rarity for senators who are elected to serve a six-year period. It is most regrettable that only one member of the current Senate-I refer to our President, Senator Douglas McClelland-has ever served a six-year term in this place. That happened decades ago, in the 1960s. It is a sign of the times and an indication of the way things have changed in the Australian Parliament when only one serving senator has ever served a full six-year term. I turn now to the results of the general election which was held in December. I note the great achievement of the Australian Labor Party in regaining office. The swing against Labor in the election was relatively low. The voting figures that are now being processed suggest that, after the allocation of preferences, it was probably less than one per cent, giving us a comfortable working majority in the House of Representatives of 16 seats. While the Leader of the Opposition (Mr Peacock) was claiming on election night that somehow his Party had won 12 seats in the election, no analysis bears that out. It is a theoretical concept anyway, given the increase in the size of the Parliament. But at the very best it can be said that, on the basis of private estimates, Labor may have lost seven seats that it might have won. Certainly three sitting members were defeated. I commiserate with my former colleagues John Reeves from the Northern Territory, Deane Wells from Petrie in Brisbane and Peter Steedman from Casey in Melbourne. They were the three sitting members who were not returned to the House of Representatives. It is very important to note that the Hawke Government can now expect to be in office for a minimum of five years until the next election is held. This will be the longest serving Labor Government in the peacetime history of Australia. It is tremendous to see in particular that, for the first time in history, the Labor Party is presiding over an Australian economy which is in the upswing phase of the business cycle. So often we have been elected to govern this country in periods of crisis. We were certainly elected to do so that at the beginning of 1983 but we are now in the very happy situation of presiding over an Australian economy on which most economic indicators are showing an upturn in activity rather than a decline. However, it is very disappointing that, once again, the party with a majority in the House of Representatives does not have a majority in this place. We, on the Government side of this chamber, will be watching with great interest the attitude of senators from minor parties towards the Government's legislation, particularly in the area of making the wealthy pay income tax. We will be watching their performance very closely in the area of tax reform and tax avoidance legislation. It is most essential that any tax reform package which comes out of the taxation summit to be held in July is not tampered with and that that package goes through this chamber intact. I noted in the speech of Senator Vigor this morning that he has already expressed a point of view in opposition to strong tax avoidance legislation. We will be watching his performance on that subject very closely indeed, and we will certainly make sure that his constituents in South Australia are well aware of that position. Turning to the election results in my State of South Australia, I indicate that the figures made available to us by the Parliamentary Library suggest that there was no significant swing against Labor in the House of Representatives in South Australia-barely one half of a percentage point. This is well at odds with the claims made on election night and in its aftermath about the large swing against Labor. It was hardly a swing at all. In particular, the results in South Australia's four non-metropolitan Federal seats were most encouraging. There were good swings to Labor. On a two-party preferred vote basis, in Mayo the swing to Labor was almost 1.9 per cent. In the electorate of Grey, which is held by Mr O'Neil, there was a swing of 1.3 per cent. There were also swings to Labor in both the electorates of Wakefield and Barker and a very pleasing swing indeed in the southern metropolitan seat of Kingston. I think the results in South Australia cast some real doubts on a number of campaign issues of the Liberal Party of Australia-those issues on which it ran during the election. For example, there is no doubt at all that there was a relatively strong swing towards Labor in the rural sector in South Australia, which is certainly at odds with the issues developed by the Opposition. I think a large number of people in the rural sector of Australia are now coming to realise, after 18 months to two years of Labor Government, that Labor Government is good for them and it is not the ogre that has been painted by the Opposition. I think Labor is poised in the very near future to destroy the myths about it in the rural sector in this country. It is also interesting to note that in South Australia, where the Opposition, and I think also the Australian Democrats, ran very strongly on the issue of a 10 per cent sales tax on wine, the voting figures for the wine producing areas were relatively good for Labor. In none of the major wine producing districts of South Australia was there a swing against Labor at or near the State average level. It was very pleasing indeed to notice for the first time in some years a swing to Labor in the Barossa Valley of South Australia. I think we can say, as a result of the very strong rural vote in our State, and I understand in other States of the Commonwealth, that the Opposition's fear campaign about the assets test on pensions and capital taxation seems to have had very little effect on the rural vote. Senator Messner —What happened in Sturt? Why don't you tell us about Sturt and Boothby? Senator MAGUIRE —In fact we had a swing to Labor in many areas where one would expect the assets test to have bitten hard and where perhaps we would have expected people to be somewhat more concerned about capital taxation than those in other areas. Those areas recorded swings to Labor. The analysis was very interesting. Senator Messner referred to the electorate of Boothby, I think. I point out that in Boothby, which incidentally has the highest proportion of age pensioners in South Australia and one of the highest in Australia, there was a quite pleasing swing to Labor in the House of Representatives. That is a very interesting finding indeed. The dominant issue at the 1 December election was the state of the Australian economy, and that is why, on the final figures now available to us, the Hawke Government won the election so comfortably and why the swing against us was very low indeed. Of course, the Australian economy now is in very good shape. The Liberal Party has much to worry about as a result of this election. It should be very concerned about its Senate vote in South Australia. For example, as you would be well aware, Mr Acting Deputy President, the Liberal Party obtained slightly less than three quotas at the election. On my analysis, that is the second lowest Senate vote from South Australia since the Senate voting system was last changed in 1949. As I have indicated, Labor's vote was relatively strong in the country areas of South Australia. The corollary of that is that the Liberal Party's vote was very soft in a number of country centres in South Australia, and I believe the Opposition faces an uphill struggle for the next Senate election. Despite all the hype and talk after the 1 December election about how well it did, in fact it did very badly. As a member of this place who has for years expressed a great interest in electoral reform, I was particularly pleased that as a result of the vast reforms in the Australian voting system introduced at the 1 December election some very positive outcomes were recorded. I am very pleased to put on the record that, compared with the 73,350 informal votes for the Senate recorded in the 1983 election, the figure was cut to 46,400 by the introduction of the new Senate voting system last December. It is very pleasing to note that 93 per cent of South Australian Senate electors chose to use the group voting ticket section of the ballot paper, by placing the figure 1 in the square against a party. With 93 per cent of the people having voted that way, it is clear that that is the voting system the majority of people want for the upper House in this country. It is also pleasing to note that the largest reductions in Senate informal votes in South Australia occurred in the industrial suburbs of the Adelaide metropolitan area. I place on the record the Senate figures for one polling booth in the Port Adelaide division, where the informal vote fell from a horrific 27 per cent in 1983 to only 7.5 per cent in 1984. So at one polling booth the proportion of informal votes fell by 19.5 per cent. Clearly, the new voting system for the Senate did what it was designed to do, that is, to have a dramatic effect in reducing the number of informal votes. Of course, that meant that a large number of Australians who had been voting for many years but who had been frustrated by an unnecessarily complex voting system were able to cast valid votes. They were effectively enfranchised as Australian electors for the first time. The fall of 19.5 per cent in informal votes demonstrates that in the past the means have always been available to overcome the high level of informal votes in Senate elections. All that was needed was the political will to do something about that national disgrace. Clearly, the Hawke Government had the will to do something about it, and it carried through the reforms. I have some doubts about the claims that the new Senate voting system was a principal cause of the large rise in the number of informal votes in the House of Representatives election. No doubt there were specific electorates where confusion over voting systems had an effect on the number of informal votes and, possibly, the final outcome in those electorates. I simply place on the record the figures for the electorate of Moore in Western Australia, which figures Senator Cook will be aware of. Only two candidates, a Labor candidate and an Opposition candidate, contested the seat, but there was still a 5.6 per cent informal vote for the House of Representatives in that electorate. Anybody who had simply copied the Senate voting system on to the House of Representatives ballot paper would still have recorded a valid vote. However, there was still a 5.6 per cent informal vote in that electorate, which is a very interesting finding. Clearly, we have a problem with informal voting in House of Representatives elections and reforms are needed to cut the number of those informal votes. I would prefer to adopt for the House of Representatives either optional preferential voting or some modification of the new Senate group voting ticket system. I now turn to the Government's record, as set out in His Excellency's Speech to Parliament. I believe that the Hawke Government was re-elected in December last year because of the outstanding success of its economic and social policies. The Government developed confidence in its policies throughout the community, including the business community. Australia's economy is still one of the fastest growing economies in the Western world. I place on record the significant growth in employment, despite the comments in recent months by the knockers in the Opposition. From the time of the National Economic Summit Conference in April 1983 until February this year, a staggering 380 000 jobs have been created in the private and public sectors of the Australian economy. Almost 400 000 more Australians are now in work than was the case at the time of the National Economic Summit Conference in 1983. That figure of 380 000 extra jobs in the private and public sectors indicates that we are well on target for half a million extra jobs in the first three years of our Administration. Even more impressive has been the reduction in unemployment, as measured by the Australian Bureau of Statistics. From a seasonally adjusted peak unemployment rate of 10.4 per cent in September 1983, the rate has now been cut to 8.3 per cent; so in the space of 17 months Australia has had a reduction in unemployment in seasonally adjusted terms of over two percentage points. That is something that the previous Fraser-Howard Government was not able to do. We have reduced unemployment. In large part, the economic recovery and the renewal of confidence within the community generally has been due to three important parts of the Government's strategy. First, and of fundamental importance, is the prices and incomes accord. As honourable senators will be aware, this has been the foundation of the Government's economic policy. The accord has allowed the economy to be expanded through stimulatory monetary policies without inflationary pressures being engendered in the community. It is a rarity in Australia for a simultaneous reduction in inflation and an expansion in the economy. I place on record that Australia's current inflation rate is 5.3 per cent, the lowest we have had for a number of years and less than half the inflation rate we inherited from the Fraser-Howard Government at the beginning of 1983. It is also very pleasing indeed that as a result of the prices and incomes accord the number of industrial disputes has been cut enormously. Days lost through disputes are now at their lowest level for 16 years. It is particularly pleasing to note that while the number of days lost per 1,000 employees has declined to 246 for Australia as a whole, in my State of South Australia the record is even more impressive. The number of days lost per 1,000 employees has been reduced to only 56. So it is well below the Australian figure. Another element of our policy to expand the economy has been the stimulus we have given to the housing industry, a most important part of the Government's strategy. Housing is not just a matter of providing much needed shelter for Australian families; it is a very large industry and a major employer in the Australian economy. I place on record figures which show the great success of this Government's first home owners scheme. To date, 80,000 Australians receive grants under the scheme. Obviously, it has had a key impact in stimulating the building sector of our economy. The Government has also made a concerted attack on unemployment by introducing a range of labour market programs to improve the situation in our labour market. Of course, the major program under this heading has been the community employment program. That program has been designed to work in parallel with the expansion in the economy by focusing on those aspects of the economy and those areas of the labour market which are not likely to improve as rapidly as the economy generally. I mention the long term unemployed, members of the Aboriginal community, disabled Australians and some migrants with language difficulties. It is very pleasing to note that until the last few days or so some 68,000 Australians had found employment under the community employment program. Of course, that gives them very valuable work experience and enables them to go out into the private sector of the economy and offer themselves to employers for work. So it is clear that the state of the economy now is much better than it was two years ago when the Labor Party took over the Treasury bench. Of course, much has yet to be done. The Governor-General, in his Speech, said: . . . the Government will continue to give a high priority to improving the living standards of the most needy in the community. As honourable senators will be aware, as part of this commitment the Government has undertaken a comprehensive review of the Australian taxation system. I believe that tax reform is the most important task facing this Government in its second term of office. The tax system in this country-a system we inherited from the Liberal Party which has ruled this country almost entirely since the end of the Second World War, a ramshackle system which we inherited from the Liberal Party which governed this country for all but three years from 1949 until 1983-is in great need of reform. I believe that there are no easy options. It is a very difficult area. Certainly, as a member of the Labor Party I believe that the burden of taxation in this country must be related more closely to each individual's ability to pay. I will be saying more about that this afternoon. Much has been said about tax in this country, about the tax mix and the level of tax. But many misconceptions prevail. I simply document a finding on a recent report by the Organisation for Economic Co-operation and Development in Paris that, at the national government level, Australia is the only member of the OECD which has no tax on assets. That is a very significant finding. Australia is one of only two countries without a capital gains tax. The other country is the Netherlands. Australia's tax system, based on those criteria, is considerably at odds with those of comparable overseas countries. I also argue that Australia is not a high tax country, as some people would have us believe. Figures which are available indicate that Australia does not take a high proportion of its gross domestic product in the form of taxation, certainly not as high as in most of the countries with which we normally compare ourselves. However, the taxation burden in Australia is borne unfairly by the poor and by people with low to middle incomes in this country. That is where the burden really is felt. Something must be done about the situation. The tax burden must be distributed more equitably. We have to work tirelessly towards the elimination of poverty in our very affluent country. Around one million Australian live in poverty. We know that. However, what we do not know, unfortunately, is just how wealthy the wealthy are in this country. We have no reliable information on how wealthy the highest income earners are, that is, those with inherited wealth. We have no information on them at all. For that sort of reason I believe that it is imperative that the Government's proposed wealth inquiry get under way as soon as possible. I am a very strong supporter of an inquiry into the distribution and ownership of wealth. I believe that many worthwhile things could come from such a report, as they did in the United Kingdom from the royal commission into income and wealth in the United Kingdom. Some members of the community and of the Opposition claim that in the context of taxation reform the 60 per cent marginal tax rate is too high and somehow acts as a disincentive to work. I simply place on the record that there is no evidence at all from economists to support this view. In fact, the real disincentives to work occur at the very bottom of the income scale where Australians face what can be described as poverty traps or poverty plateaux. Poverty traps are where citizens face very high effective marginal tax rates as a result of the joint working of income tests for pensions and benefits and the taxation system. I believe that is where the highest marginal tax rates occur, in some cases over 100 per cent. That is where I believe incentives to work really bite. We should have no more nonsense about the claimed impact of the 60 per cent marginal tax rate on incentive. Recently I had the opportunity of reading a paper by a professor of economics at the Massachusetts Institute of Technology in respect of incentives to work in the United States. It suggested that to have any noticeable effect on the work incentive as a result of income tax changes one virtually would have to abolish the American income tax system. One would have to reduce tax to such a low level before one started having and noticeable effect on the incentive to work. I am certainly very sceptical about those sorts of arguments. However, something has to be done about the very high marginal tax rates for low income earners who, in some cases, face rates of over 100 per cent. I simply place on record the fact that we have made some moves in this area. As you will be aware, Mr Deputy President, in last year's Budget the Government provided taxation rebates for persons in receipt of the unemployment benefit and the sickness benefit. I believe that if the Government is able to implement its nine principles of taxation reform, it will certainly do something to remove poverty traps and, in that way, help to remove the blight of poverty from Australia. I believe that if poverty is to be wiped out in this country the wealthy must be made to pay their fair share of tax. This is the most important challenge facing the Government and the community generally at the forthcoming taxation summit. I believe that challenge must be taken up. The DEPUTY PRESIDENT —Order! Before I call the next speaker, I draw the attention of the Senate to the fact that this will be Senator Short's first speech in this place. I ask honourable senators to accord him the usual courtesies. Senator SHORT(Victoria)(12.10) —I am honoured and delighted to have been elected to the Senate as a representative of the people of Victoria. I assure all Victorians that I will strive at all times to work in their best interests and in the interests of our State. I will travel widely throughout the State, and seek a wide range of views on the issues which concern Victorians and Victoria. I congratulate the other newly elected senators, from all States and all parties. I look forward to working with them and with other senators in the important tasks we face as members of this Thirty-fourth Parliament. I also take this opportunity to thank those many people, both within and outside the Liberal Party, who have provided such wonderful support and encouragement to me, from the time prior to my preselection, to my election and since. In particular, I thank my wife, Jan, and my family. The Senate plays an essential watchdog role on behalf of the basic rights and freedoms of all Australians, and over the excesses of executive government. Any attempts to weaken or dilute that role, or the responsibility of the Senate, must be vigorously resisted by every member of this chamber. I have returned to the Federal Parliament after an absence of more than four years, having been the member for Ballarat in the lower House for five years prior to 1980. Those four years spent in the private sector, away from active politics, have clearly brought home to me the fact that the electorate is very cynical about politics. The people of Australia simply do not believe that political parties or politicians are committed to firm political principles. The electoral rebuff the Labor Government suffered on 1 December was due, importantly, to the fact that the electorate saw the Government as governing on the basis of expediency rather than principle. The electorate demands, and deserves, much more from its politicians. Australians are desperately looking for leadership based on firm principles which they understand and which accord with the long-standing basic values of our society and the desire for growth, stability and security in an increasingly unstable world. I wish to use the unique opportunity provided by a maiden speech to state the broad principles which will guide me as a Senator; and to apply these principles to some of the major issues which I see as important to the future of our nation. At the time of my preselection as a candidate for the Senate I said, without qualification, that the political principles which motivate me are those of a Liberal who believes passionately that it is people, through the economic freedom of the competitive market, who have built our nation, not governments. This view of the fundamental importance of the role of the individual in our society extends to all areas of human activity. It extends beyond economic issues. It goes to the core of those other issues about which Australians today have such great concerns. I refer to the role of the family in today's society, the quality of education, the values and attitudes of our people, the future of our younger generation, and pride in our nation and our endeavours. It extends to the values, the legitimacy and the rights of private enterprise and property ownership, of social cohesion, of taking the best from the past and building on it for the future. It extends also to thrift, to reward for effort in whatever field of endeavour, and to self-help and family responsibility. The great majority of Australians want a vigorous assertion of a new and creative kind of liberalism based on these issues and values. There is a mood of change throughout much of the Western world. There is a return to some of the basic values which we neglected in the 1960s and 1970s. The spectacular electoral success of President Reagan and Mrs Thatcher owes much to their unflinching demonstration of their commitment to free enterprise, smaller governments, lower taxes, strong national defences and traditional values. This mood of change is also happening here. Any political party which ignores this fact is out of tune with contemporary Australia. The intellectual debate on these issues needs to be vigorously pursued in the market-place of ideas by those who believe that individual freedom of choice is the fundamental virtue of a democratic society. This debate must include a strong exposure of two of the dangerous hoaxes that have been foisted on the Australian community in recent years. I refer to the concepts of consensus and corporatism. The concept of consensus ignores the fact that in our community there are numerous differences, many of which are simply not reconcilable. The danger in consensus lies in agreements being reached on a lowest common denominator. That is the path of mediocrity, of suppression of opportunity and of abdication of political leadership. Consensus is a myth. It implies harmony, but where is this harmony? Is it with the 25 per cent of young people who cannot get jobs, the pensioners who are to undergo assets tests, or those communities, both Aboriginal and non-Aboriginal, involved with land rights? Is it with those small unions and their members who are losing their individual freedoms under the guise of the prices and incomes accord, the chronically ill who are forced out of hospital after 35 days, or those average wage earners who now pay 47c tax on every extra dollar earned? Of course it is not. Consensus is a myth. It may also well be a substitute for a lack of conviction that the elected Government has in its own policies. Corporatism in Australia has inhibited the free and wide-ranging expression of views. It has been used by the Government as a device to railroad through its own economic policy objectives. It has ignored the views of the great mainstream of Australians who are not part of the corporate state. Last year the Prime Minister (Mr Hawke) described Australia as a successful corporatist state. Did he really mean that? If he did, he was saying in effect that individualism in this country is dead and that it is a good thing that individual interests are being submerged by the dominance of a small number of groups of politically organised and powerful interests to the exclusion of the views and aspirations of the majority. I wonder how many Australians would agree that that is a desirable state of affairs. I now wish to apply some of the political principles I have mentioned to a few of the vital economic and social issues which face us. Underlying these issues is the basic question of the appropriate role of government in the Australia of the 1980s and 1990s. Australia today is inextricably linked to the international economy. There is no way we can avoid this; nor should we. If we manage our affairs correctly we stand to gain a great deal domestically. We will also enhance firmly our stature as an independent nation. If we do not recognise that we are part of the international economy and adopt appropriate policies, we will face an inevitable progressive decline in our living standards, our quality of life and our independence. The essential prerequisite for a better society is economic growth. Only through economic growth can the living standards of an expanding population be improved and new jobs created, and wealth and income created to meet the needs of those in our community who require support. Australia lags behind most other Western nations in economic growth rates. Only a generation ago Australia had the fifth highest standard of living in the world. Today we rank about twentieth and are rapidly being overtaken by many other countries, including the newly industrialising countries. Why is this so when we have a wealth of natural resources, a skilled work force, a stable political system and a host of other advantages which should have kept us near the top of the growth table rather than towards the bottom? There are several reasons. We have not capitalised on our natural advantages to produce those goods and services that we are best at producing. We have tried to produce too wide a range of goods and services. For too long we have ignored the fundamental economic principle of comparative advantage. We have been unwilling to remove the rigidities and the roadblocks in our economy which raise our cost structure and prevent our resources being used as efficiently as they should. We have allowed government to become too large and too intrusive. We have too much government and too much regulation. Each of these is a major drag on wealth and income-creating productive enterprise and a major destroyer of personal incentive and innovation. Between 1960 and 1980 some 49,000 new Acts and regulations were introduced. Many of the regulations escaped the scrutiny of Parliament. Each one of them imposed heavy costs on the community and particularly the business sector, large and small businesses alike. This financial year the public sector in Australia will absorb almost 45 per cent of our total national production. As recently as 1970 it was 32 per cent. In 1960 it was only 28 per cent. Growth in government can be financed only by taxes and borrowings, and both have increased staggeringly over recent years. Thirty years ago, in the mid-1950s, an adult male on average weekly wages paid less than 20c tax on each additional dollar he earned. Today he pays 47c in the dollar. Average tax on each dollar earned has increased two-and-a-half times over this period. Let us look at the income tax burden in another way. In the mid-1950s the top rate of personal income tax began at an income level 18 times average weekly earnings. Today the top rate begins at an income less than twice average weekly earnings. But that is not the end of the story. Not only has the tax burden increased seemingly uncontrollably; so has the debt burden-and under successive governments. In the past two years alone the Labor Government has borrowed an additional $15,000m. That is approximately $1,000 for every man, woman and child in Australia. The interest bill on Federal Government debt in this year alone is $5,600m. That is more than the Government spends on education and it is almost as much as it spends on the total defence and security of our nation. When State and local government borrowings are included, the total public sector deficit this year is 8 per cent of gross domestic product, twice the figure it was only two years ago. These levels of borrowing are dangerously high. They weaken confidence in our currency. They produce political instability. They make interest rates higher than they should be, thereby discouraging productive investment. They damage the prospect of any meaningful tax reforms and they leave both ourselves and future generations with a huge legacy of debt to repay, with interest. Government borrowing is simply a form of deferred taxation. It is imperative that these trends be reversed, and reversed quickly. They can be if government has the political courage to reduce its share of the total national cake. The only reason governments tax and borrow is to pay for their spending programs. Hold government spending and we hold taxation and government debt. But it is not sufficient merely to hold government spending at its present share of our national product, because that share is now the biggest in our history and, therefore, the tax burden and the debt burden are the highest in our history. We must reduce these burdens, not just hold them at present levels. If the Government is determined to reduce these burdens, there is no reason why it cannot reduce its spending. The private sector has been forced to do so in recent years in the interests of efficiency and, in many cases, its very survival. Why should the private sector, through taxes and regulations and other government-imposed costs, be sent to the wall while governments spend seemingly without any constraint? But the Government does not need to go even as far as to reduce its actual spending. All it needs to do is not to introduce new programs or more extensive services than already exist. Even a real increase of one to two per cent a year in government spending, to take account of new recipients under existing programs, would produce a progressive decline in the share of government spending in gross domestic product, assuming economic growth at the average rate of the past two decades. This objective should not be difficult to achieve, given political courage. However, the Labor Government's performance over the past two years does not provide grounds for much hope. If the Labor Government continues over the next three years to increase its real spending at the same rate as in the past two years, about 7 per cent, total government spending over those three years will be at least $25,000m more than it would be if spending increased by one to two per cent. No wonder the Labor Government is looking at more and more ways to increase its revenue. That brings me to the so-called tax summit. It will not be possible to achieve any meaningful tax reform unless the overall tax burden is eased, and that is not possible unless the total share of government spending is reduced. I therefore urge the Government to call a summit on expenditure before the summit on taxation. This expenditure summit should look at both the total level of government spending and a comprehensive review of the effect of government spending programs. For example, government spending on education, health, social security and welfare has trebled in real terms in the last 20 years. What the taxpayer and the community in general are rightly asking is whether the nation's literacy, security, health or ability to care for those in need has increased proportionately. The answer must surely be a loud no, and surely we must ask why. There are other areas of expenditure the effectiveness of which in furthering desirable economic objectives must be questioned. The Human Rights Commission is one and the Commission for the Future is another. Programs being proposed by the Australian Bicentennial Authority also suggest that savings could be made in this area. The potential list is very long. Unless the Government sets explicit ceilings on its expenditures, the hastily conceived and politically motivated tax summit will be not only a waste of time; it will be a farce and, worst of all, highly divisive. There are several other dangers in the tax summit. The most worrying is that it will look at tax reform in a vacuum. It will neglect the expenditure side of the equation. It will also not form part of any integrated approach to national policy formulation, which should include wages policy and social welfare policy. If we are to make real and worthwhile policy advances to reduce the scourges of unemployment and poverty in Australia, the interrelationships between the taxation system and these other areas are crucial. A primary aim of social policy must surely be to enable people to provide for themselves by their own efforts. We can make social progress in Australia only through economic discipline based on sound political principles. Principled politics is the only basis on which Australians will understand and accept basic and sometimes hard economic and social truths. Yes, we do need tax reform in this country, but please let us approach it properly. There should be scope for constructive and vigorous debate on a wide range of ideas. Some of these may be for the longer term; for example, a uniform rate of income tax at, say, 25 per cent with a constitutional guarantee ensuring that governments cannot change the rate unless under very strict safeguards. Tax reform should aim for equity, neutrality and simplicity, but within these parameters its overall objective must be to encourage the creation of income and wealth in an entrepreneurial environment in which effort is rewarded and economic growth and job creation encouraged. We must avoid taxing the inputs of wealth-creating industries. We must provide positive encouragement to economic growth and international competitiveness, and only then look to the resultant enhanced profit flow as an appropriate source of revenue. For too long in Australia we have attempted to tax wealth and income before they have been created, and the result is quite simply that they have not been created. We must change course. Not to do so would be to condemn all Australians to progressively declining living standards and an unacceptably large proportion of our potential work force, particularly young people, to permanent unemployment. It is a tragedy that in 1985, International Youth Year, we find so many of our young people alienated from the political system and in danger of becoming a forgotten political generation. We have an opportunity through creative tax reform to help retrieve this situation. But we also need to do much more in other areas. The most important of these is the area of wage fixation. There can be no doubt that Australia's wage fixing and industrial relations mechanisms are in need of even more fundamental review and reform than our taxation system. To achieve this, governments are required to balance wider public interests against the narrow sectional self-interest of particular community groups. Only in this way can a meaningful attack on unemployment be mounted. There can be no sustained reduction in unemployment if sectional interest groups such as the Australian Council of Trade Unions continue to pursue such policies as full wage indexation, increases in minimum wages, dubious equal pay and superannuation claims, and calls for ever-increasing redundancy payments. Supporters of the present wage fixing and conciliation and arbitration systems argue that wage indexation is necessary to buy industrial peace with the unions. But why? Who is running this country? It is obviously not the Government. The Deputy President of the Conciliation and Arbitration Commission, Mr Justice Ludeke, has stated quite bluntly that the system no longer satisfies Australia's requirements. Many of its elements, particularly the concept of comparative wage justice, defy logic although they are deeply ingrained in the Australian psyche. Why should all employees receive the same wage increases at the same time, regardless of their respective employer's capacity to pay? Why is it wrong to pay one employee more than another because he or she is better at his or her job? Why is it illegal to pay a potential employee a wage which the employer can afford and the employee finds acceptable, if that is the wage that will create an extra job? Why should young people be forced into unemployment and on to the dole, when they want to work and when there are jobs waiting for them at an affordable price? Many Australians are asking these questions. They are not finding acceptable answers. The absurd rigidities of our wage fixing system are the cause of much of our current economically and socially intolerable level of unemployment. Our conciliation and arbitration system suffers from other fundamental defects; the excessive legalism, the inability to enforce labour contracts, the inherent tendency to settle wage and wage-related claims to buy industrial peace, regardless of capacity to pay, and at the expense of both existing jobs and potential new jobs. Through a failure to meet these defects head-on, through a failure to stand up to the narrow sectional interest groups that support the present system-and these include not just the unions-we are unnecessarily and cruelly condemning countless thousands of people to continuing unemployment. Our young people deserve a better go than this. They deserve to be permitted to take advantage of competitive wage opportunities. These are not just matters of economics. They are also matters of profound social policy. The only sustainable and meaningful way of creating the right environment in which to tackle our social problems is by improving our economic performance. That in itself will not, of course, cure all the problems, but without it they will be incurable. All sections of the community have a role to play in pressing for change and improvement in our economic and social conditions. In particular, I urge the private sector to play a much more prominent role. As the former President of the Business Council of Australia, Sir Arvi Parbo, has said: There is nothing which businessmen do which is more important than their duty to be involved in public policy. We all have a duty to examine our own actions, to ask whether we have demanded too much by way of so-called rights, and offered too little in the way of acceptance of our responsibilities. In this respect in particular, there is an important role for government. Successive governments, from both sides of politics, have been guilty of encouraging unrealistic community expectations as to what government can provide for people rather than what people can and should provide for themselves. I repeat what I said at the outset. Australians are desperately looking for leadership which has a basis of firm political principles rather than expediency and populism. As a Victorian senator, I intend to do all in my power to encourage my Party to continue to pursue creative policies in line with political principles which have as their objective greater freedom of economic choice, a smaller role for government in terms of spending and taxing and in regulating our commercial and other activities, the encouragement and strengthening of the family as the basic cohesive unit of our society, and the promotion of those basic values which have been so vital to our development as a nation, and of which we are in danger of losing sight. I shall be encouraging my Party to speak out on those social issues which concern so many Australians. I shall be saying that unless individuals are given the freedom to choose, and to reap the benefits of their efforts, we Australians will not grow in economic or social well being. Nor will Australia be a fair, just or vibrant society. I want to see an Australia where Australians are encouraged to dare to strive to achieve. Surely that is what government should be about, and what human freedom and liberty are all about. I thank the Senate. Senator BOLKUS(South Australia)(12.37) —Towards the end of February this year, the world would have seen comments coming from the United States Administration, particularly from President Reagan, announcing that Administration's new policy in respect of the Central American country of Nicaragua. Press reports quoted the President as wanting 'to remove the present structure' of the Nicaraguan Government. He went on to say that he would press Congress to renew aid to Nicaraguan 'freedom fighters' and that it was American Administration policy 'to remove the present structure in Nicaragua', a structure which: . . . is a communist totalitarian state. It is not a government chosen by the people. It is surprising to read such comments. I wish in my contribution today to speak on the situation in Nicaragua, which I visited in January this year. As to the background to the country, I wish to do little else but make three points. The first is that the United States has claimed Central America to be within its sphere of domination for at least the last 160 years. As a consequence, there has been a massive economic drain from that region, and profits have been siphoned off to American companies operating in that region. Particularly in respect of Nicaragua, the world knows full well that Somozan rule over the last 60 years or so has meant that the people there have been oppressed, have had little to live on and have had their civil liberties and rights taken away from them consistently and continually over that period, to the extent that, towards the end, it was intolerable for the world to allow the Somozan Government to remain in power in Nicaragua. How can President Reagan deliver a policy such as he has in recent days, despite the reality of the situation and the reality that Nicaragua is, of all Central American countries, nothing like the picture that he presents? He can do so primarily because of the one-sided media sources coming out of that country. I wish to dwell on that by way of background to my discussion on the situation in Nicaragua. Let us look at a couple of instances of media reports of activities in that country. We can compare the 1982 El Salvador election with the 1984 Nicaraguan election. The media has highlighted claims put forward by the United States Administration that Nicaraguan polling was a sham. It can do that, despite claiming that the El Salvador election was legitimate, because of the emphasis of the media networks in that country. First of all, 700 journalists covered the El Salvador election but only a very small number covered the Nicaraguan election. At the same time, much of the news reporting coming out of Nicaragua focused on the parties that were not participating in that election. In fact, most articles noted prominently that Arturo Cruz was not on the ballot. However, in discussing the El Salvadoran election, they did not mention that the opposition leader was not permitted to participate. I turn to the question of Press censorship during the pre-election period. Stories coming out of Nicaragua stress the fact that in that period there was some Press censorship. Stories about the El Salvadoran election, however, rarely noted that there was no opposition Press in that country and that what opposition editors and reporters there were had been murdered or had their plants bombed. The Press reports also discussed attempts by guerrillas to disrupt voting. In El Salvador much emphasis was placed on raids by guerillas and attacks aimed at disrupting voting. In contrast, during the election period and thereafter in Nicaragua that sort of information was not prominent in news reports. We have a situation in which, deliberately or otherwise, slanted media reporting has been coming out of Central America and the Administration is able to make these sorts of claims. While I was there this media slant was highlighted when I witnessed an event in Managua. Belgian Press reporters had spent some time in the northern part of Nicaragua and had had the opportunity to film the slaughter of nine people-seven women and two children-by the Contras. It was pretty graphic film, horrific in many ways. It was film that the National Broadcasting Company Inc. bought from the Belgian film crew but, although it was made available to Australian media sources, the film was shown neither in the United States nor within Australia. It is dramatic film which shows what President Reagan's 'freedom fighters' are doing to the people, the campesinos, in northern Nicaragua. It is film which the networks, despite their control over it and access to it, have chosen not to use. The policy espoused by the United States Administration is one that should be questioned. It should be questioned on grounds of morality and on grounds of hypocrisy. I turn to the situation of civil rights in Nicaragua, a situation which forms the basis of the opposition of the United States Administration to the Sandinista Government. When one assesses the situation of civil rights, one must look at factors such as censorship, the role of oppositions, the role of the churches, the role of trade unions, and at assessments made by bodies such as the International Committee for the Red Cross or Americas Watch. I had the opportunity to discuss with opposition people in Nicaragua the Government's policy and how they could survive under it. At the outset I wish to make the point that it was an opportunity which would be very difficult to exercise in surrounding countries in the region. I met the editor of La Prensa, the opposition newspaper in Managua, Jamie Chamorro, and one of his editorial board. They stressed-it is a point that we should take note of when considering that country-that they felt there was censorship in the country and that sometimes it was excessive. They recognised that often it related to external threats and that when the fabricated Soviet MiG scare hit the world news and the domestic news in Nicaragua towards the end of last year, there was an increase in censorship. They acknowledged that much censorship was related to international situations such as that and to security needs. However, they pressed the point that, despite the fact that some censorship could be claimed to be legitimate on those grounds, they felt that in any event it was excessive. Sitting suspended from 12.45 to 2 p.m. Senator COLLARD —I direct my question to the Minister for Veterans' Affairs. I refer him to his speech to the South-Eastern District Branch of the Queensland Returned Services League and particularly to his assertion that indirect taxes are 'generally regressive' in that, as he claims, 'they fall relatively more heavily on low income earners than on the rich'. I remind the Minister that in speaking against moves towards higher indirect taxation he said that such an approach would penalise still further the 92 per cent of service pensioners who receive less than $50 a week on top of their pensions. What would be the effect on these pensioners of, say, a 10 per cent indirect tax on goods and services and what sort of exemptions to such a tax does the Minister believe would be necessary to protect the living standards of service pensioners? Senator GIETZELT —It is true that I addressed the sixty-third Annual Conference of the South-Eastern District Branch Council of the Queensland section of the Returned Services League, as referred to by Senator Collard. I raised the question of changes in the tax mix because I was interested in protecting the interests of the 92 per cent of service pensioners who come within the jurisdiction of the Department of Veterans' Affairs and whose basic living standards are not considered by any means to be high. Of course, that figure has come out of the examination arising as a result of the assets test. That examination has shown that the great bulk of persons receiving service pensions are actually in receipt of service pensions only. As the honourable senator would be aware, a couple is able to earn an additional $50 and that is why we have the figure of 92 per cent with what can only be described as a meagre living standard. Consequently, any change in the tax mix that would alter that situation is a matter that should be drawn to the attention of the ex-service community, and I did just that. In the public discussion and debate that will take place, as has been encouraged by the Prime Minister, it is important for all organisations to appreciate that any changes that take place should result in an improved living standard and not one that is reduced. Senator BOLKUS —I refer the Minister representing the Prime Minister to his recent trip to the Soviet Union to attend on behalf of the Australian Government the funeral of the late Konstantin Chernenko. Can the Minister report on any impressions he has of the new Soviet leadership and directions the Union of Soviet Socialist Republics might take under that leadership? Senator BUTTON —I had difficulty in hearing the question because of the interjections of those people on the other side of the chamber who have preconceived ideas on every conceivable issue. In answer to the thrust of Senator Bolkus's question, I did attend the funeral of Mr Chernenko and after the funeral I had the opportunity of meeting and having discussions with Mr Gorbachev and briefly with Mr Gromyko, the Foreign Minister and Mr Tikhonov, Chairman of the Soviet Council of Ministers. I also had discussions with representatives of other countries who attended the funeral. If I might risk the interjections of the Opposition and in answer to the question I was asked give some brief impressions arising from those discussions, I simply say that, as a result of the change of leadership in the Soviet Union, amongst all those present from Western countries and amongst those from the Soviet Union with whom I was able to have discussions one could sense an atmosphere of great optimism arising from the changes. I make the point that it was in the course of Mr Chernenko's short period as General Secretary of the Communist Party and President of the Soviet Union that some steps were taken towards a resumption of discussions between the United States and the Soviet Union on the question of arms control. There is no doubt that under the regime of Mr Gorbachev those discussions will be greatly encouraged and enhanced. That is certainly the view which emanated not only from foreign visitors to Moscow but also from those Russians with whom I had the opportunity of having discussions and certainly from foreign Press observers who were present in Moscow at the time. Though I understand very few words of Russian, my impression was that the speech given at the funeral by Mr Gorbachev was one which commanded attention because of its obvious authority. That view was shared by those who fully understood the contents of the speech. There has been a significant change in the Russian leadership which I hope will be important in relation to pursuing the activities which had already begun under the regime of Mr Chernenko. Also while I was in Moscow I had the opportunity of meeting with the Deputy Minister for Trade, Mr Smelyakov. I had a series of discussions with him in relation to bilateral trading relations between Australia and the Soviet Union. There is, as honourable senators on the other side of the chamber hopefully will be aware, a Business Council of Australia delegation going to the Soviet Union in May for the purpose of having discussions with its counterparts in that country on the pursuit of bilateral trading relationships. Senator Chaney —The heads of the 50 biggest companies. Senator BUTTON —Yes, as Senator Chaney says, no doubt the heads of the 50 biggest companies will be there. Let me again make the point that there was a great willingness on behalf of Soviet trade authorities to pursue those discussions, contrary to a series of decisions which were made in the time of the previous Government in Australia when those discussions were aborted, deflected and abandoned for all sorts of childish political reasons. Senator Lewis —Like the invasion of Afghanistan? Senator BUTTON —Yes, like the invasion of Afghanistan. If this country ever had the misfortune to have in government again honourable senators from the other side perhaps they would think twice about the sort of action which was taken in respect of Afghanistan on a previous occasion. It was an example of total hypocrisy when political posturing was being engaged in here at the same time as Australian wheat trade with the USSR was at a record level. That was the sort of hypocrisy in which Ministers of the Fraser Government indulged to the detriment of the furtherance of relationships with the Soviet Union. I have digressed somewhat from the original answer I intended to give. One is seldom provoked but, on the other hand, I am not prepared to suffer fools gladly. Senator PETER RAE —Does the Minister for Finance agree with the Prime Minister and the Treasurer, and indeed with the Opposition, that a major part of reform of the tax system should be a move towards more emphasis on indirect taxation? If so, does the Minister favour any particular form of indirect tax? Further, does the Minister endorse the Australian Labor Party Centre Left faction's present position that any move to place greater reliance on indirect tax should be part of a package including death duties, gift duties and capital gains tax? Senator WALSH —Certain views were ascribed to the Treasurer and the Prime Minister at the beginning of the question, that they favour an extension of indirect taxation. I was reading in the Australian Financial Review that the Prime Minister only yesterday had said that neither he nor the Treasurer was inexorably wedded to any particular tax or any particular mix of taxes at all, and I share that view. The question of a more broadly based consumption tax is certainly one that has been widely canvassed. It was widely canvassed by, among others, the discredited former Treasurer in 1981, I believe it was. He failed to carry the Sydney faction of the Liberal Party and he failed to carry the Melbourne faction of the Liberal Party in a policy move in that direction. Indeed, the Sydney faction of the Liberal Party and the Melbourne faction of the Liberal Party still do not seem to be able to get their acts together or to get them synchronised. The Leader of the Opposition said that any tax Bill which is associated with the Budget and which this Government may introduce into the Senate would be passed. Within three days he was contradicted by the leader of the Sydney faction of the Liberal Party, the discredited former Treasurer, who said: 'Maybe it would and maybe it would not; it would all depend on what it was like'. The deputy leader of the rural rump faction of the coalition, Mr Hunt, said: 'Not under any circumstances'. So we have three of the different factions of the Opposition speaking with a triple tongue, a double forked tongue, about what they would do on tax reform. Of course, the Crichton-Browne faction of the Liberal Party does not believe in paying tax at all. So we have at least four views. There are the three views of the different factions of the Liberal Party-the Perth faction, the Melbourne faction and the Sydney faction-as well as the country faction of the coalition, all speaking with discordant voices and not having the faintest idea of what they want to do. On the question of an extension towards, and a greater reliance on, a more broadly based consumption tax, like the Treasurer and the Prime Minister, I am not firmly committed to or firmly committed against it. One stipulation I would make, which is relevant to an interjection made by Senator Chaney some time ago, is that I believe that any such movement which had significant consumer price index effects ought not to be contemplated unless there were an agreement that that CPI effect would not be passed on to wages through wage indexation. When the discredited former Treasurer, representing the Sydney faction of the Liberal Party, tried to broaden the taxation base in that way a few years ago, that was a crucial agreement which he failed to secure. Therefore, the Melbourne faction of the Liberal Party, which cut him off at the knees when he tried to push that policy, was not so much in error as some people may have thought at the time. Senator PETER RAE —I have a supplementary question. The further part of my question, to which the Minister did not address himself, is this: Does he endorse the position that a move to place greater reliance on indirect tax should be part of a package including death duties, gift duties and capital gains tax? I ask his view as to whether it should be part of a package which includes those other taxes I have stipulated. Senator WALSH —I have already said that I am not inexorably wedded-and I share this view with the Prime Minister, as he was reported as saying yesterday-to any particular tax or any particular package of taxes. Senator CHILDS —Has the attention of the Minister for Veterans' Affairs been drawn to an article by Peter Young in today's Australian regarding proposed provisions in the Veterans Entitlements Bill relating to the entitlements of serving military personnel? Can the Minister comment on Mr Young's allegations? Senator GIETZELT —I have seen the article referred to. It is based on a great deal of speculation by a former statutory office holder of the Department of Veterans' Affairs. It has to be said that that person has no understanding of the way in which the Government operates its Budget proposals or, in fact, its legislative program. I would like to refute the writer's suggestion that there is something sinister in my refusal to answer his speculation, which has appeared several times in the last few days. The truth, of course, is that it would be grossly improper for me to deny or affirm any of the assertions or allegations in his articles, principally because the Government has made no decision on the Bill. I will continue to do as any responsible Minister would do, that is, to refuse to comment on any Press speculation about matters that are in the Veterans Entitlements Bill which is currently before Cabinet. I will not be a party to any pressure to pre-empt that decision-making process before Cabinet. The draft Bill is the outcome of a long, detailed consultation arising out of an advisory committee established by my predecessor to look at the rationalising of the various repatriation Acts. In keeping with this spirit of consultation, I have agreed that after the Bill is introduced into the Parliament, it will lie on the table to allow interested parties ample opportunity to scrutinise its provisions. There will be adequate time for public debate on its contents; a debate which I will be happily prepared to participate in. However, I can say that in this article the writer has revealed an astonishing ignorance of the legislative provisions relating to ex-service personnel in general. In particular, the housing and re-establishment loan entitlements, which are the subject of the article, are laid out not in the Repatriation Act, or the Veterans Entitlements Bill, but rather in the Defence Service Homes Act 1918 and the Defence (Re-establishment) Act 1965. Therefore, I can assure Senator Childs and the Senate that there is nothing at all in the draft Bill relating to these entitlements. Finally, I point out that in my portfolio responsibility lies principally with the Minister for Veterans' Affairs for war veterans and members of designated peace-keeping forces. A casual reader of the article published in the Australian today could come away with the entirely wrong belief that I am the Minister with the responsibility for the conditions of service of current members of the armed forces, and that is not the case at all. Senator Chaney —I ask the Minister to table the paper from which he has quoted. The PRESIDENT —The Minister has tabled the paper. Senator CHANEY —Does the Leader of the Government in the Senate still maintain the view which he has put on several occasions since assuming office, namely, that a capital gains tax should be part of the Australian taxation system? Further, I note his view, reported in October of last year, that the absence of such a tax has led to the diversion of resources away from industry. Does he agree that a capital gains tax would adversely affect entrepreneurial activity in Australia? Senator BUTTON —Like my colleague Senator Walsh, I have-- Senator Archer —You have no view. Senator BUTTON —Of course I have views and so has Senator Walsh, but they are not concluded views on any particular matter. I have over a period expressed the view that Australia should have a more adequate capital gains tax than it currently has. Nothing that has transpired in the recent public debate on taxation issues has dissuaded me from that view. Let me say that the purpose and context of the current taxation review and the discussion about taxation matters have been stated by the Government, right from the beginning, and I state it again now, as a review designed to produce greater fairness and equity in the taxation system. The need for greater fairness and equity in the taxation system arises particularly because of the failure of the Fraser Government to address that issue in its seven years of government in Australia. Let me make the point that in those seven years the aggregate wealth accumulated by the top 5 per cent of the community increased very significantly. The burden on pay as you earn taxpayers increased very significantly. The only growth industry in that period of Fraser government was the tax avoidance industry. Those are three things which any government which is concerned about this country and its overall economic welfare has to address in the context of a taxation review. They were not addressed in those seven dark years of running away from hard issues; that is a fact. Senator Chaney may snigger like a schoolgirl but the fact of the matter is that those issues-- The PRESIDENT —Order! I suggest that the Minister withdraw that remark. Senator BUTTON —I apologise to Senator Chaney. The PRESIDENT —Order! As well as the Minister apologising, I suggest that he withdraw that remark. Senator BUTTON —I withdraw it. Senator Chaney may snigger. I take it that I withdrew the offensive part of my remarks. Those issues were not addressed in those seven years; they have to be addressed now. I just make the point to Senator Chaney, who is probably an exponent of that view well described by J. K. Galbraith, that in a taxation system the conservative view is that the rich have to have greater incentives, namely, in terms of greater wealth, in order to perform well and the poor have to have lesser incentives in order to be motivated in a society such as this. That view, espoused by prominent conservatives in the United States of America and elsewhere, is not a view which finds favour with this Government. The issues which will have to be considered in the context of the Government's review of the taxation system will have to take account of those facts. I do not retreat from the fact that over many years I have advocated a capital gains tax or an improvement in the taxation of capital regime in Australia. I will do that again. I am not saying that my view will, of necessity, prevail, but I will advance it because I do not retreat from that position. I will advance it because of the views which I have expressed and which were quoted by Senator Chaney in the course of his question. If he feels that the presence of a capital gains tax would in some ways, be a disincentive to business initiative in this country, I ask him to look at the capital tax regimes in the various countries which had the highest growth rates in the world throughout the 1970s and, by contrast, to look at those countries which did not, in fact, have capital tax regimes which were equitable and to compare the growth rates of those countries throughout the 1970s. There may be in the view of the Opposition something very peculiar about Australians which would reverse that pattern of events in this country. I am not sure whether that is correct. That is a matter which I, in an objective approach to the issues which we confront in the course of a taxation review, would take into account. Senator CHANEY —I ask a supplementary question. I ignore the schoolboyish sneering of the answer. The PRESIDENT —Order! I hope the honourable senator will. Senator CHANEY —I remind the Minister that I did not ask about what incentives the rich required. My question was directed to what incentive investors required. I ask him again: Does he believe that a capital gains tax would adversely affect entrepreneurial activity in Australia? Senator BUTTON —The answer to that question is no. Let me say that in the past 10 years in this country entrepreneurial activity has been nothing which this country could boast about. If I might say so, the absence of a capital gains tax did not spur entrepreneurial activity in this country. Senator Peter Rae attempts to interject. He may carry on as much as he likes. The fact of the matter is that I do not think one can address those issues fairly in the context of Question Time, but let me say that the answer is no. Senator FOREMAN —I refer the Minister representing the Treasurer to the latest employment figures released last week. In view of the strong rise in employment since the same time last year, does the Minister believe that the Government's objective in respect of employment generation is being achieved? Senator WALSH —The expectations are certainly on target, or running ahead of target. In the election campaign of early 1983 the then Opposition Labor Party stated a three-year target of 500,000 new jobs. We are just two-thirds of the way through that three-year period and 360,000 new jobs have been created since April 1983. So the answer is yes, the employment target set at that time is being met. Indeed, it is being slightly overmet at this stage. Quarterly employment growth, that is for the last quarter, was running at a very high 48,000, almost 50,000, which was more than double the rate in the preceding three-month period. The annual rate of employment increase is now running at 3.3 per cent and unemployment in the most recent months fell by 0.2 percentage points in spite of an increase in the labour force participation rate. That contrasts markedly and vary favourably with the seven years during which the previous Government was in office, which, of course, encompassed the Stone Age, during which only 340,000 new jobs were created in total. Even more dramatically, it contrasts with the last year of the discredited Fraser Government, when employment actually fell by 186,000. The last year of the Fraser Government equalled an absolute fall in employment of 180,000. The first two years of the present Government equals an absolute increase of 360,000. Senator MACKLIN —My question is directed to the Minister representing the Minister for Arts, Heritage and Environment. It concerns a meeting on 19 June last year between Mr Cohen, the Federal Minister for the Environment, and his Queensland counterpart, Mr Tenni, concerning the proposed road from Cape Tribulation to Bloomfield. By making an offer to provide Mr Tenni with the names of journalists who might be interested in investigating the drug issue, as he did in the record of that meeting, is Mr Cohen saying that there is no difference between the Commonwealth's position and that of the Queensland Government? For example, does the Minister believe that there is a white slave trade and girls for drug racket operating out of the tropical rainforest area or does the Minister believe that Mr Tenni has perhaps been to too many performances of Pirates of Penzance playing to packed houses in Queensland or read too many Mills and Boon novels? Senator RYAN —The Minister for Arts, Heritage and Environment, Mr Cohen, has stated the Government's view on the proposed road from Cape Tribulation to Bloomfield clearly and consistently. The Government believes that the road should not have been built. However, the responsibility for the road lies both legally and constitutionally with the Queensland Government and the Douglas Shire Council. The Prime Minister has made it clear that the Commonwealth Government will not act unilaterally when dealing with a sovereign State. With regard to Mr Tenni's specific allegations of white slave trade and girls for drug racket operations in the Cape Tribulation area, Mr Cohen has already stated that the drug episode during his meeting was like sitting through a James Bond movie. Mr Cohen made it clear at his meeting with Mr Tenni on 19 June that he still wanted to explore ways of saving rainforests throughout Australia, particularly those in Queensland. Mr Cohen believes that such bodies as the working party on rainforests that he established last year, which includes representatives from the Queensland Government, conservation groups and wood industry employers and employees, will enable a solution to be found to this problem. Senator Macklin would be aware that the text of the record of the meeting on 19 June last year between Mr Cohen and the Queensland Minister for Environment, Mr Tenni is now on public record following freedom of information requests. If Senator Macklin really wants another copy of that text, I am sure that Mr Cohen's office will be able to satisfy him. Senator TATE —Has the Minister representing the Minister for Health seen figures prepared by the Commonwealth Department of Health for the drug summit to be held on 2 April which indicate that, in 1983, some 200 deaths of Australians could be related to the abuse of opiates, 20,000 deaths could be related to the abuse of alcohol and tobacco and up to 30 per cent of hospital beds are filled with people suffering illness, either directly or indirectly related to alcohol? Will the Minister give an assurance to the chamber and to the community that the drug summit will look at the abuse of both legal and illegal drugs, not only in order to deal properly with the great cost in illness and death throughout the community from the abuse of all drugs, but also in order to assure young Australians in particular that society is not being hypocritical in singling out particular groups of drug abusers for attention? Senator GRIMES —I have seen the figures quoted by Senator Tate. Those figures are familiar to me and to many other members of the Senate who, at various times, have served on the Senate Standing Committee on Social Welfare which has looked at the drug problem. It would be wrong if the Government or the drug summit ignored the very real problems demonstrated by those figures and ignored the problems of alcohol and tobacco abuse and other licit drug abuse in this country. Therefore, I am happy to assure Senator Tate that these matters will be under consideration by the Department of Health, the Government and the drug summit. I think everyone who has examined the problem of drug abuse in this country accepts that the problem of alcohol and tobacco abuse, if judged in sheer numbers of deaths or morbidity as recorded, indicates the fearful toll on our community which is undoubtedly the reason why one of my colleagues on my right never stops telling us that he gave up smoking several days ago. But by the same token I think we must remember that the problems associated with the abuse of opiates and other drugs of this type, apart from those demonstrated in the mere morbidity and mortality figures, are considerable and the social costs are considerable. Therefore, because of the relatively small numbers quoted by Senator Tate we would not want to ignore them. They will not be ignored either. I can assure honourable senators that the Government, and I hope the drug summit, will take a balanced view of drug abuse in this country. Senator PETER BAUME —My question, which is directed to the Minister for Education, concerns her answer yesterday to a question relating to the advice to members of parliament about certain government grants. I will quote from two parts of her answer. The Minister said: . . . it has certainly been my practice since I became Minister for Education to ask the Schools Commission to inform the honourable members of any grants going to schools in their electorates. She said further: . . . it is certainly my intention that honourable members will have that information available to them. It is in everybody's interests, including those of the local member, to know exactly what the Commonwealth is spending on schools in each electorate. I ask the Minister: Will she confirm that what she told the Senate yesterday still represents her intentions? Will she assure the Senate that she intends to give instructions to the Commonwealth Schools Commission to have her intentions put into effect? Senator RYAN —I am grateful for the elucidation of current policy which my colleague the Minister for Community Services, Senator Grimes, gave to the Senate yesterday. This is a policy which he has in relation to grants made through his Department which he inherited from his successor, Senator Chaney. I suppose that it is rather tedious for Senator Baume to raise this matter again. Obviously it is beyond the capacity of Senator Baume and a lot of his colleagues to distinguish between the practice of informing government members in advance of government decisions with relation to grants so that they may make the announcements-which is not only the practice of Senator Grimes and previously of Senator Chaney but also of me-and the general provision that information should be available to local members. There is no conflict between those two practices. I reiterate that I understand the Commission, on advice from my office, gives prior advice to government members. I think it is entirely appropriate that government members should make announcements about the government decisions. I see that Senator Chaney is smiling in agreement. That is a- Senator Chaney —It is not what you said yesterday. Senator RYAN —Senator Chaney says that that is not what I said. I was not asked yesterday. Senator Baume did not ask about advance notice in relation to public announcements. Senator Baume asked about information being available to local members. It is the case that information is available to all members. It has been the case ever since I have been Minister for Education. I now wish to incorporate in Hansard a minute concerning the minute that was the subject of Senator Baume's question yesterday which explains quite clearly the purpose of the direction that was sent out in the Department. I will-- Senator Chaney —What does it say? Senator RYAN —I will not take the time of the Senate by reading out three paragraphs. I presume-- Opposition senators interjecting- Senator RYAN —All right, I will. The PRESIDENT —Order! Senator Ryan has sought leave to incorporate a document in Hansard. Is leave granted? Senator Chaney —No. The PRESIDENT —Leave is not granted. Senator RYAN —It is probably the case that some Opposition senators would have difficulty in reading it themselves so I will now comply with their request and read it. It is headed 'Information on Grants to Members of Parliament' and states: At Question Time in the Senate yesterday Senator Baume referred to a minute which I had circulated within the Commission Secretariat on 14 February 1985 regarding the provision of information to Members of Parliament. The minute refers only to the automatic provision of information to Members of Parliament when grants are initially approved. The Commission will continue to provide information on request regarding the operation of Commonwealth Education Programs administered by it, including information on grants made to schools and school systems. The minute referred to by Senator Baume was an internal one and, given the wording of it, I am certain that the personnel to whom it was addressed were aware that the process suggested referred only to the automatic provision of information to Members of Parliament on grants. It was not intended to indicate nor do I believe it did, that information on grants should not continue to be made available to Opposition members on request. Clearly, there is a distinction between making initial information available for announcement purposes and information that is available on request. In conclusion, it is a demonstration of the absolute lack of interest in substantive education issues by the shadow Minister, Senator Baume, that he has wasted the Senate's time and my time in pursuing this trivial matter. Senator PETER BAUME —Mr President, I ask a supplementary question. I have been concerned that the Minister may have misled the Senate in her answer yesterday. I now ask the Minister: Has she not misled the Senate today? Is it not a fact that the minute to which I referred yesterday said quite specifically that information was to be provided only to government senators and government members? If that is so, has the Minister not misled the Senate this afternoon? Senator RYAN —Senator Baume has certainly wasted the Senate's time. I have not misled the Senate. Senator GILES —My question is directed to the Minister for Education. How many reports did the Commonwealth Schools Commission produce during the period of the Fraser Government? In how many cases did the Fraser Government accept or act on those reports? What is the attitude of the current Government towards the advice provided by the Commonwealth Schools Commission? Senator RYAN —It is very interesting to have a look at the record of the Fraser Government in relation to accepting or rejecting advice given by the Schools Commission. It is interesting to me because Senator Baume, the current spokesperson on education for the Opposition, has taken it upon himself to accuse me, in advance of any decision having been made, of wishing to reduce the policy advice capacity of the Schools Commission and to turn the Schools Commission into a powerless or toothless advisory body. As Senator Baume yesterday made such melodramatic claims in the Press, it is interesting first of all to look at what the Fraser Government did with regard to advice from the Schools Commission. During the period of the Fraser Government the Schools Commission produced two major needs reports for the triennia 1979-81 and 1982-84. It produced a needs report for 1983 and seven annual reports in response to that Government's guidelines. The Fraser Government did not accept either of the major triennial reports of the Schools Commission. Most of the Commission's annual reports responded to specific restrictive financial guidelines and therefore were accepted by the Fraser Government. Even so, three annual reports, developed in response to that Government's own guidelines, were not fully accepted. That is hardly an outstanding record of acceptance of advice of the Schools Commission. In contrast, I point out that major reports from the Schools Commission since I have been Minister have received much more positive consideration by the Government. For example, the major report on standards for Australian schools was substantially accepted by us and formed the bases of the new community standards formula. The major report on a new recurrent funding scheme for government and non-government schools was also substantially accepted by the Government and has formed the basis for the most equitable, best accepted and most stable form of recurrent funding to government and non-government schools that we have seen at the Commonwealth level in this country. Without pre-empting a decision I will be making later this week, another major report from the Schools Commission has been accepted by the Government. So the record of acceptance of advice from the Schools Commission has been much more constructive during the period of the Hawke Government than that of the Fraser Government. In conclusion, I add that the decision by a government to accept Schools Commission advice is not dependent on any particular administrative functions the Commission may have to perform or even dependent on any particular structure. It is dependent on two things-on the calibre of that advice and on the economic capacity of a government to fund that high quality advice which it is able to accept. Our record has shown that where we have high quality advice and resources, we have a most fruitful and constructive relationship with the Commission. It is my intention, regardless of any administrative reorganisations I may make, to continue to recommend to the Government that advice should be assessed in terms of its quality and appropriateness in dealing with educational problems and not in relation to any particular administrative arrangements. Senator LAJOVIC —My question is directed to the Leader of the Government in the Senate. I ask him whether it is fact or fiction that, as reported in the Sydney Morning Herald today, the Royal Australian Air Force aircraft on which he was flying home from Moscow, through the corridor where the Korean airliner was shot down by the Soviets 18 months ago, was warned by the Soviet air traffic controller as follows: My radar is not working-please be very careful. In view of the latest alleged incident in that corridor, will the Minister issue a clear warning to all Australian travellers not to travel on that highly dangerous route? Senator BUTTON —The short answer to the question is no. I was not aware, until the report in the Sydney Morning Herald was drawn to my attention this morning, of the discussion between Squadron Leader Armstrong and the Soviet air traffic controllers on that issue. I am aware that great attention was given by the RAAF and other authorities to ensure that people understood we were coming; that was on the way to the Soviet Union. Certainly it is true that the crew of the aircraft concerned, once we had crossed into Soviet air space, was very appreciative of the assistance given throughout the trip by the Soviet air traffic control authorities. I take it that Senator Lajovic is seeking to make some sort of political point. That was the first occasion that an RAAF aircraft has ever been in Soviet air space. I do not think it is the practice of Australians to fly into the Soviet Union on that particular route so I do not think any warning is necessary. I certainly would not give it because that would seem to be in pursuit of an ideological political point which in this particular instance I do not share. Senator McINTOSH —I direct my question to the Minister for Resources and Energy. I ask the Minister how much Commonwealth funding has been allocated for the development of synroc and associated projects? Through which departments or bodies have the funds for the various projects been made? At what stage of development is synroc? Lastly, if the project turns out to be successful in developing a reliable storage facility for nuclear waste, what will be the Government's attitude to application of such technology? The PRESIDENT —Order! Before I call the Minister for Resources and Energy, I mention that this is the first time that he has been heard today and I ask that he be extended the usual courtesies. Senator GARETH EVANS —Thank you, Mr President. The Government is continuing to support the development of synroc as a promising second generation method for the immobilisation of high level radioactive waste. Synroc technology is still in the developmental phase. The Australian synroc program involves six concurrent lines of work which I propose to indicate but not elaborate upon. They are the fabrication and testing of synroc containing simulated waste; the fabrication and testing of synroc containing small amounts of elements found in actual radioactive waste; studies of the effects of radiation damage on synroc; continual research and development on synroc formulations; studies of synroc fine structure, phase crystallography and leaching mechanisms; and, finally, the development of synroc manufacturing technology. Synroc is also being studied at several overseas laboratories. Agreements have been signed with the United Kingdom and Japan to pave the way for close collaboration between scientists in those countries and Australia in the fabrication and testing of synroc. If the promise of synroc as a waste form is realised, it could be expected that its superior performance in immobilising what I am told are the long lived actinide elements-which, shades of Jim Webster, in turn leads me to tell honourable senators are uranium, plutonium and curium-generated by the nuclear fuel cycle will make it easier for nuclear countries to find acceptable sites for geological repositories to dispose of their high level waste. To date the government has approved funding totalling $4.61m in support of synroc research and development. The breakdown of this figure is $1.512m provided since 1978 by the National Energy Research Development and Demonstration Council program for synroc research and development projects at the Australian Atomic Energy Commission, the Australian National University and Griffith University; $2.754m approved by the Government in June 1985-that does not sound right- Senator Ryan —No, it doesn't really. Senator Baume will accuse you of misleading the Senate. Senator GARETH EVANS —Well, it was a fine brief otherwise, Mr President. I am indebted to you for giving me the opportunity to read it, but it obviously needs correction in that respect. The $2.754m was approved by the Government-I think it was last year-for the construction by the AAEC of a pilot demonstration plant for manufacturing full sized, non-radioactive canisters of synroc, and $344,000 provided by the NERDDC program to fund Australia's share of a co-operative program of research and development with the United Kingdom. As to the very last point in Senator McIntosh's multiple part question regarding the Government's attitude to the application of this new technology, the situation is that, because Australia does not produce high level radioactive wastes, the potential demand for synroc is obviously not here but in countries with nuclear power programs. Australia will continue to encourage its development in the interests of enabling those countries to apply the best practicable technology to the task of isolating high level radioactive wastes from the biosphere. Senator Chaney —Having heard the answer, we can understand why it was treated as a maiden speech. I ask that the Minister table the relevant paper. The PRESIDENT —The Minister has tabled the paper. Senator ARCHER —I direct my question to the Minister representing the Minister for Transport. Can the Minister advise the present program for the reports of the Inter-State Commission on the Tasmanian freight equalisation system and the carriage of wheat? When is it expected that the report will reach the Minister and how soon after that will it be tabled? Senator GIETZELT —I understand that both the reports referred to by Senator Archer are currently being printed. As most honourable senators, and, I am sure, Senator Archer, will recall, under the statutory requirements all such reports have to be tabled within 15 sitting days of their receipt by the Government. The Government gives an assurance that those requirements will be carried out. Senator CROWLEY —My question is directed to the Minister for Finance and Minister for preventing disasters. Has the Minister seen the article in today's Canberra Times reporting Mr Hugh Morgan's claim that government accumulated debt is facing Australia's agricultural and mining sectors with industrial ruin? Mr Morgan goes on to claim that one significant part of Australia's debt is due to the expenditure on kings and Ministers, that we have 827 members of parliament at an average cost of $262,394 a year, and that their annual advice and legislation costs total $217m. Will the Minister estimate the cost of Mr Hugh Morgan to Australia and the cost of top level management in the private sector in Australia? Will he allow that his Government is reducing the country's debt left to us by the Fraser Government? Further, will he comment on the effect of Mr Morgan's prophecy of doom on this country's economic recovery? Senator WALSH —I heard a report on the wireless this morning that Mr Morgan had been making statements along those lines. I do not know to what extent they are correct, or even whether the basic claim about the number of politicians in Australia is correct. Senator Messner —You are the ones who increase it all the time. Senator WALSH —I think Mr Morgan would have a good deal of public support in claiming that there are too many politicians and too many parliaments. If Senator Messner thinks there are too many politicians, I suggest that he address his attention in particular to that Territory of the Commonwealth where there is a politician for every two and a half thousand electors, that is, the Northern Territory of course. What is more, every backbencher in the Northern Territory is paid considerably more than backbenchers are paid here. The Chief Minister of the Northern Territory is paid more than the Prime Minister of Australia. This matter is perhaps appropriate, given the matter of urgency which is about to come up for debate. There are definite plans by this Government, and particularly by me, to curb the sorts of extravagant grants to the Northern Territory which the previous irresponsible Liberal Government made available on an ad lib basis so that Northern Territory politicians could indulge themselves at Commonwealth taxpayers' expense to the extent they have done. I tell Senator Messner now that something will be done about that. I trust that, when other members of the Opposition are pontificating on the urgency motion shortly to come on for debate there will be no advance criticism of this Government's plans in respect of the Northern Territory or of the details of the curbing of the irresponsible expenditure which the Fraser Government made available to the Northern Territory on an ad lib basis so that Northern Territory politicians, who represent two and a half thousand electors each, can indulge themselves with salaries considerably higher than those of the backbench of the Federal Parliament and with chief ministerial salaries higher than that of the Prime Minister of Australia. I do not know about the accuracy of Mr Morgan's other figures. I will see whether I can have them checked to see whether they approximate the actual cost of governments in general. The other part of Senator Crowley's question related to the cost of senior executives to private business and ultimately, I suppose, to the community in general and would, I fear, would appear to be beyond the resources of the Government to quantify. Senator CHANEY —If that is the view of the Minister for Finance on the size of Parliament and the number of politicians, why did he support the increase in the size of the national Parliament-the House of Representatives and the Senate? Senator WALSH —I did not express a view as to whether there were too many politicians. I just drew attention to the parliament in Australia, if it can be called that, which has, by a factor of 5:1, a higher ratio of politicians to population than any other parliament in Australia. That parliament was created as a territorial parliament by the previous Liberal Government of which Senator Chaney was a Minister. Senator MESSNER —My question is addressed to the Minister for Community Services. In a rare but welcome moment of candour, when discussing in the South Australian Parliament the home and community care program, did the South Australian Labor Minister for Health, Dr John Cornwall, admit that the scheme had been significantly oversold in a pre-election climate, had unduly raised expectations, had suffered from bureaucratic wrangling and, finally, certainly will not be the answer to all our problems? Does the Minister agree with this incisive analysis by his colleague? Additionally, given the excitement surrounding the Prime Minister's announcement of his new $300m scheme, will the Minister state clearly how much of this $300m is new funds? When will the cost-sharing arrangements with the States be finalised? What assurances can he give to welfare groups which feel that they have been hoodwinked into believing that there will be a new scheme with a massive injection of new funds to assist the aged, the frail and the disabled? Senator GRIMES —I am not aware that my State colleague, Dr Cornwall, made the statement he is alleged to have made in the State Parliament. I certainly will check to see whether he did so. It certainly does not surprise me that he said that sort of thing. I certainly agree with Dr Cornwall if he said that the home and community care program will not be the answer to all our prayers. If he said that there has been bureaucratic wrangling about it, if that is his shorthand for saying that there has been some disputation between State and Federal public servants in negotiating the program both during the election campaign and since then. I agree. Of course there have been differences of opinion between State and Federal bureaucrats during those negotiations, as there have been with every negotiation that has ever taken place between State and Federal bureaucrats on any subject, particularly on any subject involving money, since Federation. Senator Messner said that Dr Cornwall said that the home and community care program had been oversold. I suppose that is a matter for judgment. If Senator Messner is suggesting that we said that there would be $330m-worth of new funds for this program, or if he interpreted it as being that, it was certainly oversold to Senator Messner. I certainly have not said that. The state of play with the home and community care program is simply what I have stated here before. We have had negotiations between State and Federal public servants. I have had two lots of discussions, I think, with State Ministers involved. I have been to three seminars attended by large numbers of people in three States about the development of the home and community care program. There have been more seminars involving non-government organisations to which public servants representing the Commonwealth have been. Of course, there are difficulties in negotiating any sort of agreement such as this. If, as I suspect, the Minister for Health in my own State intends merely to transfer existing State programs on to Federal funding and not introduce anything new himself, therefore cutting down State expenditure, there will be no home and community care program agreement between the Federal Government and Tasmania. That will apply to any other State. I believe that most States, in fact, are taking the potential program seriously and are negotiating in good faith. They are not using the home and community care program negotiations to score political points. I believe that in the long term they will not use the program just to reduce their own Budgets. In 1984-85 the Commonwealth allocated $10m to the States and Territories on an unmatched basis for newly expanded programs. On a 2:1 basis $25m has been provided for 1985-86, and $30m for 1986-87. Thereafter, we hope that there will be a dollar-for-dollar matching of eligible State outlays. That was the proposition we put to the States. The overall Commonwealth contribution is expected to be considerable in those first three years. The exact amount will depend on the results of negotiations. Neither I, nor the Prime Minister, nor anyone here has suggested that the home and community care program that we have put forward will solve all the enormous problems which face this country. Australia has a higher number of nursing home beds per capita than any other country in the world. It has an appalling lack of home and community care services for elderly and disabled people who would prefer to live in their own homes. It has an imbalance between the various sorts of accommodation for the aged and disabled, there being far too many nursing homes, as compared with the number of hostels and the number of people who have independent living arrangements or who live in their own homes with some assistance. Those problems are very large and will loom even larger with an aging population. The home and community care program was one proposition put forward to provide a co-operative effort between the States, the Federal Government, local government and non-government organisations as a first step in taking the emphasis away from providing institutional care for those who would be better off in their own homes and communities, with those they grew up with and their relatives. That is what the home and community care program is about. I hope we get a successful agreement with most of the States. If we cannot get agreement with individual States, so be it. If we do not make a step in this direction, if we do not change the direction we have had in the post-war years, the burden on the community in providing inappropriate institutional care will continue to rise and be considerable and the lives of the people receiving inappropriate institutional care will be less than satisfactory. That is the sort of situation we wish to correct. Senator MESSNER —Mr President, I ask a supplementary question. As the Minister would know, the Opposition supported this program from its announcement in the Budget last year. We have no worries about supporting it now. What concerns us is that there does not appear to be the same commitment on the part of the Government to introducing new funds into the program as people were originally promised. The PRESIDENT —Order! I ask the honourable senator to ask his supplementary question. Senator MESSNER —Does the Minister agree that the money now introduced into the program is peanuts? Senator GRIMES —I thank Senator Messner for saying that he supported the home and community care program which was first announced and put forward in the last Budget. The figures that I have quoted and which Senator Messner and his colleagues had to look at were in that last Budget. If Senator Messner is suggesting that the amount was peanuts then, he should have said so at that time. If he is saying that the amount of money we are able to put up in the present economic circumstances will not solve all the problems we see, I agree with him. But if he is suggesting at the same time that we should blow out the Federal Budget or transfer funds from other worthy causes in the community to provide, in one big hit, an expanded expenditure in this area, he is wrong and he knows he is wrong. Neither the States nor the Federal Government could in one fell swoop reverse the situation to which I referred earlier. We have proceeded cautiously because we do not want to proceed down the path that the previous Government proceeded down when it introduced programs like the program of aids for disabled people which crashed down around our ears in the first couple of years. Senator GIETZELT —In Question Time on 28 February I was asked by Senator McKiernan a question regarding the decision by the legal representatives of the Vietnam Veterans Association not to attend the last public sitting day of the Royal Commission into the Use and Effects of Chemical Agents on Australian Personnel in Vietnam. It could be inferred from my answer to that question that the instructing solicitors of the Vietnam Veterans Association were guilty of abrogating their responsibilities to their clients. I unreservedly withdraw any suggestion of impropriety on the part of the solicitors and assure the Senate that my criticism of the legal counsel did not extend to the instructing solicitors. The PRESIDENT —I inform the Senate that I have received the following letter, dated 20 March, from Senator Peter Rae: Dear Mr. President, Pursuant to Standing Order 64, I give notice that today I propose to move- 'That in the opinion of the Senate, the following is a matter of urgency: 'The urgent need for fundamental reform of the Australian system of the raising and expenditure of revenue which involves the need for- (a) the total review of expenditure; (b) the restoration of the incentive and opportunity for the creation of economic growth and national wealth; (c) the reduction in the burden of personal taxation; (d) the relief for families by the introduction of income splitting for tax purposes and also of tax rebates for child care; (e) the review of the distribution of the tax revenue base between the various levels of government; and (f) the emphasis upon neutral, efficient, and equitable taxes.'. Yours sincerely, PETER RAE Senator for Tasmania Is the proposal supported? More than the number of senators required by the Standing Orders having risen in their places- Senator PETER RAE(Tasmania)(3.05) —I move: That in the opinion of the Senate, the following is a matter of urgency: The urgent need for fundamental reform of the Australian system of the raising and expenditure of revenue which involves the need for- (a) the total review of expenditure; (b) the restoration of the incentive and opportunity for the creation of economic growth and national wealth; (c) the reduction in the burden of personal taxation; (d) the relief for families by the introduction of income splitting for tax purposes and also of tax rebates for child care; (e) the review of the distribution of the tax revenue base between the various levels of government; and (f) the emphasis upon neutral, efficient, and equitable taxes. This is a matter or urgency and the Opposition will speak to it as a team. The first point that I emphasise is that the Opposition will speak as a team on this matter because, as I shall elaborate a little later, unfortunately the public debate on this most important issue has been confused by the disparate nature of the desperate measures taken by the present Government in encouraging public debate of the issues involved. There is no doubt that the tax system is in need of fundamental reform. That is a widely held view. It is held by the public, as demonstrated in the Bulletin of 19 March. In that issue, the results of a Morgan poll were published which showed that 58 per cent of Australians believed that as far as they were concerned the general level of tax was unreasonable; that is, nearly three-fifths of Australians believe that the general level of tax is unreasonable. When one has regard to how many taxpayers there are, one sees that almost all taxpayers believe that the level is unreasonable. The Prime Minister, Mr Hawke, in the policy speech on 13 November 1984 said: . . . a thoroughgoing review and reform of the entire tax system . . . will be central to all our tasks in our second term. He then set out nine principles which would apply to that review of taxation. Those nine principles are well known. I will not pause to read them in detail, but they have caused considerable concern. I will deal with them later as they constitute some restraint on the approach which can be adopted to the overall review. In an article in the AFR Review of December 1984, Christopher Jay made some comments which I would adopt. He said: The problem is that large proportions of the community's savings, the funds which should be bankrolling productive enterprise and economic growth, are being diverted into avenues of marginal economic utility. The culprit is Australia's tax system, more specifically the high rates of marginal tax which virtually ensure that for a large proportion of investors the primary consideration in any rational investment program is how it can be structured to minimise taxation payments. That misallocation of resources needs to be overcome. Paragraph 5.1 of the taxation policy issued by the coalition in respect of the election last year reads: The Coalition parties not only believe that the current overall burden of taxation is too high, but also that the taxation system is in need of reform. Labor has preferred to hide behind the convenient excuse of extended consultation, devoid of any policy framework, to avoid having to reveal its plans for new taxes on capital and assets before its unnecessary early election. It is asking for a blank cheque on tax. That, apparently, is still the situation. What was eventually forthcoming from the Prime Minister during the election campaign was a statement of what he chose to call a trilogy. The trilogy can be summarised in these words: First, the Government would not increase Commonwealth taxation as a proportion of gross domestic product; second, it would reduce government outlays as a proportion gross domestic product; third, it would not increase the deficit as a proportion gross domestic product. I was impressed by what Mr Maximilian Walsh, well known for his commentaries on public matters, said when he referred to the Oxford Dictionary meaning of 'trilogy' as 'a set of three tragedies to be performed in immediate succession'. That may be an unfortunate characterisation of what this Government is taking Australia towards. The trilogy, if it is to be implemented, will simply freeze us into the present high tax, high spending situation which has existed in this country since this Government came to power. We are now suffering from paying the highest percentage of tax and having the highest expenditure as a percentage of our national wealth since this country was formed at Federation. That is the situation which this Government has brought this country to. I find it more than passing curious that the trilogy commitments were given, because they were given when the economy was suffering very severely from the impact of external and internal events. So far as external events are concerned, the export markets available for both our rural products and our mining products are squeezed both as to quantity and as to price. We are suffering the judgment which was inevitable from the time that the Australian dollar was floated, something with which we do not disagree but something which subjected this country, its management and its economy to the judgment of the international market-place; and the international market-place has this year passed that judgment. It has devalued the Australian dollar, as Senator Chaney said when speaking earlier, by 13c in the three weeks leading up to the Governor-General's speech. It has devalued the Australian dollar as a judgment of the management and re-election of the present Government. It is a judgment of no confidence in the present Government of this country. I believe that again will make the achievement of the trilogy that much harder. When one has regard further to the increased demands being made from various sectors of the community, including the Australian Council of Trade Unions, regarded by some as the real government of the country, one finds the prospects of the achievement of the trilogy are so small as to be likely to induce people with anything in the nature of a suspicious mind to believe that perhaps the confusion being created in relation to the taxation debate at the moment is an obfuscation to cover up the fact that net taxes will be increased to overcome the problems of the present Government but under a different guise so that the Government cannot be accused of a direct breach of the trilogy. I believe we must approach tax reform from a different point of view. We must not approach it from the point of view of setting down certain basic and fundamental principles outside which we cannot go, thus winding up with a situation which, whatever we do in the discussion and the consideration within the Parliament, within the parties, in government and within the summit, is subject to the veto of an outside body, the ACTU. That is the situation which as late as this afternoon Senator Walsh reaffirmed in the way in which he answered a question I asked of him. Whatever happens in the debate which takes place, it is subject to the veto of the ACTU which, if it does not get what it wants, can then say that it will not play ball in the way in which Senator Walsh outlined and, therefore, the whole thing cannot go ahead. Senator Walsh —I did not even mention the ACTU. Senator PETER RAE —I will quote what has been said by others as well so that, if Senator Walsh does not wish to be involved in it, he can just increase the number of differences within his party. Let us first look at the essentials. The first essential we believe it is necessary to look at in this country is a reduction in expenditure, in the rate of growth of public indebtedness. The rate of growth of taxation is a reflection of the rate of growth of public expenditure in this country at a Commonwealth level and at a State level as well as at local government level. Public expenditure in this country has risen dramatically. We must look also to the creation of wealth because, without the creation of wealth, there is a diminishing tax base and all we can then look at is which taxes we are going to impose to try to make up for the fact that we get less from each form of tax because the total wealth available has been diminished. The Australian Labor Party is not going down that track. It is going down the track of the intrusion of an ideological prejudice-an economically ignorant, economically inefficient and economically counter-productive approach, a doctrinal approach, to tax reform which will leave Australia and its taxpayers still disenchanted, without incentive and suffering the feeling of injustice which exists in this country at the moment as a result of the introduction of the assets test as it is felt by the small family farmer. There is an apparent manic determination on the part of the Government to seize capital at all costs as if capital, rather than being for the generation of growth and employment opportunity in this country and for the creation of national wealth, were some vile disease to be stamped out at all costs. We see the Hawke-Keating Government again succumbing to its Left extremists as it did over the MX missile matter and the ANZUS matter when we had the back-tracking which took place. So extreme is the factionalism with regard to this matter that the Australian Labor Party Centre Left held its own seminar on taxation at the beginning of March in which its members came up with their own policy. It was interesting that their chief adviser and spokesman is reported to have advised them that a capital gains tax, the darling of the Left as a tax reform measure, would be unrewarding in the return it would provide. Let me refer very quickly to the Opposition's approach. At the time of the election last year, after 20 months in government, the Government still refused to tell Australians whether it would introduce a capital gains tax, death duties and a wealth tax-and it still refuses, although many of its members are on record as saying that they favour this course; whether it would be broadening the indirect tax base-and again today Senator Button and Senator Walsh refused to commit themselves to a view in relation to that; whether it would be doing something about the average wage earner moving into the 46c tax bracket or the 47c bracket, as it really is; or whether it would do something to relieve the tax burden on the family. In contrast, firm and clear policies have been put forward by the coalition, which proposes the provision of a new deal for families to reduce the tax burden and to assist with the cost of child care, and to relieve the tax burden for one income families in the 46c bracket or those who are moving towards it. This will be partly paid for by a broadening of the indirect tax base, a firm commitment to direction so that people know in which direction we wish to move. We will not be introducing a capital gains tax, death duties or other taxes on capital; and we will not have a bar of Labor's assets test or the 31c tax on lump sum superannuation. Those are the measures which, in government, the coalition would take. There is in Australia at the moment very high taxation and very high public sector borrowing, leading to the assessment that public sector debt has risen to the stage at which it costs the average taxpayer $34 per week simply to fund the interest bill alone on public debt in this country. There is accruing and accrued, but undisclosed, through a number of matters, another huge debt, part of which relates to the devaluation which has taken place and the overseas loans and the cost of interest and repayment of those loans in Australian dollars, which will now be billions of dollars more than it would otherwise have been. There is also accrued, but not disclosed, a liability in respect of Commonwealth superannuation, particularly by statutory authorities, of mammoth proportions. This is a public debt which is not included in the public debt to which I referred. I wish to be taken not in any way as talking down the Australian economy but, rather, as being realistic. There is an urgency that we face these matters and face them fairly and squarely. We find in today's Australian Financial Review that the front page headline is: 'US investors scathing about Australia'. The article states: One of the largest and most influential broking and investment banking groups in the US has delivered a virtually unequivocal thumbs down to the Australian market. It talks about 'the stifling tax regime' as being one of the important aspects of that problem. We must remove the stifling nature of that tax regime. We must take those measures which will ensure that this country is not viewed in the way in which that group of American bankers viewed it after a visit here. We need to look at the tax base and, in particular, at the extent to which the tax base has been narrowed by the development of the mixed economy and the extent to which areas of that mixed economy are able to engage, through statutory authorities and other government bodies, in the avoidance, evasion or non-application of tax which would otherwise be applicable to economic activity which is being undertaken. I remind honourable senators that revenue forgone in that way is equivalent to a tax cut and amounts just as much to a subsidy as would a direct subsidy. Australia Post Courier is a good example of that. It carries out an economic activity that can be carried out equally well by other areas of the community but is not carried out because government carries it out without paying sales tax, excise duties and all the other taxes which would normally be paid on that sort of undertaking. We find that there is a proposal for a capital gains tax, which is generally regarded by small business as absolutely anathema. The Council of Small Business Organisations of Australia has made that abundantly clear. The ineffectiveness of such a tax was made clear in an editorial in the Australian on 18 March this year and by a series of articles by Dr Ian Spry, QC, the editor of the Australian Tax Review, who has equally made clear the disastrous potential effects of that tax, which include one matter which has not been specified yet-I pick it under the limitation of time-the increase in housing rentals, because inevitably a capital gains tax would contract the stock of rental housing available and would increase the rentals demanded by the owners of rental houses. COSBOA has made clear its objection to the constraining influence of the nine principles. I refer to its January 1985 review. Finally, it was reported on 1 November 1984, and reaffirmed by Senator Walsh today-as was my understanding-that the Prime Minister had said that before any increase in indirect taxation 'it will be necessary to get an agreement with and from the trade unions to ensure that that does not add to the inflationary process.' In other words, honourable senators opposite are not in government. Mr Hawke is not in government. The Australian Council of Trade Unions has to give its imprimatur irrespective of what may be agreed to at the tax summit. In summary, the true nature of what is happening is a vast charade, a ploy to change the system without reducing the revenue. On this matter, the Hawke Government is falling apart. It is desperate for funds and disparate as to how to gain those funds. We need genuine reform, a total review of expenditure and the restoration of the incentive and opportunity for the creation of economic growth and national wealth. We need the reduction in the burden of personal taxation and relief for families by the introduction of income splitting for tax purposes and for tax rebates for child care. We need the review of the distribution of the tax revenue base between the various levels of government and the emphasis upon neutral, efficient and equitable taxes. That is an urgent necessity for this country. Senator WALSH(Western Australia-Minister for Finance)(3.24) —I used to think that only dilettante Democrats put together packages which were unachievable and internally inconsistent in the full knowledge that they would never be called upon to accept the ultimate political responsibility for implementing them in government. From the package which has just been presented and, indeed, just read, by Senator Peter Rae, I must assume that the Liberal Party has also abandoned all hope of returning to government and, therefore, of accepting any responsibility for the package which it has presented this afternoon. The Government will, of course, be voting against the urgency motion, for reasons which I will go into in detail if time permits. I was somewhat astounded to hear Senator Rae citing with approval the Barton Biggs paper circulated by Morgan Stanley and reported on the front page of today's Australian Financial Review. I wondered whether Senator Rae knew that Mr Biggs had argued that we need a capital gains tax in Australia-something which Senator Rae had explicitly rejected during his speech in support of the motion. The Opposition appears to be as confused on taxation questions as it was when it was in government and almost as confused as it was last week when its various luminaries were giving contradictory versions of what the Opposition would in fact do with tax legislation in the Senate, a subject to which I shall return. Towards the end of Senator Rae's speech, he referred to what he called the veto of the Australian Council of Trade Unions-I think that was the emotive and fairly meaningless phrase-which is his way of dealing with the incontestably sensible statements from various members of the Government that no significant increase in indirect taxation should be contemplated unless there has been an assurance that the consequential consumer price index rises will not be passed on into wages through indexation. Obviously, the Opposition is of the view that a government should blithely proceed to boost the CPI through changes in the tax system, then pay no heed whatsoever as to whether those higher nominal CPI rates would flow into wages. The Opposition has learnt nothing since 1978, when it did precisely that. It increased by about $2.5 billion receipts from the crude oil levy, which boosted the CPI by several percentage points and which flowed on into wages. 'Act first and think later' was the motto of the Opposition in 1978. Regrettably it is the motto still. Returning to the Biggs-Morgan Stanley document upon which Senator Rae apparently sets great store, it is interesting to note that the document primarily was criticising the legacy of 30 years of incompetent Liberal government. For example, Biggs states: Australia also suffers from a stifling tax policy, which the Hawke Government hopes to address in a tax summit this summer. He continues: There seems to be a developing feeling on the part of labour, management and the politicians that confrontation isn't working-- Finally, he expresses some optimism about the future when he says: . . . it is such a great country that the time will come to own lots of Australian stocks. That is only one man's opinion, of course, but I find it interesting that the Liberal Party has chosen to cite Mr Biggs as some sort of guru or oracle, when Mr Biggs stated very clearly that there is a desperate need for a capital gains tax in Australia-something that the Liberal Party explicitly rejects or, at least, one of its factions says that it rejects. The truth is that there is a greater, a more significant and a more self-imposed fiscal constraint on this Government than there has been on any previous government. Assurances have been given that government spending, taxation and the deficit as proportions of gross domestic product will not exceed this year's levels. The absolute levels of government spending are to some extent influenced by value judgments, by history and by the institutions which exist in a particular country. International comparisons of spending as a proportion of gross domestic product can be quite misleading. Having said that, I stress that it is quite clear to anybody who adopts a dispassionate approach that levels of spending in Australia, as opposed to those in countries with which we normally compare ourselves, are not high. However, it is the view of this Government-a view which I certainly share-that there are some existing programs upon which public funds are spent, on which the continuation of that spending cannot be justified, and which ought to be either eliminated or reduced. The principle which is guiding this Government in pursuit of the stated goal of expenditure reductions is social justice and economic efficiency. Taxation, in the long term at least-even the Opposition has recognised this-is the mirror image of government spending. Similar comparisons are made about the level of taxation in Australia compared with that in other countries, with similar and often misleading results because insufficient account is taken of variations from one country to another. Those simplistic and misleading international comparisons frequently lead to false assertions. One of those false assertions is that the total level of taxation in Australia, compared with international standards, is high-particularly for income tax. That arises partly because in most European countries there is a separate income tax and a social security levy, whereas in Australia the two are rolled into one and have been for the last 30 years. Therefore, what is identified as personal taxation in one country is not comparable to what is called personal taxation in another country. Likewise, recently published figures quoting the maximum marginal rate of income tax in the United States do not bother to add that that is the maximum Federal marginal rate and that in most, if not all, States of the United States of America a State income tax is applied in addition to the Federal income tax. In total, when account is taken of all these things, Australian tax is not high by international standards. However, for reasons that I will explain in a minute, it is correct that the maximum marginal rate of tax being paid by a very large number of Australian taxpayers is high by international standards. It is important to note the difference between marginal tax rates and average tax rates. For example, it is true that the person on average weekly earnings today pays a marginal tax rate of 46c in the dollar, but the average tax rate is less than half that. Indeed, it is slightly below 22c in the dollar. Throughout a very wide range of incomes to fully employed people, which can be roughly defined as the band from $10,000 to $35,000, it would encompass almost all incomes earned by people in full time employment. With very little deviation throughout that range, the average rate of tax paid is half the marginal rate paid. There is a good deal of confusion promoted and compounded by members of the Opposition that the marginal rate paid is, in fact, the average rate. In general, and there are some deviations from this, the average rate is only half the marginal rate. Many people believe that the maximum marginal rate is too high. Again, that depends on the way in which one looks at it. The maximum marginal rate is now lower than, or as low as, it has been at any time for more than 40 years. In the late 1940s and the early 1950s the maximum marginal rate was 75 per cent, and virtually throughout the rest of the 1950s, 1960s and early 1970s it was either 65 per cent or 66 per cent. It is now 60 per cent. Senator Peter Rae —Yes, but the place at which it cut in was entirely different. Senator WALSH —I am about to come to that and explain why. So the maximum marginal rate is not high in Australia by historical standards. What is different is the rate at which either the maximum or high marginal rates cut in. Whereas 30-odd years ago the maximum marginal rate, which was 75 per cent, did not cut in until around 30 times the average weekly earnings, today it cuts in at less than double the average weekly earnings, although the maximum marginal rate is now 60 per cent, not 75 per cent. There are a number of reasons for the fact that high marginal rates cut in at a lower relative level of income than they have traditionally in Australia. Those reasons include the very large increase in the tax-free threshold of income which, after conversion to dollars at 1985 values, was around $1,000 through the 1950s, 1960s and early 1970s and is now nearly $4,600. All taxpayers have a very large amount of tax-free income below the threshold. A significant number of taxpayers have incomes entirely below the threshold and therefore pay no income tax. The second reason is that there has been some narrowing of the taxation base. The third and perhaps the most important reason of all-probably of equal importance to the increase in the tax-free threshold-is that there is widespread tax evasion and avoidance. This practice was encouraged by a sequence of bizarre judgments of the Barwick High Court at the root of which, in almost all cases of tax avoidance, is a contrived arrangement which converts what ought to be income, and taxed as income, into capital. Principally for that reason, the Australian income tax system, which is nominally progressive, is throughout most of the range probably proportional and at the upper end of the range is probably regressive because of the widespread existence of schemes to minimise taxable income through the conversion of tax receipts from income into capital. The system is mostly proportional-it is regressive at the highest end, and progressive at the lowest end. In total the tax system is probably not progressive. For those reasons the Australian income tax system is seen-I believe correctly seen-as being unjust. It is probably also inefficient. For that reason the Government has decided to hold a taxation summit in July this year at which options for a wide range of potential new, varied or existing taxes will be canvassed. As the Prime Minister (Mr Hawke) said yesterday, no firm Government decisions have been made on any of those specific proposals, and nobody in the Government, to my knowledge is absolutely committed to any particular tax or any particular form of tax. However, may I say that it is difficult to see how the widespread avoidance of income tax, which is a major cause-probably the major cause-of the quite high marginal tax rates cutting in at fairly low levels of income, can be closed off without some form of capital gains tax. I can only assume that those people who assert dogmatically, as Senator Peter Rae has just done and as many, although not all, his colleagues have done, that under no circumstance should any form of capital gains tax ever be considered are voting for the continuation of tax avoidance, for the perpetuation of a system which is both unjust and inefficient in terms of its effect on investment decisions and resource allocation. I trust that if those people do have any good-will-I believe that Senator Rae generally does-they will think again about that particular question. Senator Rae today, and other prominent spokesmen for the Opposition, have repeated the coalition belief that the burden of taxation is in total too high, regardless of its distribution, and have drawn, correctly, the linkage, at least in the long term, between taxation and expenditure. I find it extraordinary that the Opposition should continue to say that when it has just been through an election campaign in which it promised to increase expenditure by $2.4 billion, half of which would have been in the first year, in which it promised a variety of taxation concessions which would have cost the revenue around $2 billion, and simultaneously promised to reduce the deficit. Of course that is cargo cultism. I am surprised that someone of Senator Rae's knowledge, and at most times integrity, could have repeated that today. Members of the Opposition love to talk about fiscal responsibility. An affection for fiscal responsibility is regrettably something that the present Opposition developed after it left government. The chief exponent of fiscal responsibility is the former Treasurer, Mr Howard. It ought to be noted, in view of this drive to generate the illusion of fiscal responsibility, that Mr Howard's expenditure target was overshot in every Budget he produced. Following every Budget that Mr Howard produced as Treasurer the Government ended up spending much more than he forecast at the time of presentation. Of course his zenith was his final Budget in which he forecast a deficit of $1.5 billion, which produced a final outcome of $4.5 billion and a prospective deficit for the succeeding financial year of $9.6 billion. He overspent his Budget in every year. No manager of a private business operating on that basis could remain solvent for the length of time that Mr Howard was Treasurer of Australia. I guess ultimately Australia became insolvent under Mr Howard and that is one of the reasons Mr Howard is no longer in office. Moreover, if we look also at the qualitative aspects of the Howard Government as well as the quantitative aspects, we find that throughout the Howard period capital expenditure was starved. From a proportion of Budget outlays in 1974-75 totalling 25 per cent, it fell to below 9 per cent by 1981-82. Real growth in expenditure for capital purposes was negative in all but one of the Howard Budgets. So on both quantitative and qualitative grounds the former Treasurer must be regarded as a failure. As I said in the beginning, the Government will not vote for this Opposition motion. There are inconsistencies within it. It is principally a grab-bag designed to appeal to the greedy. If adopted it would impose quite severe penalties on some groups but would do nothing to restore equity or efficiency to the taxation system. The pursuit of equity and efficiency is the objective of this Government. The DEPUTY PRESIDENT —Order! The honourable senator's time has expired. Senator PETER RAE(Tasmania) —Mr Deputy President, I claim to have been misrepresented. The DEPUTY PRESIDENT —You may proceed. Senator PETER RAE —I shall be brief. In citing the Morgan Stanley group report in relation to Australia I did not adopt the principles contained in it. Rather I cited it as evidence of concern in relation to overseas opinion with regard to Australia-nothing further. Senator JACK EVANS(Western Australia)(3.45) —This is a silly urgency motion. It is silly to put a motion in this form before the Senate because, as the mover of the motion would know, it cannot be amended. Because it cannot be amended and because it addresses many topics, senators are put in an impossible situation. It needs to be recognised that one's inability to amend the motion means that one has to accept the words in it at face value and not as interpreted by either the mover of the motion or the supporters or even opponents of it. The Australian Democrats support some aspects of the motion 100 per cent and we agree with other aspects of it subject to acceptance of the fine detail of those aspects, but we may oppose some aspects of it if the interpretation is in accord with some of the extreme views of members of the Liberal and National parties, or for that matter the Australian Labor Party. However, in the end the Australian Democrats will vote for the motion because in its written form it is unexceptional and because we wish to be associated with the broad thrust for tax reform. Also, we accept the need for a review of expenditure, which also makes up part of the motion. But surely a review of expenditure is a constant exercise, not a one-off exercise. Surely it is not envisaged that the review of expenditure is to be grasped and put forward in the same context as the review of the taxation system per se. If that is part of the intent of the motion it makes it a very silly motion because then we would be talking about the whole process of government being reviewed at the same time as the taxation system is reviewed. It is a physical impossibility. I go through the points in the motion. Senator Rae has asked is there not a need for a review of expenditure. Of course there is. There is a constant demand for expenditure reduction. That gives us the hint that out there in the electorate people recognise, as has been put forward very strongly by members of the Opposition today, that the expenditure of this Government should be reviewed; that it is excessive. But it is interesting that the demand for expenditure reduction by the Government always comes from this side of the House. No matter who is sitting over here, Labor Party politicians, Liberal Party politicians or National Party politicians, they always demand from this side of the House that there be reductions in expenditure. Such demands inevitably come from the Opposition. What happens in the real world is that when they move to the other side of this chamber they always increase Government expenditure. The pattern never changes; no matter who is sitting on the Treasury benches the expenditure rate goes up. So this sort of motion is the sort that one would inevitably expect from an opposition party. Of course when we talk about reducing expenditure we do not need to go very far to find out where expenditure should be reduced. We could walk out to the front steps of Parliament House at this moment and get answers from everybody standing on or near those steps. The answers always have one implicit connotation: 'Reduce Government expenditure in every area, as far as I am concerned, except that which affects me'. That is endemic in every response we will hear. We will hear such comments from business representatives, Public Service representatives and defence representatives. Every part of our society wants Government expenditure to be reduced provided the reduction does not affect them. The second leg of the motion seeks the restoration of the incentive and opportunity for the creation of the economic growth and national wealth. Certainly, the Australian Democrats would support that. Which Government, which political party, which group in the community, which individual, would oppose it? Not only does the tax system provide disincentives, but also we want to recognise that beyond that there are the problems of over-regulation, the problems associated with three tiers of government, and so on and so on. We need to address many things which do need to be studied and remedied so that we have a restoration of the incentives and the opportunities for the creation of economic growth and national wealth. Certainly, if there is one party in this Parliament which is a private enterprise party with an absolute commitment to the encouragement and development of our entrepreneurs, and in particular small businesses, which are the epitome of Australian initiative and drive, that is the Australian Democrats, as our record proves when it comes to a consideration of those facets where the Opposition in particular champions small businesses out in the electorate and then votes against their interests in this Parliament time and time again. The third arm of the motion refers to the reduction in the burden of personal taxation. That is a surprising inclusion coming from any party in this Parliament. It is accepted by all of us that the burden of personal taxation is too high and that relief is overdue. It is interesting for that motion to be coming from the Liberal Party, because the Liberal Party has made it very, very difficult for personal income tax rates to be reduced, other than for its friends who were the beneficiaries of the loophole in the tax legislation in this country. Every amendment that was introduced by the Liberal Party was deliberately aimed at ensuring that there was always a loophole there for its friends. That is one of the travesties that flow from a motion which talks about the reduction in the burden of personal taxation. Of course, we have two groups of taxpayers in this country; the pay-as-you-earn, responsible taxpayers who pay their share of personal taxation and those who through the manipulation of their affairs are able to avoid paying personal taxation. They are the people who were specifically provided for by the sorts of tax legislation that we have seen over the last decade or so. The fourth arm of this motion relates to relief for families by the introduction of income splitting for tax purposes and to tax rebates for child care. I wonder what will be the colour of the meat on the bones of this proposition. Income splitting means many things to many people. Prior to the election the Liberal Party put forward a whole mess of policies; policies which were totally inadequate and patently inequitable. Income splitting, per se, is acceptable to the Democrats, but we want it to be very, very clear that we are not talking about income splitting which gives a massive benefit to somebody on a $100,000 income and minimal, if any, benefit to somebody on a $20,000 or a $15,000 income. During the election campaign, as it became obvious that the Liberal Party had been caught once more trying to help its very wealthy friends, the limit was suggested, as was the Liberal promise to phase it in over time. That is something that I seem to have heard before. Every year of government we hear that benefits will be phased in over time. The Liberal Party proposals for tax rebates for child care were quite obviously dragged out for election purposes by an Opposition, at that time, that had seven years in government to address the child care problem. The Liberal Party proposals seemed to concentrate the benefit on upper and middle income earners again, while neglecting the overall problems faced by the many people in Australia who desperately need access to child care. For most two-income families child care will be a necessary expense. The Australian Democrats believe that in these situations child care expenses need to be a tax concession and, preferably, subject to a rebate for equity reasons. However, in families where one parent is earning income and the other is working at home, child care is still a problem. The person staying at home may need access to child care on an occasional basis, or on short term regular bases. In situations where neither parent is working, or in one parent families, access to child care is important because those people need an occasional respite from their children. Governments must be prepared to act so that child care is readily accessible to all of those categories of people, and tax rebates for child care go part of the way towards resolving this area of concern. The last two paragraphs-the review of the distribution of tax revenue base between the various levels of government, and the emphasis upon neutral, efficient and equitable taxes-the Democrats will endorse. In conclusion, I would like to address a few remarks on the tax summit, which could be very productive. Tax reform is a long term strategy and not just a single Budget item. It needs the support of all political parties to ensure its implementation. Today I gave notice of a Taxation System Reform Bill, which will provide a structure, a timetable and a guarantee of commitment from future governments. It takes on board the Asprey and Mathews reports and the summit deliberations and the input to the summit. Parliamentarians from all parties will formulate the legislation under this Bill for long term tax reform. An all party joint parliamentary committee will consider all points of view, will arrive at achieveable goals and will prepare draft legislation. I believe that it is imperative that all political parties be represented at the tax summit, specifically to listen. If all political parties are represented if delegates attend with an open mind, if leading up to the tax summit, they do not denigrate the efforts and the inputs of those who attend and those who are currently participating in the public debate and if, instead of opening their mouths they open their ears to the people who elected them, the tax summit may well be the watershed in the tax reform system of Australia. All honourable senators agree that the tax system needs reform. We all agree that it is unjust, inefficient and very little understood and that it is expensive to learn about it. I think most of us agree that there is one major beneficiary of the present system, that is, the tax avoidance industry. The tax summit may not reach a consensus. I do not believe that is possible, but it will give an opportunity for all options to be put forward. I give this commitment: The Australian Democrats endorse the tax summit. We applaud the Government's initiative on the tax summit. We will work with other parties to introduce genuine, meaningful tax reforms for this country. Therefore, in what I hope is the spirit of this motion, we will support the motion. Senator HILL(South Australia)(3.59) —The Senate is debating, in part, the urgent need for fundamental reform of the Australian taxation system. The Government has debased the process of tax reform by the political circus it is orchestrating under the guise of a tax summit. That is why the Liberal Party and the National Party are not going to be involved in it. I call it a political circus; I know one commentator referred to it as a jamboree. I say that as someone who has been vitally interested in the subject of tax reform all my professional life. In this chamber I have spoken on many and varied issues of tax reform, questions of the tax mix, expenditure taxation, double taxation of dividends, aspects of business taxation, and I hope in a constructive and purposeful way. What I have always sought to do in any of those speeches is to reach conclusions and to advocate specific change. The resource material is plentiful. One can refer to the reports of the Asprey Taxation Review Committee, the Mathews Committee of Inquiry into Inflation and Taxation, the Campbell Committee of Inquiry into the Australian Financial System and the Martin Review of the Australian Financial System. There is a mountain of academic literature. The options are clear: What is needed by government are decisions. The material is on the table. As I said, it is necessary that decisions be made and that those decisions be implemented. I am pleased to say that at the last election the Opposition parties did that. They put a comprehensive tax package to the Australian people. We showed that it is possible to digest the material available and formulate a policy in accordance with our political, philosophical goals. For example, we wanted our policy to be fair and equitable, we wanted it to encourage economic growth and we wanted it to strengthen the family unit. We came clean; we put it to the Australian people, and our policy attracted a considerable public interest and brought about considerable comment. That comment will enable us to now refine the policy further. The Australian Labor Party of course was unable to agree on a policy, presumably because of the foreseen faction blowout. We had the shameful indictment of the Government that it was unable at the election to put its taxation policy to the Australian people. Instead the Prime Minister (Mr Hawke) said: 'We do not know the direction in which we are going to head, but you must trust me'. That is very difficult to say to somebody who found under the previous Government that the taxation on his lump sum superannuation had been increased from 5 per cent to 30 per cent. It is history now that on a talkback segment in Perth Mr Hawke was given his way out. 'Eureka', he cried at the suggestion, 'a tax summit. I will ask the Australian public what to do'. He clearly failed to appreciate though that the Australian people once fooled would not be fooled again. I am referring to the big business, big unions, big government National Economic Summit Conference. The Australian people at that Summit hardly got a look in despite all the rhetoric to the contrary. He failed to realise that even the more sophisticated participants now know what Hawke summits are all about. They experienced a Summit where the Government chose the participants, the Government appointed the committee heads, the Government prepared discussion and option papers, the Government drafted the final communique before the Summit had even commenced and the Government provided the hospitality at the Lodge. Surprise, surprise, the Government got what it wanted. This is how this Government seeks the expression of the Australian people. This is how it reaches its so-called consensus. Of course, it is a total sham, but it serves a political purpose. I now look briefly at the latest jokefest, the tax summit. Mr Hawke said he needed somebody to represent the Australian people at his summit. So during the campaign he wrote a 'Dear Eric' letter to Mr Risstrom of the Australian Taxpayers Association. 'Dear Eric, I have undertaken to the Australian people that they will be directly represented as taxpayers at the National Tax Summit. Mr Risstrom, you are being invited to represent the Australian people'. I do not know of any Australian who was asked whether he wanted to be represented by Mr Risstrom. No doubt Mr Risstrom, duly flattered-Mr Hawke's summits are a lot about flattery-accepted, but Mr Risstrom is no fool. Mr Hawke stated: I would expect your paper-- referring to a paper he invited him to give to the Economic Planning Advisory Council-- to give considerable weight to the most fair ways of alleviating the tax burden for ordinary Australian taxpayers. In other words, Mr Hawke was passing to him the responsibility of finding a formula for reducing taxation for ordinary Australians. That was to be Mr Risstrom's responsibility; no small passing of responsibility in that single sentence. Mr Risstrom of course was sufficiently astute to say that he did not feel so constrained by Mr Hawke's implied instructions. In his reply which appeared in the Age of 29 November 1984 he stated: If the ordinary taxpayer is 96 per cent of people, to honour that sentence of Mr Hawke's totally, you might have to confiscate everything from the other four per cent. Of course, the task he had been given was impossible. Mr Risstrom's first mistake was to dare to question Mr Hawke. Then of course he had the audacity to suggest that it was unreasonable that he be required to put in his submission by 15 March. That was his second mistake. To make matters worse, he questioned the Hawke-Keating switch to a major retail tax. 'Enough is enough', cried Mr Hawke. He was not going to have the representative of the Australian taxpayers speak to him in that way. His response was reported in the Weekend Australian of 16-17 March as follows: Mr Hawke said that between now and the summit Mr Risstrom's views would be exposed to 'pretty rigorous analysis by experts'. 'I mean, to this point Mr Risstrom has expressed his views, as we want him to express them, but he hasn't been subject to rigorous analysis,' Mr Hawke said. I just have a bit of a feeling that when subject to that rigorous analysis and cross-examination some of the rather easy observations of Mr Risstrom might not stand up quite so well.' I think it is reasonable to assume that the Australian people are not going to get far at the summit. As a matter of interest, I think we could have told Mr Risstrom that back in November. Let us contrast that position with that of the Australian Council of Trade Unions. As far back as November Mr Hawke admitted that the ACTU would have a veto over any changes in indirect taxes. In the Age of 1 November 1984, in an article headed 'ACTU to have tax veto: PM', it is stated: Mr Hawke said that before any increases in indirect taxes, 'it will be necessary to get an agreement with and from the trade unions to ensure that that does not add to the inflationary process'. So the Australian people, through Mr Risstrom, will not have any veto, but the ACTU, as one of the selected Hawke groups, is to be treated differently. Mr Risstrom was told that he had to get his submission in by 15 March. It is interesting to see that Mr Dolan, the ACTU President, who also says that the time constraints have been tough, nevertheless said that the ACTU should be able to get its act in order by July. For a final and considered word from Mr Dolan, I refer to the Australian Financial Review of 18 March 1985, which quotes Mr Dolan as saying that the tax summit 'could become a bit bloody useless'. The most fascinating role being played out in this farce must be that of the Australian Labor Party factions. It appears that each faction in the Labor Caucus will have its fixed and public position. We will have the position of the New South Wales Right, the Keating faction. I understand that that is for a retail sales tax and some capital gains tax. But of course the capital gains tax is necessary to enable a deal to be done with the unions over a transfer to the retail sales tax. Mr Hawke's Victorian Labor Unity faction, we understand, will be looking at death duties or at a capital transfer tax which would affect inheritances and gifts. The Left is not so keen on indirect taxes but wants capital taxes, wealth taxes and death duties. The Centre Left, Mr Hayden's faction, is looking for indirect taxes-although we are told that it is a little bit wishy-washy about them-and certainly capital taxes and death duties. South Australians would have been interested to note the views expressed at an ALP meeting last weekend by Premier Bannon, who I understand is a member of the Centre Left faction. He was reported last Monday in the Australian under the heading 'Bannon votes for capital transfer tax' as saying: 'It would be a sorry day if the Federal Government backed away from the question of capital transfer taxes'. Mr Bannon said that his Government would press the Federal Government to investigate the introduction of capital transfer taxes. I mention in passing that Mr Bannon is the only State Premier on the Economic Planning Advisory Council, a body which is to be much involved in this process. What will happen? Perhaps I can put a few of these questions to my friend Senator Maguire, who will follow me in this debate. We understand that the Government is to put out a White Paper. I presume that that will then be the Government's position. Will Ministers who are members of the various factions be bound to that position? Will the Caucus brawl to find by compromise the lowest common denominator of the factions' positions take place before or after the summit? How can the summit find consensus when the Labor Party takes to it so many fixed positions? How can the summit find consensus when certain groups are given a power of veto from the start? Perhaps the most important question is being avoided and that is covered by another part of the motion that we are debating today. It was put cryptically by Des Keegan in the Australian of 9 March 1985 when he said: A groundswell of cynicism about the taxation summit is gathering on the realisation this jamboree will not even discuss spending cuts. Back door wealth redistribution will dominate the closed sessions. In some recent papers Professor Officer said: I believe the debate about a restructuring of our tax system is misplaced. The real problem is the level of government expenditure and the increasing direct control of resources by governments who are inevitably much less efficient in utilising these resources than the private sector. . . . . The economy and society would be better served if the debate about taxation was shifted to a debate about government expenditure. Of course that is put in the context of an Australian government-the Hawke Government-which has the highest level of spending of any peacetime Australian government. In 1983-84 there were increases in expenditure of 7.7 per cent. In 1984-85 increases in expenditure were estimated at another 6.1 per cent. So it goes on. I simply ask the Senate to compare these figures with the Fraser Government's performance of an average of about 2 per cent. That is why so many Australians are really afraid of Hawke's tax reform and why they are really afraid of this summit. They know that the end result of it all will be a tax reform that will mean they will pay increased taxation. After that miserable picture it is refreshing to be able to return to the position of the coalition; a position that we put to the Australian people at the last election; and position that included a firm commitment not to allow any increase in the overall taxation burden and, in due time, to look to reducing it; a firm commitment to reduce the heavy reliance on personal taxation; a firm commitment that families with children will receive priority for personal tax relief and a firm commitment not to introduce a capital gains tax, a tax on assets, et cetera. My Party and the National Party of Australia were able to look at the options and reach firm conclusions. In conclusion, Michelle Grattan said in the Age on 4 March 1985: The Prime Minister's commitment to 'summiteering' has become a bit of a joke. I regret that the Prime Minister, through this exercise, is treating the tax reformers in Australia, those who are seriously interested in this subject and, in fact, the whole of the Australian public, as a bit of a joke. Senator MAGUIRE(South Australia)(4.15) —I vigorously oppose this motion concerning taxation which has been moved by Senator Peter Rae today. One of the reasons I oppose the motion is that the terms of the motion are internally contradictory. For example, Senator Rae refers under paragraph (d) to the introduction of income splitting for tax purposes. I cannot see how that can be reconciled with the call in paragraph (f) of his motion for the introduction of equitable taxes in Australia. To me the introduction of income splitting for the purposes of income tax cannot be regarded as an equitable tax reform. We in the Australian Labor Party believe that the taxation system is in need of fundamental reform. Unlike members of the Liberal Party of Australia, we believe in fundamental and genuine reform and not in artificial measures. It is easy to see from the motion before us today that the Liberals hardly believe in reform at all. I suppose that that is to be expected, based on their track record. In all of the seven or eight years of the Fraser Government there were hardly any genuine reforms of the Australian taxation system. I was fortunate enough to be able to read a report which ran to 20 pages prepared by the Parliamentary Library some year ago on the performance of the Fraser Government in terms of equity and redistribution. On only one of those pages could a measure be found that could be classed as a redistributive measure and that was the departure tax introduced by the Fraser Government. Members of that Government are in this chamber today posturing about tax reform; yet they presided over the largest rise in indirect taxes in Australian history. In just two Budgets, the Budgets of 1981 and 1982, the then Treasurer and now the Deputy Leader of the Liberal Party, Mr Howard, presided over a huge rise in the wholesale sales tax in Australia. In two Budgets revenue from that tax has increased by 66 per cent. I just cannot see how that sort of measure, introduced by Mr Howard and supported by Senator Peter Rae, can be reconciled at all with the terms of this motion. Nobody could suggest to me today that the Australian wholesale sales tax could be seen as a neutral or an efficient tax. It is a highly selective tax. Despite the fact that very rapid increases were made to that tax in 1981 and 1982 under the Liberals, today the wholesale sales tax remains a highly selective tax. I believe that it happens to hit my State of South Australia particularly hard. South Australia is a manufacturing State. It relies very heavily on the products of secondary industry and that tax focuses on the products of that industry. So it is a highly selective tax and one which cannot be described as being neutral or efficient at present. As I have mentioned, Senator Rae today called for the introduction of income splitting. I am rather surprised that members of the Liberal Party are persisting with this policy. They seem to have changed their policy since the election when I recall that this income splitting proposal was tied in not only with certain tax rebates but also with the introduction of a broad based indirect tax. That does not seem to appear in the motion before us today. I wonder whether Senator Rae, under paragraph (f), is calling for the introduction of a broad based indirect tax. I am rather curious about that but I certainly cannot see any reference in the motion to one of the key elements of the package that the Leader of the Opposition (Mr Peacock) put to the electorate last November. What really surprised me is that Senator Rae has not taken any heed of a report entitled 'Taxation Statistics 1981-82', which is a supplement to the sixty-first report of the Commissioner of Taxation. For the first time I believe that he has tried to match up the two incomes of working couples. He has actually tried to see what sort of correlation there is between the incomes of working spouses. I have read this report with great interest. It shows that income splitting has absolutely no advantage for the great bulk of two-income households in Australia and working couples in this country. The great majority of Australian working couples have incomes in the same tax bracket. They pay the same marginal tax rates. How on earth can income splitting benefit the great majority of Australian families? A table in this report shows the differences in marginal tax rates in the situation where there is one income earner with an extremely high income and his or her spouse has a relatively low income. Those are the sorts of people who would benefit from the introduction of income splitting as proposed by the Liberals and by Senator Rae today. I am rather surprised, in the light of that official evidence now available to us, that this policy is being persisted with by members of the Opposition. I can only assume that, through this policy, they really intend to provide the biggest benefits to those on the highest incomes. That seems to be a fairly logical conclusion to be drawn from the statistics provided to the Parliament by the Taxation Commissioner. Our tax reform will be genuine. We have convened the first national taxation summit conference, which will be held in July. The Government is in the process of preparing a White Paper, which I believe will be published in June. I hope that that White Paper will be along the lines of some of the documentation for the National Economic Summit Conference in 1983, when a range of options was put forward to the Australian people. That seems to be one logical way to go. For the first time in the history of this country, to my knowledge, the Australian community is being directly involved in devising a new and appropriate taxation system. It is absolute nonsense for members of the Opposition this afternoon to make the suggestion that the tax summit is somehow a non-event, a phoney event. It is the first time in the history of this country that the people will have a direct say in the formulation of a new taxation system. Our reforms will be genuine for the key reason that, unlike those in the Liberal Party, we in the Labor Party believe in the principle of basing taxation on the ability to pay. I certainly do not see those points made in paragraphs (a) to (f) of Senator Peter Rae's motion. We believe in a progressive income tax rate so that those on higher incomes pay a higher proportion of their incomes in taxation. That certainly is not mentioned in the motion. We take a broader view of the capacity to pay than does the Opposition. We do not take an artificial view, as the Opposition does in wanting to confine taxation changes to a very narrow view. The speeches by members of the Liberal Party today indicate that they do not see capital gains as part of the ability to pay. I simply refer to a recent report by the Organisation for Economic Co-operation and Development, published in Paris, which shows that the Netherlands and Australia are the only developed countries in the world that do not tax capital gains. I throw that in as an observation. It shows how different is our tax system from those of other countries. If there is to be genuine taxation reform in Australia, there must be a real crackdown on tax avoidance and evasion. I see no reference to that in Senator Rae's motion today. The ordinary working people, the wage and salary earners in the pay as you earn taxation system, are being hit by the activities of the tax cheats. An increased share of the taxation burden is being borne by PAYE wage and salary earners. Let us look at the record of the Liberal Opposition on cracking down on tax cheats and making them pay their share of taxation. Since 1983 there has been repeated blocking in this chamber of legislation drafted by the Labor Government to try to crack down on the activities of tax cheats. The original legislation, which was defeated, provided for the recoupment of some $570m from tax cheats. That legislation, along with succeeding Bills, was defeated in this place. It is vital that the wealthy, the tax cheats, pay their share. One of the points made by Senator Rae in his motion relates to incentive. I am not quite sure what the Liberals mean when they talk about incentives. I know that economists have a number of incentives in mind when they use that term. What is Senator Rae referring to? Is he referring to the incentive to work, the incentive to have leisure time, the incentive to save, the incentive to consume? I hope he will explain. This is very vague, and on all occasions the Liberals do not seem to know what they mean by incentive. Possibly Senator Rae means the incentive to work. As other Liberals have done on previous occasions, he may be linking the term 'incentive' with marginal tax rates, particularly those at the top of the scale; the ones down below do not seem to get much of a mention. If he is talking about marginal tax rates, I point out that since the days of Sir Robert Menzies marginal tax rates in Australia have been reduced from 75 per cent in the 1950s to 60 per cent now. So they are certainly a long way below what they were. The rates have been reduced greatly, and I refer Senator Peter Rae to some of the recent American evidence which suggests that there is absolutely nothing in this argument about direct taxation levels affecting work incentives. I refer him to reports and papers written through the Massachusetts Institute of Technology by Professor Lester Thurow, who pointed out that to get a significant lift in weekly working hours in the United States, based on the United States direct income tax system, one virtually needs to abolish income tax. It is not a matter of making marginal changes to rates or adjusting the rate structure. One virtually has to wipe out the income tax system to get any significant change in weekly working hours. I hope members of the Opposition will take note of that point. There is very little documented evidence around the world about direct links between income tax rates and incentive to work, if the Opposition is talking about incentive to work. I also point out that the United Kingdom Royal Commission on Distribution of Income and Wealth, chaired by Lord Diamond, found that much of the economic welfare of the very wealthy people in the community came from large scale inheritances. That does not seem a terribly strong argument for incentive to work. I would like some response from honourable senators opposite to that point. Certainly, I think that at the bottom of the income scale the argument about incentive to work has some validity, and I refer to those Australians dependent on social welfare payments. Our social welfare payments in most cases are assessable for income tax. Many Australians at the bottom end of the income scale face very high effective marginal tax rates-not the 60 per cent tax rate that the Liberals opposite talk about in respect of ordinary taxpayers. Many people in receipt of social welfare benefits in this country pay effective marginal tax rates in excess of 100 per cent because of the joint operation of the income tests for various social welfare benefits and the fact that those benefits are in turn taxable. I instance the case of people on unemployment benefit who lose one dollar of benefit for every one dollar of income earned within a certain income range. They lose on a one for one basis. So there is a very high marginal tax rate when one considers the tax on top of that. I hope that the Liberals will look at these points and clear up some of the internal contradictions in their motion. There certainly was no taxation reform of worth in this country under the Liberals during their last seven or eight years in office. If they are now proposing income splitting as a policy-they seem to have dropped the indirect tax element-most of the benefits will go to wealthy families, so that cannot be an equitable measure. On the other hand, the summit process which has been initiated by the Hawke Government, and the White Paper being prepared in anticipation of that summit, will enable genuine tax reform to occur in this country. Of course, then the really important phase will begin because the debate on taxation will shift to this chamber. Will we then find members of the Opposition supporting genuine reform? Anything coming out of the summit must go through as a package, as a whole, and not be picked over for partisan advantage. Senator WATSON(Tasmania)(4.28) —I support the urgency motion moved by my colleague Senator Peter Rae and spoken to so eloquently by Senator Rae and Senator Robert Hill. First, I must correct an impression gained from Senator Maguire, the previous speaker for the Australian Labor Party. He seemed to imply that an indirect package was no part of the proposals of the Liberal Party of Australia. There is a strong attitude in the community that levels of government expenditure and the taxes required to finance that expenditure are far too high, that they are excessive. The failure of the Government to discuss taxation during the election campaign led the Prime Minister, Mr Hawke, to seek a screen for deferral. This was achieved through a suggestion in a radio interview in Western Australia during the election campaign when the idea of a tax summit was raised by an interviewer. In stark contrast to the Australian Labor Party's policies, which lacked objectivity and foresight and relied on the charismatic appeal of the Leader, the Liberal Party of Australia at that time was the reforming Party, the radical Party, the Party which presented strong alternatives such as its plan for family income splitting to ease the burden of higher taxes and consequent lower living standards for the average and low income earners and so to improve family welfare. I remind you, Mr Acting Deputy President, that the need for reform did not emerge in an evolutionary way from the Labor side of politics or within the social democrat tradition. The need for reform was born of an election expediency and was latched onto by a desperate man, the Prime Minister. We now see the radical Left of the ALP and the Australian Democrats picking up the vehicle of a tax summit to push their extreme views on punitive wealth taxes, death duties and capital gains, measures designed to redistribute wealth from the rich to the poor in the very best of socialist traditions. For years, a massive redistribution of capital has been a pipe-dream of the Prime Minister. One has only to read his biography to realise the extent of his social goals. Now that he is very much the captive of the radical Left, as evidenced by his MX missile backdown, the Labor Party is in a position to implement changes that will radically alter the face of Australia, not to be benefit of the overwhelming number who supported the Prime Minister but to a minority of radicals and intellectuals. Let me give but one example of how low income earners will be disadvantaged. The Treasurer (Mr Keating) now appears to have adopted a package involving a retail sales tax of 10 per cent, with a promise of 25 per cent tax cuts. Firstly, the plus and minus figures do not equate. So there is something missing which must take up this shortfall. We presume this must be the attack on perks in business. A retail tax of 10 per cent, as suggested by the Treasurer, will discriminate severely against low income earners, philosophically the very people whom the Treasurer should be protecting. Even the Australian finance industry's proposal limits indirect tax to 5 per cent. Given the finance industry's background, it proposal shows how severe Mr Keating's proposed tax package really is, because his package contains no redistribution to help the very low income earners. If it did, it would appear a lot more reasonable. To bring in sufficient income to provide tax cuts of the magnitude needed, there would need to be very few exemptions in the indirect tax package offered by Mr Keating. We would have taxes of 10 per cent on food, clothing and basic necessities. There would be loaded onto the expenditures of low income earners. Given the hue and cry of the Labor Party when the coalition was in government and attempted to introduce a two and a half per cent tax on books, the Government's tax package shows how hypocritical the Labor Party has become now that it is in government. Earlier I mentioned that there was a need for an additional source of funds for the Labor Party to fulfil its promise of a 25 per cent tax cut. The euphoria surrounding the first announcements of a tax on non-tax benefits and on the cash economy by, for example, selecting the perks of business sounded fine until there was a counter-move in the Press which outlined the substantive benefits that parliamentarians, including Ministers of the Hawke Government and even the Prime Minister, received by virtue of their offices. Therefore, it was not surprising to read of a very quick Government back-down. What a charade! I ask: How much of the proposed original 25 per cent tax cut is now available for tax relief as a result of that back-down? It is a mystery. The truth is that the Labor Party wants extra sources of tax to fulfil its ambitious spending program. The Labor Party is a high taxing, high spending government. Having gained extra access to tax sources it is a relatively easy matter for it to change its mind and, subsequently, to raise income tax rates again. The ALP has not proved to be a responsible Government. In its last Budget it lost the opportunity of substantially reducing the deficit which came, firstly, as a result of savings due to the Fraser wages pause, and, secondly, from extra income from a one-off item, the breaking of the drought. The Government failed to act in the interests of the nation. It had the chance of a lifetime. It sought short term popularity. It failed to rein in or check expenditure. The Labor Party has an unfortunate choice of terminology which has the intent of misleading the public. Let me use but one example. There are numerous examples. The Medicare levy is, in fact, a tax. It is fixed by reference to income rather than to medical history or a taxpayer's needs. It is the imposition of a compulsory extraction of funds from the personal income of a taxpayer. So many of the Labor Party's new taxes, such as lump sum payments on retirement, attack people at a time in life when they are least able to restore their financial position. Many of the proposed taxes, like the recent newer taxes, will mean an extra intrusion of the bureaucracy into people's financial positions and lives. Many of the proposed taxes, like the recent newer taxes, will mean extra bureaucratic activity. Such intrusions can have unfortunate repercussions, as was evidenced by the assets test forms. I quote from the December editorial of the Australian Tax Review because I think it puts, in a very emotional way, the implications that such changes can have on people's lives. It states: Unfortunately, the feelings of the elderly when their financial security is threatened, when their personal affairs are inquired into minutely and when they receive intimidating communications from taxation officers cannot be measured numerically. They do not affect the ordinary economic indicators; they do not inconvenience the revenue authorities; and they are easily overlooked when politicians, captains of industry and trade union leaders settle down for cosy chats to plan the future of the country. However, the damage done to the quality of life by any new tax and by the feelings of insecurity engendered by recent events must not be underestimated. In particular, it must be taken into account as economists and others produce bright ideas for adding yet further taxes to our already overburdened system. Taxation reform is much too serious and has much too great a potential for harm for it to be allowed to remain in the hands of economists and politicians. The burden on taxpayers is directly related to extravagant increases in government expenditure. Let us examine some of the maximum rates of personal income tax of some of our near neighbours. This is important, especially as, increasingly, our trade will be within the Pacific region. I cite a number of the maximum tax rates of our near neighbours. In Indonesia the rate is 35 per cent. In Singapore, a progressive nation, it is 40 per cent. In Malaysia it is 46 per cent. In the United States, the maximum rate of tax of 50 per cent is not levied for a married person filing a joint return until the taxable income level of $US162,000 is reached, which is in the order of over $A200,000. Although the United States has certain state income taxes, they do not add up to the Australian income tax take. The maximum tax rate in Australia of 61c in the dollar is paid on incomes over $35,000, approximately twice average earnings. I venture to say, as I mentioned earlier, that the quality of life has been impaired by the tax system. Too much tax revenue accrues from income tax on middle and low income groups. For example, taxpayers earning under $30,000 pay 83.57 per cent of the total income tax paid by individuals. Income tax raises 67 per cent of total Federal revenue. There is a widespread belief in the Australian community that the tax system is not equitable, simple or efficient. The Liberal Party's policy, on the other hand, demands reductions in the tax burden through reductions in the size of government spending and sustained economic growth. During a first term, the Liberal Party would aim to reduce both expenditure and taxation as a share of gross domestic product. Other associated policies include freeing up the economy, less public intrusion, reduced regulation and a more flexible wages system. The tax summit will be a farce if it does not look at the other side of the coin, expenditure restraint. It will be ridiculed forever and a day if the Australian Council of Trade Unions or individual unions have so much power that they are able to veto reasonable changes. An attitude prevalent in the Labor Party calls for introduction of a capital gains tax. Once a tax is introduced it is very difficult to remove. Therefore, the introduction of a new tax must be subject to a great deal of careful examination. My Party, the Liberal Party, is against a capital gains tax. It is reasonable and acceptable to be taxed on recurrent incomes, but gains or losses of capital involve different principles and should not be subject to levies. Capital gains taxes do not achieve either horizontal or vertical equity. The incidence of a new tax is unlikely to reduce the levels of other taxes because politicians notoriously increase expenditure levels. Thus, there is a little opportunity to reduce tax. Capital gains tax is a disincentive to both savings and investment. Australia has a poor record in raising capital. Are we to remain dependent on foreign investment? Can we afford a further disincentive to investment? The idea that a wealth tax should be paid progressively as an asset increases in value has weaknesses. Such an idea has been put forward by the Left. Should a farmer progressively have to sell off his farm to pay his tax bill? Countries similar to Australia which have capital gains taxes had them before the onset of high inflation. If we were to introduce capital gains taxes now we would need a set of formulas to overcome illusory and inflationary gains. The revenue gained would not be great, but the costs of collection would be significant. A capital gains tax is a call for the have nots to attack the wealthy, a grievance sort of attitude. A capital gains tax reduces investment and reduces the number of jobs available as the tax would fall mainly on enterpreneurs. It would not encourage high risk venture capital or entrepreneurial activity. The Prime Minister conveniently forgets that the large majority of businesses in Australia strongly opposes such a tax. The Council of Small Business Organisations of Australia, representing the biggest employers of labour in this country, has said that a new capital gains tax would decimate small business. The National Farmers Federation is also waging a strong campaign against such a tax, because a capital gains tax locks farmers into existing enterprises by discouraging resource movement. For example, there would be a disincentive to move from farming to an alternative investment if a significant proportion of capital would be lost to tax. At a time when the Government is trying to get a restructuring of the enterprise, it is talking about a capital gains tax which locks up investment in free enterprise; it stops it moving. With the Labor Party now giving us some of the highest real interest rates in the world-that is the difference between the actual rate charged and the inflation rate-It is hard to see the creation of new capital in Australia. Experience has shown that reductions in capital gains taxes in the countries that have them have increased investment and employment in critical respects. The introduction in Australia of a capital gains tax would have an adverse effect on investment and employment. If the Government is serious about rejuvenating the economy it must be practical and not allow outmoded ideological beliefs to damage further the economic performance of an economy that is really in trouble. Australia must restore incentives to work and save by reducing income tax rates. A proper balance between direct and indirect tax must also be achieved, but not in the regressive manner suggested by the Treasurer. I support the resolution moved by my colleague Senator Rae. Senator COOK(Western Australia)(4.44) —This urgency motion was moved by Senator Peter Rae. I say 'Senator Peter Rae' because I would not want any listeners to mistake him for Senator Robert Ray, my Collingwood-supporting Labor colleague. When I first saw this urgency motion I thought only that the Liberal Party must have no shame. The Liberal Party, having been in office for 31 of the last 36 years, specifically for the seven years prior to the last two years in which we came to office, has moved an urgency motion for something to be done about the tax system despite the fact that between 1975 and 1983 it presided over the system. One could well ask what the Liberal Party did and why it allowed for so many years the taxation system of this country to decay. That is how I approached this debate in the beginning. My breath was further taken away when I heard the Australian Democrats announce that they will support the carriage of this urgency motion. They do so in the most qualified of ways, saying that the innocent words of the motion, on their face value, cause them to move to support it. That would have to be the most guileless approach by a party that has demonstrated that it wants things both ways. The Democrats say that they support the taxation summit and tax reform, yet they support this urgency motion. They pretend that the innocent words, on their face value, will not be construed by the coalition as some general support against the Government and for the coalition in the coalition's attempts to maintain the tax system in Australia. That tax system essentially and blatantly protects the wealthy at the expense of the poor. The Liberal Party has launched this urgency motion, although it had been in office for seven years between 1975 and 1983. The Liberal Party was responsible for collecting revenue and for expenditure as the economic managers of the country. Now that we have been in office for two years it calls for an urgent review of these matters. It is important that it be placed firmly on the record that the Australian people have not forgotten the sort of government they had when the coalition was on these benches and not on those they now sit on. The most essential point to be made in this debate is that the credibility of the Opposition depends on its performance when it was in government. Its performance then shows that its creditability on this issue as on so many others can in no sense be justified. During the Fraser years we had high unemployment and high inflation. High inflation, incidentally, pushed wage earners into higher tax brackets as the silent thief of inflation robbed workers of more and more through their payment of income tax. During the years of the Fraser Government we had high income tax, high industrial unrest, low growth, low investment and low confidence. When setting the parameters for how we approach public discussion of these issues, it is important that the turnaround in the Australian economy be again recited. The most important recent comment on the status of the Australian economy at present was given on Monday of this week by a respected political commentator from that conservative newspaper, the Australian. Paul Kelly, writing in his column on Monday- Senator Watson —Ha, ha! Senator COOK —Senator Watson may well laugh, because the facts are always uncomfortable. Paul Kelly began by asking the rhetorical question: What are the facts? He continued: The February employment figures, a key indicator of economic activity, have been a transforming boost to the Government. After 23 months of office they mean that 360,000 jobs have been created and clearly suggest Mr Hawke's 500,000 target is well within reach. Yet this target was regarded as a mere pipe-dream when the economic scenarios were being discussed at the national economic summit in autumn 1983. The jobs target for 1984-85 of 150,000 is virtually certain to be reached since 110,000 jobs have been generated so far. These latest results suggest the economy has improved from it lull in the early part of 1984-85. There is now confidence the momentum will be maintained. On fiscal policy the Government is in good shape to cut spending and bring down an August Budget for 1985-86 with a deficit of about $6 billion. Indeed, there is hardly any dissent even in the ALP Caucus on this broad figure. Mr Hawke explained such an outcome would mean that in two years the deficit as a proportion of GDP had been reduced from 4.3 per cent to 2.5 per cent. This is the sort of reduction which should delight the financial community. While the hard decisions are yet to be made, the Government is significantly advanced in its expenditure review process, although it is more likely the announcements will wait until August rather than be made in May. He went on to recite other achievements of the Government as well as scotching the story which the coalition is trying to develop in the community that the accord is not a success when unequivocally its success is endorsed, as is this Government on all other fronts. Senator Peter Rae —That is not the editorial policy of the Australian. Senator COOK —This is a respected and independent political commentator writing for a conservative newspaper. It is important that those facts be put on the table not by us but by independent commentators so that the people can see where the arbiters of political commentary stand vis-a-vis this Government's economic performance and so that they can see that it is a question not of our expounding our virtues but of our virtues being applauded by others in an independent position. It is important to do that as well for another reason: It is important that we approach tax reform in this country as a government in control of the economy with a respectable track record behind it. This is not a reckless attempt to do anything. It is a solid attempt, based on a performance which is well recognised and applauded, to make a most significant and much needed change in the Australian economy. However, it is of course a matter of urgency. That leads me to the urgency motion moved today. Many of the remarks in this chamber by the Minister for Finance (Senator Walsh) and by my colleague Senator Maguire have now made a mockery of paragraphs (a) to (f) of this urgency motion. Let us just go back over it briefly to give a thumbnail sketch of some of its major deficiencies. It calls for urgent reform of the tax system. One cannot argue about that. It calls for fundamental reform of the tax system. One cannot argue about that. However, one may well argue why those opposite did not do it when they had the opportunity. Paragraph (a) calls for a total review of expenditure. Many in this Parliament would say that a total review of expenditure has been going on, and in fact some would say that it has been too tough a review of expenditure and not too light a review of expenditure. When this question is raised we must also remember the performance of the Opposition under the Howard regime when a Budget never came in at the level propounded in the Budget Papers; it was always overspent. The record of those opposite is one of failure. Our record is one of living up to our expectations; and the review of expenditure is solid and is respected in the independent community. More importantly, Senator Peter Rae raised the fiction of trying to reduce government expenditure. I go back to what Bryan Kelman, chief executive of CSR Ltd, said as reported in the National Times last weekend. When talking about tax he put aside this whole red herring of talking about government expenditure by saying that it does not matter what the figure is. If the figure is X, some may argue that it should be X plus 20 and some may argue that it should be X less 20. But if the figure is X, that has to be raised and the question is: Is it to be raised equitably? That is not an issue which is addressed in most debate in this chamber. I come to paragraph (b) of the motion-The restoration of incentive. One could well ask, as Senator Maguire did so penetratingly in his address, what is meant by the words of this paragraph. Increased incentive was achieved by halving the inflation rate, increasing employment, bringing down interest rates and generating investment in the economy. That was an economic achievement. That is on the record. It is now part of our economic history. That is generating incentive and was achieved through the accord. That is what the Government intends to continue doing. I come to paragraph (f)-'the emphasis upon neutral, efficient and equitable taxes'. Of course, this is the purpose of the national tax summit. We want to conduct a review of the Australian taxation system. That review is well and truly necessary because of the way in which the tax system in Australia, on grounds of fairness and equity, has become an absolute joke. There is a wealth of literature and material about what has happened. All of that literature and material containing factual studies comes to the conclusion that there has been a shift in the tax burden from the rich to the poor in this community. In fact, the poor are subsiding the rich, and words to that effect were uttered in 1980 by Professor Russell Mathews when he reviewed the system. In an undated Current Affairs Bulletin which I will make available to any member of the Opposition who wishes to check it there appeared an article which I think they all ought to read. It is headed 'Unequal Burdens-Personal Income Tax Changes Since 1975', and is written by Ann Harding. It sets out on page 18 a table which repays study. That table shows that the burden has been shifted quite clearly so that at the higher range of incomes, $64,000 and above per annum, there has been a reduction in income tax paid of 0.2 per cent, that at the bottom of the table, incomes of $10,700 and below, tax has increased by 38.1 per cent and that on average weekly earnings of $16,654 there has been an increase of 21.6 per cent in the years from 1975-76 to 1981-82, a span of only six years. The burden has been shifted on to the backs of the poor. That is a fundamental reason why there should be a reform of the system. Another major concern is the massive tax avoidance going on. There are still $2 billion of uncollected taxes because this chamber refuses to vote through the legislation necessary to recover that type of tax avoided. Those opposite could ask how people can trust them when they talk about taxes when they, by their legislative votes, encourage that type of avoidance. In addition, the Australian Taxation Office, held down by artificial staff ceilings during the Fraser years, was unable to collect taxes that were properly due and, if properly staffed, would have been able to collect much more. Those figures are all available. In the end, the summit comes down to a government addressing one of the most fundamental and tough issues of political life. It is a political question: How does one conduct a fundamental reform of the tax system in this country without seeing what we are seeing today-the Liberal Party embarking once again on a massive scare and fear campaign to try to frighten people with all the hocus-pocus of its rhetoric into believing that they will be worse off? That is what it comes down to. That flies directly in the face of the Prime Minister's commitment in the election campaign. When laying down the nine points on which the national tax summit would conduct its affairs, he started by saying: First, there must be no increase in the overall tax burden, as measured by the share of Commonwealth Government revenue in gross domestic product. He went through his nine points, finally saying in the ninth point: . . . any reform package must have widespread community support, including support at a widely representative National Tax Summit of economic organisations and community groups. The Opposition may well want to try to run a fear campaign to scare people out of confronting the problems of the tax system and making it impossible for governments to legislate, but if it does that it has to take responsibility for the inequities that that will create and for wrecking the possibility of long-standing and much needed fundamental tax reform. That brings me to a major point which I think it is necessary to conclude on, because this debate has been launched by the Opposition and its position needs some explaining. It is interesting that on the speakers list Senator Dame Margaret Guilfoyle is the last speaker for the Government. Senator Peter Rae —The next Government. Senator COOK —I am sorry; not the Government, the Opposition. She may well at long last want to answer an important question for this chamber. On the Sunday program a few weekends ago Andrew Peacock made it clear that the Liberal Party would not block in this chamber Bills associated with tax reform if they came forward in association with Budget measures. That has since been derided by many spokesmen in the Liberal Party, many of the various factions in the Liberal Party, starting with John Howard arguing that the Opposition may block such Bills. I would like Senator Dame Margaret Guilfoyle to make it quite clear whether her Party does or does not intend to try to find an accommodation on an ad hoc and populist basis with the Australian Democrats to block tax measures and thus resist the overwhelming consensus of a national tax summit. We await Senator Dame Margaret Guilfoyle. Senator HARRADINE(Tasmania)(4.59) —I thank Senator Dame Margaret Guilfoyle for giving me the opportunity simply to state that I shall be unable to vote for this motion because it is moved pursuant to standing order 64 and thus it cannot be amended. Whilst I agree with most of the points raised in the motion, I cannot vote for it because, firstly, it does not cover the field sufficiently and, secondly, my voting for item (b) could put me in the position of supporting a policy almost of laissez faire in the area of so-called incentives and opportunities for the creation of economic growth and national wealth. I am sorry that under the Standing Orders such motions are not capable of being amended. Were this motion capable of being amended, I would seek its amendment in respect of item (b). I would seek to amend it to cover the need to recognise that family allowances have been eroded severely over the years and that they should not have been placed into the social welfare sphere but should have been maintained in part in the area of taxation so that there would not have been the pressure to keep down family allowances that has arisen. Had they been continued as tax measures, there would have been recognition of the fact that, as with any business, it is costly to raise a family and that there should be tax incentives and tax considerations for that all-important job. Senator Dame MARGARET GUILFOYLE(Victoria)(5.02) —It will have been noted during the debate on this motion that Opposition members speak with one voice on the matters before us in seeking a fundamental reform of the tax system. They speak with the authority of the tax policy which they placed before the Australian people at the time of the last election. This is in sharp contrast to the method of changing tax policy that has been adopted by the Hawke Labor Government. If there are difficulties in changing tax policy, I would have to say that what has occurred since the Prime Minister (Mr Hawke) stumbled into a tax summit at the time of the last election has shown that this is certainly not the way in which policy ought to be made. There seems to be no understanding by Mr Hawke and his Government that taxation policy is the essence of government. It is the essence of government responsibility to draw from the people the requirements of government and to have a policy on expenditure which makes these matters compatible. It is not a way of dealing with government responsibility to go to a summit. I can only assume that the Prime Minister is using the summit as a means of binding the various factions of his Party together to enable some sort of legislation to be brought forward. Owing to the time constraints, I am not able to develop these remarks, but it was rather damning that the Prime Minister commented yesterday to his colleagues that it would now be more damaging not to change tax policy than it would be to go forward with some form of tax changes. If that is the Government's tax policy and the way that this Government is governing, I fail to see what can be achieved by the tax summit, unless it is a reconciliation of the various columns of faction opinion on the major items of tax policy before us. It is the Opposition's desire to bring this urgency motion to a vote today. Therefore, I move: That the question be now put. Question resolved in the affirmative. Original question put: That the motion (Senator Peter Rae's) be agreed to. The Senate divided. (The President-Senator the Hon.Douglas McClelland) Ayes . . . . . . . . . . . 36 Noes . . . . . . . . . . . 31 —— Majority . . . . . . . . . 5 —— Archer, B. R. Macklin, M. J. Baume, Peter Mason, C. V. J. Bjelke-Petersen, F. I. Messner, A. J. Boswell, R. L. D. Missen, A. J. Brownhill, D. G. C. Parer, W. R. Carrick, Sir John Puplick, C. J. G. Chipp, D. L. Rae, PeterCollard, S. J. Reid, M. E. (Teller)Durack, P. D. Scott, D. B. Evans, Jack Sheil, G. Guilfoyle, Dame Margaret Short, J. R. Haines, J. Teague, B. C. Hamer, D. J. Townley, M. Hill, R. Vanstone, A. E. Jessop, D. S. Vigor, D. B. Knowles, S. C. Walters, M. S. Lajovic, M. E. Watson, J. O. W. Lewis, A. W. R. Withers, R. G. Aulich, T. Jones, G. N. Black, J. R. McClelland, DouglasBolkus, N. McIntosh, G. D. Childs, B. K. McKiernan, J. P. Coates, J. Maguire, G. R. Cook, P. F. S. Primmer, C. G. Cooney, B. Ray, RobertCrowley, R. A. Reynolds, M. Devlin, R. Richardson, G. F. Elstob, R. C. Robertson, E. A. (Teller)Evans, Gareth Ryan, S. M. Foreman, D. J. Sibraa, K. W. Gietzelt, A. T. Tate, M. C. Giles, P. J. Walsh, P. A. Grimes, D. J. Zakharov, A. O. Hearn, J. M. Crichton-Browne, N. A. Coleman, R. N. MacGibbon, D. J. Colston, M. A. Kilgariff, B. F. Georges, G. Chaney, F. M. Button, J. N. Question so resolved in the affirmative. Motion (by Senator Reid) agreed to: That the Sessional Orders relating to the consideration of Government Papers and Committee Reports be suspended for this day. Debate resumed. Senator BOLKUS(South Australia)(5.15) —When the debate was interrupted I was discussing the question of Nicaragua and civil rights in that country. I wish to continue my remarks on that subject. I had discussed the attitude of the United States Administration and the propaganda that was emanating from that source and was trying to compare reality on the ground in Nicaragua with the rhetoric coming from the United States Administration. I had touched on the position of censorship in Nicaragua and the attitude of the editor of the major opposition newspaper La Prensa. I now wish to turn to other forces of opposition in that country and to highlight how those forces can operate within this so-called totalitarian dictatorship, as it has been described by the United States Administration. The trade union movement is often a major force of opposition to governments when it comes to totalitarianism. In Nicaragua there are four trade union organisations. One in particular is headed by a person named Alvi Gutrie. He is the Secretary-General of the Confederation of Unified Trade Unionists, the CUS, and was trained at the AFL-CIO training school at Fort Royal, Virginia, a school which is partly funded by the Central Intelligence Agency. Alvin Gutrie's criticisms are seized upon by the United States Administration as one lever to prove that civil rights in Nicaragua are being repressed. Gutrie has a number of complaints about how the Sandinistas treat him. I was able to listen to those complaints. In fact, I was able to ask him to document them, and with the assistance of a paper that had been prepared by a tutor-a lecturer in sociology at the Australian National University, Dr Andrew Hopkins-I was able to discuss with Gutrie the points of his complaints. In the past Gutrie has claimed that many of his union organisers had been gaoled. In fact, he claimed that at the port of Corinto in May 1983 six of his union organisers had been gaoled, and he repeated that claim to me. The claim had been made in the past to many people, and in this instance I was able to respond that my information-information that had been substantiated by the United Nations-funded Commission for the Protection and Preservation of Human Rights in Nicaragua-was that these union organisers had not been gaoled by any indiscriminate act of the Sandinistas, they had been gaoled because they had been found guilty of frauduently converting 43,000 cordobas of unions funds. The sorts of criticisms Gutrie makes could all be explained. When I left him, having discussed with him the kinds of acts of repression about which he was concerned, it appeared that he was putting up a sham situation. However, even a person such as Gutrie, with a vested interest to play within the Nicaraguan state at the moment, was able to say that if he had any problems he was able to raise them with the administration. In fact, he had an open line to the President of the General Assembly. He made it very clear that the last thing he wanted to see happen in Nicaragua was an invasion by the United States. As far as he was concerned, the Nicaraguan people had come a long way and could handle their own problems. Once again, this sort of attitude runs counter to that expressed by the United States Administration. Not only does Nicaragua have an independent trade union movement, not only does it have opposition newspapers, it also has an organisation which is, in effect, the right wing opposition in Nicaragua. This organisation is called Coordinora Democratica, and it consists of a number of colleges of professional organisations, business administrators, and so on. I had the opportunity to meet that organisation, together with embassy officials. The organisation participated to a certain extent in the electoral process in Nicaragua last year, but towards the end it withdrew from it. It withdrew because it claimed that there was excessive censorship. That was a claim which was repeated to me, but unfortunately for the organisation it was a claim that was not substantiated by the evidence from La Prensa. La Prensa made it clear that during the electoral process there was minimal censorship, this information coming from the editor of La Prensa and the editorial board. The right wing opposition organisation said that it thought there was excessive censorship, but the evidence from La Prensa, which is available to any visitor in Nicaragua, runs counter to that. I was rather disappointed with the organisation because, apart from general rhetoric, rhetoric which is very similar to the hardline left wing rhetoric we sometimes find in countries associated with the Soviet line, there was very little to substantiate the claims of repression that the opposition organisation put forward. I turn to the church, which of course is a major obstacle to any government in that region which wishes to repress civil liberties. The church is playing a vital role within the Sandinista Government and outside it in Managua. The pleasing part about church-state relationships in Nicaragua is that all parties are prepared to consult and to talk with each other, to argue their points in a civil way. They have not heard of our system of conciliation and consensus, but in their own way they are prepared to discuss their outstanding problems. The other point one must look at is the rights of minority groups. In Nicaragua there is a recent history of concern about the role and rights of the Meskito minority group. I will say nothing more about them than refer to the most recent report of the Americas Watch organisation, published towards the end of last year. That organisation said that, although the Sandinista Government started off treating the Meskitos badly, its policy in recent times had changed and was now one to be commended. The report says: In the last two and a half years, the most serious abuses involved the Meskito Indians. In regards to them, the government has made substantial progress with the release of those held in prison, and the more careful procedures for investigation and arrests in the Atlantic Coast area. Local authorities no longer relocate villagers after attacks by the 'contras', and have opened both a complaints office of the Ministry of Interior and an office of the official National Commission for the Protection of and Promotion of Human Rights. I mention that specifically because it is one particular point that the United States Administration seizes upon. It claims that the rights of that minority group are being repressed, but when we assess its claim in the light of a report such as that from Americas Watch once again we find that reality and the fantasy of the United States Administration's rhetoric are very different. The electoral process has been of major concern in Nicaragua. When one assesses the rights of individuals within a country one has to look at the rights of those individuals to participate in the electoral process and the election of governments. President Reagan claimed that the election in Nicaragua last year was a sham. However, the electoral process in Nicaragua has been praised by a wide and disparate group of people-wide enough to include British Conservative members of parliament, members of the French Socialist Party, representatives of the British Guardian Weekly and also independent observers such as representatives of the Swedish and Canadian governments. All these sources have assessed the processes of election in that country as being far better than expected. British Conservative member of parliament David Ashby is quoted as having said: There were no irregularities in the conduct of the electoral process or the counting which I could see. I asked the people if they considered the vote was secret, and the answer was in the affirmative. I asked if they felt free to vote for any party and the answer was yes. The British Guardian Weekly summed up the situation as follows: The United States had tried hard to persuade or force all the opposition parties to boycott the election, precisely in order to keep up the image that Nicaragua is a one-party state. But the effort failed and it was clear to most observers that they were fair elections. The Sandinistas polled over 70 per cent of the vote in those elections, in which over 80 per cent of the electorate voted. Last year in America President Reagan finished up with something like 28 per cent of the people voting for him; so he has a major credibility gap when he claims that the Sandinistas do not have the support of the people in Nicaragua. It is of concern also to see what is happening to the Sandinista Government and to the Nicaraguan people as a result of external forces. In this respect one must refer to the policy of the United States Administration. In assessing whether an intervention in a foreign country can be acceptable, one can agree that if one of four criteria can be met there may be some reason for intervention. Those four criteria can be summed up as follows: Internally, if there will be a build-up within the country which may have a destabilising effect within that country and may affect surrounding countries, there may be a need for external countries to interfere. Once again internally, if pluralism is threatened, if there are no free elections or if human rights are threatened, there may be cause for intervention. In the foreign affairs field, if a country can be proven to be a source of subversion or terrorism in a region once again there may be cause for intervention. In this instance President Reagan claims that a military build-up is being undertaken in conjunction with the Union of Soviet Socialist Republics. If that can be proven, obviously the Americans would claim that they have a right to intervene, given their continual adherence to the Monroe doctrine over the last 60 years. The evidence in Nicaragua does not support intervention on any of those four grounds. In fact, the evidence is that the United States Administration's policy in that country is being counter-productive. Sure, we acknowledge that there is no separation of powers in Nicaragua and that human rights there are not what we acknowledge them to be here. However, because of the intervention, either through the dirty war, as it has been called in America, sponsored by the Central Intelligence Agency or through the economic blockade which is taking place, there is a build-up within Nicaragua of antagonism and antipathy towards the United States Administration. In fact, the policy there is counter-productive and is being seen by the people there as such. It is easy now for the Sandinistas to claim that certain actions they have to take, whether repressive or otherwise, are related to the war effort. They have often claimed, quite rightly in many instances but not in all, that their acts of censorship are related to domestic security. They can claim, quite rightly in this instance, that their economic hardships have been occasioned by the fact that they have to mount a massive war effort to protect their own borders. Most international opinion is that that is what they are doing. I had the opportunity to visit one part of the country in which a group of Australians, the Australian Brigade, had spent three to four weeks picking coffee for the local people. They had to do that because 30 per cent of the local labour force in the Matagalpa region was being used to defend the area from CIA-sponsored contras. The Australian Brigade-a group of young people ranging from apolitical housewives to very political Marxist-Leninists-outlayed almost $3,000 to spend that time there. It was quite obvious that the effects of the war effort were being felt by the people, that region having lost to the war effort 30 per cent of its labour force. That is only indicative of the general demands made on the Nicaraguan economy by having to mount this war effort. Around 30 per cent of its economy goes into defending its borders. We see at the moment attempts by the Reagan Administration to move from the private war, or the dirty war, to an official war against the Nicaraguans. One wonders what difference that would make. John Stockwell, an ex-CIA case officer who left the Agency not long ago, is quoted as having recently said: So the CIA has proceeded full strength. They are keeping about a million dollars a month flowing to the contra forces. Now there is some limitation on what they can accomplish. The result is that the contra forces seem to have gone down from about 15,000 to about 12,000. But they are still able to do a lot. So at the end of the day we have a situation where America is spending a great deal of money in an attempt to force these people away from their chosen, self-determined government. The Americans are spending a lot of money trying to undermine the Government of the Sandinistas, as the world now acknowledges they did in Chile over 10 years ago. I believe that it is a self-defeating policy, a contradictory policy and one that is totally hypocritical when one compares the attitude of the American Administration there with its attitude in respect of surrounding countries such as Costa Rica, Honduras and El Salvador. Rights are being threatened and people are being slaughtered but we do not hear the same sorts of objections to that sort of activity in those areas. I am pleased that the Australian Government is taking an independent role when it comes to the Nicaraguan situation. I am glad that the Minister for Foreign Affairs (Mr Hayden) and the Minister for Immigration and Ethnic Affairs (Mr Hurford), as well as a parliamentary delegation from this Parliament, have been able to go to Nicaragua. For the first time in 160 years countries outside the region are taking an interest in the people of Central America. I hope that this time that interest will mean that the people of this country will be able to exercise fully their rights of self-determination. The DEPUTY PRESIDENT —Before I call the next speaker I inform the Senate that this will be Senator Parer's first speech in this chamber. I ask honourable senators to accord him the usual courtesies. Senator PARER(Queensland)(5.32) —Mr Deputy President, it is a great honour to have been selected by the Liberal Party in Queensland to replace Kathy Martin Sullivan in the Senate, particularly as there were a large number of quality candidates. Kathy served well both the Senate and the people of Queensland before she resigned to contest the new House of Representatives seat of Moncrieff. Against tremendous odds she succeeded in winning Moncrieff for the Liberal Party because of her well-known fighting abilities. The electors of Moncrieff are fortunate to have Kathy as their representative. With her knowledge and experience, she will be a great asset in the other place to the good government of our country. I would also like to pay tribute to those honourable senators who have smoothed my transition to parliament from the world of business. Mr Deputy President, in the Governor-General's Speech the Government outlined its views on the economy and its vision for Australia over the next three years. There are two claims, in particular, in that Speech which require comment. Firstly, the Government speaks in glowing terms of its strongest and most sustained economic performance for decades. Secondly, it claims to have created a strong momentum toward the change which is necessary to eliminate unemployment. These are strong claims, particularly in view of the weight of disarming evidence to the contrary. Certainly, overseas confidence in our economy has recently been shattered, as reflected in the collapse of our dollar. Our current account balance has led one economist to describe Australia as the 'sick boy of the Organisation for Economic Co-operation and Development'. The slide since the Second World War of Australia's living standards relative to those of comparable countries is well documented, as is our horrendous overseas borrowing requirement. Our inflation rate remains higher than the rates of our major trading partners, and the current Budget deficit in absolute terms is the second highest in Australia's history, second only to the previous Hawke Budget. Recent Bureau of Statistics figures reveal a dramatic decline in manufacturing production in the past 12 months. Unemployment remains unacceptably high at over 8 per cent and, more importantly, is becoming more entrenched. These facts cast grave doubts over the Government's grandiose claims in relation to our current economic performance and to its optimism in relation to employment. The benefits of the international economic recovery have largely been lost on the people of Queensland. That State has recently been paralysed by mining industry strikes whose costs are beyond calculation. Its unemployment rate is over 11 per cent. This is despite the much-vaunted accord between the Labor Government and the unions. Mr Deputy President, politicians too often spend time either scoring cheap points against their opponents or against other governments, protecting vested economic interests at the expense of the national interest, or simply blaming a current malaise on the policies of a previous government. All this is at the expense of rational analysis of the root causes of our obvious and continuing economic problems. These problems are deep-seated and, under present policies, intractible. The solution, I suggest, lies in a more flexible and decentralised approach to economic management. The relative falling living standards of all Australians will be helped only by governments, both Federal and State, making the economy more sensitive to the many factors that affect our international and domestic performance. This means governments taking a less active role in directing the economy. For decades now, governments and bureaucrats have, to our great cost, encouraged the view that the state is the repository of all economic wisdom and has the answers to all our social problems. Too often, attempts by governments at social engineering only aggravate the problems they seek to solve. The most obvious example of harmful government regulation somehow continues to escape the attention of our political opponents. I refer, of course, to Australia's rigid and centralised system of wage determination under the control of the Australian Conciliation and Arbitration Commission and its effects on employment. Under this system, bureaucrats who are removed from economic reality and who do not have to live with their decisions attempt to determine, in place of the market, what is a just wage for all Australian workers. The effect of comparative wage justice is to extend wage increases across the board and to index them to the consumer price index, irrespective of productivity or of the capacity of individual industries to pay. Last year wages rose on average by 8 per cent in Australia, well above the inflation rate. The claim that centralised wage-fixing minimises wage hikes is a myth. The present arbitration system simply institutionalises the self-interest of over-mighty union leaders who often care little for the national interest or for the interests of their members. The lack of flexibility in our wage determination structures sits particularly awkwardly with the Government's deregulation of the financial system and exchange rates. Australian industries are expected to compete in an increasingly uncertain world of floating currencies, fluctuating commodity prices and falling overseas inflation. Yet they continue to be crushed by the high costs of a centralised system of wage indexation that can only make our industries less competitive and contribute in a major way to our unacceptably high unemployment. At the moment the depreciated value of the dollar should be helping those industries, but all possible benefit is lost as a result of continual wage hikes. Clearly, what is needed is a wage system that is sensitive to the needs of individual industries and their markets. One cannot deregulate one part of the economy while others remain in a straitjacket. Or, in the analogy of Dr Chris Higgins of the Treasury, the economy is like a patchwork balloon which can expand only as far as the flexibility of the least elastic segment will allow. The effect of artificially high wages, when combined with the crippling effects of non-wage labour costs, including annual leave loadings, workers' compensation, payroll taxes, penalty rates and severance provisions, is to give employers every incentive not to employ people. By rigidly fixing minimum wage levels, particularly for the young, industrial tribunals prevent mutually advantageous voluntary arrangements between employers and workers. In the words of one noted economist, they in effect make full employment illegal. Instead of freeing the labour market to create real jobs, particularly in the small business sector, the Labor Government continues simply to apply band-aid solutions in the form of job programs that attempt to ease some of the symptoms of the problem but do not go to the causes. The effect of such schemes is simply to make the unemployment figures look better for the Government. The much-vaunted community employment program is no solution to the tragic plight of the unemployed. It lacks permanence and certainly does not offer much hope of career development potential to the vast majority of the unemployed who have come in contact with it. Over half the jobs created by the present Government have been in the ever-expanding, non-productive public sector. Over the same period employment has actually fallen in the wealth-generating farming, mining and manufacturing sectors. Needless to say, the jobs created in the public sector must be financed by further imposts on an already over-burdened private productive sector. The Institute of Public Affairs has referred to the efforts of governments in this area as job destruction rather than job creation. Mr Deputy President, other examples of unwarranted and harmful intrusions by government into the economy are legion. I need only mention the distortion effects of featherbedding inefficient industries at the expense of more productive enterprises, of tariff walls and of subsidies to favoured groups. Yet the vested interests which enslave governments, when engaging in their special pleading, can always point in their defence to some other groups in receipt of similar artificial advantages. Such interests need to be exposed to the disciplines as well as the advantages of free markets. Similarly, the disincentive effect of confiscatory taxation are well known. High marginal tax rates simply swell the coffers of big spending governments while at the same time reducing the disposable income of ordinary Australians, who are continually being forced by inflation into higher and higher tax brackets. It is interesting to reflect that 30 years ago the top marginal tax rate applied at 18 times average weekly earnings. Now it applies at less than twice average weekly earnings. The Government has realised that something must be done about taxation. What it has not grasped, however, is that the vital issue concerning most Australians, certainly Queenslanders, is not how they are taxed-whether directly or indirectly-but how much they are taxed. The seemingly certain movement towards indirect consumption taxes and capital gains taxes, whatever their merits and demerits, may simply be an excuse for this Government to impose higher taxes overall in order to finance its spending programs. The fear of new and higher taxes is a genuine and legitimate concern of many Australians who simply want to be left alone by governments to make their own way in life. Clearly, the problem of high taxation is a function of the high cost of government regulation and of the alarming growth in government spending in recent years. Commonwealth expenditure alone now accounts for a record 31.1 per cent of gross domestic product. The Opposition is not alone in demanding that, if there has to be a summit this year, it should be about government spending and not just about the appropriate mix of taxes. The overall effect of big spending and high taxing is to sap initiative and transfer the right to make economic decisions from the individual to bureaucracies. A less publicised yet no less important area of overburdensome intervention is revealed in the massive duplication that occurs between local, State and Federal governments. We are one of the most overgoverned nations in the world. In recent times we have seen an increase in Federal parliamentarians and even in Brisbane an increase in the size of the City Council when it is well known that the population of Brisbane has not increased in the last decade. This sort of thing is madness and serves only to denigrate politicians in the eyes of the already overtaxed community. Under the Constitution there are clearly defined powers of Federal government. Yet over the years, by various devices, Federal governments have slowly usurped powers that are better left to the States. State governments are not let off; they have done the same to local government. Yet the bureaucratic baggage of regulation remains at all levels, much to the bewilderment of the person in the street. People are confused and frustrated at the cost and the complexity of the plethora of State and Federal laws. Obvious examples of duplication occur in the areas of housing, health, roads, education and the environment. The elimination of duplication would not only put us on the road to real reductions in taxation but it also makes political sense to have a clearly defined separation of powers. This is the essence of a properly functioning, dynamic Federal system where competition and diversity, rather than levelling uniformity, are the hallmarks. Over the years it has been all too easy for the States to sheet home the blame for various problems on the Commonwealth or vice versa. Mr Deputy President, of particular interest in Queensland are the areas of mineral resources, primary industry and education. I would like to say a little about each of these. The mining industry did very well when left to its own devices. Since 1973, however, it has been subject to increasing economic, political and regulatory decisions which sap its competitive position in unforgiving global markets. The spirit of enterprise is shackled and weighed down by the dead hand of governments. The mining industry is exhausted by government regulations and punitive charges. The extent of the exhaustion can be seen in the dramatic decline in profitability, employment and investment-this in an industry which has the potential to contribute so much more to the prosperity of our great nation. Federal and State governments are equally to blame for the intolerable level of crippling taxes, charges and costly regulations. Governments avoid their responsibilities if they think the real problems will go away simply by the formation of committees and sub-committees. This is now happening in the coal industry and will only exacerbate the position. Trade policies force the mining industry into the world market arena like a boxer with one arm tied behind his back. How can any business expect to succeed in the rough and tumble of international commerce if commodity buyers know that the seller cannot commit himself to a deal without leaving the negotiating table to get the blessing of a bureaucrat sitting in his office half a globe away? Take the example of the coal industry. What rational being could expect a government edict to have any influence at all on the market price of an international commodity in a market oversupplied by around 20 million tonnes? In the 1960s and early 1970s the industry, in a market just as tough as today's-that should not be forgotten-without government intervention achieved remarkable success. We, the Parliament of Australia, need to remove these shackles and let our exporters compete for every corner of every market to which they can gain access. Of great concern is the gravity of the situation confronting the sugar industry in Queensland. I have recently completed an extensive visit to north Queensland talking to cane growers and millers. What came out of those meetings is that the cane growers, who were and still are very hardworking Queenslanders, have a feeling of total neglect and confusion. They have been made pre-election promises which have not been honoured. The vast majority do not have outside investments. They have ploughed back past profits into their farms. They are not looking for handouts. They have too much dignity for that. They are, however, looking for a price stabilisation scheme and they point with pride to a similar situation in 1966 where every cent borrowed was paid back with interest when the market recovered. What they are concerned about is that out of the current review will come an inquiry and by the time that inquiry is completed a great many will be bankrupt. Their confusion is understandable when they read of $170m royalty relief given to gas producers in Western Australia by the stroke of a pen. Governments are fiddling, Mr Deputy President, while this great and efficient industry is burning. If it should collapse we will see an economic catastrophe which will not only affect cane growers-that should be remembered-but will also mean disaster for whole communities in towns and provincial cities from Maryborough to north of Cairns. There are differences between the growers and millers, but this should not be seized upon by either government as a petty excuse to avoid or delay the implementation of a scheme which, over a period, will cost the taxpayer nothing. It is a scheme which has the support of the Australian Cane Growers Association. It is also a scheme which is directed at the whole industry. In any industry, and the sugar industry is no exception, there are always a small number who will not survive. That must be recognised. Any attempts, as has been suggested, to prop up only inefficient producers, will be of no benefit whatsoever to the sugar industry. The problems of growers and millers are further compounded by the inflexibility of wages policy referred to earlier. The number of jobs lost because of it runs into thousands. People working in the mills are still being paid a prosperity bonus which was introduced in the short-lived boom of earlier years. The position of the sugar industry is critical. I urge both the State and Federal governments to put aside political differences and act quickly in the best interests of a very large sector of Queensland and Australia. Mr Deputy President, Queensland has two major education problems. The first is that at the Grade 12 level we have a system of assessment which, while it might be understood by academic educationalists, is totally beyond the comprehension of students, parents and employers. Any system in our society which can boast those attributes is inherently bad. The defects of this system are highlighted by the increasing difficulties young people have in gaining entry into a tertiary institution. We encourage them to go on to Grade 12. They qualify and then are denied entry because of lack of places. This is really the major problem. Participation rates in tertiary education in Australia are too low and Queensland has the lowest rate per capita in Australia. According to a recent OECD survey, the United States of America has 74 per cent of people in the 15 to 19 age group enrolled in higher education, Japan has 71 per cent, Canada 65 per cent and Australia only 45 per cent. In 1984 13,500 people were turned away from entry into tertiary institutions in New South Wales. In Queensland the number was 20,000. The result is that many students are repeating Grade 12, which will exclude from entry many now going into Grade 12 this year. Thus the problem is compounding. Enrolments at the University of Queensland are less then they were 10 years ago. Based on total recurrent funds available for 1985, Queensland is down $25.8m on a per capita basis compared with, say, Victoria which is up $52.8m. That $25.8m would educate a further 6,000 students at a quality institution like the Queensland Institute of Technology. With those sorts of figures freely available, it is impossible for us in Queensland to understand when we read about it why yet another tertiary institution, the West Melbourne Institute of Higher Education, is to be built in Victoria. Compared with all other States, qualified students in Queensland are being denied access to tertiary institutions. This obvious discrimination against one State must stop. Queensland must receive its fair share of recurrent funds. This does not, of course, solve the problem of lower participation rates throughout Australia. In order to achieve greater equality of opportunity in higher education, it may be desirable to look at a system whereby students who benefit from higher education may be willing to pay for that education out of their future earnings. This would not discriminate against less advantaged groups, and it would enable more young people to pursue their chosen careers. Mr Deputy President, it is often claimed that those of us who question the policies of the status quo and who query the achievements of the Government are simply prophets of doom and gloom. This is a dangerous attitude that can only stifle debate about the important issues that confront us. We have a responsibility to attempt to explain to the growing army of unemployed youth, to businesses that must keep putting people off, to industries that are being priced out of the international market place and to qualified students who are not allowed to go to college or university, why governments are failing them. I hope in this place to continue to ask these questions on behalf of the people of Queensland and to continue to argue for Liberal solutions to our problems. I thank honourable senators for the courtesy of their attention. The DEPUTY PRESIDENT —Before I call the next speaker I inform the Senate that this will be Senator Brownhill's first speech in this chamber. I ask honourable senators to afford him the normal courtesies. Senator BROWNHILL(New South Wales)(5.53) —I commence by thanking Senator Jones from the other side of the Senate for standing aside tonight to allow me to make my maiden speech in front of my wife and father-in-law. I speak in this chamber conscious of the enormous responsibility that is placed in me as a senator. I thank the members of the National Party of Australia for the honour they have given to me to represent that great Party in this chamber. The trust that the vast membership of the National Party has put in me will not be misplaced. My dedication and determination are at the service of the people of New South Wales. I was elected as a member of the joint Senate team fielded by the New South Wales Liberal Party and the National Party. Our joint ticket arrangement in New South Wales is indicative of our mutual resolve to recapture the Government benches at the next election. I trust and hope that my stay in this place will not be dominated by the bombardment of rhetoric and oratory but that this House reviews and improves legislation that will make this great nation of Australia a better place for all people. This objective will not be achieved with words; it will be achieved only by action. I follow into this Parliament a politician possessed of high integrity, dedication and ability. I refer, of course, to Senator Douglas Scott, Leader of the National Party in this place. Senator Scott is a true leader to my colleagues and to me. He has given great service to the Party. If one were to highlight only one of the great contributions that Senator Scott has made to this country and to rural Australia one would first nominate his efforts to remove death duties, which I regarded then and still regard as a cruel and unjust burden on all Australians. Like many of my colleagues, including Senator Scott, I come from a rural background. Over the last few years I have seen and felt the cost-price squeeze bite into the rural communities. I have seen country towns start to dry up and die. Young country people are forced to drift to cities for work that they once found in their home towns. I have seen and I continue to see the diabolical effects of strikes on export industries, one after another, month after month. I saw all these things and I believed then, as I do now, that there must be a better way for Australia and all Australians. I do not profess to know all the answers. I am not sure that I even understand half the questions, but if I and all honourable senators here are to be of service to our constituents and to this country I believe that it is incumbent on all of us at least to try to understand the questions and to search for responsible answers. Obviously I have a great interest and affection for rural Australia and the sector that that represents. But too often those who do not understand the problems of rural Australia tend to dismiss us. Too often city people have no idea that country people have just the same problems that they do. We all have mortgages, some so high that we could not even jump over them, not even in a lifetime of trying. We worry about where our children will find jobs. They cannot all stay on the family farms. Those in rural towns and cities cannot always find work where they want it. We all have the same problems, wherever we live. I think it is time for all Australians, irrespective of where they live, to look at where this nation is going and to ask themselves: 'Is it heading in the right direction?' I do not believe it is. The cost of industrial disputation is immeasurable in any real sense. I can quote the costs of individual strikes. The last New South Wales rail strike cost $150m in lost coal markets. That meant a loss of $80m in lost rail freight, and $12m in lost wheat sales that cost the State Rail Authority over $2m per day-a strike that further put at risk our reputation as a reliable trading nation. But that is only half of the story. What of the strikes that cannot be measured in financial terms? How does one estimate the cost of the teachers' strikes, the power strikes, the sewerage workers' strikes and the cost of delays in loading live sheep for overseas export from Victoria and South Australia? How do we estimate the loss of production and productivity of Victorian dairy farmers who were forced to come to Canberra and demonstrate on the lawns of Parliament House to make someone listen to them? The right of labour to be organised is not under debate, but the fact that it has assumed the right to cripple Australian industry and to ruin the livelihood of others most certainly is. Every day in every newspaper in every State there are reports of one strike or another which causes disruption, delay and disorganisation of the whole community. In fact, in 1984 there were 1,965 disputes compared with 1,787 in 1983. Days lost were down but disputes were up. Why? Yet at a Federal level and in the majority of States we have governments that supposedly understand the unions, governments that know how to get along with them and understand them, governments that have agreements and accords with them to ensure effective negotiation and the smooth running of this country, governments that stand idly by allowing strikes to cripple industry and initiative. It is time that governments did more than just stand idly by. It is time that employer and employee, government and union, got together and enacted some of what was promised before the election. I think the system is falling apart in many directions. Equally, I believe that the remedies must start to be implemented at the top. Governments are and continue to be too top heavy, too cumbersome, too expansive. I am saying these things in 1985. In 1920 Sir Earle Page, in his maiden speech to Parliament, said: We have to consider whether this Parliament is going to be extravagant in the future. It is time parliamentary government was restored and the control of the public purse properly placed . . . It is time for every party to consider that taxation should be levied and . . . the way . . . our Commonwealth revenue shall be dispersed before it is spent . . . Government expenditure is one of the prime causes of the high cost of living . . . Perhaps another reason is the addition to the overgrown civil service. It is 65 years on and we are still pondering the question of government spending. We are bombarded with the rhetoric of Australia being a better place for all people, but that will not be achieved with words. It will be achieved only by action. I and my Party, the National Party of Australia, believe that government spending is too high. If governments want industries, small and large, primary and secondary, to cut their costs, prune their expenses, become more efficient and increase their productivity, the example must start at the top. Artificially imposed accords will not disguise inefficiency. They will not substitute for action. The prices and incomes accord has not made government more conscious of costs. It has not made it more efficient. Summits, in whatever form, are not a substitute for government. Promises of farm prices summits and taxation summits do not replace action and management. Taxation summits and, more appropriately, government expenditure summits should be held before elections, not after them. They are not mandates to introduce a range of legislation to levy more charges or extract more taxes. They are not mandates to increase capital gains taxes or introduce wealth taxes or death duties, to all of which I am totally opposed. Governments should look at what they have to produce and provide before determining what taxation measures are required. When this has been done, the whole taxation system must be reviewed, refined and renewed-not patched up with band-aid measures. When the new system is set up it must have incentives for people who want to work hard. It must be equitable and, above all, cost effective. The urgency motion passed in this House this afternoon shows that many others agree with me. The National Party believes strongly in the principles of free enterprise, private ownership and the minimum amount of government interference in industry, commerce, production and distribution. Socialism does not work for Australia. We believe in the need to lower taxes, reduce the size of government, and encourage individual economic freedom. These things cannot happen while successive governments increase taxes, increase the size of the bureaucracy, and stifle and over-regulate the private business sector. These things cannot happen while there is gross wastage and inefficiency in government at all levels. The Australian Telecommunications Commission and the Australian Postal Commission are only two examples of excessive bureaucracy, over-regulation and red tape. I am concerned at the wastage of resources and money in the social security area. Social security expenditure in Australia is probably the largest and fastest growing industry. It costs each and every Australian-man, woman and child, pensioner and baby alike-$964 a year. It costs every taxpayer $2,440 a year. We spend $18 billion a year on social security and the system still does not work. We have some 570,000 people on unemployment benefit. The deserving definitely need help, but the undeserving should be exposed. Identity cards should be used for the receipt of unemployment benefit. This is no more an interference with individual rights than the advent of the Medicare card. I also believe there is a genuine desire for people out of work to do something in return for the unemployment benefit. Over one million people are on invalid pensions, sickness benefits, disability pensions or service pensions. I do not disagree with the deserving receiving help. Australia is an aging nation, with some 1.4 million people on age pensions. The number of people over 65 years of age will jump from 1.6 million this year to 3.5 million by the year 2021. In other words, fewer people will be working and paying taxes to provide that $18 billion for social security payments, which by then will be much higher, of course. Our aging population is increasing and we are doing nothing to prepare for those people or to help them prepare for themselves. At present our aged people are in fear of an iniquitous assets test. Those receiving a pension and those coming close to retiring age have no assurance, no idea of what they will be entitled to. At present the thrifty are being penalised for the sake of the careless spendthrifts. Those who have saved during their working life for their retirement are now finding that it was not wise to do so. I believe we should give encouragement for people to provide for their retirement. There should be incentives for personal savings through the taxation system. The time is right for a national superannuation scheme run by private enterprise. The alternative is higher taxation. I believe that the very young, the aged and the disadvantaged are entitled to the support of society and should receive the help they need to live in comfort and dignity. For example, I consider that present arrangements for sick aged people are both costly and unfair. The eviction or threatened eviction of chronically ill people from hospitals is wrong. Again, I do not believe that the system is working. I believe that there must be a better and fairer way. I am not advocating a return to or support for the big spending policies which are a hallmark of Labor governments; I simply ask for better financial management and for compassion. Never has an understanding by government been needed more than in the area of primary industry. I am pleased that this Government has acknowledged the significance of rural industry in the economic recovery and I look forward to the promised major report this Government is planning on primary industry to the year 2000. I believe that, unless government takes serious notice of the pleas of farmers and their organisations, Australia's major income earning industries will continue to decline in international competitiveness. I remind the Senate that the people of rural Australia are the same ones who carried this country and made it what it is today. The average yearly farm income per unit of farm labour is now predicted at about $6,000. This should be compared with the average male earnings of $22,399 per annum. It must not be forgotten that the farm sector employs some one million people. They produce $10,000 million of export earnings every year and supply more than 90 per cent of the Australian householders' food, something this Parliament, this Government, and the Australian people should never forget. Ignore agriculture and our cities will decay. The National Farmers Federation, in its recent submission to government, blames high farm costs on five government functions-excessive tariffs on imported goods, excessive government spending and borrowings at both State and Federal levels, a rigid labour market, over-regulated service industries, and government taxes and charges. Fuel prices are a classic example of excessive government charges. For every dollar we pay at the bowser for petrol, over 50c goes in State and Federal levies and charges, of which only a small proportion is spent on our roads. The wheat industry has been hard hit. Diesel has increased by some 700 per cent in 14 years while the price received for wheat per tonne has increased by only 300 per cent. Add these to road and rail freight costs, increased interest rates, export meat inspection charges-are there any other countries in the world that have a tax on exports-and one starts to see the crisis facing every farmer in Australia today. While all these taxes are being extracted from the rural sector, successive governments have done, and continued to do, precious little in areas such as soil conservation. A 1977 joint Commonwealth-State soil conservation study described the extremely serious situation of land degradation and called for an immediate national action. The odd millions that are being spent on soil conservation are not even sufficient to stop the degradation, much less reverse the situation. I realise the pressure that is put on governments to spend the money on people and services. However, if governments continue to neglect our soil there will be no way in which to produce food to feed the people in future. We have had many words on the subject of soil conservation but precious little action. Obviously, in one speech I cannot hope to cover all the issues and philosophies in which I believe and wish to see implemented. I am concerned for the young people of Australia today. I am concerned that the decisions that we, as a parliament, make should provide a better future for young people and their children. According to a 1984 survey, the majority of young people perceive politics and government as lacking relevance to their lives. We must help to change that. We must have better communications. We must make sure that this wonderful human resource is not wasted on the unemployed scrapheap or allow young people to become disillusioned with society. I saw on a motor vehicle in Canberra only the other day: 'If you think the system is working, talk to someone who isn't'. As a member of the National Party of Australia I consider the family unit to be the basis of a strong and stable society. I thank my family-all of them-for backing my decision to enter the Senate. I know, as we all must know in this place, what disruption a member of parliament in the family causes. However, I know that my family believes in and supports me in what I am doing. That is shown today by the fact that my father-in-law is visiting this House for the first time since 1927 when he heard Dame Nellie Melba sing on the steps at the opening of this House. A quotation that should perhaps apply equally to all in this place is: God grant me the serenity to accept the things I cannot change, courage to change the things I can, and the wisdom to know the difference. I thank the Senate. Senator TATE(Tasmania)(6.14) —I have been preceded in the Address-in-Reply debate by two new senators, Senator Parer and Senator Brownhill, both of whom made excellent contributions. I am sure that their families in the galleries are well justified in the pride they must feel in the contribution made by those honourable senators to this debate. They have given very clear expressions of their interests and the stances they are going to adopt during their time in this chamber. I congratulate them on their maiden speeches. We look forward to their contributions over the coming years. I take the opportunity offered by this debate to speak about the strategy that must be adopted if Australia is to combat the dreadful drug abuse which is such a scourge throughout our society. I make some comments and a contribution to the debate which I believe we all ought to engage in as we, amongst other things, move towards the drug summit to be held on 2 April. I believe that the time has come to bring to an end the various commissions of inquiry and committees that have been a feature of discussions concerning drug abuse in Australia over the years. It is time for parliamentarians, for politicians, to make some of the hard decisions that will be needed if we are to deal with the ever-growing problem of drug abuse. The first thing to do is to clarify what drug abuse needs to be tackled. If we as a society confine our attention to illegal drug abuse, I believe we will be missing the mark in a very profound way. The fact is that drug abuse in Australia is not confined to illegal drug abuse, whether it be of marihuana or of opiates. We know, and I think it is becoming more widely recognised, that the abuse of alcohol, tobacco and analgesics is far more likely to lead to our hospital beds and graveyards being filled by its victims than the abuse of illegal drugs. During Question Time today I was able to point to a statistic prepared by the Commonwealth Department of Health to the effect that in 1983 some 200 deaths could be attributed to the abuse of opiates and some 20,000 to the abuse of alcohol and tobacco-4,000 directly related to alcohol abuse and 16,000 to tobacco abuse. Fifteen per cent of our hospital beds are filled with the victims of alcohol abuse and another 15 per cent by patients with conditions indirectly related to alcohol abuse. Alcoholism is Tasmania's number one drug problem according to Dr Jacob George, the Director of the Alcohol and Drug Dependency Service of the John Edis Hospital at New Town. The Tasmanian situation is, of course, not unique and is mirrored in the other States of the Commonwealth. If we as a society become obsessed with the concern in the community or if we as politicians respond only to the very real fears in the community engendered by the robberies, some with violence, by the breaking and enterings that are such a feature of the larger cities such as Melbourne and Sydney and by drug dependent prostitution-in other words, if we as politicians respond simply to the concerns of those people who are affected by the drug dependent crime and social disintegration which is a feature of life in those cities-we could miss the mark because drug abuse goes across the whole spectrum of the drugs I have mentioned. In 1983, a survey of weekly drug use by Year 10 students in New South Wales-Year 10 is what we in Tassie would call the 'Schools Board', the top of high school but before matriculation studies-found that 50 per cent used alcohol, some 34 per cent used tobacco, some 29 or 30 per cent used analgesics and some 10 or 11 per cent used cannabis. The fact is that drug abuse goes right across the board. Our hospital beds and graveyards are filled with its victims. However, in sheer terms of numbers the preponderance lies in the abuse of so-called legal drugs. At the drug summit, we as politicians must address the abuse of all sorts of drugs, otherwise we are not only missing a large proportion of the abuse but also we will appear to be hypocritical, particularly in the eyes of the young. When we come to those educational and preventative programs which are so essential the ears of those young people will be closed if they believe that society is conducting a witch hunt in relation to some of the drugs which young people are aware of in their semi-criminal subculture where they deal in these-I will come to that in a moment-and if they think that society is singling out the illegal drugs, continuing to shower honours on the tobacco tycoons and the brewery barons and continuing to foster the way in which, for example, the media can be used to push, if I may use that term, sales of these legal drugs. What we need is a comprehensive approach to drug abuse in Australia and a recognition of the damage that can be done by the abuse of all sorts of drugs. Having identified the sorts of drug abuses which are a problem in our society, the question becomes how, nevertheless, do we deal with the abuse of illegal drugs? There, of course, the cry is that we as politicians should respond by imposing ever-increasing penalties in relation to the abuse of marihuana and drugs derived from the opium poppy, for example. They are quite distinct types of drugs and have quite distinct problems associated with them. I think it is now generally recognised that the victim, the user, is to be distinguished from the trafficker and the dealer. No doubt the drug summit to be held will serve a purpose if it rules out some of the anomalies between the different jurisdictions throughout Australia and recognises the distinction between traffickers and dealers on the one hand and users, or victims, on the other. Australia has just about exhausted the route of ever-increasing penalties by way of jail terms or ever-increasing fines which are applied only to a few of those who are engaged in the trafficking and dealing. Only very few are detected. Of those who are detected, only a few are prosecuted and convicted. In calling for a distinction to be made between users and traffickers, I had in mind a very famous quotation from Lord Justice Lawson in an English case some 10 or 12 years ago. He said: The first thing to be said, and said very firmly indeed, is that Her Majesty's Courts are not dust-bins into which the social services sweep difficult members of the public. Still less should Her Majesty's judges use their sentencing powers to dispose of those who are socially inconvenient. If the courts become disposers of those who are socially inconvenient, the road ahead would lead to the destruction of liberty. It should be clearly understood that Her Majesty's judges stand on the road barring that way. I believe that this Parliament and the other parliaments in Australia should stand with the judges in barring that use of the judicial and sentencing process against the users of drugs. The situation with respect to traffickers and dealers is different. In considering appropriate penalties, we should respond to the reports of Special Prosecutor Redlich and the Director of Public Prosecutions, Mr Ian Temby. They have called for civil remedies by which the confiscation of assets upon conviction could be used more extensively than at present. Further, they have said that assets should be frozen whilst investigation and prosecution is in train. Such a course has obvious dangers and would have to be approached with great sensitivity and care to ensure that those who are innocent, those who are not convicted, are not denied the enjoyment of their assets. Nevertheless, society does not want to have these assets dissipated, sent abroad, conveyed to or otherwise disposed of among friends, relatives and associates before the conviction upon which confiscation of assets should occur. Senator Chipp and Senator Lewis, who are in the chamber, will recall that when members of a Senate committee inquiring into the National Crime Authority we were told by Mr Costigan and others that one of the surest ways to deal a blow that really hurts drug traffickers and dealers is to deal with the cash flow, the profiteering and the assets that they accumulate by way of their latching on to those whom they use to generate these tremendous profits. As was the case during the prohibition era, they then use those profits to move into more nefarious criminal activities. When considering the penalties for trafficking and dealing in illegal drugs we should consider the freezing or confiscation of assets as a very due remedy in relation to those activities. If we acted in conjunction with the Australian Taxation Office, which was prepared to use its powers and its ability to raise assessments against the accumulated assets of these people, we would do much more than merely give ourselves some sort of satisfaction by adding five-year jail terms to the list of penalties in our various statutes. As we know, without an effective, honest, honourable and incorruptible detection and prosecution system, such action will not come to much more than further listing of additional penalties in our statutes. We ought to consider penalties but we should also consider the new way that has been suggested by Mr Redlich and Mr Ian Temby. In doing so, we should clearly distinguish between the penalties to dissuade those who traffic and deal in drugs and those used to dissuade the users, abusers or victims of those drugs. I repeat the words of Lord Justice Lawson: . . . Her Majesty's courts are not dust-bins into which the social services sweep difficult members of the public. He said that we should stand barring the way against the use of sentencing powers to dispose of those who are socially inconvenient. That is a very important distinction that we should take up. The views I hold in relation to various illegal drugs are reasonably well known to members of the Senate, but given the importance of the summit that is approaching I will repeat them. In relation to marijuana, I have taken the view that to adopt, as we do, a model that was discredited by the experience of the United States in relation to alcohol during the prohibition era of the 1930s is so manifestly stupid and socially unproductive as almost to beggar belief. I have exhausted myself for 10 years on this theme, but I want to say why I believe that system has proved ineffective. Some of the disastrous social impacts of that model are along these lines. First, hundreds of thousands of young Australians who indulge in the recreational use of marijuana suffer socially from that use. I do not use marijuana and nor do I advocate its use. I do not gainsay the fact that marijuana has ill effects but I am talking of the social impacts. Out of the hundreds of thousands of users a few are selected by the drug squads around the country from time to time. They are prosecuted and convicted. They carry the stigma of that conviction right through their lives. It is a blight on their records which can affect their career and employment prospects and can undo years of training. It can reduce their opportunity to travel abroad in so far as some countries will not grant a visa to persons with a drug conviction. It creates a sense of shame not only for the offender but also for the family. I have had heart-rending letters from parents speaking of a youthful indiscretion, as they see it, of a son or daughter that carries an impact throughout their lives. I will come to means of remedying that in a moment. Secondly, it is also the case that by adopting the prohibition model many hundreds of thousands of Australians find themselves in a criminal sub-culture where they conduct their furtive dealing for the drug. Whilst there is no pharmacologically proved progression from soft drugs to hard drugs, from marijuana to heroin, it is nevertheless probably true that most heroin users started using marijuana somewhere along the line in the same way as most alcoholics would have started with an ordinary beer. The fact is that by placing these people in this subculture there is a chance of a sociological progression. They will be led to harder drugs because of peer group pressure within that subculture and because they are the more easy target for and prey of those who want to lead them to them. As anyone with any experience of real life knows, as I know from the north-west coast of Tasmania, when there is a drought of marijuana, somehow the hard drugs turn up. People who are in the network of dealing are then exposed to temptation. For that reason alone, to get people away from the possibility of sociological progression, we should lift the prohibition model. Thirdly, use of marijuana is so widespread that one would be naive to think that law enforcement officers are not exposed to tremendous temptations in relation to the enforcement of the law. They must pick and choose. They must exercise discretion. In that situation, they are put under tremendous stress and the possibility of being tempted to corruption. I will not speak of a certain case because it is sub judice, but there has been a recent move against certain detectives in New South Wales in relation to this sort of matter. The general public will know to what I am referring. Fourthly, unless brought before the courts for a driving offence, many young Australians may come into contact with the law only with respect to a marijuana matter. Because they regard it as a hypocritical exercise of society's penal powers, the law itself falls into disrepute. Not only do the drug squads and police officers come into disrepute; the courts, as law enforcers, and the parliaments that stand behind the laws also do so. If we were setting out to construct a system which put a stigma on the lives of many ordinary and decent Australians, which put them into a subculture leading possibly to their being tempted to take harder drugs, and which put law enforcement agencies in a situation of stress and temptation, and if we wanted to undermine respect for the law and bring the law making and law enforcement powers of society into disrepute, we would adopt a system similar to that we have now. It is time we abandoned the prohibition model of the United States in the 1920s in relation to alcohol and, at least in relation to marijuana, perhaps had a ticket offence like a parking offence. If society wishes to say that it is not entirely condoning a matter, something like that might at least be acceptable. I cannot go into all my thoughts on marijuana except to emphasise that, if we are not to have full scale law reform in relation to it, we must at least accept a rehabilitation of offenders Act along the lines of the United Kingdom model whereby, after three years of good behaviour with no other proven criminal activity after a conviction, the conviction is quashed or expunged from the records to allow the person to be reintegrated into society. Rehabilitation is not simply a question of medical treatment. If we say that rehabilitation equals medical treatment we are missing the point. Rehabilitation must involve social reintegration into the whole of Australian society, and I believe that that can be well achieved by expunging a conviction after a certain time. I do not take the same view in relation to heroin. I have come to the view from what I have read of the experience of the United Kingdom that, rather than providing free heroin to registered addicts, one should really emphasise and make accessible methadone programs. This is the experience now of the United Kingdom and Hong Kong. If free heroin is provided to addicts who must have their two, three or four shots a day, and if it is distributed at a clinic, there are all the dangers of congregation of addicts at those premises constantly throughout the day and the security problems which naturally attend the holding of heroin for that purpose. If it is distributed to addicts for self-administration, all it means is that government-guaranteed pure heroin, or a portion of it, finds its way on to the black market. So I feel that the distribution of free heroin to registered addicts is perhaps not the answer. I am inclined to think that methadone, even though methadone programs have their problems and it is in itself addictive, because it can be administered simply once a day by way of syrup, has fewer of the dangers I have spoken of in relation to the distribution of free heroin. Senator Chipp —The problem is to get addicts to take it. Senator TATE —That is true. That is the stage I have reached. I think it is a better alternative for society than the distribution of free heroin, although I am awaiting the drug summit and any other contribution in the chamber in relation to these matters to help me think it through a bit more. I have spoken about the need to deal with drug abuse right across the spectrum and about the way in which we should deal with illegal drugs. Of course, in speaking of drugs right across the spectrum, one comes back to the fact that prevention education is far better than rehabilitation, conviction and so on. We know that recidivism in relation to heroin addiction is notoriously common and indeed the rule, so prevention by education and so on is essential. I believe that the education programs on which we might expend moneys, whether through the schools or through the media that young people particularly read by way of pop magazines or enjoy by way of radio or television, will, as I say and emphasise, be listened to only if the intended recipients of the message are convinced that Australian society is really tackling drug abuse right across the board. I believe that we as politicians probably cannot come up with the answers in relation to prevention and education programs. We need to be very good listeners to those most closely associated with the very hard, concrete and practical work which is the lot of those who deal compassionately and effectively with the victims of drug abuse. Of course, I include the traditional agencies, spanning from the Salvation Army, which I know runs in Tasmania a program called the bridge program in relation to alcohol dependent persons, to the perhaps more novel, breakthrough areas fostered by people such as Brother Alex in the back streets of St Kilda in Melbourne or the Wayside Chapel in Kings Cross run by Ted Noffs. I do not speak of them merely because they are the notorious ones, and I do not want, by mentioning them, to single them out to the detriment of the many hundreds, perhaps thousands, of voluntary organisations, community groups and individual persons who are trying to find a way to encourage our young people not to become part of the drug ridden society which we are. I mention them only because they stand out because of their perseverance in the face of tremendous odds in environments which are very hostile and personally dangerous. Unless we listen to them we will be missing out on much experience which has been accumulated over the years and which will be very useful to us, because they will be able to tell us the types of programs that need to be undertaken to be truly preventive. They can tell us about the underlying reasons why people turn to drugs. They will be able to describe the boredom and alienation of the young, the financial worries, the peer group pressures, the disintegration of the family and various other factors. It is no use saying that these people are out on the streets. We have to ask: Why are they on the streets? Why are there homeless and destitute young people in a society such as Australia? Unless we get a very clear picture, as I believe the Institute of Family Studies in Melbourne is undertaking to do, of the scope of drugs in relation to families, we will be missing out on a dimension which is also very important. I make this contribution to the debate in the hope that this subject will be taken up from time to time in this chamber. I believe that, in dealing with drug abuse, we need to be tolerant. I believe tolerance is a moral and political virtue which, if it is exercised by parliamentarians and by the courts, will be very valuable. I recall a submission made by the Catholic Diocesan Pastoral Council to the Tasmanian House of Assembly Select Committee on Victimless Crime. I make it clear that it did not advocate the decriminalising or legalising of marijuana, but in the course of its general submission it made a point which I think is worth while reiterating: Law must keep close to the moral sense of the community and the moral sense of the community must inspire law. This is not repressive of minority opinion because in a civilised and Christian community tolerance of differing moral view-points and practices will be part of that general moral sense. If we could create a structure of laws and their enforcement and a structure of programs relating to education and prevention which conveyed to Australians, young Australians in particular, the sense that they were in a tolerant society, I believe that some of the sense of paranoia, some of their sense of being victimised and some of their sense of being unduly and unfairly discriminated against, which reinforces or even causes them to turn to drugs as a solace, as a way out, as an act of rebellion or as an act of despair, could be mitigated and we would be well on the way to creating the sort of psychological environment that may help them to live in the way which is not drug dependent. When people are in a situation of pressure with perhaps a sense of discrimination against them they turn to drugs as a way of enhancing their possibilities of social intercourse with others and getting some self-esteem, however wrong that turns out to be as the abuse becomes an addiction. Not only is tolerance an important virtue from that point of view, but also it is a political virtue. In a democracy, tolerance is particularly valuable and is part of our sort of society. If one means by 'democracy' simply that the majority for the time being has the political power, one is not saying any thing more than that a dictatorship can be voted in. A democracy exists where minority views, as long as they are expressed in a non-violent fashion, and practices and ways of life which are not, perhaps, agreed to by the greater part of society are tolerated. It is the sort of society where non-violent viewpoints and ways of life should be tolerated. If we have that sort of tolerance as a mark of our Australian democratic society, we will be well on the way to creating the kind of environment where recourse to drugs is not so prevalent. I hope that honourable senators, members of the other House and, indeed, members of parliaments right around Australia, after many years of many reports-including some distinguished reports from committees of this chamber-have come to a point where we can create a legislative framework and fund the sorts of programs which will lead to Australia not being a drug ridden society. Debate (on motion by Senator Lewis) adjourned. Bill presented by Senator Gareth Evans, and read a first time. Standing Orders suspended. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(6.42) —I move: That the Bill be now read a second time. I seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- This Bill introduces a range of significant amendments to the Bankruptcy Act 1966. One group of amendments is consequent upon a review of the operation of the Act. This review, of a detailed and technical nature, commenced under the previous Government and has been completed by this Government. Secondly, the Bill contains a number of amendments flowing from the Government's policy decision to modify the legislative implementation of the Review of Commonwealth Functions decision in this area. I would like to outline, for the benefit of honourable senators, the administrative and legislative context in which the Bill has been prepared, and some of the principal amendments proposed. A detailed description of the provisions of the Bill appears in the explanatory memorandum which has been circulated to honourable senators for information. Review of the Bankruptcy Act 1966 In the past two decades a number of countries which have insolvency legislation of similar derivation to our own Bankruptcy Act have embarked upon a review of their legislation. In Australia there have been two major reports, the Clyne Committee Report-'Report of the Committee appointed by the Attorney-General of the Commonwealth of Australia on 23 February 1956 to Review the Bankruptcy Law of the Commonwealth'-in 1962, and the sixth report of the Law Reform Commission-'Insolvency: The Regular Payment of Debts'. The former report eventually led to the passage of the Bankruptcy Act 1966. In relation to the second report the Government has approved the preparation of draft legislation, along the lines of that recommended by the Law Reform Commission, for exposure for public comment. However the need for a thorough review of insolvency law in this country has been apparent for some time. Accordingly, in 1983, as Attorney-General, I issued a reference to the Law Reform Commission to report generally on insolvency law and practice. Other countries have carried out similar, in-depth reviews. In England, the Report of the Insolvency Law Review Committee (the Cork Committee) was delivered in 1981. In the Republic of Ireland, the Report of the Bankruptcy Law Committee (the Budd Committee) reported in 1972. Other reports on company insolvency or bankruptcy have been submitted in New Zealand, Scotland, Canada and Ghana in the last two decades. Consequently, it can be seen that we are experiencing a time of transition in this field of law. The amendments proposed in the Bill presently before the Senate are intended to address some of the problem areas in this field. A more thoroughgoing review of the law must await the report of the Law Reform Commission. Obviously this is some years in the future. The amendments proposed in the Bill may be grouped into the following categories: removal of anomalies; enhancement of the special protection accorded to Maintenance creditors; improving the administration of the Act; achieving greater uniformity with corresponding provisions of the Companies Act 1981; and modification of the Review of Commonwealth Functions (RCF) decision in this area. Removal of anomalies The Bankruptcy Amendment Act 1980 (Act No. 12 of 1980) created the Common Investment Fund. Essentially, this fund comprises the proceeds of the realization of assets by the Official Trustee in Bankruptcy. At any point in time it is a large sum of money, usually in the order of $12 million to $13 million. This money is invested and, subject to the provisions of section 20J, interest earned by the Fund is paid to Consolidated Revenue. Section 20J provides for interest to be paid to a bankrupt estate, or some other person entitled to moneys in the Fund, in certain circumstances. This Fund was a new initiative. Experience has revealed some shortcomings in two of the sections of the Act dealing with the Fund, section 20B and section 20H. Amendments to these sections are proposed by clause 11 and clause 12 respectively of the Bill before honourable senators. Similarly, time and judicial decisions have exposed flaws in other provisions of the Act. Thus, clause 25 proposes an amendment to section 125 of the Act to ensure that the control which can be exercised by the trustee over bank accounts of an undischarged bankrupt can also be exercised over accounts with financial institutions other than banks. Clause 20 of the Bill proposes an amendment to section 64 (First Meeting of Creditors) which will defer the need for a first meeting until after a Statement of Affairs has been filed. In most cases it is futile to convene a meeting before a Statement of Affairs has been filed as the Statement details the creditors of the bankrupt and the moneys owed to them. Enhancement of the special protection accorded to maintenance creditors For various reasons default under maintenance orders is rampant in Australia. In 1984, as Attorney-General, I released a report prepared by the Attorney-General's Department on this matter. (''A Maintenance Agency for Australia, The Report of the National Maintenance Inquiry''). At paragraph 1.53 of the Report the following statement appears: ''If a respondent is sufficiently determined the payment of maintenance can be made a voluntary act''. In 1980 the Joint Select Committee on the Family Law Act [''Family Law in Australia: A Report of the Joint Select Committee on the Family Law Act''] made a specific recommendation, at para. 5-83, relating to changes to the Bankruptcy Act to facilitate the enforcement of maintenance orders. This recommendation is the genesis of the amendment to sub-sec 40 (3) which is proposed by cl. 13 of the Bill. A further amendment, relating to maintenance is proposed by cl. 3. This will clarify the definition of ''maintenance order'' by removing any doubt that the term includes an order for arrears of maintenance. It is realised that the problem of enforcement of maintenance orders is an enormous one in our community. Action in this area, for example along the lines of the recommendations in the report of the National Maintenance Inquiry referred to earlier, will require some time. However the changes proposed in this Bill will alleviate in part the difficulties confronting a maintenance creditor endeavouring to recover arrears of maintenance. Improving the administration of the Act As the Bankruptcy Act presently stands, appointments to statutory offices are made by the Governor-General (sec. 16 of the Act). This procedure leads to a degree of inflexibility and inefficiency in the processing of such appointments. It imposes a relatively routine task on Executive Council. It is, therefore, considered more suitable that such appointments should be made by the Secretary to the Ministry of State responsible for the administration of this Division of the Act. At present this would be the Secretary to the Attorney-General's Department. This is a task with which the Secretary to that Department is quite familiar. A significant number of appointments to similar offices are already made by the Secretary pursuant to powers delegated under sub-sec 17 (2) of the Law Officers Act 1964. Another change in this category involves the functions and powers of the Inspector-General in Bankruptcy. For example, cl. 4 proposes to amend sec. 12 of the Act to enable the Inspector-General to obtain from registered trustees such reports as he may presently obtain from Registrars and Official Receivers. One way in which this power will be useful is in obtaining information for inclusion in the Annual Report on the operation of the Bankruptcy Act prepared pursuant to sec. 314 of the Act. It is also proposed, by cl. 32, to amend sec. 179 to permit the Inspector-General to make application to the Court for an inquiry into the conduct of a trustee. This removes a shortcoming in the powers of the Inspector-General. Sec. 12 of the Act charges the Inspector-General with the function of conducting inquiries and investigations. However, in the event that these inquiries or investigations disclose some irregularity, the Inspector-General has no power to act upon his findings. The amendment proposed to sec. 179 will rectify this shortcoming. Achieving greater uniformity with Companies Act 1981 There are of course significant differences in the role of the Bankruptcy Act and that of the winding up of provisions of the Companies Act. In winding up, as the expressive term ''liquidation'' indicates, the existence of the corporate entity is extinguished. The Bankruptcy Act is concerned with the insolvency of individuals; mainly people who have become insolvent through some change of circumstances, such as unemployment or illness. Consequently, bankruptcy must involve a significant rehabilitative content as the debtor will re-enter the commercial community. Certainly however both enactments deal with insolvency, one with the insolvency of individuals or natural persons, the other with the insolvency of corporate bodies. To that extent it is desirable that creditors should receive similar treatment irrespective of whether the debtor is an individual or a corporate body. Consequently cls. 23 and 24 propose amendments to those sections of the Act which regulate the rights of the creditors inter se. The changes will achieve a greater degree of uniformity with the corresponding provisions of the Companies Act. Therefore quite significant changes are proposed to sec. 109 and a new sec. 109A is inserted. As a result creditors will be able to expect largely similar treatment in a winding up in a Bankruptcy. Very significant changes are proposed by cls 29 to 32 of the Bill to Part VIII of the Act, which relates to Trustees. The amendments will entrench in the Act the qualifications which are necessary for a person to obtain registration as a trustee. They will also permit a greater degree of supervision of the continuing suitability for registration of trustees. There is at present no requirement for regular reporting by trustees nor for the updating of bonds by registered trustees in bankruptcy. Once again many of these changes are modelled upon the corresponding provisions of the Companies Act relating to the registration of liquidators. For example cl. 29 amends sec. 155 which deals with the registration of persons as trustees. The new provisions largely reflect sub-secs. 20(2) and (4) of the Companies Act, combined with sec. 227 of that Act. Modification of the RCF decision In 1981 the previous Government amended the Bankruptcy Act in order to channel a large proportion of administrations of bankrupt estates to the private sector. Most of those changes, which were implemented by the Commonwealth Functions (Statutes Review) Act 1981, are modified by this Bill. Experience has shown that the changes were implemented in such haste that no thought was given to the need for new measures to ensure that the newly expanded role of private trustees was subjected to proper scrutiny and regulation. The number of new estates handled by private trustees grew from 13 out of 5,154 in 1980-81, or 0.25 per cent, to 1,063 out of 5,156 in 1982-83, or 20.62 per cent. 1980-81 was the last complete financial year under the old arrangement, and 1982-83 was the first complete financial year under the new arrangement. It is not the policy of the Government to exclude registered trustees from the administration of bankrupt estates. However it is apparent that the majority of registered trustees perceive their role as administrators, and not as investigators. Thus the registered trustees have realized assets and distributed dividends, but have largely disregarded the discrepancy duty to investigate and report upon the conduct, dealings and affairs of the bankrupt. Investigation of bankruptcies must continue to be given significant priority. Insolvency fraud does occur, even if only in a small number of bankruptcies. Mr Costigan's Royal Commission uncovered some instances of persons using bankruptcy to defraud their creditors whilst concealing the gains for their own benefit. Consequently this Bill proposes, by cl. 10, an amendment to sec. 19 of the Act. The result will be that in a bankruptcy administered by a registered trustee, there will be a reserve power of investigation cast upon the Official Receiver. In the first instance the duty to investigate will remain with the registered trustee. If however the trustee indicates that he or she does not intend to investigate then the Official Receiver may elect to do so. This is the effect of the new sub-sec. 19 (1C) proposed by sub-cl. 10 (e). Honourable senators will note that a number of the amendments proposed in this Bill relate to the control over or regulation of registered trustees. For example, as mentioned earlier, cl. 4 amends sec. 12 to permit the Inspector-General to obtain reports from registered trustees, cl. 29 amends sec. 155 to strengthen the requirements for registration, cl. 31 inserts a new sec. 161A to require registered trustees to lodge triennial statements, and cl. 32 amends sec. 179 to empower the Inspector-General to apply to the Court under that section. All of these changes have become necessary as a result of inadequacies in the Act exposed during the time of an expanded role for private trustees. Some trustees have engaged in distinctly unprofessional conduct. Over the past 12 months the Federal Court of Australia has cancelled the registration of some trustees as a result of misconduct. Some other trustees have themselves become bankrupt as a result of their mishandling of administrations under the Bankruptcy Act. Statistics indicate that many trustees, even most trustees, do not take seriously the investigative and reporting duties which the Act imposes on the trustee of a bankrupt estate. All of these factors point to the need for amendments to Part VIII of the act in order to improve the control over registered trustees. The thrust of the RCF changes was to oblige the appointment of a registered trustee wherever the divisible assets exceeded $10,000 in value. This was done by requiring a petitioning debtor (seeking to make himself bankrupt) or a petitioning creditor (seeking to make someone else bankrupt) to file the consent of a registered trustee along with the petition. The modification of the RCF will make the filing of such a consent optional rather than mandatory. The option will be exercised by the petitioner, whether petitioning creditor or petitioning debtor. It will remain possible for the creditors to meet together and pass a resolution appointing a registered trustee as trustee of the estate, pursuant to sec. 157 of the Act. The reversal of the RCF decision will not, therefore, preclude registered trustees from playing a significant role under the Act. However, it will ensure that the involvement of registered trustees is coupled with proper safeguards and checks. The changes proposed by this Bill represent a blend of the experience before the RCF changes and the experience subsequent to those changes. Prior to Act No. 74 of 1981, which gave effect to the RCF decision, as the figures cited earlier for the participation of registered trustees indicate, registered trustees played an insignificant role in the administration of bankrupt estates. Partly this may have been due to the then sec. 166 of the Act which prohibited a trustee from solicitation in obtaining proxies or in procuring the trusteeship. Act No. 74 of 1981 repealed sec. 166 and made a number of changes which greatly increased the role of registered trustees. As mentioned earlier, that Act failed to consider the need for new measures which would ensure high standards of conduct by registered trustees. However, in deciding to modify the changes effected by Act No. 74 of 1981, the Government had decided not to reintroduce the earlier prohibition of solicitation. It may well be that, in the future, steps can be taken once more to further expand the role of registered trustees. This however will need to be coupled with adequate measures to ensure that the public interest, as well as the interests of bankrupts and creditors, are protected. Experience in the last 2 1/2 years has shown this to be essential. Financial impact statement The Bill will result in an increase in the number of new estates administered by the Bankruptcy Branch of the Attorney-General's Department. The impact of this increase is not expected to be felt until mid-1986. (It is not expected that the changes will commence operation until late this year). The increased workload will require some extra resources, estimated at 42 extra staff. The resources required will be reviewed in the 1986-87 Budget context. This demand for extra resources will, however, be offset by other savings in expenditure. At present a task force of 47 temporary employees is working in the Branch to reduce backlogs in work. The engagement of the estimated 42 staff will permit the Branch to administer the level of new estates, and to prevent the recurrence of backlogs. The need for the extra staff will coincide with the conclusion of the task of the Task Force. Consequently there will be no nett increase in staff levels, and a nett reduction in expenditure will be possible. Also, the increased costs will be partly offset by expected increased revenue from the Common Investment Fund and from fees. On the assumption that 42 extra staff will be required, the anticipated nett cost of the proposal is $869,088. This will be offset by savings resulting from the conclusion of the work of the Task Force. The savings resulting from this amount to $1,646,384. Consequently it will be possible to achieve a saving of $777,296 over current levels of expenditure. More detail of the costings are contained in a table attached to the copies of this speech. These figures relate to the expected costs and additional revenue once the changes have become fully operational. It is expected that the amendments will be proclaimed to come into effect in late 1985. This will result in an increased intake of new estates by the Bankruptcy Branch which will increase gradually through the year. The full impact will be felt around mid-1986. There will therefore be no financial impact in the current fiscal year, or the fiscal year 1985-86. The financial impact will be felt only in the first half of the year 1986/87. I commend the Bankruptcy Amendment bill to the Senate. Debate (on motion by Senator Sheil) adjourned. Senator TATE(Tasmania) —I present the First Report for 1985 of the Standing Committee for the Scrutiny of Bills concerning the Australian Capital Territory Smoking and Tobacco Products Advertisement Prohibition Bill, the Horticultural-Plant Variety Rights Bill 1984 [1985], the Justices (Long Leave Payments) Amendment Bill 1985, the Property Rights Protection Bill 1984 and the Trust Recoupment Tax Assessment Bill 1985. I also lay on the table Scrutiny of Bills Alert Digest No. 1 dated 20 March 1985. Ordered that the report be printed. Senate adjourned at 6.44 p.m. The following paper was tabled: Public Service Act- Appointment-Department of Aboriginal Affairs-Mr D. C. Elliott