Thursday, 21 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: 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 Childs (from 589 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: Upon evidence from within Australia and overseas, the introduction of Plant Variety Rights legislation would not be in Australia's best interests because: 1. Plant genetic resources should remain a public resource; 2. Australia's public plant breeding programmes could be undermined; 3. Such legislation may lead to a reduction in the genetic diversity of commercial varieties; 4. There is reason to fear that choices of seed and other plant propagation materials may be restricted due to the controls placed on their use; 5. Plant Varietal Rights legislation could lead to higher costs for the grower, the consumer, the plant-breeder and the tax-payer; 6. Plant Variety Rights will lead to a further increase in foreign control of Australia's plant genetic resources. Your petitioners therefore humbly pray that Parliament ensure that it recognises the widespread public opposition to PVR and promote alternative means of royalty collection for plant breeders. And your petitioners as in duty bound will ever pray. by Senator Childs (from 24 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 Government's 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 55 citizens). The Honourable 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 to 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 the Government take no further action nor legislate 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 15 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens humbly pray that the Commonwealth Government reject any attempt to re-introduce Tertiary Fees. And your petitioners as in duty bound will ever pray. by Senator Childs (from 728 citizens). To the Honourable the President and the members of the Senate in Parliament assembled. The humble petition of citizens of Australia shows- That the people of New Zealand and the New Zealand Government have given an example to the world in their efforts to achieve a nuclear free South Pacific, and such decision being endorsed by the people at a general election. Your petitioners therefore pray that the Australian Government support the principled stand taken by the New Zealand Government and urges it to condemn any efforts by the U.S. Government to impose economic or other sanctions on New Zealand in retaliation for their stand on nuclear vessels. We further urge the Australian Government to urgently implement its policy to promote the development of zones of peace and nuclear free zones in the Indian and Pacific Oceans. by Senator Bolkus (from 18 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of certain citizens of Australia respectfully showeth: That we are greatly concerned with the extent to which serious crime including murder, major drug financing and massive tax frauds have penetrated into the highest levels of Australian society as shown by the investigations of various Royal Commissioners and in particular by Mr Frank Costigan Q.C. That we are concerned that the National Crime Authority has too many restrictions and possible lines of veto placed upon it for it to be an effective successor to the Costigan Enquiry and that this will allow major criminals to avoid prosecution. And your petitioners humbly pray that the Federal Government negotiate urgently with the Victorian Government on the reactivation of the Costigan Commission and to extend its term to at least the 31st March, 1985 and also to provide the Costigan Commission with whatever resources it may need to successfully conclude its investigations into organised crime in Australia. Further we believe that the issue of organised crime in Australia is so important that the Parliament should not be dissolved until at least the interim Costigan Report has been received and fully debated in both Houses of the Parliament. And your petitioners as in duty bound will ever pray. by Senator Short (from 23 citizens). Petitions received. Senator JONES(Queensland) —I give notice that, on the next day of sitting, I shall move: That the Senate, noting that- (a) the Queensland Government has passed an Electricity (Continuity of Supply) Act; (b) this Act contravenes sections of conventions of the International Labour Organisation which have been ratified by Australia, and which are binding on all countries that have ratified them; (c) under the Act the Queensland Government is forcing any sacked employee or any contractor employed by the South East Queensland Electricity Board to sign contracts binding them to inferior working conditions and denying them the right to strike; (d) under the same Act, the Electricity Commissioner can force any qualified person, by the direction of labour, to restore the supply of electricity in the event of any breakdown; and (e) the Act is in contravention of international law. calls on the Federal Government to investigate all means to overturn the Queensland legislation, namely, the Electricity (Continuity of Supply) Act, to report to the International Labour Organisation on the breach that has occurred and to establish what action can be taken against the Queensland Government. 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 relating to the control of tax avoidance schemes. Senator GRIMES(Tasmania-Manager of Government Business) —Mr President, 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. Department of Home Affairs and Environment-Annual Report 1983-84. 2. Department of Communications-Annual Report 1983-84. 3. Economic Planning Advisory Council-Annual Report 1983-84-pursuant to section 27 (3) of the EPAC Act 1983. 4. Australian Institute of Sport-Annual Report 1983-84. 5. Special Prosecutor R. V. Gyles, Q.C.-final report for the period 1 July 1984 to 21 September 1984. 6. The Honey Industry-IAC report. 7. Australian Water Resources Council-minutes of the 26th meeting held in Tasmania 11 May 1984. 8. Canberra Theatre Trust-statement of reasons for the delay in tabling the Canberra Theatre Trust annual report for 1983-84. Senator GRIMES(Tasmania-Minister for Community Services)(10.04) —On behalf of Senator Ryan, I seek leave to make a statement on the Government's response to the report of the Commonwealth Schools Commission's Panel on Planning and Funding Policies for New Non-government Schools. Leave granted. Senator GRIMES —This report is in response to the Government's request in the guidelines to the Schools Commission in August last year to appoint a panel of commissioners to draw up proposals for the notification and assessment of applications for Commonwealth assistance from proposed new non-government schools. These arrangements were to incorporate a negotiated set of priorities so as to enable the Commonwealth to budget for this program from 1986. In preparing its report, the panel has consulted extensively with the States and with non-government school groups and authorities. The panel has reported widespread support for its major proposals, which are based on effective structures and procedures for co-operative planning, including Commonwealth and State governments and non-government authorities. These educational and financial planning arrangements reflect the shared responsibilities of all the authorities in the dual system of schooling in Australia and the need to plan for its development in a manner which promotes social harmony, educational co-operation and the planned efficient use of resources. The Government has accepted all of the recommendations of the panel, and is confident that implementation of these recommendations will lead to a more equitable and efficient approach to the planning and establishment of new non-government schools, to the benefit of all Australian children in government and non-government schools. As indicated in the report, while there is evidence in all States of well-developed, informal links between government and major non-government systems which have contributed to effective planning, nonetheless, there are a number of inter-related concerns. These include the need: to plan new non-government schools in ways consistent with the need to cater for changes in enrolment patterns, and to avoid the tensions which can result from the unco-ordinated growth in new non-government schools in areas already well-provided; to cater for needs relating to various forms of educational disadvantage; to provide for the orderly development of non-government schools without seriously reducing standards of service in existing schools, govern- ment or non-government; to recognise limits to public funding; and to promote the economic use of resources. The main features of the new arrangements, which will apply to new non-government schools to be established from 1986, are: modification of the existing criteria for determining initial eligibility for Commonwealth funding; the adoption of a planned approach to the provision of schooling services, with judgments to be made at the State level; priorities for new schools proposals to be based on the principle of 'planned educational provision' in particular locations, including the planned development of both the government and non-government school sectors and the maintenance of standards in existing schools affected by new schools, this more comprehensive approach to planning to replace the previous mechanisms for assessing 'impact' on a school-by-school basis; general recurrent grants for approved new non-government schools to be based on the general enrolment plan put forward by schools at the time of their approval; priorities for the determination of both general recurrent and capital assistance for new non-government schools to be established against four broad categories of 'priorities'; the establishment of State level bodies to advise the Commonwealth on relative priorities; the consideration of annual budget allocations for new non-government schools and their relative priorities; and schools generally to be advised of provisional approval for assistance some 12 months before opening. Schools opening in 1986 to be advised by about September 1985. These new policies are an important element in the Commonwealth's overall approach to the provision of a firm basis for proper educational planning. They are also consistent with the need to make the best use of available resources, against the background of strong demand for schooling arising from increased secondary participation and enrolment shifts, and for technical and further education and for higher education places. The panel has also observed that the educational and financial effects of unplanned expansion of new places in existing schools are similar to those arising from the unplanned development of new schools. At some future stage, the Government will consider the most appropriate way to accommodate to the planned educational provision significant increases in new places in existing schools which fall outside the Government's policy of increasing retention rates. As the panel points out, a dual system of schooling requires the development of co-operative arrangements among all the funding partners. The States are substantially involved in the overall process: They are responsible for planning new government schools and for registering new non-government schools. In most States, interest subsidies on loans for building projects, along with per capita grants, have been a significant factor in assisting new non-government schools. However, as the panel has demonstrated, there is now a need to upgrade the planning process, and a most important part of this will be greater involvement and co-operation from the States, as well as the non-government schools authorities. I will be taking up with State Ministers for Education the early establishment of State level bodies, with procedures and structures to reflect the particular needs and circumstances of the different States and Territories. Once these are in place, the new processes can be implemented. There will be early action taken to implement transitional administrative arrangements for applications for proposed 1986 school openings. The consequential changes to the States grants schools assistance legislation will be introduced as soon as possible. These initiatives will complement the Government's other policies for schools which were announced in the guidelines last year by ensuring the planned development of the dual system of schooling in Australia in the context of the educational needs of all Australian children. Senator PETER BAUME(New South Wales)(10.10) —by leave-I move: That the Senate take note of the statement. The document we have before us and the statement by the Minister for Community Services (Senator Grimes) represent major statements on education and on policy as it relates to non-government schools. What we are seeing is a major attack upon the rights of parents in Australia. It is a major administrative attack because these arrangements provide a means by which the emergence of new non-government schools, or some new non-government schools, may be prevented. It will lessen the capacity of parents to give effect to their choice about the education of their children, and on that basis the Opposition will not have a bar of it. The Government has accepted the recommendations, so this document does not represent just proposals; the recommendations represent the policy of the Government. We are entitled to look at them, to say what those recommendations will mean, and to set out why we think they are unfair, inappropriate, and not in the best interests of Australian children. What the Government failed to do by frontal attack on non-government schools in 1983 it is now trying to achieve by administrative attack, which has been going on continuously and will continue through 1985. We on this side of the Parliament desire a first class system of government schools for Australia. I will go even further and point out that some honourable senators on this side actually went to government schools, unlike the Minister. I can remember my time at North Sydney Boys High School. The Minister, of course, has never seen the inside of a government secondary school. That is a fact. At least we not only support government schools, some of us actually attended them. That does not alter the fact that this document, which concerns non-government schooling in Australia, will provide major headaches for those who are in the non-government sector-- Senator Messner —The Government is out to destroy it. Senator PETER BAUME —It certainly is. The Government is out to destroy the non-government schools. This document provides the administrative structure for containing and confining the emergence of new non-government schools. It is a major departure from established practice and a major departure from the principle that parental choice should be given primacy in this area. The report sets out to redefine what will be called new schools, and I will come back to that point. It sets out with a definition of what is a developing area and that definition contains the key to the way in which the Government will control new non-government schools. The guidelines contain an implicit threat that once a priority list has been established the Government may, by manipulating its Budget appropriations, simply not fund those proposed new non-government schools which are low in the priority order. That will prevent the emergence of some new non-government schools in Australia by denying them the funding. The agenda, which is made clear in the statement, is to force people to remain in government schools, even if that is not their desire. I wish to make a point about that: Three out of four Australians have their children educated in government schools, most of them by choice. Most of the schools I visit are government schools and I regard them as good quality schools giving good education. But where parents have a desire to have their children educated elsewhere they should be able to have that desire reflected in the funding policies of government. This document advances arguments as to why that choice should not be honoured. Some of the statements in the document make this quite clear. The document actually sets out on page 7, in paragraph 20, the following statement: A continuing significant decline in the government school sector's share of overall enrolment is likely to change substantially the social composition of the student population in government schools, with potentially significant negative consequences for the general comprehensiveness of public school systems. It goes on further in developing the same argument to say that competition adversely affects government schools. Part of the answer to the problem in Australian schools today is for the less preferred sector-whichever that might be in some regions-to lift its game. It is not a question of making the barriers to entry or the barriers to funding so high that people cannot exercise their free choice. The document points out, quite correctly, that between 1972 and 1982 enrolments in non-government schools increased by some 17 per cent, by 100,000 children. What does that mean? It means that some parents were prepared to put their children into schools which generally were less well resourced than government schools, had larger classes and poorer physical plant, and they were prepared to pay from their pockets extra money to exercise that choice. That is what it meant, and yet over that period 100,000 extra children enrolled in the non-government sector-an increase of 17 per cent. Over the same time the government school sector also increased its enrolments, but by only 60,000, or 3 per cent. So it is quite clear that there has been some general trend by Australian parents to exercise their choice in favour of the schooling they want. Funding policies have allowed community preferences to be reflected in practice but, as I say, at real cost to the parents who pursue what they value. Whether their values are right or wrong is a separate question. We, on this side, happen to think that the values they espouse should be supported in public policy. Not only that, but the enrolments in the non-government sector have varied within the components of the non-government sector. In fact, we have seen over the last few years different kinds of schools emerge, including more community schools and schools from minority religious groups, and a range of groups now seek public funding to establish their schools and have them supported, even in well developed areas of population. The document really gives itself away when it says in paragraph 11: There is now a general understanding that the development of new school places in one sector cannot responsibly be considered without reference to the overall effects of the planned provision of schooling services . . . That is what the teachers unions have been saying for some time. I spoke to the teachers unions when I was Minister for Education and I can say that they are totally against any state aid to any child in any non-government school. This is the kind of proposal which has been put by those who are interested in planning in education. They are not concerned with parental choice, they are concerned with the efficiency of the system. In their minds, the economic use of resources should take precedence over the preferences and wishes of parents. The real challenge for education in Australia today is to ask in a positive way why it is that so many parents are voting with their feet. We must then ask how we can make parents prefer the government system, which costs very little in terms of cash to the parents. That is the real challenge; not to make it more difficult for parents to exercise their choice, whatever that may be. To argue otherwise is an argument for having more control over the rights of parents to make life more difficult for them. There are several features of this report to which I wish to refer. The definition of new schools, which the Government has now accepted as policy, is contained in recommendation (1). Part of that definition is simple enough and in fact is not controversial, but there is one part of it which seeks to define as new schools, and therefore subject to all the procedures contained in the rest of the report, existing schools which want to undertake a change in character, resulting in a significantly increased or different clientele. Consider that for a moment: An increased clientele. Maybe, if the school wants to increase its size significantly, it will then be considered as a new school and will be thrown back into the pot. As I will demonstrate later, the potential will then exist for it to lose the funding which it presently gets for the support of the parents who send their children to that school. The definition of the ways in which an existing school can be redefined as a new school opens up an endless series of threats to any school at all. Even if it has parents beating down the doors to enrol their children, it is a threat to that school to attempt to meet the needs of those parents. Their definition of new schools is one of the worries. I hope that, in the application of this recommendation, which I understand may take place through various committees to be established at State level, people will realise that, if this is applied with any kind of clumsiness, it can in fact do great harm to education and to children. The main problems, however, relate to the planning provision which the Government is proposing. Recommendation (6) talks about planned educational provision. At State level it wants to ensure that the provision of schools, whether they are government schools or non-government schools, will fit into a planned provision of education in that region. Implicit in that is that, if it can be shown that there is adequate school provision already, there will be precious little sympathy for anyone who wishes to establish a new school in the same region. I must say again that this is one aspect whereby the needs of the system and the needs of system efficiency are being placed ahead of parental choice. This is being done quite explicitly. In this report it is acknowledged that some of the parent groups and independent school groups find this proposition obnoxious. Indeed, it can spell the end of expansion of non-government schools of any kind which do not fit in with the Government's agenda or which do not meet the Government's priorities. If planned educational provision is a problem, the budgetary proposals are even more horrifying. The Government has indicated that at State level proposed new non-government schools, in the light of planned educational provision, are to be allocated a priority; high priority for funding, medium priority for funding, low priority for funding. The Government, at the time of the Budget or at the time of the guidelines, will indicate an amount of money which it will provide for new schools, both for capital and recurrent expenditure. It is quite apparent from this document that the real possibility exists that the amount of money will not be sufficient to provide funds for all proposed new non-government schools and that the new schools proposed which do not get a high priority may in fact get no recurrent funds at all. Let me remind the Senate that under the previous Administration we had the same requirement that there be State registration of any new non-government school. We required that there be a non-profit organisation. I was very close to developing some minimum enrolment requirement. I do not object to the fact that the Government has laid down some minimum numbers. Having met those conditions, we, as a matter of principle and policy, were willing to give recurrent funds to any schools that were established, provided they met those conditions. We are now faced with a proposal where a priority list will be established. The Government will then decide its budget priorities. The possibility exists that some new non-government schools will receive nothing and they may never receive anything. This is part of the Government's program to cut back the expansion of schools in the non-government sector. I must say that the non-government sector was not attracted to this proposition. In paragraph 59 of the report the following words appear: However, a significant number of groups and individuals within the non-government sector expressed concern at the use of budgeting as a planning tool and found unacceptable in principle the notion of a budget mechanism which could result in the exclusion of some initially eligible schools from funding or allow government to restrict the number of students in new non-government schools for whom recurrent funding would be provided. I want to say on behalf of the Opposition that we share the concerns expressed by those groups and individuals within the non-government sector. We think they have got it right. We think the concern they expressed goes to the centre of the problem. We reject entirely the idea of putting into the hands of this Government a budgetary capacity to give no funds at all for the support of some Australian children whose only crime will be that their parents have decided that they want them educated in a certain school in a certain place. This matter is not going to rest here. Government senators-Oh! Senator PETER BAUME —I notice that Senator Giles, a former candidate of the Council for the Defence of Government Schools, intervenes. I know that the honourable senator has a view based on her beliefs, but I want to tell her that DOGS is a discredited group, and the views for which she stood for Parliament as a DOGS candidate are discredited views in the Australian community. We in the Opposition place value upon freedom of choice in education. What we have here is a paper and some recommendations which express the Government's view on the value clash that exists today in Australian society-the clash between choice as a principle for policy and between system needs and system efficiency as a basis for policy. The acceptance of these recommendations in the report and Government action which may flow from them represent a major threat to parents who want to choose non-government school education in new, non-government schools. I tell honourable senators that parents all around Australia want to establish new, non-government schools for their children. They now face a threat in respect of funding. Why should one sector be held back if parents want to support it with their time, their commitment and their money as they are doing now? This report is a continuation of the broad pattern of administrative obstruction which has occurred since the Government was elected and which has become more marked since the frontal assault on non-government school funding was turned back about 16 months ago. We are not interested in the kind of philosophy which this Government endorses. We are not interested in equality of outcomes as a primary goal of education. We want equality of opportunity. We are not interested in placing system efficiency and system needs ahead of parents' and children's needs. I do not mind if some government school facilities end up underutilised if the parents in the community are not willing to place their faith in those schools as places for their children to be educated. I say again that the challenge will be for the government systems to lift their game. The first way to do that is to try to do what Mr Cavalier is doing in New South Wales; that is, to take on, to curb and to beat the teachers' unions in their agendas which are destructive of education. These proposals will impose new administrative costs on those who seek to promote or establish new non-government schools. The bureaucratic load will also be felt within the Schools Commission. We will be watching very closely the way in which this Government proceeds to try to implement these recommendations. If we find that non-government schools, properly conceived, registerable, non-profit, having given due notice and having gone through these procedures-- Senator Giles —And accountable. Senator PETER BAUME —Let us stick with what is in the statement. If those schools, having met with all the requirements, are then told that because they are low priority schools according to this Government's anti-non-government school agenda they will get no recurrent funding, that will be a tragedy for Australian education. This Opposition will continue to watch, to fight and to make an issue of this if the Government moves even one inch to limit or to deny parental choice of schooling. Senator MACKLIN(Queensland)(10.32) —I congratulate Senator Peter Baume for not letting this document entitled 'Planning and Funding Policies for New Non-Government Schools' get in the way of a very good speech. Having read this document, I would have thought that the private sector would be overjoyed with it. That is my major criticism of the document. I think Senator Baume will find himself in agreement with a group with whom he does not very often find himself in agreement, that is, the Australian Teachers Federation. I am quite sure that that group also will not find this document to its taste. I think the reaction from the Teachers Federation is a much more accurate presentation of what the document is about than what Senator Baume has just told us. He made some propositions about curbing freedom of choice in a budgetary context. The Government has always had the power to curb the development of any new school, if it wished to do so, by not funding that school. Not only does the Labor Government have that power but the Government of which Senator Baume was Minister for Education also had that power. Whether or not governments choose to exercise that power and the criteria they use to exercise that power are matters raised in this document. Under the heading 'Funding to a Plan', which is basically the seventh recommendation in this document, the Commonwealth will be looking at material presented to it, it is hoped, from Commonwealth and State Ministers for Education. If those co-ordinating bodies are established at a State level-in my State of Queensland the chances of that happening will be pretty remote-the advice coming to the Minister for Education (Senator Ryan) must necessarily be superior advice to that which she is currently receiving. The reason it will be superior advice is that, at the moment, the type of advice she is receiving is coming from, as it were, the familiar contacts that departmental officers have one with another. This will be a formalised context where State governments will be involved in an exercise which they also have a fair budgetary commitment. Any new school established, whether it be a private school or a State school, has implications not only for the Federal Budget but also for State Budgets. It seems to me that, at some stage or another in Australia's history, we have to get the Federal and State governments talking to one another about these types of commitments. All too often in the past one or other level of government has made commitments that it expects to be picked up by somebody else. I point out also that the private sector would be fairly happy with the abolition of impact statements. Impact statements have now been replaced by a more comprehensive structure that will allow an input and a priority to be given to each of the schools. It is entirely up to the Government to choose that listing of priorities. It has always been up to a government to decide where it will fund. Whether a school falls into the high priority area, the medium priority area or the low priority area for funding is a political decision. Senator Walters —Should it be? Senator MACKLIN —I say to Senator Walters that it has always been the case, both under her Government and every government. She should wake up to herself. She does not know what she is talking about most of the time and certainly does not on this issue. She should keep quiet or go outside. As Senator Walters would know, the current Labor Party Government has done more for private schools, oddly enough, than the previous Liberal Party Government. This was the basis of my objection last year when the Australian Democrats were the only group to oppose what the Labor Government did in setting in place an eight-year program of funding for private schools, which was basically open ended. The figures used in the Budget last year were undoubtedly fudged because the basis of those budgetary figures for government schools was the predicted growth in government schools and the basis of those for private schools was current enrolments. What this Government has done is to set up a structure with which people in private schools and people who run private schools-if Senator Walters cares to go and talk to them she will see this-are very happy. Senator Walters —You obviously haven't done your homework. Senator MACKLIN —I have talked to more teachers and principals than Senator Walters has ever met in her life. Senator Walters —You are joking. You have no conception. Senator Lewis —You have no idea. Senator MACKLIN —That is very good coming from a person who probably has not seen inside a school since the last time he attended as a student. The DEPUTY PRESIDENT —Senator Macklin, you should not reply to interjections. Senator MACKLIN —No, I will not reply to those inane interjections which have certainly been coming forward. Senator Baume's thesis on this document could hold water only if the Labor Party was unwilling to support private schools. That thesis has to be supported by facts. Unfortunately for Senator Baume, the facts are not there in money terms. Senator Peter Baume —It is the difference between new schools and existing schools. Senator MACKLIN —Yes. But the point I was raising in relating to Senator Baume's speech is that it was predicated on the notion that the Australian Labor Party Government which is currently in office has shown in its budgetary allocations a bias against private schools. That cannot be substantiated. The budgetary allocations are there. In order to substantiate the type of thesis he is putting forward-in other words, that the Government would use the funding plan and the priority system to stop the development of private schools-one has to show bad feeling on the part of the Government, other than the type of thing that may exist in people's minds, or in the previous operations of the Labor Party when it was in opposition. I agree with him about the Labor Party's rhetoric in opposition. However, in government, I cannot find the budgetary basis for the types of proposition which have been put forward. If we take the determining policies in the eighth recommendation, the priority listings, as an example, we can see that what we are looking at are schools in growing areas consistent with planned educational provision. I raise an issue that I think is important for private schools. When one looks at the development of private schools in new growth areas and suburbs, which of course are not and cannot be identified in this document with growing areas because the definition is different-- Senator Peter Baume —It's a funny definition, is it not? Senator MACKLIN —It is a definition I am not at all happy with. I think it goes part of the way towards meeting the problems we have had regarding the growth of the new areas, but not as far as I would like it to go. Let us take the new growth areas, the new suburbs where we might find a fair amount of pressure building up for the development of private schools. In those circumstances we have seen already in Australia many private schools being pushed almost to the point of non-viability by the development of a further private school in the same area without any consultation. Senator Baume knows that has occurred because it was occurring when he was Minister. Senator Peter Baume —That is just tough for them. Senator MACKLIN —Fine. Senator Baume's interjection at least makes clear the context. It is an important clarification. I am grateful for it because it clarifies, and probably makes a lot easier, the debate in basic philosophical terms of where we stand. It is a useful interjection. Senator Peter Baume —It is a market model. Senator MACKLIN —It is a market model. The problem I raise now is that I am not quite sure whether Senator Baume would have very much luck in selling his idea certainly to the Catholic education officers in each State. I leave it at that. He would have a great deal of difficulty selling it to them. The Catholic education officers in each State are very keen, as Senator Baume knows, on a planned projection not only for their own schools but also for other schools in the area. That is simply because of the extremely limited resources available to the Catholic sector in terms of the development of new schools. The Catholic sector really cannot afford to take punts, as it were, in the free market. Senator Baume knows that. Senator Lewis —That is their decision. Senator MACKLIN —I am quite happy with that operation, which is the philosophical position of the members of the Opposition. I say only that they will find it hard selling it to the Catholic education officers. The other point I raise, unfortunately, does not get a great deal of attention here, yet it is fundamental to any planning of new schools, that is, what the definition of a school might eventually be. Senator Baume drew attention to paragraph 1 (c) of the first recommendation on the definition of new schools in the report. It refers to the various changes existing schools may make to their characters. Unfortunately, it contains no definition of a school. The reason I raise this matter-I think we may have some agreement on it by Senator Baume, the Government and me-is that there is a great deal of concern about schools and their registration. A small section at the end of the paragraph refers to this problem of registration. Senator Peter Baume —The States have to lift their games. Senator MACKLIN —Not only that. Unless we get a strong and rigid operation of the registration provisions at the State level we will run into enormous difficulties in implementing this recommendation. If States are willing to allow certain schools to operate pressures undoubtedly will build up on the Commonwealth to fund them. I refer to schools which operate in sub-standard conditions, in situations which are health and fire hazards to the children who inhabit these so-called schools. I refer to schools which often have only one registered teacher, where all the teaching is done by unregistered and unqualified teachers. These schools use programs which essentially prevent the children ever having a chance of going on to any further education. They use programs which often prevent those children ever having a chance of getting jobs in our community. Plenty of those so-called schools exist in Australia today. They are being established all over the place. They are essentially schools, so-called, which do enormous damage to a large number of young children in Australia. Senator Walters —In your opinion. Senator MACKLIN —It is not only in my opinion. I suggest that Senator Walters keep quiet as she knows nothing about education. Senator Walters —You don't like them so you would get rid of them. Senator MACKLIN —Yes, I would get rid of them. They are a health hazard, a fire danger and they deny children a chance of further development in their community. They are not registered by the States. Senator Walters —Do not hide behind it. Give us some examples. Senator Sir John Carrick —They are not funded if they are not registered. Senator Peter Baume —That is one issue which the States have to address. Senator MACKLIN —If the honourable senators who interjected, with the exception of Senator Baume, had not interjected, perhaps they would have discovered that what I was talking about is part of the report which is rehearsing the problem of the registration of schools. I point out that recommendation (1) (b) of the report provides that a new non-government school may be eligible for Commonwealth funding if it is an existing school not presently receiving Commonwealth assistance. My worry about that is that some of those schools may be moved into schools recognised by State governments. That is my concern. Senator Peter Baume —They will have to be registered to get funding. Senator MACKLIN —No. At the moment, unless we have a rigid series of criteria upon which those schools are registered, as Senator Baume knows as well as I do, there will be political pressures to register some schools which are not of any use to the students in them. Political pressure is currently being brought to bear, not only in Queensland but also in other States. I know of at least two other examples in two other States, one of which is a Labor State. Recommendation (1) (c) in relation to the definition of new schools eligible for Commonwealth funding was raised by Senator Baume. There will be problems with this definition if, for example, there is a significantly changed clientele, particularly if the school goes from being a single-sex school to a coed school. A more important example may be if a school drops out a boarding section because of the enormous and rapidly increasing costs of boarding students in Australia. Senator Peter Baume —It might prevent schools going coed. Senator MACKLIN —If a school drops out, it drops out of the system. If it drops a boarding section it may very well be in difficulty. I would agree with Senator Baume on that point. That certainly could flow through. However, I point to the recent history of funding and to the pressures that have built up on governments providing funds. Recommendation (1) (c) merely brings back into the determining system those schools which have a significant change. For example, it would be highly unlikely that, if a school amalgamated or if there were a significant change in clientele from a single-sex school to a coed school, the Commonwealth would withdraw funds. The fact that the schools are brought back into consideration probably flows from a further recommendation in the document that outlines the need to be consistent; that is, when putting in initial plans, schools are required to plan a fair way ahead. As Senator Baume realised, schools have to be able to predict their enrolments for a number of years. In many ways, that is probably an unrealistic requirement. Given the fact that the Commonwealth Government, with its enormous range of bureaucracies, finds it very difficult to predict what will happen with the Budget deficit in 12 months time, it is a bit much to ask a private organisation to make predictions for two, three, or four years time about the number of kids who might want to come into a school. There are significant movements in Australia with regard to schools and the pressures on them. There are significant growth areas, particularly on the fringes of our capital cities. These areas have sustained enormous growth over a short time. Let us acknowledge that a State education authority would have a much broader range of statistics and predicting tools available to it than would most private organisations. Nevertheless, much of this rapid development which has taken place on the fringes of our capital cities has left State education departments completely flat-footed. In fact, they do not have the schools to provide for the students who want to go to them. Enrolments at some schools have leapt from 800 or 900 to 1,500 in the space of a 12-month period. They have had to import wholesale so-called temporary accommodation to try to cope with the enormous influx. If a State education authority with all the planning tools available to it cannot make those types of predictions even 12 months ahead, private schools should not be expected to make long range predictions of enrolments. The report seems to expect them to do so. If predictions do not fall within a 'reasonable tolerance level' they may lose funding. That is a harsh requirement. Quite frankly, I think that the information to make that type of predicting statement is not available to private organisations. It is an unrealistic and unwarranted onus to place on private schools. The report itself is a useful product of a range of discussions that have gone on for quite some time with the private schools sector. Those discussions have been about how best to generate a planning structure that is predictable and understood by all concerned. When we are talking about millions of dollars for one institution alone, it is reasonable to expect a fair amount of predictability in the system. I would have thought that most private school organisations would also be relatively happy with a predictable system. As can be seen from reading the text of the report, the private school sector was happy with a number of the recommendations which have been brought forward and with the generation of a range of safety nets which are included in the propositions. The last point I raise is that of the appeal mechanism. Recommendation (14) reads: That an appropriate appeals mechanism be developed to hear appeals- Senator Harradine —Where is that? Senator MACKLIN —It is recommendation (14), paragraph 113 to 114. Senator Harradine —It is in the Minister's statement, is it? Senator MACKLIN —No. It is in the panel's report. Recommendation (14) reads: That an appropriate appeals mechanism be developed to hear appeals against decisions relating to new schools' eligibility or priority for funding. The appeals mechanism envisaged here is the one about which, as honourable senators may remember, we had some debate the last time we discussed the States Grants (Schools Assistance) Bill last year. In that debate we discussed the need for private schools to have a better appeals mechanism than they had previously. I moved that such an appeals mechanism for private schools be established and that it be a specialised appeals mechanism. The mode that I originally suggested was not the one which was finally adopted. The one which was finally adopted, with the complete concurrence of the private school sector, allows private schools the services of an expert body and a range of appeals at all levels over funding. Senator Peter Baume —It may still be seen to be an appeal from Caesar to Caesar. That is what the people are worried about. Senator MACKLIN —When I put forward my proposal, I was also worried that the appeals mechanism could be seen as going from Caesar to Caesar. I was somewhat surprised that the private school sector was happy enough with that new appeal mechanism that was adopted. I imagine Senator Baume was too. Senator Peter Baume —Very surprised. Senator MACKLIN —Nevertheless, there it is. I would have thought that an appeals mechanism of the kind I suggested would have obviated that situation. I merely foreshadow that we are happy to allow the appeals mechanism that has been adopted to run, since it has been accepted by the private schools sector. If there are problems, we shall seek to move again for the type of appeal mechanism that was discussed and supported last time, by this side of the Senate at least. I recommend that honourable senators read this document in detail. As Senator Baume has already foreshadowed, the document will be the basis of very spirited debate in the community. I think that is extremely useful. Senator Harradine —For how long have you had it? Senator MACKLIN —I have had it for the normal two hours provided to Opposition spokespeople in relation to these documents. The document will undoubtedly suffer a number of changes. I foreshadow one change that I should like to take place; that is, to drop the definition of increases and decreases based merely on government schools and not on all schools in the area. I think we now have a useful base document. Hopefully, when people address themselves to the document, they will do so in a way which will enable us to look forward to a predictable context for what is a billion dollar operation. I am certainly pleased that the clarification which has come from Senator Baume in this debate might, probably for the first time, start to spell out a distinct policy with regard to the sinking and falling of private schools. I have never before heard it expressed in quite such a definitive way. That may be very useful because the private school sector, at least the various groups I deal with-I must admit that, to a very large extent, that is the majority private school sector, that sector being much easier to address oneself to because it is organised-has been asking me, in the years I have been in this job, for predictability of planning. Hence, it will certainly make for very interesting debate in the community over the next few months. Senator TEAGUE(South Australia)(10.57) —The Government's decision, announced today, is the death knoll of new non-government schools in Australia and reopens the whole debate that we had in 1983, and have had over the last 20 years and more, about the future of non-government schools. Senator Grimes announced with a very wry smile the death knoll of non-government schools. The Opposition will not take this decision lying down. There will be a renewed debate in every part of Australia because of this disastrous news. It is disastrous not only for the 25 per cent of Australians who are connected with non-government schools and who believe in freedom of parental choice for the enrolment of their children in schools and for the type of education they will then have for their children, but also for more than that 25 per cent. The Government today has laid down a gauntlet that will alienate a significant quarter of Australia and the vote will tell not only in the coming election but also in the polls in the intervening period. This Governments acceptance of all the recommendations of a panel of the Commonwealth Schools Commission, prescribed from the start by the terms of reference and instructions from the Minister for Education (Senator Ryan), is a disastrous outcome for education. Over the decade from 1972 to 1982, there were an extra 100,000 new enrolments in non-government schools, which was a 17 per cent increase. In the same period, there was a 60,000 enrolment increase in government schools, which is only a 3 per cent increase. That decade reflected the educational intentions of increasing numbers of families. The five-fold increase in non-government schools compared with government schools indicated the clear choice of so very many families. It is that trend and preference for freedom of choice by families for enrolment in non-government schools which by this decision the Hawke Australian Labor Party Government is seeking to stop in its tracks and to reverse. By so doing, it will alienate that proportion of families which will be shown eventually by a falling away of support for this Government. The Minister for Education is not in the chamber today. She is, I understand, absent from Canberra on some exercise for the Prime Minister (Mr Hawke). However, she had this report more than five weeks ago. She had it before the Senate was convened, and the decision to bring down this major report-the death knoll of new non-government schools-has been left to the wry and cynically smiling Senator Grimes, Deputy Leader of the Government in this chamber. He understands the politics of this document. He understands that a gauntlet has been thrown down to middle Australia. The absence of any speaker on the Government side and the absence of the Minister for Education is testimony that the Government believes that it can continue to wryly smile and get away with it. I believe that the Minister has been discredited as a Minister for Education on the strength of her performance in 1983 and 1984. One of the greatest surprises in the formation of the new Ministry after the last election was the Prime Minister's retention of Senator Ryan, a discredited Minister, in this important portfolio of education. She had led an attack on non-government schools throughout that two-year period until she had so alienated the community, concerned about freedom of choice in selecting schools, that the Prime Minister just had to stop her in her tracks and lay on her an eight-year funding program for government and non-government schools. That election ploy by the Labor Cabinet and by the Prime Minister was to try to reassure that group of alienated Australians that they could still hope that a Hawke government could be trusted in education matters. The ploy was to give an assurance on funding increases which gave greater real increases to government schools, compared with non-government schools, but to defer completely any commitment to capital grants, any kind of commitment to the future growth of non-government schools and any kind of commitment that would allow a family to exercise the freedom to support the building of new non-government schools. Originally, this contentious matter was deferred for the panel of the Schools Commission to report by mid-November 1984, but, lo and behold, that date became inconvenient when it fell in the middle of an election campaign called early and cynically to try to gather votes so that a program such as we see of hard, hurting decisions could be made by this Labor Government now, at the beginning of its new period after re-election. I believe that there was a direct ploy in the Prime Minister's decision to softly sell to concerned Australians an eight-year funding program, and at the same time, not disclose in any way whatsoever a policy with regard to the growth of non-government schools. However, there is not just a ploy; there is a trade-off. The Prime Minister, by reversing completely the policies, statements and the direction taken by the Minister for Education during 1983 and 1984, was totally rebuffing the apologists for the Teachers Federation and the socialist Left who wanted to eliminate non-government schools in this country. In so rebuffing those elements within his own party, he has to have a trade-off now. He has said to them: 'After the election we will finish off new non-government schools. Be patient with us; allow us to announce this eight-year funding program, because we need to reassure concerned Australians so that they do not desert us completely in this election. But I promise you, members of my Party, that there will be steel ribs in our boots which kick the guts of the non-government system after the election'. That is the decision that has been announced here today. I was quite amazed to hear the spokesman on education for the Australian Democrats being an apologist for this socialist decision of the Labor Government. In the opening remarks of his speech today, Senator Macklin made incredible statements which will only rebound on the diminishing public support for the Australian Democrats in this country. I genuinely believe that the Democrats, by saying that this is, in fact, a gain for non-government schools, are giving a blind to concerned Australians. I totally reject the Democrats soft-soaping of this socialist decision. I believe it will rebound on them just as much as it will on this Labor Government. I return to the absence of the Minister for Education from the chamber today. The most important decision that she will make in this Parliament has been announced today by her colleague, Senator Grimes, in her absence. She has been discredited not only in 1983 and 1984, but also in the last two days in this chamber she has been more than embarrassed. She has been caught out for misleading the Senate. Given that record as recently as the last two days, I do not believe that the Government would trust the Minister for Education to be here. It would not face the possibility of her further embarrassing the Government by allowing her to present this decision here today. I treat that as a most serious point. The people in Australia do not trust the Minister for Education. She has a track record of commitments to a socialist scheme for education which is offensive to a majority of Australians, not least the 25 per cent of Australians who are concerned and involved with non-government schools. We do not have the Minister present with us today; we only have Senator Grimes's wry smile. What we will now see in Australia is a return to what could have been avoided by the Government-a series of public meetings throughout the country protesting about this death knell that the Government is announcing to new non-government schools. The Prime Minister's soft words prior to the election that he was working towards some consensus in schools policy have now gone out the window. There is no doubt that the arrangements announced in this panel's report, which has been fully accepted by the Government, will tie up the system completely with barbed wire barriers, every kind of administrative delay and all kinds of definitional problems so that it will become almost impossible for the pattern of new non-government schools of the past decade to be seen in Australia. The only way that we will see a return to allowing freedom of educational choice for Australians is to see a rejection of this Government and the election of a Liberal Government again. Let me turn to the letter that was addressed to the Minister and which the panel has included as the first page of its report. The letter, dated 14 February this year, is over the names of each member of the panel. Very significantly it says this: Dear Senator Ryan, In accordance with the Government's Guidelines and your related letter to the former Chairman of the Commonwealth Schools Commission of 14 August 1984, I have pleasure in submitting the final report-- In other words, the panel is explicitly saying from the beginning: 'You have given us terms of reference; you have given us guidelines; and our report is predicated on those guidelines.' The first statement that the panel members make in the report is to say that they did not have a free hand to look at capital funding of non-government schools in Australia; that their hand was restrained entirely by the guidelines that were given to them. Senator Robertson is in the chamber. I remember that when he was in opposition he took offence on many occasions at what he saw as the Commonwealth Schools Commission having its hands tied by government guidelines. I am making this point in good faith not only to Senator Robertson. I understand that governments do give guidelines to statutory authorities and that they have every right to do so. But let me see some acknowledgement that this is not a free report about the capital funding of non-government schools; it is a totally prescribed report. Its guidelines have already defined the logic that leads to its conclusion. I refer briefly to the Minister's letter of 14 August 1984, in which there is reference to such guidelines. The letter is attachment A to the panel's report and I refer to a middle paragraph which sets out eight matters which should be considered by the panel. When those eight areas are considered, the letter is, I assert, manifestly restraining the panel to consider only areas of population growth, such as those from migration or from new housing extensions of a town or city, or some special educational need not provided for in the existing or so-called stable area. These prescriptions, I assert, totally proscribe anything of the expansion that we have seen in the last 15 years. I repeat that in the decade from 1972 to 1982 there was a 17 per cent increase in non-government school enrolments, compared with a 3 per cent increase in government school enrolments. That five-fold difference in the rate of enrolment growth is not the outcome of new migration, or newly alerted needs for special education provision or growth areas of new housing in cities and towns. It is directly the outcome of families in Australia expressing their freedom of choice to have their children enrolled in schools in which they have confidence. They pay for that choice, and we on this side of the chamber will continue forever to guarantee that such families have the ability to make that choice. My point is that the Minister's guidelines in these eight matters for consideration totally preclude the driving momentum that has led to the increase in non-government school enrolments over the last 15 years. There is no way one can construe any of the guidelines given to this panel as allowing for that freedom of choice factor in Australian families. It is restrained, by barbed wire barriers, to population growth arising from migration, population growth in new housing settlement areas, and special needs in education, especially in regard to educational disadvantage, which have not been fully met in so-called stable areas. The Opposition has no quarrel with the extension of non-government schools or government schools in these areas according to parental choice, but we object entirely to the preclusion in those guidelines of the most important factor, the driving force that has led to the expansion of non-government schools in this country. I turn to the tabling statement made by Senator Grimes today on Senator Ryan's behalf. The statement is full of such phrases as 'consistent with the need to make the best use of available resources', 'will lead to a more equitable and efficient approach to the planning and establishment of new non-government schools' and 'to the benefit of all Australian children in government and non-government schools'. I support the actual meaning of those phrases. Of course we want equity, efficiency, reasonableness and benefit to all alike, but by using these deceptive phrases, which are spread throughout the entire statement, a smokescreen, a ploy, is put forward that the Government endorses the restricted conclusions of this panel. I reject the ability of a government to use administrative strategems to tie up completely the free exercise of the development of the non-government school system in Australia. Again, I reject the use of such high sounding phrases to put the steel-ribbed boot right into the guts of the non-government school system. Paragraphs 70 to 80 of the report set out initial eligibility for Commonwealth funds. I believe that the report sets out a new offensive regime of barbed wire barriers to any new non-government school being established in this country. There is barrier after barrier. Again, some of the continuing requirements are supported by this Government. In its application for funds a new non-government school needs to demonstrate that it has a viable plan for the maintenance of the school and also has the ability to gain registration within a State. These were always requirements under the previous Government, and we continue to believe that they are a reasonable basis for the Commonwealth funding a new non-government school. But these ordinary and reasonable requirements are added to enormously by the new barbed wire barriers. Reasonable prospects of financial viability have to be demonstrated, and such are the definitions put forward by this panel that they can be used administratively to rule out the requirements of the past. There is a set of words in paragraph 73 that will allow a government to conclude that it is not satisfied that the plans for a school are financially viable. There is a requirement to meet minimum enrolment guidelines, but such are the terms of paragraph 74 that, again, administratively this Government, given its determination to achieve socialist goals in this area, can use that as another direct veto on a new non-government school being established. There is to be evidence of notification of government and non-government education authorities in the State, and a requirement for adequate consultation. Again, administratively, this can be used as a veto by the Commonwealth Government of any proposal for a new non-government school. We go on to a central new criterion which requires those proposing a new non-government school to give 24 months advanced notification. In July 1983 Senator Ryan announced that there would be no new capital grants for non-government schools and that that decision would be backdated to the date of the election in March 1983-a retrospective rebuff to new non-government schools. So any applications received from March to July were completely denied by the Minister's announcement. The whole question of new non-government schools was put into the melting pot and eventually this panel was set up. The deadline of November 1984 was deferred and only today do we have the outcome. For the whole period of this Government there has been a retrospective aspect to this matter. Now we have this forward aspect, with schools being denied the ability to gain any capital grant unless there is a full two years' notice. I know that there is a transition provision with regard to applications received before January this year and that there may be a speeding up of that process for 1986-87. The criteria are that those putting forward a new school must have a fully described financially viable proposal, that proposal must be as a result of consultations with the State education authorities, and the school can be only in a new housing area or an area that is swollen by migration. When that package is defined and planned those putting it forward have to wait two years before they can expect any support. It is practically not possible. I believe that these barbed wire barriers are directly designed to tie up any proposal for a new non-government school so that it just cannot be proceeded with. The following paragraphs of the report state that, after the announcement of this fully defined new non-government school, there must be widespread notification of the proposal, so that everybody in that area can hop in to the proposal and say that they will be negatively affected by it. This, of course, will be taken into account before any approval can be given. I thoroughly distrust the direct provision for administrative action by the Commonwealth Minister at every point in this process. This is explicitly set out, for example, in paragraph 78 of the report, where it states: The panel also recommends that responsibility for determining initial eligibility criteria, as outlined in paragraph 77- which is a summary of the other criteria- continue to be exercised by the Commonwealth Minister for Education on the advice of the Commonwealth Schools Commission. It is possible that, even if a brave group of Australian families tries to define some package that will go through all these barbed wire barriers and somehow they meet each one of them in turn, they will still have to face a two-year wait before they can actually see it being put into practice. There is an explicit emphasis upon the Commonwealth Minister for Education, at every point in the process, putting in a veto and directly denying that school. I believe that the announcement of this decision of the Government to support fully the findings of that panel, when that panel has been given guidelines that entirely prescribe its findings, is of enormous political importance for this country. It will be heard day after day in this chamber and from the public that this Government has sold out that middle ground of Australia on whose support it has won government and whom it has conned by its soft-soap promises about funding to the detriment of education in this country. Senator Sir JOHN CARRICK(New South Wales)(11.30) —The Senate is debating a ministerial statement. That statement is an adoption by the Government of a report on planning and funding policies for new non-government schools. The recommendations of that report, which are now policies of this Government, are and must be a seriously retrograde step, both for government schools and non-government schools. The Government's policies can be conceived only in ideology; they cannot be measured in terms of budgetary economics, and I propose to demonstrate that. The policies come as no surprise, because for almost the whole of the lifetime of the Australian Labor Party that Party's platform and policies have been totally opposed to aid to independent schools. It was only in the past 12 to 13 years that the Labor Party acknowledged, however reluctantly-and then forced by this side of politics-some forms of direct aid. I make it abundantly clear that the Labor Party, over its history, has believed in a socialised system of education, with no direct aid to independent schools. I found it extraordinary that Senator Macklin should claim that the Labor Party has done much for independent schools. Let me put the record totally straight. As with the rejection of ANZUS, the Democrats have moved to a surprising doctrinaire stand in terms of independent schools; and that must be understood. Let me put nine clear points of the history of the advancement of the independent system. I speak as one proudly educated in the state system of education, but as one who is profoundly interested in the development of the dual system of education-a first-class government school system, and a first-class and competitive independent school system. The first step in the road to assistance to social justice for the independent system was the decision of the Menzies Government in the 1950s-a decision that I had some part in-to provide interest subsidies for capital for the building of independent schools in the Australian Capital Territory. That was the first milestone, recognised as such. The second step by the Menzies Government was the provision of capital for libraries to be built in the independent schools system. The third step was the provision of science blocks; indirect aid. The fourth step, of course, was the provision of direct per capita grants. The fifth step was the fundamental principle, which has been breached and now broken by Labor, that there should be direct per capita grants for all students in independent schools. The sixth step was the decision of the Fraser Government progressively to raise the basic per capita grant to 20 per cent of the cost of a government school and to persuade the states schools-and I was happy to assist in that persuasion-to match it with 20 per cent. It then applied a needs base on top of that; an absolutely imperative system of social justice. The seventh step was the percentage link between the basic per capita grant and the cost of educating a student in a government school; a link which, incidentally, the Labor Party was quick to break. The eighth step was the funding of non-government teacher training colleges. The ninth step was the provision of significant new capital for new non-government schools, recognising that if there were a demonstrable demand in an area, whether it was an area of growth of government schools or not, freedom of choice was there. That is not a bad list of nine. Let us look at the score which the Democrats commended. The Labor Party over 70 years of this century has totally opposed any assistance to non-government schools. That is not a bad start at all. Then, of course, there was a time when the Labor Party said: 'We do not believe in basic grants for all'. Then the Whitlam Government fought to introduce a category one where there were no grants at all. Then, of course, there was a promise by the Labor Party, in order to get into office, that it would not disturb the situation. Having come into office, it breached the promise by breaking down the principle of direct per capita grants. It took a shotgun to some schools, and that was the first shot. Then, of course, it removed the percentage link. The Government went further than that. This is the Government which appointed to the Schools Commission people with doctrinaire stances, totally opposed to any assistance to independent schools. What kind of ideology is it for a government which has a Schools Commission, which, under the Act, is pledged to look to all children, all scholars of both independent and government schools, deliberately, by its choice, selection and act, to put on to that Commission people who are setting out to destroy the dual stream of choices? What an extraordinary situation. Of course, it goes further than that now. It is now going to emasculate the actual administrative circumstances of the Schools Commission. Great parts of the Schools Commission are going to be transferred to the Department of Education itself. The Government says that that will not affect the Commission, but we will see, step by step by step, that the independence and capacity of the Schools Commission to do its job will be destroyed and it will become a puppet of the Government. This represents another MX turnabout by the Prime Minister (Mr Hawke). The Prime Minister was blackmailed by the Left on his statement on Willesee. The reason he turned around on the MX-he being a man of integrity and knowing that to support it was right-was that, if he did not, his Party might upset the American installations and the ports. He is a man who is willing to be blackmailed, a man who gave assurances before the election that this kind of situation could not occur. Now we have it. Why do I say it is an ideology and not a budgetary matter? Running through all this is the implicit argument that we must not have waste; we must not have two schools where one would do. But just hold everything. Is not the principle that it is much cheaper for governments if children go to independent schools than if they go to government schools? I am a little bit puzzled by this whole situation. Here is an attempt to rationalise. If, indeed, Senator Peter Walsh, who in fact demonstrates the Peter principle-because nobody could be promoted beyond his abilities more than he-wants to save money, he ought to be bringing in an argument that more and more students should go to the independent system because it will save two-thirds of the normal revenue maintenance over the years. So it has nothing at all to do with the saving of money. What is it? It is a socialist rationalisation. The Government has perverted this as it has perverted most arguments. The fact of the matter is that, until the late nineteenth century, education was a voluntary matter in this country. In the late nineteenth century it was made compulsory, but it was not made compulsory to go to government schools. The school is simply a mechanism. What was made compulsory was that a student should absorb so many years of education and a particular kind of syllabus. There was no compulsion as to the mechanism at all. A provision was made for government schools so that those who could not afford independent schools could have an education. There was never an attempt to provide a single socialist monopoly at all and freedom of choice was inherent. How ugly is a document which has now been adopted when it contains a classic case of social engineering? Senator Peter Baume, in a first class speech, made a point of this. Paragraph 20 on page 7 of the report states: A continuing significant decline in the government school sector's share of overall enrolment is likely to change substantially the social composition of the student population in government schools, with potentially significant negative consequences for the general comprehensiveness of public school systems. The cumulative effect of these financial, educational and social consequences could, in the long term, threaten the role and standing of the public school as a central institution in Australian society. I can only say I have never heard a more monstrous piece of nonsense. It is the right of people to change their minds and say: 'I do not want my child to go to a government school; I want him to go to a Catholic systemic school'. Why would that alter the structure of things? There is inherent in this some idea that there is an exclusive privilege to a child going to an independent school. Let that nonsense go out the window. Ninety per cent of the children who go to independent schools come from the low to middle income families. Many of them are in the Catholic systemic system, a magnificent system which looks to poor and underprivileged children to give them a chance in life. I commend the Catholic system as I do the non-Catholic system. Do we say that it is wrong for a mother to go to work to pay that extra fee to send her child to a school? The Australian Labor Party has always built up this ugly idea that somehow or other the independent system is a system of privilege. I cannot think of anything more ugly than that. Incidentally, one of the strangest things about it is that members of the Labor party inveigh about it here and they send their children to independent schools, as do trade union leaders and others. If we look at it, this is a most corrupt system. Members of the Labor Party are compelled to speak for their numbers. Just as Mr Hayden in Hanoi had to act to make sure he had the Left behind him, just as Mr Hawke had to change the MX situation to have the Left behind him, so indeed the adoption of this proposal is a move so that in fact the left wing and the Centre Left will rally around. It is an astonishing situation that we should be led by these kinds of factions and that we should have the perversion and corruption of what is an essential right. The essential right of the Australian people is freedom of choice, whether it changes the intended social engineering of the Labor Party or not. What nonsense it is that we must not have a continuous decline. Let me give another example, if we are looking for a doctrinaire document. How can we define growing, declining and stagnant areas by one measurement? Pardon my saying it, but the Government's slip is showing. How does one define a growing area? It is an area in which government schools are growing. It would be wrong for it to be an area in which independent schools are growing. See what I mean? If this were right and all nice and rational, no doubt members of the Labor Party would tell the Federal President of the Labor Party, who has some difficulties at the moment in New South Wales, that he should have adopted this principle and so should his Director-General in relation to the Dover Heights High School. When that school became empty and could not be used a very fine independent school asked whether it could use it. We must rationalise these situations. Members of the Labor Party turn somersaults to prevent it from working that way. It is all right to drive independent school children back into the state education system, but when there is an empty government school and a demand from an independent school it does not allow that situation. I am proud to say that when I was Minister for Education I was able to make provision in the Australian Capital Territory for independent schools temporarily, by paying rent, to use empty government schools. Why should there not be a two-way system in this matter? If we are going to have this nonsense that the Government, against the public will, is going artificially to arrest a trend and create rigid social engineering by not allowing a drift, we have socialism which has gone absolutely mad. The fundamental situation about education in this country is that there ought to be the right for every individual to decide whether his child goes to a government school or an independent school. Indeed, the bulk of people who make that choice in favour of independent schools are the poor. This is contrary to what the Labor Party says because the Labor Party always conjures up and talks of the independent system as though it were level 1. The fact of the matter is that the great bulk of people who send their children to independent schools have low economic standards and sacrifice an enormous amount to do so. Indeed, those who send their children to level 1 and level 2 schools that this Government is now attacking are, in many cases, people of straitened circumstances who believe that it is worth virtually sacrificing their living standards to give their children an education of their choice. It is right and proper that if a person has to go to a hospital he can choose, if he so wishes, a hospital where the surgeon with the scalpel in his hand has a prayer in his heart and receive the same amount of government subsidy. Why can this not occur in the school situation? The Labor Party is making the only exception to the rule of freedom of choice in the system of schools. Admittedly in New South Wales there is a pursuit of restraint of the private hospital system because it would be a dreadful thing to have competition with the public system. Nevertheless, there is the same kind of public subsidy. Nobody asks about people's means. They are not means tested if they choose-as the Federal President of the Labor Party and many others choose, and I commend them-a private religious hospital for their treatment. Why should not people believe that education is not entirely a secular matter, that religion is not just a matter for the sabbath and that education should have a prayer in its heart and chalk in its hand? But apparently they must not believe that. This report and this Government have said that it would be wrong to have a decline in government schools and an increase in non-government schools. Why would that be sociologically wrong? How can it be structurally wrong when today the great bulk of people in independent schools are poor? The argument ought to be reversed. Senator Peter Baume —It would be wrong because it would be putting power in the hands of parents. Senator Sir JOHN CARRICK —Let me deal with that interjection. Senator Baume said that the Government would think it wrong because it would be putting power in the hands of parents. The fundamental situation of members of the Liberal Party of Australia and the National Party of Australia is that decisions in education should be in the hands of the parents. The Australian Labor Party, and we now find that the Australian Democrats are strongly supporting it in this regard, is looking to the socialist concept of organising everyone. I cannot think of a worse piece of doctrinaire nonsense than paragraph 20 in this report, nor can I think of a worse piece of nonsense than the classification of 'growing areas' as areas where government schools grow. What an astonishing thing! There is also some suggestion that we ought not to have these small schools that are cropping up around the place at the moment and that some people do not like. As Minister for Education, I toiled on this problem. I believed two old-fashioned things: First, I believed that if a State government said that it would register a school in terms of its basic education standards, I had cause to consider very much indeed that it deserved funding. Secondly, I recognised that in a society that is struggling to seek spirituality and struggling to find a philosophy and a cause such a right to be different and such a choice must be inherent and must be preserved. Fundamentally, Senator Macklin's arguments are wrong. If a State has the constitutional power to decide what should be registered and what should not and it states that a school satisfies educational standards, its other choices ought not to be a matter for argument even if all of us here said that we oppose what that school is teaching. I have been thinking very hard on this. This report was conceived in 1984 and I can see that it is really Orwellian in its structure. It contains Orwellian double talk in terms of socialist double standards. Why should the recommendations in this report not proceed? We have had the massive financial influence of the militant teacher unions. They have placed massive political pressure on the Labor Party. In reflecting upon the militancy and the pressure of those unions, I do not want to reflect upon individual teachers. My experience of individual teachers in Australia is that the great majority of them are doing a first class job. But what we have in Australia is a militant organisation of teacher unions with tunnel vision. These unions have an industrial self-interest. They do not look at the educational needs of children but at the industrial interests of union members. They see the need to create an educational monopoly to garner all the money and direct it towards their industrial interests. That in itself is corrupting education in Australia. It is doing great harm. Their goal ought to be to meet the educational needs of children. The reason why there is a growth in the independent school system and a decline in the government school system is that parents, who are the only proper judges, believe that their children will get a better total education, including pastoral care, in the independent system. It is not for governments to decide whether parents are wrong. That is the arrogance of socialism and communism. When a government decides it knows better than parents, this country is no longer functioning as a democracy. Essentially the parent must have the first choice. Again, I make it abundantly clear that if one were to read the report and the ministerial statement, one would think they were a very sensible piece of rationalisation. In effect, the report and the Government are saying: 'If we have a couple of schools in an area and there is really no need for them, we must do something about this. If there is a decline in the school system in another area we must do something about that'. What an extraordinary situation. It means that we do not measure freedom of choice. We simply use the socialist philosophy of levelling down rather than freedom of choice. What is the situation if there is a growing demand for an independent school in an area of decline? According to this report we rule it out. The test to be applied is that there must be a growth in government schools. We can see the thinking that is inherent in this. This Government will force a polarised view of the government school being the dominant and overriding school. But even if we accept that, we are not arguing about money. I know that at this moment the Government has painted itself into a corner. All the things it said we were doing wrongly in putting on restraints in the period from 1975 to 1983 it is now saying are right. It argued that big deficits were all right and it said that we could spend as much as we liked. Now it suddenly finds that what we said was right. Step by step it is now trying to pretend that what it is doing is a device for good order and good economy. But I put it frankly to the people of Australia that the great bulk of public expenditure on education, per capita, goes far more heavily to government school students than to independent school students. If we are wanting a cheaper system for the taxpayer we should encourage people to transfer to independent schools. In other words, we should do the very reverse of the Government's policy. We should encourage this movement and encourage freedom of choice and then we would save money. That brings me back to this report which has been constructed by socialist engineering with doctrinaire socialism as its goal. Its aim is to ensure that the government school system shall dominate and that there shall not be freedom of competition. It states that we must tidy things up. That argument ought to be extended to a suburb in which there are too many chemist shops. After all, many suburbs today are oversupplied with pharmacies. Why not tidy them up? They are costing too much in terms of the scrips for which the Government pays. Why do we not also tidy up all the service stations to be found at every corner? Let us tidy up anything at all where demonstrably some socialist mind can say: 'In my view there is an oversupply'. Of course, if this is so, we must cut down that supply. What we have is a very simple situation. We have a Labor Party which, for 70 of the 80-odd years of this century, has been implacably opposed to state aid to non-government schools and which, for the remainder of the century, has been reluctantly doing something about it. But in the latter years it has been trying to retreat. We have a Labor Party caught up in the doctrinaire bids of both its parliamentary left wing and the trade union movement and it is being forced inexorably to turn about, to change its mind as it did in the case of the MX missile testing. We have a Prime Minister and a Cabinet who know what is right but who do what is wrong. It is no wonder that the leaders of the nations of the world are now turning to criticise this Government and this country. It is no wonder that Wall Street Journals state that the basic reason for the fall in the Australian dollar is the mess of this Government's leadership, its indecision and the effect of the left wing on this country. Here again we see a classic example of the Labor Party knowing what is right. It knows that it ought to have continued with the success stories and first class policies of the Fraser and Menzies Liberal governments, but it does what is wrong because it is being forced to do so by its left wing, both inside and outside the Parliament. I reject the recommendations. Senator HARRADINE(Tasmania)(11.56) —The document that has been tabled with the ministerial statement is an important document. I acknowledge having received the ministerial statement prior to the debate, but not the actual document from the Commonwealth Schools Commission. Therefore, I have not had the chance that I would have liked to have to analyse it thoroughly. I want to make a couple of brief points. For example, paragraph 20 on page 7 of the report states: A continuing significant decline in the Government school sector's share of overall enrolments is likely to change substantially the social composition of the student population in government schools, with potentially significant negative consequences for the general comprehensiveness of public school systems. I am not really sure what that means. It seems gobbledegook to me. I hope that it does not mean what one could read into it, that is, that if poorer persons are forced to stay in the non-government school system because their parents do not have true freedom of choice due to economic factors, their level of potential intellectual achievement or scholarly achievement is somehow reduced by the creaming off, as it were, to independent schools of the student children of more wealthy parents. If that is what is suggested in that comment, it reflects gravely on the persons who made the comment. I am one who believes quite firmly that we are born equal and that students from poor parents are as capable of achieving a scholastic result of excellence as are those from more wealthy parents. In fact, given equal opportunity within the school system, the materialism in the more wealthy homes may detract from the scholastic achievements of the students from those homes. I do not assume that the Government accepts all of the document-it may accept only some proposals-but I would be interested-- Senator Peter Baume —Senator, I think they have accepted all the proposals and recommendations. Senator HARRADINE —I have not read that. Since Senator Baume has interjected, I state that I do not reduce this whole issue to a question of free enterprise. I do not know whether he suggested that that should be so. Senator Grimes —He did. Senator Peter Baume —I did not. Senator HARRADINE —I see. It is very important that we have clearly in our minds that we are talking about the fundamental rights of parents in the education of their children. Those rights should not be circumscribed unnecessarily by the imposition of unreasonable economic structures. Paragraph 20 of the report, having stated those things in an intervening sentence which is not relevant here, states: A clear public policy on the planned development of government and non-government schooling within a dual system is needed to avoid such a situation. I agree with that, provided that there is a full acknowledgment that parents may choose, for educational, religious, cultural or other reasons, a non-government schooling for their children. That was a quote from the Federal Government's guidelines which were forwarded to the Schools Commission. That is the Federal Government's acknowledgment right now. If that is an acknowledgment and we are talking about a dual system and about the need to ensure the rights of parents in that dual system, there is clearly merit in education planning. The document states: A clear public policy on the planned development of government and non-government schooling within a dual system is needed to avoid such a situation. Such a situation was described above. But this document, in its actual recommendations, does nothing about that. It is one-sided. It does not really talk about planning in the government sector. It is really only about planning in the non-government sector. Unless I am reading it incorrectly, it does nothing to subject the government sector to the criteria being proposed for the non-government sector. As people are declaring their interest in these things, I add that-- Senator Jack Evans —Where were you educated? Senator HARRADINE —At the Bordertown Higher Primary School. I had a very good primary school headmaster called William Thomas 'Gibber' Stone, who made a lasting impression, or several lasting impressions, on me. Nevertheless, I come to the point that nowhere in these recommendations do I see the ability of the joint planning and co-ordinating bodies proposed to be established under recommendation 12, or the joint planning and co-ordinating bodies that are proposed under recommendation 13, to consider certain criteria for the establishment or extension of government schools. I recognise that these are largely questions for State governments and State education Ministers. It is interesting to note that the membership of the planning and co-ordinating bodies recommended under recommendation 12 includes 'a nominee of the Commonwealth Minister for Education and such other nominees of the State Education Department and other authorities as are determined by the Commonwealth Minister, following consultation with the State Minister and non-government school authorities'. Recommendation 13 states: That until Joint Planning and Coordinating Bodies, as set out in recommendation (12) above, are established in a State, Commonwealth New Schools Committees be instituted with the following membership and general responsibilities: The membership is interesting. It continues: (a) membership: one nominee of the Commonwealth Minister for Education; two nominees of the State Education Department; two nominees of the State Catholic Education Commission; and one nominee of the State Association of Independent Schools. It is interesting to note that the responsibilities of the proposed joint planning and co-ordinating bodies are to include the following: (i) consultation with other groups and authorities, as appropriate; (ii) advice to the Commonwealth Minister on priorities for new non-government schools according to the guidelines proposed; (iii) monitoring and advising the Commonwealth Minister on the continuing eligibility and enrolment plan of previously-approved new non-government schools; (iv) advice to the Commonwealth Minister on the Commonwealth Capital Program for new non-government schools. All of this is directed only at criteria for new non-government schools. None of it is directed at the need, as explained in paragraph 20, for the planned development of government and non-government schooling. So recommendation (12) refers only to government schooling. It is assumed that government schools will expand without any criteria. If that is the assumption, these proposals are not what they are said to be. They will place strictures on the rights of parents to choose. If that is so, it gives concern, although it may be too early to say whether it is so. It will be interesting to see the amendments that come forward by way of legislation in this Parliament. I ask whether the recommendations, or at least the advice to the Minister, that will emerge from the joint planning and co-ordinating bodies or, until those bodies are established, from the Commonwealth new schools committees, will be published. In my view, it is important for advice of that character to be published. As I understand it, previously all advice from the Commonwealth Schools Commission was published and made available for members of parliament and the community in general to consider and comment upon. I simply ask whether, if this advice is to be public, provision for its publication will be made in the subsequent legislation drawn up to give effect to these recommendations. In summary, aside from the points that I and others have made-one was made about the 24-month period, which seems to me to be too onerous-I reiterate that I do not wish to see, nor do I believe that most members on both sides of the Parliament would wish to see, the rights of parents substantially affected by administrative action. It is one thing to have clear government policies, to have commissions such as the Schools Commission which make clear recommendations available for the public to consider and comment upon. It is another thing again to have bodies providing Ministers with advice which is not published or able to be commented upon, the Minister then acting in a way that could, in an administrative sense, restrict the rights of parents. Given the fact that government schools are not to be subject to the restrictions and constrictions proposed for new non-government schools, I believe that an undue influence is written into these recommendations by the State education departments. The number of their representatives on the various bodies are listed in the report, and it seems to me to give them an undue influence in this area. I am concerned about statements that have been made by people such as the New South Wales Minister for Education, Mr Rod Cavalier, who recently said that he had a dream of seeing all New South Wales pupils out of private schools unless they were there on religious grounds. I believe that statement is not consistent with the view of the current Commonwealth Government. In its guidelines to the Schools Commission the Commonwealth Government said: The Government acknowledges that parents may choose for educational, religious, cultural or other reasons a non-government schooling for their children. The statement by the New South Wales Minister is disconcerting. Yet, if the joint planning and co-ordinating committee is established in New South Wales, the New South Wales Minister, who has the views I have mentioned, will have an undue influence on the results for non-government schools in that State. With those caveats, I reserve my further remarks until such time as I see the legislation which emerges from this report. Senator WALTERS(Tasmania)(12.12) —I had no knowledge of the report of the panel of Commonwealth Schools Commissioners, entitled 'Planning and Funding Policies for New Non-Government Schools', having been brought down, so I have not had time to read it. That applies to all back benchers, a fact of which we are well aware. Senate back benchers generally do not get copies of reports. However, Ministers, shadow Ministers and leaders of the minor parties usually do. I have never witnessed such an outcry from the back bench as that which has accompanied the tabling of the report. It really is a disgrace. The report states that the Government indicated to the Commonwealth Schools Commission that 'it wished to be able to budget for Commonwealth support for new non-government schools from 1986'. So the whole excuse for all this is that the Government wanted to budget for new non-government schools. Senator Sir John Carrick has pointed out very clearly that if the Government were sincere in cutting the money being spent on education it would be encouraging the setting up of new non-government schools. It does not take any great whiz to understand that, if parents are paying the majority of fees, governments or the taxpayers are relieved of the need to do so. It does not take any mental giant to work that out. So the indication by the Government to the Commonwealth Schools Commission that it wants to be able to budget for the setting up of new non-government schools is all pie in the sky stuff. Why is it necessary? It is necessary because, as has already been stated by Senator John Carrick, the Prime Minister, Mr Hawke, is doing a deal with the Left. After all, he received a nice lot of money from the teachers. He is now doing a deal with the Left. Senator Aulich smiles, but he knows a lot better than I the factions within the Australian Labor Party. He understands very clearly that the deals being done in the Cabinet room between the Left, the Centre Left, the Right, the independents and the other factions of that Party are very complicated and have to be stuck to. The Prime Minister has already done a deal on the MX missile test, by backing off. He is now doing a deal with the factions on the schools. There is no doubt at all that prior to the election the Prime Minister took over the portfolio of the Minister for Education (Senator Ryan). He said to the private schools: 'Don't take any notice of her. I will make sure it does not happen'. He has now given back the portfolio to the Minister and it is happening. Senator Macklin —I'll bet the Prime Minister has not even seen the document. Senator WALTERS —Senator Macklin is back in the chamber, having left it straight after his speech. He did not have the courtesy to stay to hear the replies. He is now expounding his and his Party's Labor views. We do know that members of the Australian Democrats came here and were previous Labor Party members. Senator Macklin —I was not and neither was any member here, as a matter of fact. You have no information on that at all. The ACTING DEPUTY PRESIDENT(Senator Townley) —Senator Macklin, I warn you. If you have any objection you know the right time to make it-that is, at the end of the honourable senator's speech. Senator WALTERS —Perhaps I had better calm Senator Macklin down a bit by referring him to Hansard tomorrow. I had never suggested that he had been a member of the Labor Party, so he had better calm down. Read Hansard tomorrow or listen more carefully. Senator Messner —Perhaps he protests too much. Senator WALTERS —As Senator Messner says, perhaps he does protest too much. Let us now consider what has occurred. The panel set out the Minister's guidelines very clearly. We are told that the commissioners have to abide by the guidelines and I have no complaint about that. One such guideline states: to plan new non-government schools in ways consistent with the need to cater for growth and shift in the overall school population; and to avoid the tensions which can result from the unco-ordinated growth in new non-government school places in areas already well provided; What tensions? What tensions are to be found in areas where private schools might set up and where public school numbers might go down? It is very clear what tensions might result. We have had those tensions in the Australian Capital Territory. The Minister has tried to stop the building of a private school in the Australian Capital Territory because she did not like the fact that that school may take numbers from the government sector. Another of the guidelines states: to provide for the orderly development of non-government schools without seriously reducing standards of service in existing schools, government or non-government; Again, it is very clear that we must not set up a new non-government school in an area in which that school may be able to take students away from a government school. Senator Macklin —It does not say that. Senator WALTERS —Senator Macklin ought to read the report. Senator Macklin —I have read it. You said you had not read it. There is a difference. Senator WALTERS —I am reading it now, and I think that Senator Macklin ought to read it. As he well would know, I am quoting from it now. The report also states: In its consultations with groups and authorities, the Panel found wide acceptance of the need for co-operative planning between government and non-government sectors in the development of new non-government schools. I wonder what is meant by 'wide acceptance'. How many groups or authorities constitute a wide acceptance? From whom is this wide acceptance to be obtained? The panel has not specified that. It makes no statement about the criteria to be used in judging what is a wide acceptance. The report continues: However, a significant number- What is the difference between a significant number and wide acceptance? We are not told. However, the panel does say where the significant number comes from. The report continues: . . . a significant number of groups and individuals within the non-government sector- The panel does not say where the wide acceptance came from-no doubt it was from the government sector-but it does speak of the concern expressed by the non-government sector about the disastrous curtailment of funding. The choice of parents, likewise, will be disastrously curtailed. Many honourable senators who have spoken today have quoted from page 7 of the panel's report. I also will quote from that page of the report. Paragraph 20 states: A continuing significant decline in the government school sector's share of overall enrolment is likely to change substantially the social composition of the student population in government schools, with potentially significant negative consequences for the general comprehensiveness of public school systems. One honourable senator said: 'What on earth does that mean?' We know all too well what that means. The ideology of the Government, nothing more and nothing less, might be affected. It has nothing to do with budgeting considerations; it is purely the ideology of the Government. The paragraph continues: The cumulative effect of these financial, educational and social consequences could, in the long term, threaten the role and standing of the public school as a central institution in Australian society. Thus the ideology is spelt out quite clearly. The paragraph continues: Such a development would be unwelcome- Unwelcome by whom? By the parents or the Government? The panel certainly does not say that it would be unwelcome by the parents. It would be unwelcome by the Government and the Australian Democrats, but not by the parents of Australia. The paragraph continues: Such a development would be unwelcome to most citizens and is inconsistent with the stated policies of governments . . . It is inconsistent with the policies of most State governments because most State governments at the moment are Labor governments. So, of course, it is inconsistent with their policies. The paragraph also says that such a development would be inconsistent with the major school interest groups, government and non-government. It continues: A clear public policy on the planned development of government and non-government schooling within a dual system is needed to avoid such a situation. The Democrats have underlined to the full extent the amount of socialism that is well within their Party. They have now come out on two major issues since the last election. They have done a little count around and seen that they have lost votes on the defence issues, including the ANZUS Treaty. For the first time, they have said that they are altogether against ANZUS. They have expressed themselves in that manner because they can see their numbers being depleted with the arrival of Nuclear Disarmament Party senator. They can see that after the next election they will be put in their place. If they are lucky, two Australian Democrat senators will be elected. Thus, they have come out to pick up that radical group about which Senator Walsh talked the other day. It is the first time that I have agreed with Senator Walsh for a long time, but I certainly agree with him on that issue. The Democrats are now coming out in favour of doing away with any new private schools that may be set up in an area in which government schools may be interfered with. They have made that very clear. Senator Macklin made that very clear in his speech today. It is with great concern that I have quickly read this report. I welcome a further full-blooded debate on this report. Senator ARCHER(Tasmania)(12.24) —I raise only a couple of points with respect to the report of the Panel of Commonwealth Schools Commissioners on Planning and Funding Policies for New Non-government Schools. My argument is predicated on the fact that the report is yet another attack on the very rich. I have been to many private schools as well as non-private schools, and I have found there circumstances which are seldom taken into account. Around the schools that I have been to I have found a considerable number of people who either choose to make or have to make special arrangements for their children if they wish them to be educated. The government system does not provide the sorts of facilities that are often necessary. Of course, quite a lot of schools cater very largely for the children of outback farmers, of seamen, of slaughtermen, of miners or of side-show operators. Those schools cater for special needs and activities, either educational or cultural. There are schools to assist children from broken homes to settle down. Some of these schools are boarding schools; some are day schools. Who will provide this sort of facility when we have wiped out the private schools? It is not a matter of dealing with the very rich. I find that very many of the children at the schools I go to are educated through parents' second jobs and second incomes, very often at considerable personal sacrifice. People should be encouraged to do what they see as most appropriate for their children at some personal sacrifice. I shall make one or two other comments, including one that Senator Sir John Carrick made: It is just rotten economics to prevent the parents' dollar going into education instead of the tax dollar, particularly at a time when we claim to be short of money. I think this report cost $750,000. In the election before last the Victorian Teachers Federation claimed that it had been treacherously sold down the drain; having paid the money, it did not get what it bought. The report may be a little late, but it is probably the report that the Federation bought then. I have even had letters complaining about private education from a couple of teachers whose best argument was that new government schools were affecting their promotion opportunities. Somebody even suggested to me that the Department of Education should be renamed the department of teacher occupation. However, the vast majority of teachers, whether in the private or public sectors, are dedicated and capable people interested in the good of their pupils. Why should we interfere to this level to try to get them to do things which are contrary to their training and professional dedication just to make them political pawns? The Government is so weak. I think I would have given it more credit had it just said that it intended to implement its policy for the elimination of private schools rather than going through this charade of producing this fabrication of a report which claims to say: 'Yes, it is bad that we should allow people to do what is reasonable, sensible and within their means'. Senator GRIMES(Tasmania-Minister for Community Services)(12.29) —I do not think that I can say much about the last contribution to this debate, except that it demonstrated that Senator Archer has not read the report and has no idea of what is in it. The best way to dismiss Senator Walters contribution is to point out that she said that the debate is really about Senator Ryan, the Prime Minister (Mr Hawke) and the rest of this Government paying the Teachers Federation back for the great support it gave us in the last election. I have no idea where Senator Walters was during the election. The Teachers Federation not only did not give us a cent; it also opposed us, and spent $40,000 in the Australian Capital Territory trying to have Senator Ryan defeated. That was an extraordinary statement by the good senator. Senator Walters —What about 1983? Senator GRIMES —We have heard what Senator Walters has said. Those were the words she used. She should read the Hansard. Her words demonstrate that she does not know what she is talking about. The rest of her speech followed in the same way. The gist of the contributions-I exclude from my remarks the thoughtful contributions of Senator Macklin and Senator Harradine-from Senator Baume, from Senator Teague and, especially, from that great knight of the realm Senator Sir John Carrick, was that here the Government is accepting a socialist document supported and promoted by the socialist Left, a document which is about social planning and which is doctrinaire and demonstrates what a terrible, socialist Government this is. I remind the Senate that we are debating the Government's acceptance of the recommendations of a report called the 'Planning and Funding Policies for New Non-Government Schools' which is a report of the panel of the Commonwealth Schools Commission. Who was on the panel? Certainly, the Chairman of the panel was Ms Lindsay Connors, the Acting Chairman of the Schools Commission. We have heard the personal attacks on Ms Connors from Senator Baume and others on that side. Senator Peter Baume —I did not even mention it. Senator GRIMES —The honourable senator has mentioned it in the past. I do not need to defend Ms Connors. The second member of the Commission is Sister Denise Desmarchelier. She is the principal of a Catholic high school in Western Australia. She is a nun and the principal of a non-government Catholic school. The third member is Mr Vin Faulkner, the planning officer of the Catholic Education Office of Victoria; and the fourth member is Professor Ron Sackville, the chairman of the Australian Law Reform Commission and a member of the board or the committee which looks after the Jewish day schools in New South Wales. The final member is Mr Doug Swan, the Director-General of the New South Wales Education Department. Are we seriously saying, as did Senator Teague, that Sister Desmarchelier, Vin Faulkner, Ron Sackville-anyone who knows Professor Ron Sackville would not put him anywhere near the socialist Left of the Australian Labor Party or any other such radical group-the majority group on that committee, produced a socialist doctrinaire document for social planning? Senator Teague is doing what he has always done in this place. When he has no basis of argument he proceeds on certain principles: The first is what he and Senator Baume were doing-attack the Minister. In an extraordinary statement Senator Baume attacked the Minister because she had not attended a government school. He said that she had never been inside a government school. Senator Peter Baume —As a student. Senator GRIMES —Senator Baume did not say 'as a student' and I defy him to find that in Hansard. Apart from the fact that Senator Ryan has two children educated in government schools, and this nonsense of attacking the Minister when one has nothing else to do, on three occasions Senator Teague talked about us ringing the death 'knoll' of the private education system. I think he had better get back to his private education system and try to explain to me what knolls have to do with it. I think he had another word in mind and had some difficulty. He was also full of stuff about putting up barbed wire fences, sticking in the steel-ribbed boots-whatever they are-and laying down the gauntlet and all the conspiratorial theories that he usually goes on with when reports such as this come down. He went on for half an hour about some great socialist conspiracy which arises out of a report, the majority of those who wrote it being associated with non-government schools. One of the members of the panel is a principal of a non-government school and, as Senator Jack Evans said, a fine woman. The Opposition has mounted an attack on the people who have produced this report and that is absolutely typical of the sort of nonsense that Opposition senators go on with in this place. We have had all the old shibboleths today, all this nonsense which has gone on for two and a half hours on a report that has been brought down. At least Senator Walters had the decency to admit that she had not read it. Senator Archer demonstrated clearly that he had not read it and I doubt whether the other Opposition senators had either. In answer to an interjection from Senator Harradine, Senator Peter Baume said that he was not about some free enterprise principle in private schools. He said that the Opposition did not have a market theory about private schools. However, when Senator Macklin expressed concern about the very real difficulty and the very real worries facing the Catholic parochial school system over the untrammelled increase in the development of small private schools in areas that were already well supplied, and suggested that some private schools in existence would become non-viable and therefore their students might be affected, Senator Baume's interjection was 'Tough'. I ask him to look at that in Hansard. That is what this debate is about. It is about 'Tough'. This debate is not about the standard of children's education when Senator Baume says: 'Tough, too bad if the school becomes non-viable, too bad if the kids do not get a decent education'. The Opposition has the same nonsensical view about education as it has about health-that the best way to deliver services like this is to throw them open to some free market system in which only the wealthy do well and only the rich survive. We have this nonsense frequently debated in this place. This is the kind of argument that is put forward frequently by senators on the Opposition benches. I am not concerned about the rich; my concern in the non-government sector would be the same as that of Senator Ryan and the same as that this Government has always had. We want to support, for example, the Catholic parochial school system which takes all the kids it thinks it should care for. It tries to give them all an education whether they can pay their fees or not. We do not want to see the system which arises now and which was commented on in a television program yesterday morning in which some private schools-I do not think Senator Teague will deny this-reject pupils because their academic standards are not up to the academic standards that those schools would like to see. They reject pupils out of hand so that they can keep up their academic standards for publicity purposes. Senator Teague remains silent because he knows that that happens. Senator Teague made two unfortunate remarks which I must reply to briefly. First, he criticised the Minister for Education for not being here. He said that she should have been here. I am the Manager of Government Business in this place and Senator Ryan has been at me for the last few days to make sure that this report came down as soon as possible and that the Government gave its response as soon as possible. The fact that she is not here is not of her doing. She desperately wanted to be here because this is an important report. For Senator Teague to get up in this place without any knowledge-and I notified the Opposition spokesman on education of the facts-and criticise Senator Ryan because she could not be here is typical of the sorts of tactics the Opposition members use. If we had delayed the bringing down of this report because Senator Ryan could not be here today, Senator Teague would have criticised us for not bringing it down. He is a disgrace because he uses those tactics and personally criticises the Minister in this regard. He should be ashamed of himself, but then that is typical of the sorts of tactics he introduces in this place. In the few minutes that I have left to discuss this matter I should like to point out certain simple facts. The panel's recommendations came to the Government in February after they had been asked for by the Minister in a letter last August. The panel members received an extension of time at their request so that they could further consult with the various non-government bodies and others concerned. This was not done at the request of the Prime Minister, as Senator Teague has suggested. That is also typical of the tactics that Senator Teague uses in this place. These recommendations were based on the need for a planned development of government and non-government schools in this country. The recommendations were aimed at the provision of a balance-as panel members say, and they make no bones about it-between reasonable choice and the right of children to receive high standards of education, and I really do not think that anyone in this place should complain about that balance, and the provision of co-ordination between the Commonwealth and State governments in the planning of new schools. Senator Harradine raised this matter. The State governments already have planning mechanisms for the development of new government schools. In general, they put the schools where they are needed and where the population increases warrant them. There always has been a planning process in the development of government schools, as there has to be with budgetary and other considerations that Commonwealth governments must introduce. What the Minister has suggested is that concern has been expressed in both government and non-government school sectors-and, as Senator Macklin pointed out, particularly in the Catholic system-at the proliferation of a large number of schools in recent times and some question asked about the standards that those schools provide. One only has to read the newspapers or follow the media in this country to know that that happens. The Minister asked the panel members to bring forward a report on how we could better look at the planning and funding policies for new non-government schools in this country. That is what they have done and they have done it on the basis of the facts, the evidence and the consultations that they had. Senator Sir John Carrick seemed to think that it was offensive that we should take budgetary considerations into account when we are dealing with the funding of non-government schools. If we took that attitude to the funding of nursing homes or hostels, for example, or to the funding of child care or the provision of anything else that the Federal Government funds in this country, if we said that the Budget did not count and that we must fund all those people who want it and all those people who can get licensing by State authorities, there would be a riot on the other side of the House and a much more lively debate than we have had here today. We would be castigated for being irresponsible, as indeed we would be irresponsible. Of course budgetary matters come into consideration and to suggest that they should not or would not is nonsense. We need to develop a planning method so that the funds can be used sensibly and so that they can be distributed in an equitable manner throughout this country for the benefit of parents and the education system as a whole, and in particular for the benefit of the kids who will be educated in the future. For this Government to ignore the disquiet and the uncertainty that have existed in the community for some years now about the proliferation and the type of some of the schools that have proliferated would be absolutely irresponsible. We have done this and we have received this report. In general, the Government has accepted the report. The Senate will get the opportunity to debate the legislative changes which come in. When that debate occurs, I hope that those members of the Opposition who have spoken here today will actually read the report and will consider the principles which are important to us all. I hope that we will not have another exercise in slanging across this chamber, as we have had today, and that we will not have people such as Senator Harradine and others feeling they have to declare in this place where they stand, where they were educated and where their kids are educated and everything else. I hope that we have a debate on the important principles of education which are concerned. Opposition senators have all got it off their chests this morning and they all feel much better and they all think that they have helped themselves out in the electorate in those small groups who listen to the sort of nonsense they have gone on with today. But I hope that when the legislation comes in we have a sane debate. We shall see then whether Senator Teague's warnings and threats, which he has been repeating since we were first elected in 1983-that this will bring the Government down; that this will bring the wrath of the people down-are as empty now as they have been all the times he has made them. Question resolved in the affirmative. Motion (by Senator Jack Evans) agreed to: 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. Bill presented by Senator Jack Evans, and read a first time. Senator JACK EVANS(Western Australia) —I seek leave to move the second reading of the Bill forthwith. The ACTING DEPUTY PRESIDENT(Senator Haines) —Is leave granted? Senator Townley —No. I take a point of order, Madam Acting Deputy President. It is a quarter to one, at which time we usually adjourn for non-controversial debate; and some of us have commitments following that time. The ACTING DEPUTY PRESIDENT —Senator Townley, it does require a motion to bring that on. There are one or two matters of detail that will take no more than about five minutes. If you wish to move the motion, go ahead; but otherwise we will just clear these matters. Senator Townley —No. Go ahead; I just objected to leave being given to move the second reading forthwith. The ACTING DEPUTY PRESIDENT —Senator Jack Evans will be seeking leave to incorporate the speech in Hansard. Senator Townley —All right. The ACTING DEPUTY PRESIDENT —Senator Jack Evans, would you seek leave again please? Senator JACK EVANS —Yes. I seek leave to move the second reading of the Bill forthwith. Leave granted. Senator JACK EVANS —I move: That the Bill be now read a second time. I seek leave to have my second reading speech incorporated in Hansard. Leave granted. The speech read as follows- In the last Parliament, I introduced legislation which sought to provide machinery and a time-table for the formulation of comprehensive reforms to the Australian taxation system, public comment, and the introduction into Parliament of legislation to give effect to those reforms. At that time, I presented the Bill in the expectation that the Government and the Opposition parties would honour their rhetoric and support the Australian Democrats' initiative. In the months that have passed since that time the Government has announced the creation of a 'tax summit' with, presumably, input from the widest cross-section of Australian interest groups. This could be an ideal prelude to comprehensive tax reform. Australian taxpayers need reform, not just talk. This Bill provides the machinery for such reform. It does not deal with the nature of reform. It merely establishes a procedure and a framework for reform to occur. If it so wishes, the Government can support this legislation without losing political 'face'. The summit could become an integral part of the consultation process required by the Bill. A tax summit could be constructive; however, it needs to occur within a framework of assured reform implementation. At present, the summit will occur as a political event with no assurance that reform will actually occur. The passage of this Bill will ensure that reform legislation is tabled in the Parliament. The Bill does not seek to present the philosophies or policies of the Australian Democrats, nor any other party, as a part of the reform process. It merely seeks to initiate a process and time-table for reform to occur. In general terms, the Bill provides for the establishment of an all-party Joint House committee. The committee, with the assistance and advice of consultants and staff, has the following functions- (a) To review- (i) the reports of the Taxation Review Committee (the 'Asprey' Committee); and (ii) the report of the Committee of Inquiry into Taxation and Inflation (the 'Mathews' Committee); (b) to formulate, in the light of its review of those reports and of any evidence taken by the committee for the purposes of that review, comprehensive reforms of the taxation system; and (c) To prepare draft legislation to give effect to those reforms. The committee shall present copies of its draft legislation to the Presiding Officers of the Parliament before 1 July 1987. The Presiding Officers shall table the draft legislation within 15 sitting days after it has been presented. After being tabled in the Parliament, copies of the draft legislation shall be made available for public comment for a period of 12 months. During that 12-month period, any person may make representations to the committee and suggest amendments to the draft legislation. After the 12-month period of public comment, the committee may amend the draft legislation in light of representations, suggested amendments or any other evidence. The committee has 12 months in which to make any such amendments. Within two years of the tabling of the initial draft (i.e., 12 months of public comment followed by 12 months of committee amendments) the committee shall present copies of the final draft of the legislation to the Minister. The Minister shall then, within six months, seek the leave of the House of Representatives to introduce the legislation. This timetable will result in the Minister seeking leave to introduce the draft legislation during 1990. If the Parliament at that time supports the legislation and it passes through the Parliament and receives Royal Assent, it does not necessarily mean that a new taxation system would immediately come into effect. Both Government and business are tied into long term plans and investments. It is not practical for the taxation system to be reformed in a short time span. Consequently, although the legislation may receive Royal Assent in 1990, that legislation may not necessarily commence on the same date. It is possible that parts of the legislation could be phased in over subsequent years. This Bill does not specify when the legislation shall commence. That decision is left to the committee and to the Parliament at that time. This Bill merely provides for the drafting and introduction of reform legislation, not the manner of its implementation. The reason for this Bill is that the present taxation system has become a complicated anomaly-ridden mess. In simplistic terms, a taxation system needs to be simple, efficient and equitable. The present system fails on all three counts. The present system is anything but simple. No single person could truthfully claim to be aware of, and to understand, the taxation law as it now stands. The tax system is contained within thousands of pages and a multiplicity of inter-related Acts. It has suffered thousands of amendments and contains large numbers of exceptions, anomalies and loopholes. It is a system which even Queen's Counsellors cannot predict nor master. The average pay-as-you-earn taxpayer or people managing small businesses have little hope of understanding the multiplicity of laws which affect them. The complexity of the present system is a major reason for its inefficiency. The system abounds with loopholes, anomalies and inconsistencies. Consequently, tax avoidance has blossomed. Blatant tax avoidance schemes have proliferated, and although the Parliament is attempting to stamp them out, the result is that the system becomes increasingly complex and only marginally more effective. The existing system encourages tax practices which, while not constituting evasion, could be seen as being on the borderline between legitimate minimisation and illegal evasion. At present, there is a very fine line between astute business acumen and tax evasion. This is intolerable. A businessperson should be able to operate a concern and know what is clearly acceptable and what is not. There should be a clearly distinguishable line between legal minimisation and illegal evasion. The PAYE taxpayer has similar problems. Very few PAYE taxpayers know exactly what are legitimate deductions and what are not. The poor taxpayer has little option other than 'punting' on deductions and waiting for the Taxation Office to declare which are acceptable and which are not. The problems, however, are not confined to those who honestly try to meet their tax commitments. There exists a huge cash economy which is still largely untouched by the tax system. Although recent legislation has made inroads into the black economy, it appears to be surviving and prospering. The existing system is clearly inequitable. Professor Russell Mathews has argued that it would be difficult to improve on the present system if the aim was to deliberately design a tax system that requires the poor to pay more taxes than the rich. Wage and salary earners are discriminated against in favour of business and other taxpayers. They do not have the same legal rights and they lack the flexibility afforded to business enterprises. In addition, higher income earners have a greater capacity for tax minimisation. It is a fact of life that those who can afford good legal and accounting advisers are in a much better position to minimise their tax liabilities. The system is inequitable in that it encourages the redistribution of wealth from the poor to the rich. Although the intent of the system is to effect a measure of redistribution of wealth towards the poor and under-privileged, it fails to effectively achieve this. The failure of the present system has been recognised by large numbers of taxpayers. Individuals and groups from all sectors of society have publicly expressed the need for tax reform. The call for tax reform has come from political parties, trade unions, industry groups, academics and welfare groups. Even governments have argued that reform is necessary. Governments have instigated several official inquiries into the taxation system and they have had a series of reports and recommendations presented to them. In June 1974, Mr Justice Asprey presented a preliminary report of the Taxation Review Committee. This was followed by the full report, which was presented on 31 January 1975. As a part of that inquiry, a number of commissioned studies were undertaken and departmental papers presented. In May 1975, Professor Mathews, Chairman of the Committee of Inquiry into Inflation and Taxation, tabled a report which examined the indexation of taxation, overseas practices and other tax matters. While these inquiries were specifically tax reform inquiries, there have been two subsequent economic/financial inquiries which have addressed aspects of taxation. The first was the Committee of Inquiry into the Australian Financial System, chaired by Mr Campbell. The Committee's report was presented in 1982 and was accompanied by a number of commissioned studies concerning taxation. A review of this report was undertaken by a committee chaired by Professor Martin and the subsequent report was presented in 1983. There have also been papers prepared for bodies such as the Economic Planning Advisory Council, government departments, academics, interest groups and individuals. Most commentators merely point out the failures of the existing system. Others have advocated specific proposals for either the restructuring of existing taxes or the creation of new taxes. The majority of commentators do not look at the entire system, but are merely concerned with specific aspects of the system. A reform of the taxation system will need to be just that: Reform of the system as an entity and not just mere piecemeal amendments. It is the 'fire-fighter' approach of amending the tax laws piece by piece that has been the cause of much of the present complex mess. Reform of the system as a whole is not a simple task. It is not just the task of finding a simple, efficient and equitable system. Although reform of the tax system involves obvious considerations such as the efficient allocation of resources within the economy, the redistribution of wealth, social welfare, employment, industry protection, Federal-State relations, international trade and the management of the economy, there will also be ramifications for the business community due to the effects upon the legal status, liabilities and responsibilities of legal entities such as corporations and trusts. There will, of course, be philosophical and political considerations which will be taken into account. 'Real politic' will intrude on any kind of reform. Although it may not be a desirable consideration, it must be realised that such 'real life' pressures exist. The Australian Democrats do not seek to pronounce what should, or should not, be considered, nor in what form the committee's considerations should be. We, as do the other political parties, have our view of how the taxation system should be reformed. This Bill, however, does not seek to promote that view. This Bill does not deal with the nature of taxation reform. It merely establishes a procedure and a framework for reform to occur. This Government has talked of tax reform, as have the Opposition parties. The Australian Democrats are not content to merely talk. We are not prepared to 'pass the buck' and assist in perpetuating the piece-meal amending that is occurring. If the Government and the Opposition are genuinely desirous of tax reform, and are not merely interested in political 'duck-shoving' exercises, then there is no need for me to ask for their support; it should be automatic. I therefore re-present this legislation in the expectation that the Government and the Opposition parties will honour their rhetoric and will support this Australian Democrats' initiative. I commend the Bill to the Senate. Debate (on motion by Senator Gareth Evans) adjourned. Motion (by Senator Gareth Evans) agreed to: (1) That, unless otherwise ordered, the order of General Business for consideration this day pursuant to Sessional Order be as follows: (a) General Business, Order of the Day No. 24, Social Security and Repatriation (Abolition of Assets Test) Bill 1985; and (b) consideration of Government Papers pursuant to Sessional Order. (2) That so much of the Sessional Order be suspended as would prevent the consideration of Government Papers pursuant to Sessional Order exceeding 1 hour. Senator Walters-Madam Acting Deputy President, I raise a point of order. Is it usual for the Minister in the chamber not to inform the Opposition shadow Minister if he wishes to depart from normal agreed times and hours in this Senate? The ACTING DEPUTY PRESIDENT(Senator Haines) —There is no point of order, Senator Walters. I did explain that it required a motion to bring on non-controversial debate. There are a number of matters that had to be dealt with first. I assure you that your turn will come. Motion (by Senator Gareth Evans) agreed to: That, unless otherwise ordered, to 2 p.m. this day, matters of public interest may be raised and discussed by senators, provided that no senator shall speak for more than 15 minutes. Senator TOWNLEY(Tasmania)(12.50) —It is nice to start off the non-controversial matters on a controversial note, Madam Acting Deputy President. I would like to point out very quickly that, had we not been moving to non-controversial matters, we would have adjourned at a quarter to one for lunch, if that was the normal pattern, and I think that is the way it should be in future. This time is one of the few times when senators can speak about various matters, and many of them want to. Today I want to deal with a couple of matters. On the first one, I want to give a very brief outline about the way uranium is used in the nuclear fuel cycle. Senator Gareth Evans —I see. Senator TOWNLEY —You would well see, Minister, because you are going to have to learn this, and I hope that you learn it better than you learnt your Attorney-General situation. But this is meant to be non-controversial, and I am trying to leave it that way. Some people, of course, worry a great deal about the use of uranium in any form, whether it be in defence or in peaceful uses, and, of course, I am one of those who feel that it should be used, quite often, in peaceful manner, and particularly to produce electricity; so for a few minutes I shall speak about it. Of course, the aim in any power generation is to somehow turn a generator which produces electricity. In the usual coal-fired station, water is heated by a coal-fired furnace, which produces steam, which is passed directly into the generator, and then it is quite often condensed in a rather large condenser stack outside. That gives many people a lot of worry, because of all the smoke and so on that they think is coming from the condenser; but in fact it is pure water vapour that is coming from there, and the real pollution from a coal-fired station comes from the smokestack. In a nuclear reactor the fluid that circulates through the reactor is heated in a closed loop, and that than, by way of a heat exchanger, heats other water, which is usually at a lower temperature then it is in a coal-fired station, but then that other water that does not go through the nuclear plant then goes through the turbines to generate the power. Again, the steam that one sees outside a nuclear plant-or, rather, the water vapour that one sees; nobody can see steam-is in fact quite clear of any pollution whatsoever and quite safe. So the only difference between a nuclear power station and a coal-fired one is where the heat for the water or the steam comes from. In one it is from a coal furnace and in the other it is from nuclear reactor heat. One might then ask: How is the nuclear heat produced, and how is the magic of a nuclear plant arrived at? The first thing that one has to do, of course, is mine the ore. When one mines uranium ore, one has to remember that it is a fairly common element throughout the world. There is quite a lot of uranium in most soils throughout the whole of this world, and even in the water there is 50 thousand million tonnes of uranium. When it is mined in Australia it is turned into yellowcake, which is a mixture of oxides, and they are shipped overseas to be enriched. When I talk about enrichment, I do not mean enrichment to anywhere near the enrichment that is required for nuclear bombs. Uranium in nuclear power stations is enriched to about four or five times what it is in normal yellowcake, and that is about 0.7 per cent of uranium 235. To enrich yellowcake it is turned into a very pure uranium hexafluoride and at room temperature that is a solid but at somewhere between 50 degrees centigrade and 60 degrees centigrade it becomes a gas. There are two ways of enriching that uranium from the 0.7 per cent uranium 235 to about 3.2 per cent 235. The 235 uranium is one that we wish to get because it is the radioactive part of the uranium. There are two ways of enriching uranium. One is by diffusion. Senator Jessop and I visited an enrichment plant in France toward the middle of last year. The size of that plant is very hard to describe. It had 14,000 diffusing units. The largest of them weighed about 150 tonnes each, and two-thirds of them were about that size; the others were smaller. But the whole plant needed three nuclear power plants, in fact, to drive it-it required so much energy-and the uranium hexafluoride of about 3,000 tonnes was within that enrichment procedure for about three months to become enriched. It is a very expensive process and a very complicated process, but one that is carried out quite safely by the French. If any of the uranium hexafluoride did leak, it would not be the uranium, the nuclear side of it, that would be dangerous; it would be the fluoride. Fluorides in a lot of ways are very dangerous to the human body, so the detection mechanism they have there is one that worries about not the nuclear side of it but the fluoride side. That uranium hexafluoride, when enriched, is changed to uranium dioxide by various processes. It is heated, sintered and machined, and fitted into zirconium rods that are about 3 metres to 4 metres long and about 15 millimetres in diameter. About 225, I think, of these are placed in a small area alongside each other, and that becomes the core of the reactor. That is then lowered into the reactor, with certain rods that help to keep the reaction at a low level, and when the rods that stop the reaction are removed somewhat, the process starts up and it is used to produce heat that heats the circulating water that makes the steam to drive the generator. It is not an extremely complicated process; it is a very simple process in theory, but there are, of course, some complications in making sure that it is a foolproof process because, as the nuclear process goes on, there are some very radioactive elements generated in the core. Those cores last for about three years. I think one-third are replaced every year, and the other uranium can be reprocessed. It can be done quite safely and effectively. Senator Jessop and I have also seen areas where that is done, in Germany and in the United Kingdom. At the end one has some high level liquid waste that has to be stored. In England it is stored within a glass inside a stainless steel container, and then those containers, a bit over a metre high, are placed in geologically stable places. This is a kind of safe, already developed, first generation storage. It is now quite feasible, and in a few years' time it may well be that synroc will be perfected to such a degree that that will be available to be used as a second generation type of storage. But at the moment this system is reasonably feasible. I have here a table that shows comparisons of environmental impacts of coal and uranium power generation and the nuclear risks in a certain perspective. I seek leave of the Senate, Madam Acting Deputy President, to have that tabled. The ACTING DEPUTY PRESIDENT(Senator Haines) —Is leave granted? Minister? Obviously. Senator TOWNLEY —I thank the Senate. Finally, on this topic, I believe that Australia should let itself become known as a reliable source of uranium. With at least 30 per cent of the world's easily recoverable ore we would be crazy not to export it, because if we do not do so, other countries will. Also, it is the key to some 7,000 jobs, as was explained in an article in the Australian yesterday. This is something that we, as inheritors of so much uranium, really should be doing. Uranium is not, as I have said, a particularly rare element. It occurs in most parts of the world in various amounts, and if we miss the boat on the contracts that are available, others will move in and we will not have stopped in any way the supply of uranium to the power industry, but shall have done a lot of unnecessary damage to our economy. This has simply been an overview of the way power comes from nuclear power plants, and I soon want to give a more detailed explanation, as indeed I and others have done in the past, notably Senator Jessop. Turning to another subject, I congratulate Senator Tate on the speech that he made last night concerning drugs. He showed a very sensible view about the matter. I do not want to repeat all the troubles that come from the drugs that he was mentioning last night, but I would like to take him to task on one matter. A few days ago, on the radio, I heard Senator Tate on this topic, and he made a statement that lumped analgesics in with alcohol and tobacco, and, of course, analgesics do not belong in that area. If one wrote a book about the dangers of drugs and it was 100 pages long, one would devote about 95 pages to tobacco and alcohol and five to all the other drugs involved, all the other drugs that are known to man. Those of us, myself included, who have more than the average aches and pains are grateful for the relief that sensible use of analgesics can give us-and let it be noted that I say 'sensible use'. I have a great interest in this matter because I have a very sore back. Many people fear analgesics because of the damage phenacetin was known to cause, and, of course, phenacetin was the 'P' that used to be in APCs. That 'P' is not there any more, but it was known that that caused liver and kidney damage. I had an occasion to take some aspirin a little while ago and a doctor said to me, 'You should not be doing that'. I said, 'Why not?' He gave me a few reasons. I did not argue with him, because I am not an argumentative type, but I went to the Parliamentary Library and obtained some very good articles about aspirin. For those who are a little worried about it, I would like to suggest that it has a lot of uses. Some doctors recommend it, particularly for males, to help to prevent strokes and heart attacks. It lubricates the blood, and that is with only one or two tablets a day. With diabetics it seems to delay the onset of cataracts for some 15 years. Of course, for pain it is very good in big doses. It is very effective for broken bones. It is an anti-inflammatory. It is a very safe drug indeed. Of course, it has to be taken as directed, but honourable senators might be surprised to know that the dose, for a person of ordinary weight, of 300-milligram aspirin tablets is 24 tablets in a day. If asked to take more than one or two of them in a day, many people get quite worried about the whole thing. However, I emphasise that analgesics, used properly, are not in the same category as alcohol and tobacco. We do not always see the deaths that are caused by alcohol and tobacco. Sometimes we see alcohol-caused deaths on the roads, but unfortunately, when those who smoke get to the stage that the damage is really done, they are removed from our sight; they go to hospital or other places. I just wanted to put that matter in perspective. But once again, I thank Senator Tate for the genuine interest that he has shown in this matter, which is so important to so many of the young people and their families around this country. The ACTING DEPUTY PRESIDENT(Senator Haines) —Order! Before I call Senator Missen, I would like to clarify a point with you, Senator Townley. You did seek leave to table the document which is now on my desk. I wonder whether you meant to incorporate it in Hansard. Senator TOWNLEY —I am sorry. I seek leave to have it incorporated in Hansard. The ACTING DEPUTY PRESIDENT —Thank you, Senator. You have that leave. Senator Gietzelt —We have not seen the document. The ACTING DEPUTY PRESIDENT —I did try to attract the attention of the Minister at the time, when it was first mentioned, and he was busy having a conversation. The document read as follows- SPECIAL URANIUM FEATURE Environmental Impact of Coal and Uranium Impact Coal Nuclear Annual fuel consumption 2.3 million tons 30 tons (U02) -Acres/year consumed by mining and waste disposal 740 12 -Required fuels storage space 45-acre pile for two-month reserve Small Fuel Transportation requirements 27,000 railroad cars/year 5 truckloads/year Carbon dioxide releases (tons/year) 7 million Nil Sulphur dioxide releases (tons/year)-with abatement 24,000 Nil Annual wastes disposed (partial) 100,000 tons of fly ash 60,000 tons of sulphur (based on 3.5 per cent sulphur coal with 80 per cent stack efficiency) 90 c.ft. of solidified high-level radioactive waste concentrates, 175 c.ft. of low level Source: Atomic Industrial Forum, New York. (Revised January, 1975). Nuclear Risks in Perspective Average chance of death Accident Type annum/individual Motor vehicle accidents: (a) occupants of vehicles 1 in 4,500 (b) pedestrians 1 in 20,000 Fires and hot substances 1 in 25,000 Drowning 1 in 30,000 Air travel accidents 1 in 100,000 Electrocution 1 in 160,000 Railway accidents 1 in 250,000 Lightning 1 in 2,000,000 Hurricanes 1 in 2,500,000 Nuclear reactor accidents (based on 100 reactors 68 sites in the USA for population living within 40 km of the site) 1 in 5,000,000 Source: Nuclear Power and the Environment. Questions and Answers, Published by The American Society, Hinsdale, Illinois 60521m 1976. Senator MISSEN(Victoria)(1.06) —I rise to speak in this debate because this day happens to be the Afghanistan International Day-21 March. That is the day which, in fact, is the first day of the year 1364 according to the Afghanistan calendar, the first day of spring. It is the day which throughout the world is now recognised as one to be-one could not say 'celebrated' but, perhaps it is one on which to commiserate with the people of Afghanistan in their misfortunes. As one of the two patrons of the Australian Relief Committee for Afghanistan-the other in this Parliament being Mr Lewis Kent, MP-I want to bring further to the attention of the Australian people this day the complete travail and unhappiness that is occurring in Afghanistan, because we fear that insufficient attention is being given to this five-year struggle which they have had against Soviet invaders. On this day the Committee to which I referred has released a statement, which is of one page and which, Mr Deputy President, I have shown to the Minister who was previously at the table. I seek leave to incorporate that statement in Hansard. Leave granted. The statement read as follows- PRESS RELEASE March 21st-Afghan International Day The 21st of March is the Afghan's International Day. This day is the first day of the Afghan year and it is the first day of the spring season in Afghanistan. Since the Soviet invasion of Afghanistan the 21st March has been organised as the Afghan's International Day all around the world except the Eastern Block countries. The idea of this day is to give sympathy and support to the Afghan freedom fighters (Mujiahadeen) and to the more than four million Afghan refugees in Pakistan, Iran and other parts of the world. In 1979 the Soviet Union sent thousands of its troops across the border into its neighbour Afghanistan. Since then it has continued to put men and the most advanced arms into that country. Today there are something in the order of 140,000 to 150,000-00 Russian troops there. The unstable and unpopular Soviet puppet regime of Babrak Karmal which is internally divided and which is bitterly opposed by 99% of Afghan people, is facing increasing and widespread opposition. It is clear that the Soviets are doing the same in Afghanistan as what the Nazis did in Germany in the Second World War. Since the Russian invasion there have been more than one million men, women and children killed, burned and executed. Entire villages have been destroyed. The world has witnessed in the last five years that the army of the most powerful country in the world is having problems and difficulties in controlling and achieving their goal in Afghanistan. This is because the people of Afghanistan do not and will not recognize the influence of any foreign country. They are free people and would like to be free and independent. Afghanistan is historically recognized in the long contest for influence between Britain and Russia, because it controls the gateway to the Indian subcontinent. In recent years its importance has been increased because of its proximity to the world's main supply of oil. Since the Islamic revolution in Iran it has become more sensitive than ever. Russian military power is now 400 kilometres closer to the Gulf than it was five years ago. It is now 450 km from the Straits of Hormuz, the chokepoint through which the bulk of the world's oil supply must move. The Soviet Union has acquired a border of over 2000 km with Pakistan and for the last five years have crossed the border with Pakistan more than 150 times; in some cases bombarding Pakistan villages close to the border. Now there are more than 40,000 troops stationed close to the Pakistan border. Given these considerations the Soviet invasion of Afghanistan could not but have the most profound implications for the stability of global order. To reduce future danger in this region, the Afghanistan crisis needs the attention of every freedom loving person, and their support for the Afghan refugees in Pakistan, Iran and other parts of the world is most important. At the same time it is most important to give your full political and economical support to the Afghan freedom fighters. The Afghan people can and will be fighting against the Russian invasion of their country until they are able to live freely in their own country. Freedom is natural and it is the right of every person, and country, to choose it. Senator MISSEN —I thank the Senate. In that release is set out a number of salient factors about the position of Afghanistan and the fight which its citizens have been making now for five years, since the invasion in 1979. That invasion, it will be recalled, was by the Soviets to protect their puppet Government of Babrak Karmal, which continues to hold sway in the major cities due to the force of Soviet might and which has, of course, very little support and sympathy among the people of that country. Indeed, so much is that so that in the constant war that occurs, despite the overwhelming modern weapons which are supplied by the Soviet, there are only 30,000 Karmal Government troops now left out of 100,000 troops or so that there were previously. My figures even indicate the extent to which there have been defections in the last year. In the last year 40,120 soldiers defected and 50 per cent of them brought their weapons with them. Those who resist the communist Government of Afghanistan therefore must rely on their own fairly inadequate supplies against the mighty powers of the Soviet and the 140,000 or more Soviet troops that are engaged in this long and very bloody warfare in that country. It is not only that but, indeed, there are Cuban and also Czechoslovakian troops in the country. Some 5,000 Cuban soldiers and a further 5,000 Czechoslovakian troops are now in Afghanistan, and these are the forces which the people have to fight. We well know, from our experience and the attitude which we took in previous times, that Australia boycotted the Olympic Games in 1980 because of the Soviet invasion, and we recognise that in the past, under the previous Government particularly, steps were taken which were designed to raise international anger and to try to bring the Soviet to its senses. But that has not happened. We also know that in these five years, there has been enormous economic destruction in the country and that people have been driven out. Indeed, about three and a half million of the citizens of Afghanistan are now refugees in Pakistan, and about 800,000 are refugees in Iran. Nearly one in five of the citizens of that country have had to leave, and also, of course, something close to one million of the citizens, most of them civilians, have been killed in the course of this war. So it is, indeed, a disastrous war that has taken place. It has even come to the desperate situation that the communist Government and Soviet troops have forced children as young as 10 years old to be taken from schools and their homes for military training. From 14 years of age they must go to the fighting. Those who refuse are shot. It is just one of the desperate situations which there occur. We know at the same time that the mujihadeen forces, the resistance forces, who have the support of the overwhelming section of the population, have managed to resist the efforts of the Soviet and they have fought magnificently. I want to refer to some comment on this made in an article by Dr Amin Saikal, which appears in The World Today of November 1984. He is a noted expert in this area, a lecturer in political science at the Australian National University and Rockefeller Foundation fellow in international relations. He has this to say: The Afghan resistance stemmed largely from thg distinctive nature of the Afghan people. They are individualistic, with a complex ethnic, tribal structure and socially pluralistic. At the same time, they are fiercely Islamic, patriotic and proud, with limited political sophistication, and therefore capable of mounting collective ideological and physical opposition to any foreign, particularly communist, imposition. In this they are helped by their traditional skill in tribal warfare and their mastery of Afghanistan's rough and mountainous territory, whose permeable borders with the non-communist world make it extremely difficult for any central government, let alone a weak one, to impose its rule throughout the land. Thus the resistance goes on, but thus at the same time a great number of their families have to take refuge in Pakistan. One must say that Pakistan has given great support and, though a poor country itself, has provided a great deal for the people who have had to flee. The situation in that country has been described by many of the reporters, and I want to refer to the report that came from Philip Brooks to the Australian on 6 December 1984. He says that of the refugees who have left Afghanistan, probably three quarters of a million have moved to Pakistan's large cities but that there are still 2.3 million in camps. He said this after his own visit: After visiting the camp and listening to the testimony of dozens of refugees, it was clear that Afghanistan is engulfed in a war of national liberation, with virtually the entire population against the Soviet invaders and what is left of the Afghan army which has seen its numbers drop from 80,000 in 1980 to a mere 30,000 today, due to massive defections. That appears to be the situation. It is a continuing resistance and, of course, extraordinarily strong attacks have been made on their forces, including the attack in the Panjsher Valley last year, but they have continued to survive and to resist. What are the consequences of these actions, the consequences of the behaviour of the Soviets and this puppet Government? There have undoubtedly been gross human rights violations. Speaking now as Chairman of the Parliamentary Amnesty Group, I have to say that we find offensive the extent to which there have been murders, torture, rape, destruction of people's homes, and most of the elementary rights of the people are denied to them. Even, of course, in the city of Kabul, which is controlled by the puppet Government, the new Russian system of living has been introduced. Inhabitants must have new identity cards if they want to leave the city. The security office of the party must be informed as to where they are going and how long they intend to stay. Only after receiving written permission will they be allowed to travel. If they receive guests, the party office must be informed about their identities, and the guest must not stay more than three days. It is a typical communist state that exists in those parts of that country that are under the Soviet jurisdiction. The United Nations has taken considerable interest in this matter. One realises that the United Nations has carried resolutions in regard to the behaviour of the Soviet in its invasion. In January 1980 the General Assembly resolved to condemn the Soviet and also to demand withdrawal. In 1984 a further resolution-and resolutions were passed in the meanwhile-was passed by 119 to 20, with 14 abstentions. So at least world opinion has been rallied in this cause. Recently there has been a report, which I have not yet seen, mentioned in the Christian Science Monitor of 9 March 1985 about the United Nations investigation and prepared by Felix Ermacora, an Austrian law professor, who has participated in previous United Nations inquiries. That report, which now goes to the United Nations Human Rights Commission, accuses the Afghan Government of holding some 50,000 political prisoners and says that torture in its gaols is commonplace. Mr Ermacora makes very many direct criticisms of the activities of that Government, and he refers to abuses such as the reported massacre on 13 September, 1982, when 105 villagers took refuge in an irrigation tunnel in the village of Padkhwab-e-Shana, in Logar Province. Troops poured liquid into the tunnel, set it alight, and the charred bodies later found included those of 12 children. They are just some of the many breaches of the Geneva Convention and abuses by Afghan and Soviet forces which have been the subject of this United Nations complaint. It is important for us to realise the mass suffering which has gone on. It is important to recognise that there has, of course, been international aid. The United States, among other nations, has contributed very substantially to that aid. A recent report from the Information Service of the United States State Department says this: Working through UNHCR, the World Food Program, and a variety of voluntary agencies, the US Government continues to share in the international assistance program. Since 1980 the United States has contributed more than $350m to Afghan refugee relief. During fiscal year 1984, the United States contributed about $70m to support Afghan refugees in Pakistan, including $49m through the World Food Program. The US contribution represents some 35 per cent of the total UNHCR budget and about 50 per cent of the international food contribution. One must acknowledge that we, in Australia, have also made contributions, and useful ones. During the last two financial years, Australia has provided $11m in food aid to Pakistan through UNHCR program. It has also provided $1.3m for a water drilling rig this financial year. These are useful things, but it is not adequate. There is an enormous problem for the people who are there in camps and who are living what they hope is a temporary existence. They hope they will be able to leave there soon and go back to their homeland. But in the meanwhile, they are working to preserve their culture and standards and it is a great strain, not only on Pakistan but also on the people who have to suffer in these conditions. I believe that we in this country must do more. We must, of course, remember this situation and not let it slip from our consciousness. We realise that Soviet tyranny operates in many parts of the world, but it is especially vicious in this particular area. The Soviets are facing a cost in this war, altogether, of $US8,760m, according to recent calculations. One must hope that these types of experiences may lead the Soviet to the negotiating table and that ultimately it will come to the conclusion that it is not worthwhile to try to subjugate these valiant people in this way. In a debate last year which the Bureau International Afghanistan held, one of the leading authorities in this area, Olivier Roy, spoke about the long term weaknesses of the Soviet position. He mentioned, first, Soviet young people and their military term of duty in Afghanistan. About 1,000,000 of them, altogether, have served there, and therefore they return with bad memories. Secondly, the impact on the Muslims is also very bad, because they see what has happened to their fellow religionists. Thirdly, the international political climate is deteriorating badly. I trust that we will help and encourage assistance in Australia, and that we will do more, so that we can try to force the Soviet into removing itself from that country, and that people in this country will assist organisations such as the Committee of which I am a patron to obtain supplies and help for these people who are long-suffering and deserve every support of the Australian people. Senator MacGIBBON(Queensland)(1.20) —I take the opportunity of this non-controversial debate to raise some points about the replacement program for the Royal Australian Navy submarines. As you would know, Mr Deputy President, Australia has six of the best diesel-electric conventional submarines in the world, and they are the best because they have the best weapon systems; the electronic fit in those is equal to or better than anything in the world. But the mechanical design of those submarines has its origins in the philosophies and the technologies from the end of the Second World War. It has been known for many years that the hulls are reaching the end of their lives, and the previous Government-the Fraser Government-had this matter well in hand to build a fleet of replacement submarines. That program has been taken over by the present Labor Government. It is generally understood in the community that from the list of possible contending designs, the designs have been evaluated in a preliminary way and the Defence Force Development Committee of the Department of Defence has supplied to the Minister a short list of two submarines, and the announcement of those two manufacturers on the short list was due to be made by this date and a funded project definition study undertaken. The difficulty seems to be that the back bench of the Labor Party, in the light of the Kirribilli agreement, have got into the act and that the Caucus Foreign Affairs and Defence Committee of 43 members, including the astonishing number of 13 Ministers, have decided that they need to have a look at and vet the proposals from the Department of Defence before anything can be done, so the Minister has deferred making an announcement. My concern is: How much time is going to be lost in a program that is already slipping down the track before the decision is taken? The Caucus Committee called up the four combat weapons systems contractors before it on Tuesday and on Wednesday the hull manufacturers appeared. My concern is the defence of the national interest. I am concerned that the best design possible for Australia is selected. I am also concerned, given the very great importance of submarines in the deterrent role for Australian defence, that we do not lose any more time on this program while people discuss and probably argue on the base of either regional loyalties-trying to get those boats built in their own backyard-or in the light of hang-ups or national political prejudices they have, and knock out designs which might be suitable. I think that Government members and Opposition members are quite entitled to be taken into the confidence of the Department of Defence, but I do not believe that programs should be put at risk, with respect to either time or quality, by the intervention of back benchers. On the same subject, just as a matter of courtesy, I would have thought the opportunity should have been provided for the Joint Committee on Foreign Affairs and Defence to meet the weapons systems suppliers and the hull suppliers, if it was possible to bring these people together for the business of the Labor Party back bench. So, my concern is that we look as though we are now embarking on an unnecessary delay in the execution of this program. I would like to take a few minutes to move on to another point and make some general observations that have not been made on the public forum yet about the submarine replacement program. We are going to build these boats, and I hope that we build them in Australia-for a whole variety of reasons. I would like the technological skills that will be involved to be developed within the Australian community. I would like the money to be spent within Australia. I think that if we get on with the job with expedition and keep to the program and not delay for too long, it will be possible to build these ships sequentially. The trouble will come if we delay for a long while and then we have to acquire two, three or four boats simultaneously, and then we will not have the capacity to build them economically within Australia and we will have to go overseas for them. The building of those boats naturally falls into two sections: First of all, the development and the building of the electronic weapons systems in the submarines, and the other half is the building of the hull and the propulsion systems. I go back to the point I made before. It is very important that we get the best design for Australia's needs, and it is also very important that we get those boats built as economically and as efficiently as we can for the benefit of the Australian taxpayer. That means that the hulls are going to be built in Queensland, New South Wales, Victoria or South Australia. Western Australia has no shipbuilding industry, any more than Tasmania has, but the capability clearly exists in Queensland, New South Wales and Victoria, and maybe in South Australia, to build these boats. Provided that the contract price comes in competitively from manufacturers in Queensland, I would argue very strongly that Queensland should win the case to build the hulls and propulsion machinery, and I will tell you why, Mr Deputy President. It is because all the offset work that has come to Australia from the aviation industry, all the electronic work, has been concentrated in the southern States. South Australia, Victoria and New South Wales have got the whole lot. Queensland, Western Australia, the Northern Territory and Tasmania have not got anything out of that because they do not have the electronic industries in-house to be able to do it. The weapons systems for the submarines, which will be roughly as expensive as the hull and propulsion machinery and may even be 60 per cent of the cost of the boats, are inevitably going to go to South Australia, Victoria and to New South Wales. So, everything else being equal on the tender prices, then I would make the claim that Queensland should be considered for the hulls. However, I come back to the point. I am very concerned at the possibility of delay on this program. I am very concerned that narrow sectional interests within various factions of the Labor Party, for reasons that I do not wish to go into in a non-controversial debate such as this, will influence and prejudice the selection and the acquisition of these boats against the best interests of Australia. Sitting suspended from 1.27 to 2 p.m. Senator BUTTON(Victoria-Leader of the Government in the Senate) —I inform the Senate that the Prime Minister (Mr Hawke) left for Canada this morning. Opposition senators-Hooray! Senator BUTTON —If I might interpolate, the Canadian Prime Minister informed me last week that the people of Canada were very much looking forward to our Prime Minister's visit. The Prime Minister will return on the night of Monday, 25 March. In his absence the Deputy Prime Minister and Attorney-General, Mr Lionel Bowen, will be Acting Prime Minister. Senator MESSNER —My question is addressed to the Minister for Community Services in his own capacity and in his capacity as Minister representing the Minister for Social Security. I remind the Minister of assurances he gave pensioners last year that their properties would not be subject to visits by assets test valuers and of the Prime Minister's policy speech commitment when he said: . . . they will never see social security inspectors in their homes. In view of today's report that Ministers Howe and Gietzelt are pushing for access by valuers, is the Government about to renege on this promise and do what the Minister claimed so vehemently last year would not be done? Will the Minister now acknowledge that he grossly misled Australia's pensioners by not telling them the truth about the need for proper and professional valuations, as strongly pointed out by the Liberal and National Parties last year? Finally, what action will the Minister now take to relieve the hardship of those who have lost their pensions and are now in financial straits? Senator GRIMES —My understanding of the matter-I have no direct knowledge of this-is that only in those situations involving an appeal would any valuer want to go into anyone's home. There is certainly no suggestion that ordinarily anyone would go into a home just to value property. I am uncertain-perhaps Senator Gietzelt can help the honourable senator-as to what Senator Gietzelt and Mr Howe are suggesting at the moment. Secondly, I am sure that under no circumstances will valuers be entering people's homes without their permission, but I will get the details of that from Mr Howe and I daresay that Senator Gietzelt, who is here, can help us in that regard. Thirdly, anyone who may lose a pension under the assets test and who is in financial hardship can, of course, take advantage of the hardship provisions of the legislation. I suggest that if Senator Messner knows of any pensioners who believe they are in that situation, they should contact the Department of Social Security so that those provisions can be applied. Senator MESSNER —Mr President, I ask a supplementary question. Is the Minister aware that the hardship provisions have been tested by numerous rural pensioners who have found that they still remain excluded? What will he do to assist those who are caught in that vice? Senator GRIMES —I hardly think that was a supplementary question, but I will answer it. There have been some problems in rural areas, as I understand it, because of the valuations that have been put on rural properties. Mr Howe has already announced that he has taken that into account. Secondly, I repeat that if people in rural areas or any other areas believe that they are being treated harshly by the assets test, they have the opportunity of taking advantage of the hardship provisions in the legislation. I will seek details from Mr Howe as to how many people have done so. Senator Walters —These are not wealthy pensioners. Senator GRIMES —We hear enough of Senator Walters supporting the privileged in this community without inane interjections of that type. I will seek further information from Mr Howe as to the current situation. As I am no longer the Minister, I do not know the current situation. Senator MAGUIRE —Has the Minister representing the Treasurer seen the recent Press report in which the Leader of the Opposition, Mr Peacock, is reported to have said that the dependent spouse rebate in respect of income tax should be reviewed to determine whether it should be means tested? If so, what is the Minister's response to that report? Can he tell the Senate what is the total cost to revenue, on the latest available figures, of the dependent spouse rebate? Senator WALSH —The latest figures on cost are from the financial year 1982-83, so I think it should be noted that something like 18 per cent ought to be added to all the figures that I am about to give to update them to present levels. I am aware of the report last week that the Leader of the Opposition-he is Leader of the Opposition for the time being anyway, until the Sydney faction takes over the Liberal Party-believes that the spouse rebate should be means tested. The cost for 1982-83 was some $900m. In that same year about 17 per cent of taxpayers, those with taxable incomes above $22,000, which is approximately 120 per cent of average weekly earnings for that time, received one-third of the total rebate. In other words, one-sixth of the highest taxpayers received one-third of the rebate. It could certainly be argued, I believe, that that provides a prima facie case for means testing. The argument commonly cited against means testing such a rebate is derived from the principle of horizontal equity in taxation matters, but whether horizontal equity ought to take priority at all times over all other equity considerations is something which could perhaps be questioned. Senator Watson —It depends how horizontal it is. Senator WALSH —Yes, horizontal equity. It perhaps ought to be noted that suggestions are made from time to time that the rebate ought to be cashed out and paid to the spouse instead of the taxpayer claiming the spouse as a dependant. In practice, of course, that usually means being paid to the wife or daughter-housekeeper rather than to the taxpayer who is claiming the deduction on behalf of the wife or daughter-housekeeper. There are certainly attractions in that proposition, although it would involve considerable administrative difficulties unless the rebate was paid out on an annual basis which, unfortunately, would reduce on a temporary basis the after-tax income of the 95 per cent of pay as you earn taxpayers eligible for the spouse rebate who are paid on a PAYE fortnightly basis. Nevertheless, it is something which I am certainly willing to look at and which I am sure the Treasurer also will be willing to look at. One final comment ought to be made. Should the Government make such a change-I am not suggesting that it will do so-it would induce a cosmetic increase in both outlays and tax revenues without changing the underlying reality. Senator ARCHER —I ask a question of the Minister for Resources and Energy as Minister representing the Attorney-General and also as the former Attorney-General. I ask whether he recalls that in the Senate on 28 February last year, in reference to the Age tapes, he said: We simply have no means, and are unlikely in the future to have any means, of being sure we have a full, untampered with, reliable account of the conversations that appear to have been intercepted. In the light of the willingness of the New South Wales Police to give evidence to Mr Justice Stewart under indemnity from prosecution, does the Minister now concede that there is a means of authenticating the material? Why is the Attorney-General not prepared to ensure that the truth is established about the tapes and criminals brought to justice? Does it have anything to do with the possibility, as alleged today by Bob Bottom, that a very senior political figure in New South Wales used information on the tapes to head off legal action and would be exposed if police gave evidence? Senator GARETH EVANS —I will refer the honourable senator's question to the Attorney-General and seek an early reply. Senator REYNOLDS —Is the Minister for Education aware of the Sydney Morning Herald article of 14 March in which former Treasury head, John Stone, accused Australian historians of trying to 'falsify our history'? Are Australian historians guilty of national subversion at public expense, as stated by John Stone, or should these claims be dismissed as merely the alarmist cluckings of a superannuated Henny Penny? Senator RYAN —One would have thought that as Mr Stone's record in managing the area in which he was supposed to have competence-namely, the Australian economy-was so abysmal he would have been a little wary about treading into areas in which he has no expertise, or even alleged expertise. Of course, as we have noticed since the former discredited Secretary to the Treasury has been in the public arena, he seems, despite his abysmal record in managing the Australian economy, to have taken it upon himself to make comments on all manners of things, including, it would seem, the quality and standards of Australian historians. It is regrettable that attacks have been made on the efforts of a number of our scholars to participate in what I think will be one of the most successful bicentennial projects. I have high hopes for the bicentennial history project, which I think was the object of Mr Stone's ill-informed and ignorant attack. I believe it will be one of the permanently beneficial projects of the bicentenary because it will bring together a complete history of this country and the society, diverse as it is, that makes up Australia. A number of Australia's leading historians are engaged on this exciting enterprise. Why John Stone considers that this is a waste of taxpayers' money or that somehow it is a subversive activity is absolutely beyond me. I cannot conceive why he would decide to make this sort of attack. The Australian public generally, and certainly Australian students of history, have been very well served by the recent work of eminent Australian historians such as Professor Manning Clark, Professor Henry Reynolds, Dr Lyndal Ryan, Dr Kay Daniels and the art historian Bernard Smith- Senator Lewis —What a joke. He writes history out of his mind. Senator RYAN —Of course the Philistines on the other side of the chamber have probably never read one word of the work of any of Australia's leading historians. Senator Lewis —Of course we have read his work. It is absolute nonsense and rubbish. Senator RYAN —The continual flow of ignorance and prejudice that we are subjected to from the other side of the chamber- The PRESIDENT —Order! I ask Senator Ryan to confine her answer to Senator Reynolds's question and to ignore interjections. Senator RYAN —I will abide by your ruling, Mr President, but I must say I am provoked when we have an ill-informed, prejudiced and unfounded attack on Australian historians by John Stone and then, by way of interjection from the Philistines opposite, this ill-informed attack is continued. Not only as Federal Minister for Education in this country but also as a person who cares about this society and who is concerned that students have proper access to records and historical accounts of what has led to Australia being the country that it is, I must admit that I do become provoked at the anti-intellectual, anti-academic and anti-scholarship approach that is so often evidenced on the other side of the chamber. In conclusion, anybody who is familiar with the work of contemporary Australian historians would know that there is no shred of basis for this stupid attack made by John Stone on them. Senator Chaney —Mr President, a point of order. I seek your clarification. Would you confirm or otherwise that there is nothing in the Standing Orders that protects a public servant who has loyally served a series of governments, including the present Government, from an unprincipled attack made on him from this House? I would ask for your ruling as to whether any protection can be given to a public servant in these circumstances. I can find nothing in the Standing Orders which does. I think that is a pity, but I would appreciate it if you could confirm that. The PRESIDENT —There is no point of order. The matter to which Senator Chaney refers is well outside the confines of standing order 418, which offers no protection to anyone other than members of parliaments throughout Australia. Senator CHIPP —I ask the Minister representing the Attorney-General a question similar to that asked by Senator Archer, and notice of which I unashamedly gave Senator Gareth Evans at about a quarter to one today to give him ample time to get a reply from the Attorney-General. What is the Attorney-General's response to today's very serious allegations on the Australian Broadcasting Corporation program AM by journalist Bob Bottom that a senior politician in New South Wales has had access to the so-called Age tapes for several years and had actually used some of the material on them to prevent an embarrassing court action involving himself? Why is the Attorney-General so reluctant to facilitate the passing of the vital information on these tapes to the National Crime Authority by granting indemnities to the 31 policemen involved, just as the Stewart Royal Commission of Inquiry into Drug Trafficking recommended, particularly when Senator Evans himself as Attorney-General, no doubt for good reason, had no hesitation in granting indemnities to all manner of crooks and criminals-I repeat for good reason-and, in particular, granting parole to a creature like Fulcher who served only four and a half years of an 18-year sentence? Why not grant indemnities to the policemen, who were doing their bit? Senator GARETH EVANS —Ample time may have been given me by Senator Chipp to seek a reply from Mr Bowen but there has not proved to be ample time for me to get one. Under the circumstances I do not believe that I can add to the answer I gave Senator Archer other than to say that I am not sure that the media reporting this morning has properly construed Mr Bowen's response in Question Time yesterday to the extent that it is not clear, from my reading of his answer, that he was in fact saying that a final Government decision had been made on the indemnity question. Senator Durack —Did you hear him on AM this morning? Senator GARETH EVANS —I did not hear him on AM this morning, so Senator Durack knows more than I do. It is the first time in the seven years I have been in this Parliament that I can acknowledge that Senator Durack has been ahead of me. I accept the point. Senator Chaney —How long were you Attorney-General-20 months? Just like Halley's Comet. Senator GARETH EVANS —I will return in 80 years to haunt the honourable senator. As to the gratuitous reference by Senator Chipp to the Fulcher case, I can only say in that respect that, as is well known to honourable senators opposite-certainly to Senator Durack who was party to the decision in question and certainly to Mr Neil Brown in the other place who was also party to the decision; I believe it is well known to Senator Chipp as well-the decision to release that particular gentleman at the time was made by both governments, first in principle, then in practice by me, on the basis of reasons which were well known to both governments at the time and which I believe have ample objective justification. Senator ELSTOB —Is the Minister representing the Special Minister of State able to say whether consideration has been given to using the specialised skills of the forms working group either to assess or develop a simpler voting form? Could this group also be an effective resource to use when formulating and evaluating voting information and advertising campaigns? Senator GARETH EVANS —I am advised by the Special Minister of State that such consideration has been given to this question. The Australian Electoral Commission has asked Professor Robert Eagleson of the Government's plain English program to review a number of Electoral Commission pamphlets and ballot papers. Professor Eagleson is expected to report to the Commission on 27 March. The material submitted for review includes 1984 House of Representatives ballot papers, Senate ballot papers, the referendums ballot paper, posters, information pamphlets, and the electoral enrolment claim card. In addition, staff from the Commission involved in information and education programs are participating in plain English workshops conducted by Professor Eagleson. Should significant changes be proposed to ballot papers, in particular, arising out of this process, they will be put to the Joint Select Committee on Electoral Reform for consideration. Senator DURACK —My question is directed to the Minister for Resources and Energy. Does the Government's present policy banning the supply of uranium to France, which has been recently interpreted by him as applying only to banning of the end use of Australian uranium in France, prevent the processing of Australian yellowcake in France to the extent required for use in nuclear power stations? Senator GARETH EVANS —No, and it never has. Senator DURACK —I ask a supplementary question, Mr President. If that is the case, could the Minister spell out what the Government means by 'end use'? Senator GARETH EVANS —End use in power stations; which end use is, except in France, consistent with the Government's nuclear safeguards policy. End use could also mean, technically speaking, but not consistently with our policy, end use for non-peaceful weapons purposes. That is end use in the sense of using it, as distinct from merely processing it and getting it into a shape in which it can be used. I would have thought that answer was fairly self-evident. Senator DEVLIN —My question is directed to the Minister representing the Minister for Transport. Has the attention of the Minister been drawn to Press reports that the Federal Government is proposing that truck speed limits on Australian highways be increased to 100 kilometres an hour outside built-up areas? If so, can he explain the rationale to those members of the public who see such a move as undesirable for road safety? Senator GIETZELT —The Senate would be aware that the Government last year commissioned the Inquiry into the National Road Freight Industry, chaired by Mr May. The report of that inquiry has been in the hands of the Government for some time. The report seeks to co-ordinate all the activities of the trucking industry in particular, because most trucking businesses are involved in interstate trade and passage from State to State. I have seen the report, but it needs to be emphasised that the primary responsibility for road speeds rests with the States. The States can vary, and on occasions have varied, the speed limits imposed on traffic on State road systems. The proposals for some degree of uniformity form part of a package for the implementation of the recommendations of the May report. That report has already received wide acclaim within the trucking industry. The Government proposes to legislate to provide for registration and licensing of interstate trucking operators, and it will establish a consultative committee with the States and the industry in order to achieve those objectives. In return, the States are being asked to introduce a graduated driving licence system for truckies; to improve the cost recovery rates of the railways; to introduce reforms on finance and insurance; to remove fees on out-of-State vehicles; and to allow trucks to travel at the same speed as other vehicles on the road. I am informed that the greatest road safety problem is caused by the low speed of trucks compared with that of other vehicles. I know that many people would find it difficult to accept that analysis, but that is the conclusion. The figures show that 50 per cent of all fatal crashes involving trucks involve vehicles that are overtaking the trucks. As the responsibility for road speeds rests with the States, the national Government will be seeking to get some uniformity, in the belief that it will lead to improved safety on our national roads system. Senator PARER —I refer the Minister for Community Services to the speech delivered in Canberra last night by his colleague the Minister for Social Security in which Mr Howe spoke strongly against an increased emphasis on indirect taxation. Given his overall responsibility for social welfare policy, does the Minister share the concerns expressed by Mr Howe about the impact of a consumption tax on the less well-off members of the community? Does he agree with his colleague that, even if the tax threshold were doubled by way of compensation for a 10 per cent consumption tax, the two million workers below the new threshold would be worse off? Can the Minister tell the Senate whether he believes there should be extensive exemptions from any extension of indirect taxation and, if so, in what areas? Senator GRIMES —I have read the Press report of my colleague's speech last night. I understand from a conversation I had this morning that what Mr Howe said was that, if indirect taxes were applied without consideration for the incomes of pensioners or others, the taxes would be regressive and would cause difficulties. That is what the Prime Minister has said, what the Treasurer has said, and what the Minister for Finance, Senator Walsh, has said. I can only repeat what all my colleagues have said in this situation. In approaching the reform of the taxation system in this country and in approaching the tax summit, we will consider, with the rest of the community, a whole lot of options. One of those options, quite clearly, is a change in direction to indirect taxes, which is an option I first heard suggested in this country by the previous Treasurer, Mr Howard. If such a change were made, any Minister for Social Security, any Minister for Veterans' Affairs, any Minister for Community Services, or any honourable senator in this place, would have to ensure that low income earners, including pensioners and beneficiaries, were protected from the impact of such taxes. That could be done by excluding certain goods and services, or it could be done by ensuring that the money collected from those taxes was redirected to those groups in sufficient sums to ensure that they were compensated by those increased tax receipts. There are many ways in which that can be done; there are many ways in which it is done overseas. I understand that all Mr Howe was saying was that if we moved to a greater reliance on indirect taxation, and we have made no such decision, then low income people, including the people to whom he pays pensions and benefits, would have to be protected. I would have thought that was a perfectly reasonable statement. Senator ZAKHAROV —Will the Minister for Community Services advise the Senate of the arrangements that will apply to services for psychiatrically disabled people under the supported accommodation assistance program, the handicapped persons assistance program, or the home and community care program? Is it the Minister's intention to exclude all such services from Commonwealth sources of funding? Senator GRIMES —No, it is not my intention to do so. Services for pshychiatric people in the community have been, by and large, the responsibility of State governments. State governments in recent years, certainly with my agreement and I am sure with the agreement of most people here, have been moving towards the deinstitutionalisation of people with mental diseases or psychiatric illnesses. In doing so, it is important that the community provides services within the community for those people who previously would have been institutionalised. We do not want the situation to arise, as arose in some States in the United States of America, where deinstitutionalisation proceeded without the development of community services and people were left without such services. In those circumstances, I believe the State governments have a responsibility when deinstitutionalising people in this way to look at the funds they previously used in institutions to see whether those funds should not be used to provide services in the community. Indeed, the Richmond funds in New South Wales are intended to do that. As for SAP, the sheltered accommodation program, at the moment we are discussing with the States what will be and will not be included in the program. Quite clearly, sheltered accommodation is at present provided for young people and, in some cases, women's refuges include accommodation for people with psychiatric illnesses. We cannot exclude them from that program. We have funded some halfway houses under that program and under the handicapped persons assistance program in the past, and in the future we will again fund halfway houses which provide accommodation for those who are leaving mental hospitals or other institutions and who are psychiatrically ill. The home and community care program is designed to provide home services for people who need them, again to keep them out of institutions, both people who are disabled and people who are aged. Obviously some people under this care will be classed as being psychiatrically ill and, therefore, one cannot arbitrarily exclude them from such a program. I qualify all that by saying that I do not believe it would be right for State governments-I am not suggesting that any State government would be so outrageous as to do so-to believe that they could take advantage of these programs to transfer the funding from programs that were traditionally theirs to the Federal Budget. Should they do so they will not get much co-operation from me or from the Treasurer. Senator MISSEN —My question is addressed to the Minister representing the Minister for Immigration and Ethnic Affairs. It relates to the mandatory requirement placed on prospective migrants that they have a written job offer when they submit their application for permanent residence. Is the Minister aware that because a large number of employers are prepared to give verbal but not written employment offers, many migrants are being deprived of the opportunity of coming to Australia even though they may have substantially high points overall and considerable assets? Is the Minister also aware that many applicants get around this requirement by organising job offers that they have no intention of taking up upon their arrival in Australia? In light of this abuse and the hypocritical nature of the provision which compares, surely in its hypocrisy, with the requirement of the European language tests under the white Australia policy, I ask the Minister: Firstly, how many complaints has the Government received from potential migrants and employers about the unreasonable nature of this requirement? Secondly, will the Government undertake a review of this requirement in an effort to make it easier for those prospective migrants who have genuine promises of employment, but not written offers, to gain permanent residence? Senator GRIMES —Yes, there is a provision, as Senator Missen has indicated, that people have written offers of jobs before they are allowed to have permanent residence in this country. This is not a provision which has been introduced by the present Government, as I am sure he knows; it is a provision in the immigration procedures with a twofold purpose: Firstly, to protect the jobs of Australians, to ensure that people are not coming out here to take jobs for which there are plenty of applicants in Australia; and, secondly, to ensure that migrants who come here do have an opportunity under these circumstances to work and do not quickly become a cost to the public purse through the social security system or other systems. I think Senator Missen suggested that people are, if I might use the vernacular, rorting the system. Yes, I agree, and the Minister for Immigration and Ethnic Affairs agrees, that that does happen, as it happens in all systems of this type. The Minister at the moment has this whole procedure under review to try to introduce a system which will not be so prone to such rorting. I am informed by the Minister that no records are kept of the exact number of complaints of people misusing this system and, therefore, I cannot assist the honourable senator in that regard. As for the second and final part of his question, yes, the Minister is reviewing the situation, as is the Department, with a view to, first of all, making the system fairer and, secondly, ensuring that people are unable to come here by falsifying records and that those who have the genuine capacity to work and to contribute to this society can in fact get here. I do not think it is an unreasonable provision that people have written proof that they have a job offer. An employer who would give only verbal proof of such a job offer would, in my view, be fairly suspect. Senator JONES —Mr President, my question is directed to you. Are you aware that the staff of the parliamentary refreshment rooms this morning voted to withdraw catering and liquor services to all members of the Press, which I later established means the media generally, because of an article which appeared in the Sydney Daily Telegraph of 13 March? The article was seen by the catering staff as implying that one of them leaked information and this, of course, is strongly denied. In view of the fact that such a ban, if extended for any length of time, could result in a considerable drop in Commonwealth revenue, could you, or one of your senior officers, intercede through the due courses of conciliation and, if necessary, arbitration and bring this unfortunate dispute to a happy conclusion? The PRESIDENT —I am aware of the ban that has been imposed by all Commonwealth parliamentary refreshment rooms staff on all members of the Press Gallery working in Parliament House. The ban relates to an article published in the Daily Telegraph on 13 March under the authorship of one Col MacKay who, I understand, is not an accredited member of the Press Gallery. The headline of the article was 'Canberra's good life-and you foot the bill!'. The article then went on to refer to the increase in crime in the Australian Capital Territory. In the last paragraph of the article on that date-I understand there was a follow-up article-the following passage appeared: A steward in the Members' bar at Parliament House had a far better grip of the situation when he told me over an off-duty drink: 'The local coppers might have a bad record for solving crimes, but most of the crimes I hear being planned by pollies in the Members' Bar could never be solved.' Staff of the members' bar have taken umbrage at those remarks and have had discussions, as I understand it, with a representative of their union. The union representative sought a retraction by the editor of the Daily Telegraph of that section of the article. The editor of the Daily Telegraph refused to retract the paragraph in question. As a result, members of the Commonwealth parliamentary refreshment rooms met, I understand, shortly before lunch and imposed a ban on all members of the Press Gallery. I understand the anguish and anger of the staff of the parliamentary refreshment rooms at the remarks, because the very nature of their job requires them to maintain confidentiality of all conversations that might take place in the bar. Having said that, I hope that common sense will prevail and that the staff of the Commonwealth parliamentary refreshment rooms might be prepared to give consideration to lifting the ban on all members of the Press in the Parliament. Nonetheless, I can say that I did discuss the matter briefly with the Speaker at lunchtime, and he was considering the question of conciliation, as has been suggested by Senator Jones. However, we will keep a watchful eye on the situation. At this stage, I urge all members of the staff of the Commonwealth parliamentary refreshment rooms to give consideration to lifting the bans that they have imposed. Senator BJELKE-PETERSEN —I refer the Minister representing the Minister for Communications to reports in this week's Press which suggest that the Federal Government's decision to favour a transmission technology known as B-MAC is causing alarm amongst the industry and future rural recipients as well. Will the Minister please comment upon claims that remote and isolated outback inhabitants will have to pay thousands of dollars for expensive receiver equipment which will pick up, in the early stages, only the Australian Broadcasting Corporation and, in the later stages, only one commercial television service? Can the Minister also clarify the suggestion that the high costs and limited receiver potential could lead to a thriving black market in decoders which have the capacity to pick up more than one station? Senator WALSH —I can neither confirm nor deny the early part of the question. I will seek a response to it from Mr Duffy. However, I know that there has been an enormous increase in capital expenditure on broadcasting services, principally within the ABC, in recent years. I understand also that Senator Bjelke-Petersen's Party favours reduced government expenditure. In other words, the inference to be taken from her question is that she wants to have it both ways. She wants both to reduce capital expenditure and to have Rolls-Royce technology for everybody no matter what the marginal cost. But of course that is a characteristic of the type of thinking that dominates politics in her Party in her State, the end product of which we are now seeing with the dreadful condition of the Queensland economy, which is dragging down the rest of the nation. Senator COONEY —I ask the Minister representing the Minister for Housing and Construction: Does the Government see a need, firstly, to improve the standard of public housing presently available for rental in Australia and, secondly, to increase the number of units presently available for rental in the public housing sector of Australia? If the Government sees a need to increase the number of such units, what does it see as the appropriate increment? Senator RYAN —The Government's commitment to providing adequate and affordable housing for all Australians is clearly demonstrated in the new Commonwealth-State Housing Agreement. This historic Agreement provides fresh hope for those low income Australians in need of housing assistance whose plight was ignored during the Fraser years. The Government has substantially increased the level of funding for public housing and it has used the new Agreement to extend the benefits of home ownership to public tenants. In 1984-85 total Federal and State funding for public housing will be almost $1,600m, a record even in real terms. Additionally, the eligibility criteria for housing assistance have been changed to ensure that all Australians, irrespective of their life situation, can apply for assistance with priority to be based on need. The new Agreement caters for a range of housing needs, including Aboriginal and pensioner housing, crisis accommodation and housing for singles. Having pointed to the excellent record of our Government in respect of public housing, to answer the specific questions of Senator Cooney, I would think, given the backlog of needs in the area which we inherited from the neglectful Fraser Government, there is a need still to improve the standard of public housing. I believe that there would be a need also to increase the number of units available. As to what level of increment will be available for those most fundamental priorities, obviously at this stage of the budgetary discussions I am in no position to predict. But I say to Senator Cooney, to all people like him and to all members of our Government who appreciate the basic importance of providing a decent roof over the head of all Australians, that I think our record to date gives grounds for optimism that the public housing budget will be given a very high priority by our Government. Senator VIGOR —My question is directed to the Minister for Industry, Technology and Commerce. What is the current state of the offsets program that was instituted to encourage local production of certain high technology items for our defence and government requirements? What is the current size of unclaimed offsets credits? Is the level of offsets credits which companies have to honour in order to meet their commitments under the offsets program of the order of $1,200m, as reported in a recent edition of Ascent in November 1984? Is it true that the system of offsets is being shamefully exploited by certain organisations that are claiming benefits and not using the required local content? If that is so, what is the Minister intending to do to eliminate such exploitation? Senator BUTTON —The honourable senator was kind enough to give me some notice of this question. So if I sound more than usually articulate today it is because I am reading from a prepared answer. Since 1970 the Commonwealth Government has operated an offsets program using the leverage available through government purchases to direct back to Australia work and technology to stimulate local industry. To ensure that the program remains effective, given the changes in market conditions and changes in industry policies since this Government came to office, the Government in April last year initiated a review which was conducted by an independent committee chaired by Sir Brian Inglis, the former Managing Director of the Ford Motor Co. of Australia Ltd. That committee has reported and its recommendations are currently under consideration by the departments concerned. The committee recommended that the program be continued on the basis of its assessment of the cost effectiveness of the program to date. It also made a number of suggestions to review the program's objectives and improve its operation and performance. It is expected that decisions about the Inglis report recommendations-not all of which I agree with-will be made by the Government in the near future. Senator Vigor also asked me about the differences between the value of the offsets commitment and the value of offsets work actually placed in Australia. I understand that figure to be something in the order of $850m. This amount should not be interpreted as a level of delinquency by prime contractors, as many major offset agreements extend over three to five years. We expect that a high percentage will ultimately be fulfilled. An earlier figure which was quoted included a substantial amount from Daimler-Benz in Germany. I understand that that offset obligation is now being discharged, which will go towards reducing that amount. As I said, the current figure is some $850m. The Inglis committee, in commenting on the figures generally, reported that in its view the extent of non-compliance had been very much exaggerated, and it considered that a significant backlog of long term non-compliance, however, still existed. The committee estimated the value of the backlog as being $160m. It attributed this backlog to the 'best endeavours' nature of some early offset arrangements. While it is true that some overseas companies have difficulty in establishing satisfactory offsets arrangements with Australian companies, there is no evidence that false claims for offset credits are being made. The value of offset activities undertaken in Australia by overseas suppliers is confirmed by regular reports by the local companies involved. I conclude by saying that improvements in the administration of offsets are proceeding in parallel with the Government's consideration of the recommendations of the committee of review. I am very confident that any exploitation of offset credits will be prevented. Senator SIBRAA —Is the Minister representing the Minister for Foreign Affairs aware that the Opposition parties seem unable to resolve their approach to President Reagan's Star Wars nuclear program? Can he clearly explain this Government's approach to the program? Senator GARETH EVANS —It is sad to see this once great party tearing itself apart over an issue such as this, as Mr Howard and Mr Macphee have in fact been doing in recent days. The Government's position, by contrast, is quite clear. The Prime Minister, during his recent visit to Washington, made it absolutely clear that Australia does not endorse the strategic defence initiative or so-called Star Wars program. The SDI is, as I imagine even the Opposition knows by now, a long term research program aimed at establishing the feasibility of developing and deploying a ground and space-based system of total defence against ballistic missiles using advanced technologies. The Australian Government understands the concerns that led the United States of America to undertake this research program. We also acknowledge the attraction in principle of an approach to nuclear war avoidance which places the emphasis on defence rather than the more traditional concept of mutually assured destruction or devastating nuclear counter-attack. Accordingly, we in no way question the integrity of the United States Administration in proposing the SDI. However, we do question the sense of the initiative, strategically speaking. We are concerned, as are so many people in the United States and elsewhere, about the possible implications of SDI for strategic stability and in fact the prevention of an arms race in outer space. There are a great many difficulties with the whole concept of the SDI. Senator Walters —This is non-nuclear. Senator GARETH EVANS —They are set out in a document, which I commend particularly to Senator Walters, entitled 'Uranium, the Joint Facilities, Disarmament and Peace' authored by Mr Hayden and put out in July of last year. It makes clear the reason that so many people believe that the implementation of the SDI strategy, albeit only at the research stage that we are talking about at the moment, is more likely to destabilise the international situation than is the system which it is designed to replace. For a start, it would require a high level of technical perfection in concept and performance which is manifestly difficult, if not impossible, to achieve now and in the future, in particular in order to keep ahead of any possible system of offence which may be developed in the years ahead, bearing in mind that an offensive system which is only 5 per cent successful could be quite devastating while a defensive system would need to be 100 per cent effective to provide assured defence of the kind involved in this theory. Secondly, there is a basic flaw in the whole concept to the extent that it is designed only to be anti-ballistic in its operation and would not provide even conceptually for defence against intermediate range cruise missiles or bombers. Again, it is obvious that the deployment of a total defence system of this kind would have to be implemented simultaneously by both the super-powers if it were not to create a fear in the mind of one side or the other that an imminent advantage of an overwhelming kind would be about to be secured by the implementation of a total defence system. Of course, there is the further and obvious problem that the cost of such a system would be enormous in an environment in which we are all trying to reduce the crippling burden of expenditure on the arms race. Well grounded opposition is being expressed by Mr Macphee and by many others with an even clearer appreciation of the world strategic situation. Certainly, there is opposition on the part of the Australian Government at this stage. I conclude by saying that we place great importance on the prevention of an arms race in outer space. We have called repeatedly for negotiations on outer space arms control. We welcome very much the fact that the United States has agreed to discuss SDI with the Soviet Union during the bilateral negotiations which have now opened in Geneva. Just in case there should be any concern on the part of our opponents that our approach is in any way one-sided, I state for the record that Australia's concerns in this respect have also been registered with the Soviet Union, which is also believed to be undertaking similar research on technologies for use in a possible system of ballistic missile defence. Senator SHORT —My question is to the Minister representing the Prime Minister. I refer to the Prime Minister's address last week to the Canberra branch of the Economic Society of Australia and New Zealand. I ask whether the Minister is aware that the Prime Minister is reported as having said, during that meeting, in response to a question: I would need an enormous amount of evidence put to me to suggest that greater flexibility in the labour market is to be equated with greater economic rationality. I ask whether the view of the Prime Minister that it is irrational to believe that economic growth and employment would be assisted through greater labour market flexibility reflects the considered policy of the Government. If so, why does the Government ignore the overwhelming evidence from overseas experience, and earlier experience in Australia, that the price of labour, namely wages, affects the demand for labour and that high wage and wage related costs in Australia are one of the basic reasons for our existing unacceptably high level of unemployment? Senator BUTTON —I was not aware that the Prime Minister made a speech to the Economic Society in Canberra last week and I certainly was not aware of questions which he was asked or answers which he allegedly gave. Senator Chipp —Don't you read all his speeches? Senator BUTTON —Yes, on most occasions, but last week I was reading Izvestiya. In Senator Short's question he attributes to the Prime Minister in an answer the remark that he would need a great deal of evidence in relation to labour market flexibility. I do not know what weight in that context can be attached to that quotation. Insofar as wage levels and on-wage costs are concerned, of course they are a relevant factor in industry competitiveness. I have said so on numerous occasions in this chamber and elsewhere. I state in answer to the honourable senator's question that it is not a considered view of the Government that those things are irrelevant. It is very important to consider what is meant by labour market flexibility. It may mean a number of things and not only flexibility in relation to the wages system. If it is intended to relate to the wages system, there are a variety of factors, historical and otherwise, which are very relevant in the context of wage fixation in this country and which this Government believes have to be taken into account. Whatever the future holds, this Government is firmly of the view that the prices and incomes arrangements reflected in the prices and incomes accord have been a success, beneficial to the macro-economic environment in this country and with consequent benefits for Australian industry. I speak not only of the prices and incomes arrangements themselves but also of what has flowed from them in terms of industrial relations issues and so on. If Senator Short attributes the comment about labour market flexibility to issues other than wages, I must say that for my part I agree that there are enormous rigidities in the labour market situation in Australia which this country would do better without. But these things cannot be overcome overnight; they are matters of concern to the Government which have to be worked out in a steady and regular way. I also agree with the implication of the question that labour market factors are relevant to the question of employment and unemployment. I just make the point that there are many high wage societies-higher wage societies than Australia-which have been infinitely more successful in terms of industry, entrepreneurship and success in exports, for a variety of reasons other than their wage fixation procedures and their flexibility of labour markets. The issue of addressing competitiveness and the performance of industry generally embraces a wide range of issues of which that is only one. It would be helpful in the context of a debate in Australia if the Liberal Party was not fixated in the intellectual time warp of 1976 to 1982 but instead considered a wider range of issues in the discussion relating to industry competitiveness and the performance of the industry economy in Australia than it has been prepared to do in the past. Senator BLACK —My question is addressed to the Minister representing the Treasurer. Has the Minister seen statements reported in today's Courier-Mail by the Queensland Premier and Treasurer which claim that Queensland's current economic downturn is the result of national and international factors? Does the Minister agree with this assessment of the causes of Queensland's economic slump? Does the Minister also agree with the Queensland Treasurer's assertion that the State currently has the economic and financial basis for sustained long term economic growth? Senator WALSH —Yes, I have seen the apologia for the sick state of the Queensland economy, published in today's Courier-Mail, coming from the Premier. Among other things, the Premier said in that statement that the primary responsibility for economic management in Australia rests with the Federal Government. Of course that is true. What the Premier fails to explain, however, is why the rest of the country is doing so well and Queensland is doing so badly, all under common Federal Government policies. For example, the unemployment rate in Queensland currently is 11.3 per cent, by far the highest of any State in Australia and some three percentage points above the national average. In the year ended February, employment in Queensland fell. The number of people employed in Queensland actually fell. Queensland has the lowest percentage of job vacancies in any State. A 20 per cent drop in private capital investment occurred in Queensland in the September quarter of 1984, compared with the same quarter of 1983, when nationally private capital investment increased by 2 per cent. Private capital investment was up 2 per cent in the rest of Australia but down 20 per cent in Queensland. There are official expectations of a further decline of private capital investment in Queensland. The Queensland economy is pulling down the national economy through its Government's inept handling of the State. I notice that the Premier had the audacity to say today that the nation's performance was dragging down Queensland. Sir Joh Bjelke-Petersen's understanding of the national economy, as revealed in the statement published today, is telling testimony to his Government's economic ignorance. For example, in contradiction to his comments about the economy nationally, the consumer price index increase for the December quarter of 1984 was the lowest it has been since 1972. The inflation rate has been halved since this Government took office. In conjunction with adjustments of the dollar exchange rate, that has enhanced substantially Australia's international competitiveness. While the economic indices in the rest of Australia are favourable and going in the right direction, in Queensland they are almost all going in the wrong direction, in spite of the $3.3 billion, representing more than $1,300 per capita, which the Commonwealth Government paid to Queensland for 1984-85. The fact is that although the Queensland economy may have the potential for sustained long term growth, as Senator Black suggested, a pre-requisite to realising that potential is the removal of the present Government. It is really no wonder that the Queensland economy is in the dreadful condition it is. The Premier and his Party have long been economic disciples of the League of Rights and its voodoo economics. They have pushed cargo cultish economic policies which have been sustained temporarily by incurring enormous amounts of debt-by far the highest per capita debt of any State in Australia. Ultimately, of course, the chickens had to come home to roost. They have done so in the last couple of years. As I said, if Queensland is to realise its great economic potential, it is essential that the Bjelke-Petersen Government reform itself, which is unlikely. That leaves only one option-its removal. Senator GIETZELT —On Tuesday last, Senators Tate, Archer and Devlin raised matters with me with respect to Wynyard Airport. Senator Archer subsequently raised the matter during the adjournment debate. I undertook to get a response from the Department of Aviation which indicated the Government's attitude to the problem. There is an amazing degree of unanimity in this chamber about the need to make some progress on the construction problems at Wynyard Airport. The Government, of course, supports and is committed to the airport local ownership plan. In that respect it has made an offer to the Marine Board of Burnie whereby the airport would be upgraded to a good standard for F-27 aircraft at a cost of $1.2m to the Commonwealth. The provision of T-VASIS, a visual approach slope indicator system, would be funded separately by the Commonwealth at a cost in the order of $175,000. The need and demand for such services could then be properly assessed to determine the need for further upgrading of the Airport. The Government accepts that that position is justified. However the need and economic justification for the upgrading of the airport to medium jet standard has yet to be proven. I am advised that the Prime Minister (Mr Hawke) has advised the Tasmanian Premier that use of the unallocated Gordon below Franklin funds at Wynyard should be based on entry to the airport local ownership plan under the original Commonwealth offer. In response to that, the Premier has again written to the Prime Minister indicating that the State is prepared to provide $3m on the understanding that $3m of Commonwealth funds will be available. This most recent communication is being considered by the Government. It is correct that the T-VASIS equipment has been available for installation at Wynyard since November 1984. However, the installation has been deferred because the Tasmanian Government has indicated that it wishes to proceed with the construction of a new runway at Wynyard and that therefore it would not be sensible to install the equipment at this stage if the new runway is to be built. I can give an assurance to honourable senators from Tasmania that the matter is receiving the urgent consideration of the Government. We will be in a position to make a final decision on this matter as soon as the Cabinet has had an opportunity to consider the submissions from the Tasmanian Government. Motion (by Senator Grimes) agreed to: That, notwithstanding anything contained in the Sessional Orders, Government Papers tabled in the Senate on 20 March 1985 may be considered following the consideration of Government Papers tabled earlier this day. Senator PUPLICK(New South Wales)(3.08) —I move: That the Senate take note of the paper. The annual report of the Department of Home Affairs and Environment 1983-84 is a very complicated report with which to deal in just a couple of minutes because the Department covered so many aspects of cultural and environmental life in Australia, now covered by the Department of Arts, Heritage and Environment. Therefore, I pick out only a couple of matters which I think deserve at least passing comment. First, I congratulate the Department and those associated with the establishment of the Film and Sound Archive in Canberra. It is a long overdue and most worthwhile project. Those like yourself, Mr Deputy President, who have some commitment and understanding in this area will appreciate the significance of the archives. People such as Mr Ray Edmondson of the National Library have been very active in this regard. Those who have had the opportunity to see the new facilities will appreciate the contribution they will make in the long term to the preservation of an important part of our cultural heritage. The next point I make is that I believe the Government must undertake a serious review of the fire safety standards in a number of the institutions for which this Department is responsible. The tragic fire at the National Library which could, of course, have been a great deal worse, serves to draw attention to this. The Department is also responsible for the operation of the Australian Film Commission. Undoubtedly we will have a chance at some later stage to discuss in the Parliament the activities of the Film Commission. However, I simply say now that most people would share some degree of concern about the way in which the Commission is currently being operated by its incumbent Chairman. I hope that an opportunity will present itself at some stage to discuss what I think will prove to be Mr Adams's long term weakening of the viability of the Australian film industry, something which undoubtedly he will carry over into making an equal mess of the Commission for the Future, to which he has also been appointed as Chairman. The Department also has some responsibility for the national conservation strategy. I am glad to see that some progress is being made with further development of this strategy. I am also glad to note that the Liberal Party, at a recent Federal Council meeting, became the first political party to give a formal endorsement in its party policy to the conservation strategy laid out and supported by successive governments. I wish to make only two other points: First, I draw attention to reports in the media recently about the perilous financial plight of the Australian Opera. I indicate that in large measure this is due to the deliberate policy of the New South Wales State Labor Government in withholding from the Opera the $901,000 refund to which the Opera is entitled over payroll tax deductions. The New South Wales Labor Government has effectively confiscated that money from the Opera and has refused to return it. The Australian Opera's perilous state is due also to the deliberate policy of the Victorian State Labor Government in reneging on the $397,000 which it really owes to the Opera. It is worth noting that the Queensland Government alone, in spite of the many accusations made against it, has consistently fulfilled its obligation to the Australian Opera. It has consistently provided the degree of financial support necessary for the Australian Opera to perform in Brisbane. Without that support from the Queensland Government, the Opera would be in an even more perilous position, reduced as it is to the brink of financial ruin by the recent loss of an amount in the vicinity of $100,000 due entirely to the union disruption of its Melbourne season, in particular, the cancellation of its performance of The Tales of Hoffmann. Secondly, the failure of the Government in its wildlife policy-particularly its failure to extend the Whale Protection Act to include coastal waters, its failure to provide the resources for wildlife protection, the operation of the Wildlife (Prohibited Import-Export) legislation and its failure to support the campaign by the Fund for Animals for research into terrible diseases currently decimating our koala population-is a national disgrace. It is no surprise that the Canberra Times on 18 March reports: The Australian Conservation Foundation will write to the Prime Minister, Mr Hawke, expressing its 'serious concern about the unsatisfactory performance' of the Federal Government toward conservation. This report will undoubtedly give many opportunities to expose the failure of the Government in a number of cultural, artistic, heritage and conservation matters. All these stand as complete condemnation of the failure of the Government for its betrayal of a constituency which it once claimed to represent. Question resolved in the affirmative. Senator MAGUIRE(South Australia)(3.12) —I move: That the Senate take note of the paper. The 1983-84 report of the Economic Planning Advisory Council is a milestone in public life in Australia. It is in fact the first annual report of the Economic Planning Advisory Council. The Council was established as the result of an election pledge by the Hawke Labor Government in 1983 to set up planning machinery in Australia. That concept was embraced by the Australian people. EPAC is a body comprising all levels of government in Australia-State, local and Federal-trade unions, business organisations including small business, welfare bodies and the rural sector. Currently, South Australia, New South Wales and Tasmania are members of EPAC. Apart from the Council, to which I have referred, there is the secretariat. It is currently funded for a staff of 50 during the current financial year. The Economic Planning Advisory Council had its origin in the Australian Labor Party's national economic policy committee of the late 1970s. As a rank and file member of the Australian Labor Party at that stage, I was very fortunate to be one of the members of the policy committee which devised the concept of planning machinery in Australia, which ultimately led to the establishment of EPAC. Previously, Australia had been far out of line with most of the other developed economies of the world, those countries with which we normally compare ourselves. In this country we had simply no planning machinery, apart from the period immediately after the Second World War. There was no economic planning machinery in this country other than at that time. Our relatively poor performance since World War II to some extent can be linked to this absence of a planning machinery. We need to look only at the performance of those countries that have had some economic planning machinery to see how much more rapidly their per capita incomes have grown in the decades since the 1940s compared to those of Australia. Our performance has been quite woeful in terms of per capita income increases over that period. EPAC has constituted Australia's first economic planning mechanism. It first met in July 1983. As I have indicated, there is a vital need for planning mechanisms in advanced societies because the market mechanism does not work in all cases. It certainly does not allocate resources efficiently in all cases. I simply refer to the role of planning authorities in preparing long term forecasts and in monitoring medium to longer term trends, in disseminating information throughout the economy and in helping decision makers to make better decisions. That is a very important and basic aspect of planning. Since the development of EPAC we now also have a second, perhaps somewhat more restricted, form of planning. The introduction of the trilogy concept-that is, regulating government expenditure and government revenues in relation to gross domestic product-is a form of economic planning imposed on the public sector of this country. Much of the work which has been done by EPAC so far has been in looking at policies and assessing the scope for cutting unemployment. In the last 17 months there has been some success in reducing unemployment. It has been cut from a peak of 10.4 per cent, seasonally adjusted, in September 1983 to a level now of 8.3 per cent. While there has been a 2.1 per cent reduction in unemployment, I believe that it is still unacceptably high. I am pleased that EPAC has given a great deal of attention to consideration of a series of measures designed to alleviate some of the social costs associated with unemployment. During 1983-84, for example, EPAC has done work on the need for higher school retention rates. It has looked at alternative life styles, job sharing, part time work and early retirement. All these matters should be on the agenda although they do not find favour in all quarters. At the very least, they should be looked at. EPAC now has a very key role in preparing for the run-up to the national tax summit in July. It is now collating and compiling submissions for the tax summit and for the White Paper which will be published by the Government in anticipation of that summit. EPAC, at its March 1984 meeting, pointed out that there were serious shortcomings in the present taxation system. It said that piecemeal reform of taxation was no good and that there was a need for a comprehensive package of measures. I trust that it will come out of the national tax summit. Senator HARRADINE(Tasmania)(3.18) —I simply indicate that there is a difficulty with respect to the membership of the Economic Planning Advisory Council. No member of that council represents the general viewpoint of the average woman in the home, that is, the full time mother. In fact, I studied the documents that were prepared by EPAC. In those documents I could see nothing that was directed towards an objective consideration of the need for support, for recognition of the importance of the work done by the mother in the home. In fact, the only reference that was made was made in a document prepared by Mr Menzies. I hope my memory serves me correctly on that point. That document suggested a reduction in or abolition of the spouse rebate. It is quite remarkable that in a body such as EPAC there appears not to be a person who would be able to represent that very large number of dedicated Australians who are doing probably one of the most important jobs in this country. I refer to the nurturing and education of and the caring for the young. No one in EPAC has addressed himself to the economic worth of that work, let alone its social worth. Senator Button —Hugh Stretton has had a fair bit to say about that. Senator HARRADINE —In EPAC? Senator Button —No, not in EPAC, but in general. Senator HARRADINE —We are talking about EPAC at the moment. Senator Button —I understand that you were talking about EPAC. You said nobody had given any attention to it. Senator HARRADINE —Well, I have certainly given a fair bit of attention to it over the years. I am simply talking about EPAC here. It probably escapes the notice of some of the businessmen, for example, and of some of the other interest groups on EPAC, but it ought not. I congratulate the courage-perhaps that is putting it too highly-or the foresight of Mr Coates and Mr Kelman in drafting their well-considered comments on the capital gains tax matter. They were honest enough to approach that matter as members of EPAC and as people with open minds-and expert minds at that. I feel that the criticisms levelled at Mr Coates and Mr Kelman for daring to raise publicly matters about the capital gains tax were unworthy of those who levelled them. It could be said that shareholders or policy holders in the various companies had different opinions but, surely, persons of the stature of Coates and Kelman ought to be able to consider objectively whether a capital gains tax should be introduced and, if so, how it should be done. Surely we should not go on a witch hunt just because people raise matters which need raising in any event in the context of a review of the taxation system. There are a number of other matters on which I want to comment, but we have only five minutes to do so under Standing Orders. I feel that the rights of and the efforts put in by those women who are doing a very important job in the home should be considered by EPAC and, at least, a paper should be prepared by the secretariat to outline the economic worth of their contribution to society. Senator COOK(Western Australia)(3.24) —Senator Maguire has rightly acknowledged that this first annual report of the Economic Planning Advisory Council is an historic milestone. He was right too in acknowledging that EPAC grew out of the national economic summit, probably the most stunning example of economic consensus seeking in the Western world. I do not think that can be repeated often enough. EPAC has a brother organisation, the committee that reviews the prices and incomes accord, and together they show that this Government is dedicated to the idea of disowning the confrontationist tactics which pervaded the previous Government and finding the necessary compromise to get a united effort to make sure that this economy, in the first instance, got started and, in the second instance, keeps going. The task of EPAC is to draw all the individual interest groups together and to hold their various viewpoints up against a statistical information base, which allows the various weightings of opinion to be judged against performance and facts, and in that environment in the, if we like, more dispassionate, real world environment of what is really happening, to try to find the necessary bridge of compromise for a united approach on economic policy. Perhaps one of the most recent telling comments about EPAC was that uttered by Bryan Kelman, the Chief Executive of CSR Ltd, in an interview reported in the National Times on the weekend. He said something along these lines: There have, of course, previously been other Prime Minister's advisory groups but EPAC has been by far the most successful one and the one that has done the most work and offered the most useful advice. That is not a direct quote, but if one consults the National Times I am sure one will find that it is an accurate capture of the tenor of Mr Kelman's remarks. Coming from such a leading figure in Australian industry, an area that one would expect some criticism of a Labor government to come from, I think that is reasonable praise for the performance of EPAC, the type of work EPAC has been able to do and the type and quality of advice that EPAC has been able to generate. In commenting on this report, it is necessary to reflect on what the world was like before we were EPAC-ted, and we have no better example than the contrast on our own doorstep of two, if we like, conflicting ways in which one ought to run an economy. We have the EPAC approach that this national Government is taking and we have the Queensland Government approach. On the national plane our economic performance is of great merit and is acknowledged to be so by independent commentators. We find the Queensland economy is suffering severe difficulties. The State is riven with internal dissension and we find being enacted legislation of the sort that should never appear on the statute books, and the old campaign of finding a scapegoat-someone to blame for what is going wrong-being paraded again. There is no greater contrast and, faced with it, I believe Australians will make the right choice and continue with the consensus model. The post-EPAC performance of this Government is quite significant and the Senate and the wider Australian community should be constantly reminded of it. Two important indicators ought to be recited when reviewing the performance of the Government as advised and led by EPAC on the economic front. Those two indicators-how we have performed on employment and the situation with private investment in Australia-are, I think, both worth citing. In the Hawke Government's period of office, 264,000 new jobs have been created since the summit in April, so we are more than half-way to creating the 500,000 new jobs promised for the first three years of this Government. Growth in employment last financial year, 1983-84, was 234,000, the largest number in a single year in Australia's history. That is the post-EPAC performance. Pre-EPAC performance under the Fraser Government, by contrast, showed a fall in employment of 186,000 in the last year of that Government. The number of jobs created in the last five years of that Government was about the same as the number of jobs created since the economic summit under the Hawke Government. That is an important contrast. Turning to private investment, which is traditionally the slowest to recover of all indicators in a recession, private, new, fixed capital spending rose in real terms in the March and June quarters of this year, the first rises since the June quarter of 1982. Of course, under the Fraser Government it declined by 12 per cent in 1982-83. Not all that is due to EPAC, but certainly EPAC has played a significant role in helping to find the basis of consensus so necessary for the resurgence of this economy, and this historic first report charts some of the advice it has been able to offer. I commend it as a worthwhile document to be considered by the Senate.. Senator PETER RAE(Tasmania)(3.29) —I too welcome the arrival at last of the first report of the Economic Planning Advisory Council. As we all know, there is a statutory obligation on EPAC to report to the Parliament or at least to the Minister who has the obligation to present the report to the Parliament. The Minister is, of course, the Prime Minister, but one anticipates that one of the functions of the Minister for Finance is to ensure that those who have an obligation to report do so, particularly those associated with the general and particular financial areas of reporting. We find that section 27 of the Act says that the Council shall, as soon as practical after 30 June, prepare and furnish to the Minister a report of its operation during the year that ended on that 30 June. And so, on 21 March 1985 we are debating a report for the year ended 30 June 1984. Since the Council does not have any major financial activities which require lengthy auditing and perhaps delays in relation to the Auditor-General's detailed examination of the books-in fact the financial statement takes up three lines only-the reason for the delay can hardly be that. When one looks at the remainder of the report one finds that it comprises in total 57 pages. Of those 57 pages there is one page that has three lines of financial statement on it, there is one page of information about freedom of information and half the remainder of the report is a reprint of the Act which governs EPAC and a register of information papers, a register of EPAC papers and a register of submissions to EPAC, all of which is absolutely fascinating and is fundamental information to those who would like to know who might have presented a paper. But as to what might be contained in any of the papers, one has to delve further. When one delves further one finds that the provisions of section 27 place some constraints upon EPAC as to what it might say. Section 27 says: A report by the Council under this section in relation to a year shall state the number of Council reports that were furnished to the Minister during that year and the number (if any) of those reports that have not been published by the Minister under sub-section 7 (1) or (5) but shall not reveal the nature or contents of any such report that has not been published by the Minister or particulars of any matter deleted from a Council report as last published by the Minister. Then it goes on to place the obligation on the Minister to lay the report before Parliament. What do we find when we look at the contents of the report itself? We find that it has an executive summary, which talks about the composition of the Council, the work of the Council and the office of EPAC. It summarises that in some three pages. Then we find the establishment functions, membership and powers of EPAC. That sets out rather the same thing in more detail over the next four pages. Then we find the work of the Council and that leads on to something about the release of information, unemployment and the economic outlook summarised in less than one page; industry policy and structural change which is able to be summarised extremely briefly in about eight lines. The EPAC statement on medium to longer term economic policy is the most detailed part. That summarises the whole nature of the economy and where we are going in about two and a half pages and that is followed by a budget strategy which is less than a page. Taxation takes about 10 lines. We then find it goes on to the detail, which is rather perfunctory, of the establishment and operations of the office of EPAC and who the staff members are, all of which is an important part of reporting. We find that EPAC has a personnel management system, a financial management system, a relationship with other agencies and a work program. Then we get on to that financial statement to which I referred, which takes three lines. If that is the best that EPAC can do by way of a report it is not giving a very good example to the other bodies, statutory and otherwise, which have been created by this Parliament or by the Government, as to how an annual report should be presented. This report is way out of time, it has been delayed, it is perfunctory, it is lacking in information and in fact it has breached almost every one of the guidelines which have been proposed by the Royal Australian Institute of Public Administration as to the production of reports. I hope that EPAC does better next year. Question resolved in the affirmative. Senator LEWIS(Victoria)(3.34) —I move: That the Senate take note of the paper. I commend the annual report of the Australian Institute of Sport and the progress made by this Fraser Government initiative. However, I wish to refer to two of the aims and objectives of this body. The first aim is to promote, provide, encourage and develop opportunities for Australians to pursue and to achieve excellence in sport and activities associated with sport; and the second is to provide equipment and conduct laboratories and other research facilities designed to assist in the pursuit of excellence in sport or in activities related to sport. What concerns me is that the Minister for Sport, Recreation and Tourism (Mr John Brown) has apparently decided to reduce funding for the location of other sports centres of excellence in the Australian Capital Territory on the grounds that Canberrans have more sporting facilities than the people of other cities. He fails to understand that the Australian Institute of Sport was proposed, as the objectives set out, as a centre of excellence for the whole of Australia, not just for Canberra. In fact, Canberrans come about eighth in line for the Institute's use. This is an Australian facility of international standing with accommodation and scholarships being provided to encourage Australians, particularly young Australians, with the necessary potential to develop to international standards in sport. The Minister apparently either seems totally to misunderstand the whole purpose of the Institute or is determined simply to mislead the public and engage in cheap Canberra bashing as a matter of political expedience. Then again, perhaps like many of his colleagues, he does not believe in any sort of excellence, treating that as being elitism. I hope I will not be misunderstood. Clearly, where there are existing facilities of international or near-international standards in other locations, their use is logical. But what I am talking about is the establishment of new centres of sporting excellence which this Government now proposes to locate outside Canberra and not in Canberra in association with the Australian Institute of Sport. I suggest to the Senate that any such proposals should be subjected to searching scrutiny and they should be accompanied by detailed financial impact statements indicating the costs involved in locating these facilities away from the Australian Institute of Sport in the Australian Capital Territory. The ACTING DEPUTY PRESIDENT(Senator Townley) —Order! The time allotted for this debate has expired. Senator HARRADINE(Tasmania) —by leave-I move: That the Senate take note of the following Government Papers tabled on 22 February 1985 and 19 March 1985: National Health and Medical Research Council-Annual Report 1983. Department of Health-Annual Report 1983-84. Attorney-General's Department-Annual Report 1983-84, together with the Annual Report 1983-84 of the Office of Parliamentary Counsel. Institute of Family Studies-Annual Report 1983-84. Family Law Council-Annual Report 1983-84. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator LEWIS(Victoria) —by leave-A number of senators on this side, and I am sure on the Government side, are concerned that this week there has been practically no opportunity to debate papers. We have had half-an-hour today and we had no opportunity on Tuesday or Wednesday. Senator Grimes —That is not our fault. Senator LEWIS —Senator Grimes says that it is not the Government's fault. It was by arrangement to enable certain people to make their maiden speeches and things of that nature. I am not saying that it is the Government's fault but there is definitely a problem. I seek leave to move a motion relating to this matter. Leave granted. Senator LEWIS —I move: That the Senate take note of each of the Government Papers tabled on 19, 20 and 21 March 1985, with the exception of those Government Papers in relation to which motions to take note have already been moved. Senator MASON(New South Wales)(3.41) —Mr Acting Deputy President, I think we have a chaotic situation here. The ACTING DEPUTY PRESIDENT(Senator Townley) —It seems pretty straightforward to me. Senator MASON —Is it not a fact that we will resume consideration of papers at a later hour this day? I thought that further time was to be given to precipitate consideration of these papers. I wanted to speak to one of the papers tabled yesterday. The ACTING DEPUTY PRESIDENT —As I understand it, the papers are listed to be dealt with under General Business if we get that far through the business sheet. Senator MASON —I just raise the point-- The ACTING DEPUTY PRESIDENT —Senator Mason, I am sure that the Senate can do exactly what it wants to when it gets to that point and can change the situation if it needs to do so. I am sure that if we get to that point and you want to speak to a paper the Senate will arrange it. Senator MASON —I conclude by saying that if we agree to Senator Lewis's motion all papers tabled yesterday and today will be disposed of. I do not want that situation. I want to speak to one of the papers. The ACTING DEPUTY PRESIDENT —I am sure that the Senate will accommodate you later in the day. Senator LEWIS(Victoria)(3.42) —I move: That the resumption of the debate be made an order of the day for a later hour this day. That will accommodate Senator Mason's question. Senator Grimes —If there is time. Senator LEWIS —If we have time. Question resolved in the affirmative. Senator LEWIS —I seek leave to continue my remarks later with regard to each of the motions I have moved. Leave granted; debate adjourned. The following Bills were returned from the House of Representatives without amendment: Sugar Agreement Bill 1985. Marriage Amendment Bill 1985. Debate resumed from 28 February, on motion by Senator Messner: That the Bill be now read a second time. Senator GRIMES(Tasmania-Minister for Community Services)(3.43) —We are debating the Social Security and Repatriation (Abolition of Assets Test) Bill 1985, a private member's Bill introduced by Senator Messner and yet another device to bring about debate on the assets test, which seems to exercise the minds of members of the Opposition almost daily. The Bill in effect is aimed at abolishing the assets test, at wiping out the related social security and repatriation legislation which was introduced and passed by this chamber and the other House last year. The Opposition states that the Bill is based on two grounds. The first ground, it suggests, is that the assets test is designed to encourage people to become more dependent on the Government. We immediately, of course, question such an assertion. For the great majority of pensioners and the great majority of people approaching pension age, the assets test is and should not be an issue at all. This is because it has generous exemption limits which are indexed annually. For a single person the limit is $70,000 plus a home or $120,000 if no home is owned; and for a married couple the corresponding figures are $100,000 and $150,000. For those who are affected by the assets test, the facts are quite the reverse of the Opposition's assertion. The existing income test, which has been in place by itself since 1976, has been increasingly exploited by people with very considerable assets who, together with their financial advisers or who, unfortunately in a couple of cases, without their knowledge, have had their affairs arranged so that they receive little or no income from their assets and therefore qualify for a full pension. It is the existence of this avenue of avoidance which has encouraged people to be more dependent on the Government. The assets test has brought to light a significant number of cases of people having had assets amounting in some cases to hundreds of thousands of dollars which have not been used to produce a reasonable income. In some instances capital appreciation was sought. In other cases unreal amounts were kept in cheque accounts and in all instances additional assistance was sought through the social security system. Thus, far from encouraging dependency on the Government, the assets test encourages a person with assets of, say, $300,000 to invest those funds reasonably and safely to produce, say, 10 per cent and enjoy the $30,000 income rather than a pension of $4,778.80. The test has clearly succeeded in closing many glaring loopholes which the previous Government had permitted to flourish, loopholes which benefited the wealthy at the expense of the vast majority of pensioners on low incomes and, in fact, the vast majority of taxpayers in this country. These loopholes were not discovered by Ministers in the present Government; they were recognised by Ministers in the previous Government and we have at various times-I will not bore the Senate with it again-quoted from speeches by such people as Senator Chaney, Mr Peacock, Mr Howard and others repeatedly pointing out that these loopholes have existed and suggesting that we do something about them. With an income test as the only measure of eligibility for pensions and fringe benefits a small number-I repeat, a small number-of pensioners clearly went to some extraordinary lengths to cheat the system, or certainly to cheat the spirit of the system, and give themselves an advantage over their brothers and sisters. In order to qualify for government assistance that they did not need, a minority of pensioners were even prepared to deprive themselves of substantial income they could otherwise have received. This income in many cases would have far exceeded what they got in pension payments. I think it is worth while giving the Senate some examples which have come to light through the assets test implementation exercise. In one case a person disclosed that he had $400,000 divested in a non-interest bearing family trust. Under the income test that person qualified for both a pension and fringe benefits. A pensioner in Queensland revealed that apart from his home he owned several blocks of land with an unimproved value of $490,000. He was receiving a full rate of pension. A married couple received a full rate of pension because the business they ran in an outer Sydney suburb was supposedly running at a loss. The business was valued at $700,000 and their home, which they used for wedding receptions, was valued at $400,000 and its contents at $70,000. A widow was receiving a full rate pension and she disclosed that her late husband had lent $730,000 to a family company at no interest. A pensioner in Queensland who owned $800,000 worth of shares was receiving the maximum rate of pension because the interest from the shares went into a family trust. This pensioner, incidentally, had also applied to the Department for rent assistance of $15 a week, but without success. A Queenslander pensioner was receiving a full rate of pension even though he owned several farm properties. This was because the farms were not being run at a profit. The application of an income test only induces wealthy pensioners to cheat the system by depriving themselves of income. It is important to note that it is also an inducement to some unscrupulous people to exploit the elderly. In one case which has come to light an elderly woman in a nursing home was shown to have invested with her accountant $500,000 in a non-interest bearing account. Her form, filled in by the accountant, also revealed that she had $50,000 invested in the bank. If the $500,000 had been invested on the woman's behalf at the relatively modest rate of interest of 12.5 per cent, the interest would have provided her with an annual income before tax of $62,500 a year-considerably more than the single rate of pension. The hysterical campaign waged by members of the Opposition against the assets test over the past twelve months has been both immoral and unjust. In seeking to defend the position of a privileged few and in seeking in fact to gain political capital out of a fear campaign, they have turned their backs on the vast number of Australians-children, single parents, the sick, the disabled and the elderly-who live in or near poverty. The Opposition would by this legislation and by its opposition to the assets test prefer to see money going to the sorts of people I have been talking about, and even to millionaires, than to see a more just and equitable distribution of social welfare funds. Frankly, their selfishness is appalling. The people of Australia should bear in mind that when the Opposition attacks the assets test it speaks on behalf of people such as the Queensland Liberal ex-member of Parliament who admitted he was receiving almost a full rate pension under the income test. When it came to filling out the assets test form he self-cancelled his pension payments rather than reveal his assets. He has admitted that publicly. The assets test is ensuring that pensions go to those who need them. It is clear from the figures that have come through since the implementation of the assets test that savings to the taxpayers of this country, and the money available therefore for redirection to more worthy people, is in excess of $100m. It is interesting that one of the complaints about the assets test was that it would not raise sufficient funds for any such purpose. We now know that it will. The amount of asset holdings is much higher than I, the Minister for Veterans' Affairs, Senator Gietzelt, or any of our departmental officers realised. The Opposition is now saying that we should abolish the assets test; that we should either raise that $100m-plus from the taxpayers of this country, particularly the pay as you earn taxpayers who cannot indulge in the sorts of schemes I have mentioned and who cannot indulge in the myriad of tax evasion schemes we have had in this country, or deprive those people who rely on social security benefits-the poor, the sick, the invalid and the destitute-of any increased benefits through, say, an increased rent allowance, in order not to annoy the 2.3 or 2.4 per cent of pensioners affected by the assets test, and in particular not to annoy those who have obviously had the ear of members of the Opposition. It is a fair comment that the average worker in Australia readily accepts his obligation to support those in need. The fact that workers object to supporting through the taxation system a person with very considerable assets, assets considerably greater than their own, is understandable. No reasonable person believes that we should be paying a pension at the full rate and providing fringe benefits to people with assets-even cash assets in some cases-totalling more than $500,000 in some of the cases that have come to light as a result of the implementation of this assets test. It was for this reason that the Australian Council on the Ageing agreed with the implementation of the assets test. On 12 March it put out a Press statement saying that the results of the implementation of the assets test have justified its stand even though many of its members and many people in the community thought that it should come out with a knee-jerk response and oppose that assets test. The second position on which the Opposition seems to base its opposition on the assets test is that the legislation, according to Senator Messner's second reading speech, is shot through with anomalies. This suggestion also needs to be examined both generally and in relation to the specific examples quoted by him. I remind Senator Messner and other honourable senators present that Senator Gietzelt and I, during the time we were debating the assets test in the community and in particular in this chamber, recognised that there were areas of difficulty in the implementation of such a test. We recognised at the time, as had been recognised when the previous assets test was in place before its removal in 1976, that there were particular problems with people in rural areas and with people with non-liquid assets. We also recognised at the time that we would need to monitor the assets test as it was applied and would need, on having our attention drawn to difficulties which may arise, to modify the administration of that test. We never made any pretence that that situation would be otherwise and, in fact, problems-some apparent, some real-have been brought to the attention of the Minister for Social Security, Mr Howe, and Senator Gietzelt. Those problems will be looked at, whether they come from people writing reasonable letters to the various Ministers, whether they come from organisations writing reasonable letters about problems facing people affected by the assets test or whether they come from hysterical outbursts in this or other chambers. We will proceed to deal with those problems and seek to continue that practice. The basic fact remains that the taxpayers of this country, in particular relatively low income earners with children to support, were paying taxes to support people who were far better off than themselves, who had managed to manipulate the system so that they could receive full pensions and full fringe benefits in a manner quite contrary to the spirit of a needs-based social security system, a system to which everyone in this chamber and the other chamber, on both sides, at various times gives at least lip service. At the general level, the impartial observer might suggest that this test, even with its generous exemption limits and total disregard of income, has addressed the anomaly in the existing system-the anomaly that I have been talking about-since its immediate effect has been to reduce the annual pension bill by some $100m. As I said before, it has resulted in the situation where people with substantial assets who are able to provide for themselves have in fact been holding their assets in non-income producing, sometimes artificial non-income producing, forms and have been calling on the general community for their support. This most glaring anomaly in our pension system has been minimised and it is as a result of that minimisation that there have been so many screams from so many members of the Opposition. Some 30,000 pensioners in the social security system have lost all of their entitlement to pensions; some 20,000 others have had their pensions reduced. In order to have no entitlement to a pension a person must have assets, apart from a home, of $116,000 if he or she is single and $177,000 if married. If a person does not own a home, the figures are $166,000 for a single person and $227,000 for a married couple. Those are not ungenerous figures; those are figures beyond the dreams of most pensioners, or most non-pensioners for that matter. It is ludicrous to suggest that the figures are ungenerous. There has been some difficulty in the introduction of this assets test. Of course there has been some confusion; we have never denied that. However, the improvement in the Government's ability to address problems in the welfare system through the savings that will be generated will make all of this worthwhile. I believe that confusion is becoming less and less and will become nil as the assets test is increasingly applied. Senator Messner talks of anomalies-as he did in his second reading speech and as he has on matters of public importance in this place-but he is short on specifics and he is inaccurate about what he calls anomalies. Let us look at the so-called anomalies he enumerates. I take the example of the woman recently widowed. The woman and her husband would have been allowed $100,000, plus their home, before the assets test affected them. They would be unaffected by the assets test. If the $100,000 produced $8,000 in income, their combined pension would have been some $101 a week. In those circumstances, when the husband dies the effect under the existing income test is that, after the period when the pension formerly paid to the couple is continued, which I think everyone here knows about, the pension payable to the widow would drop to $30 a week. Under the assets test the pension payable to her would be $31.90 a week. It is not apparent to me how the assets test adversely affects the widow in that example. Further, she would be in a position where her private income amounts to $154 a week and her pension to almost $32 per week; a total of $186 a week. Many people in the community would question whether a single person with that level of income, plus a home, plus $100,000, requires the special consideration that Senator Messner claims. Another example is the person who realises a considerable sum of money when he sells his home to enter a nursing home or an aged persons home. Such a person has the potential to obtain an attractive income from investing the proceeds. To preclude him from a pension, the person would require assets of $166,000. It is not necessary to have particular skills in investment, since reasonably attractive rates are now available from deposits in building societies or investment accounts with banks. Given the generous exemption limits, a person in those circumstances who qualifies for some pension is likely to be income tested rather than assets tested. In the case of a granny flat, where a person spends an amount to construct a flat on premises owned by his or her family and does not obtain any legal title, that person has deprived himself or herself of the amount concerned. However, given the extra exemption of $50,000 allowed under the assets test to a non-home owner, few such persons will be adversely affected. In fact, that is the experience of the implementation of the assets test. It is worthwhile noting that 10 per cent of any sum held as deprivation of assets is depleted each year so that any possible adverse effect is strictly temporary. If the person obtains title to the granny flat, he would be treated as a home owner. A person who obtains entry to an aged persons home without payment, loan or donation is treated as a non-home owner. If payment is made to obtain admission, the person is treated as a home owner, since he or she has a right or interest in the accommodation. The amount he or she pays is disregarded as an asset since it represents his or her home. Whilst there are a wide range of circumstances under which people enter aged persons homes, in practice few will be affected by this provision. Persons may have other assets of $70,000 without being affected in any way by the assets test. If a person has $70,000 invested at, say, 9 per cent, the income produced allows a pension of $46.30 to be paid. Under the assets test a person would need assets not of $70,000 but in fact of $92,800 before pension at that rate was payable. In order words, only those with very substantial assets are likely to be adversely affected. I accept that this is a very sensitive area. I accept that people have paid varying amounts to get into aged persons homes. Mr Howe, Senator Gietzelt, the Government, and I accept that there may be people at the margin who would be affected more than they need to be, and it is for that reason that we are monitoring this area very closely. It is for that reason that a Government Party committee is monitoring this area very carefully. The Government is willing, as I have said previously, to make changes if these are seen to be necessary. Senator Messner talked of farmers with limited income who on retirement would normally hand the property to children who have been working it for little remuneration. This is a group we hear a lot about. There are a number of instances where persons have assets in the form of a farm worth $300,000 or more but wish to receive a pension. The assets test is based on the premise that people generally should employ their assets productively. If the asset is a business requiring active participation and the person is unable to do so, the test presumes that he or she might rearrange assets holdings. In terms of claiming assistance from other members of the community who may not be fortunate enough to have an asset of equal magnitude, I suggest that this is an eminently reasonable approach. However, where it is unreasonable to expect the person to sell the asset-for example, because of the long term unpaid contribution of the son-the person may have the asset disregarded under the hardship provisions if his situation is such that he would suffer severe financial hardship. Similarly, if the son's long term commitment to the farm resulted in little recompense to him, this would be recognised if the farm was gifted. Senator Walters —Ha, ha! Senator GRIMES —Senator Walters may laugh, but the simple fact of the matter is that there are people whom Senator Walters and I represent who have no income, who have either nil assets or a very modest home, who are utterly reliant on the pension, who have been paying taxes all their lives, who are deprived of a more adequate pension, and who, if they had been working, would have been paying a pension to people with considerable asset holdings. Does Senator Walters seriously believe that a person on an income of less than $300 a week, with four or five children, who is paying taxes, should pay a pension to someone with assets of over $500,000, which could be providing him with an income? If she believes that sort of nonsense, she believes in absolute inequity in our society. She certainly does not believe in her own Party's policy of a needs based social security system, and there is no way that she can argue against that. The Government has copped a lot of flak over the introduction of the assets test. I dare say we will get it over and over again until Senator Haines, Senator Gietzelt, and I, and others speaking in this debate, bore each other more than we bore most people in this place. The simple fact of the matter is that all the criticisms about this assets test have been aimed at the Government for trying to introduce a needs based system and prevent some 2.4 per cent of the whole of the pension community in this country from taking advantage of the rest of the community. We are trying to ensure that we have a social security system which enables governments of any persuasion to increase the benefits to the poorest in the community, those people with no assets, those people particularly with no assets and no home who are living in private, rented accommodation, those people who, in most cases, are reliant on the State, through no fault of their own, for public housing. We need to support and help these people. A system which is as patently unfair and shot full of loopholes as the system which existed until the introduction of the assets test is seen to be unfair and is resented by the taxpayers of this country who, I might add and I repeat, have in fact no objection to paying some of their taxes to those in need. We reject this piece of legislation. This legislation is, in fact, an attempt to rescind the assets test. We resent it because the test, though difficult to introduce politically and socially, was introduced by a government which believed something had to be done, which knew it would get criticism for it and which knew it was easy to stir up fear, it was easy to misrepresent and it was easy in the community to paint us as doing something we were not doing. The simple thing about the assets test-I think it is a very good reflection of what happened-is that Mr Barry Cohen, who represents the electorate of Robertson in New South Wales, and who has the largest percentage of pensioners of any electorate in this country, was never under any concern about the effect of the assests test on his vote and he was right. He said that people who were on the pension, who knew what was going on and who were aware of the system, realised what it was all about; those who are not on the pension, who thought one day they might be on the pension were able to be frightened because they did not understand the system. That, if it had any electorate effect, was where it had the most effect. But once the test is introduced, once the system is seen to be fairer than it was before, once governments of the future will be able to demonstrate how they can improve the system with the introduction of such a test those people will accept it and are accepting it now. I make one final point: If members of the Opposition seriously say that this Government, or any other future government, can forgo over $100m in payments of this type to go to the people to whom it has been going, they have got to put to the people of this country where they are going to replace the more than $100m. The DEPUTY PRESIDENT —Order! The Minister's time has expired. Senator WALTERS(Tasmania)(4.14) —The assets test starts today and yet yesterday there was a headline in the paper 'ALP puts the Minister on the mat over test'. The rural assets test valuation is under fire, not by the Opposition but by the back bench of the Australian Labor Party. The Labor Party has also been putting the Minister for Community Services (Senator Grimes) on the mat. Not only the Labor Party, but the back bench of the Labor Party has been very concerned about the injustices that are showing up. It is not that the Minister was not warned. Six or eight months ago the Minister was well warned about the anomalies. The Minister says, and says very clearly, and he reiterated it today, that only the wealthiest people will be caught. I will quote from the Minister's news release before the election. He stated that 'only about 40,000 of the wealthiest pensioners, or less than 2 per cent of all pensioners will have their pensions affected'. That statement was made before the election. Following the election we have had a reassessment of the situation. The Minister's excuse was: 'More people hid their money than we even realised'. The truth is that 57,000 pensioners will either have their pensions cancelled or reduced under the assets test later this month. With several thousand asset test forms still to come in, it is estimated that the final figure will be about 60,000 to 65,000. Before the election it was 40,000, and not long after the election it was up to 65,000. Senator Grimes —That's not bad. Senator WALTERS —The Minister has just said: 'That is not bad'. He reiterated today that a small number went to great lengths to cheat the Government and that we, in the Opposition, 'are seeking to defend the position of the privileged few'. What absolute rubbish, and the Minister knows it. Let us look at a few of the injustices to which the Minister referred. He said that the test will affect the wealthy, the privileged few and the people who go to great lengths to cheat the Government. I have a constituent in Tasmania whose property has been valued at $90,000 and his stock at $30,000. For some reason or other the Department of Social Security has put a business value on it. When we made an inquiry we were told that a goodwill of $20,000 had been placed on the farm. No other business is being carried out. Until last night that was still on. We were told late last night by the Department, after we had a look at it and brought the matter to its attention, that it was all a horrible mistake that it should not have added the $20,000. What absolute rubbish. Okay, we will leave the $20,000 out. Let us look at the wealth of this very wealthy man who has gone to great lengths to cheat the Government and who is one of those whose position we are seeking to defend-one of the privileged. He has a bank balance of $1,406 and he has a car worth $3,000. He does not have house contents valued at $10,000; the contents are valued at $4,000. He is one of the wealthy people, one of the privileged few. He is in a similar position to that of other small farmers-he is retired, on a pension and has handed over his farm to his son. His son and his family are scratching out a living. This farmer has been caught because he did not make his son pay for the farm. This is, without a doubt, retrospective legislation because a myriad of other small farmers, along with this farmer, have handed over their properties to their children, with no thought that the Government would suddenly introduce death duties, with no thought of the Government changing the position where, if they owned the property, they would suddenly be deprived of all pension. This family is now in a terrible mess. Others in very similar positions have appealed and their appeals have been knocked back. They are in equally disastrous positions. But they are the tall poppies that Senator Grimes talks about, they are the privileged few. He ended his speech by saying: 'If it does not all work out they can go on hardship benefits; they can apply for benefits'. What arrant nonsense this Government talks. It talks about the tall poppies. It talks about the wealthy and the privileged few as being the only people who will be caught and then it says that people can always apply for hardship benefits. What option has this family got? It has been told that it can borrow for its pension and use the pay as you die scheme. Lovely stuff. Bearing in mind that this man's property is worth $90,000 and his stock is worth $30,000, let us see what he has to pay after a series of years. If he lasts 10 years-a pretty small number of years after retirement-which would only take him to the age of 75, he would then have a debt of $180,846, far in excess of the value of his property. What justice is there for the man whose property is worth only $120,000 when someone else living in Canberra or Sydney can have a home worth upward of $400,000? Units in Canberra are selling for $340,000 and people do not have to declare that; they get that completely free. This family, one of the tall poppies, has property valued at $120,000. There is no justice in it at all. Indeed, it is retrospective because there is no way in which this was able to be foreseen by the majority of people in the community. Let us see what the Gruen Panel of Review of the Proposed Income and Assets Test that this Government set up had to say. It made some rather relevant comments. It stated that there is no justice and there cannot be any justice in the way it works out. It stated that the panel believed that its recommendations were only of an interim nature. The report states: . . . Whatever proposal is accepted . . . there will be some problems and some hardships caused in the community. It also states: The Panel has not been able to agree that an income and assets test is a desirable element of our social security system. . . . The Panel acknowledges that no test is completely fair. Yet the Government has ignored that. It has gone straight ahead and it has tried to make this very unjust assets test work. There are other anomalies. Let us look at some of those. A widow has 12 weeks within which to change her way of life. Senator Grimes touched on this today but he touched only on the money assets, which is all he ever thinks about. He touched only on those situations where money would be affected. That widow will have to sell her assets. She will have to sell her shack or her car and change her entire lifestyle because the Government says that she is not entitled to them. Life insurance is being valued at its surrender value. If there is no surrender value the Department of Social Security puts its value on it. In many cases very large valuations are being put on these policies by the Department and protests are coming from all over the place. Pensioners going into nursing homes are allowed to keep their homes for two years. After two years their homes are assessed and they then lose their pensions. Why is the Government picking on the weakest members of the community in this way? If people have invested large amounts of money in their homes in Sydney, Melbourne or Canberra, do not end up in a nursing home, have learnt how to work the system well and know how to invest their money they can leave it all to their children. They can leave a home worth half a million dollars or more to their children. But if they have moderate homes and they happen to end up in a nursing home their kids will not get a thing because, after two years, their homes will be assessed. They will lose their pension and will have to sell. People may have been battlers all their lives on small dairy farms, as so many are on the north-west coast of my State, working seven days a week 52 weeks of the year. Dairy farmers do not find it easy to take a holiday; there is no way that they can take one. If they have employed their sons and their sons have worked virtually for pocket money until they retire-and this happens in so many cases-they have had it. They are the tall poppies, the wealthy, the privileged few and they are not permitted to do anything other than sell their properties. They cannot hand their properties down to their sons. There is no justice in this at all. Let us go back to the Gruen report. That report states very clearly that a minority of panel members believed that farmers faced special problems. It recommended that special consideration should be given to allow additional money to be exempt for long term farmers whose farms were family concerns and would otherwise be likely to be sold. This was recognised as early as the Gruen report. But what has the Government done about that recognition? Absolutely nothing. That report was handed down in May 1984. It was recognised then that there were special considerations for the farming community where it was not possible for two families-a retired family and the children of that family-to earn an income. The Government has done nothing. Today is the day that it all starts, and the Government has still not done anything. It still ignores the suggestions in the Gruen report. Senator Grimes has said that all this must be done, otherwise the poor will not get a reasonable pension. The poor have always received a pension. Honourable senators on both sides of this chamber would like to see that pension increased. I am not suggesting for one minute that the former Government was any more able to increase the pension than is the Government today. At least we tied the pension to the consumer price index-a Labor government did not do that-which guaranteed a twice-yearly increase in line with the cost of living increases. This Government has made all sorts of promises that it has never kept. It promised to increase the pension to 25 per cent of the average weekly wage, and that has not eventuated. Before the March 1983 election it promised that pensioners' pay packets would not be touched. It has now introduced an assets test. Senator Grimes said today that the poor have got to have a decent pension and that is why the Government has introduced the assets test. That is why the Government has taken money from all these tall poppies to whom I have referred, those privileged few, those little farmers who went to great lengths to cheat the Government. With all this lovely money that the Government will save, it will be interesting to see just when it will increase the pension and what figure it will increase it to. These ordinary people who have worked all their lives had not belonged to the Australian Council on the Ageing; they are not members of that august body, they are just ordinary people who have been minding their own business and organising their inheritance in a way that they felt governments allowed them to do. But suddenly they find that they can no longer do that, that they have done the wrong thing and that they should have signed their property over to their sons ages ago because the Government has now brought in this new system. The Opposition will watch the Government very carefully. If any monitoring is to be done, we will certainly be doing it to see whether the Government will increase the pension in line with its promises. It has taken the money from these very wealthy privileged few and we will await the outcome of that. Senator HAINES(South Australia)(4.31) —I had hoped, from listening to Senator Walters's contribution today, to get a clearer picture, a clearer explanation from the Opposition of exactly what its complaint is about the social security and repatriation assets test legislation and why it wants to repeal it absolutely. Apparently all it boils down to is that the about to be implemented new assets test legislation contains anomalies. I can assume only that behind the Opposition's attitude to the anomalies and its belief that the only way to cure an anomalous system is to repeat the entire legislation lies an assumption that no anomalies existed under the previous system. If we repeal this legislation, we must automatically go back to a system in which income only was being tested. To anybody who in the last few years has received letters from people going into retirement, that was one of the most anomalous, unfair and inequitably spread means testing systems that anyone could devise. The example raised by Senator Messner and others of problems facing widows and widowers who drop from a married entitlement to a single entitlement was covered by the Minister for Community Services, Senator Grimes, and I do not need to go into it again except to reiterate that that problem existed under the previous system just as it does under this one. I suggest to the Liberal Party of Australia that while it is in opposition it consider exactly how it approached anomalous legislation when it was in government. The answer is certainly not that it repealed it. We all know that there are more anomalies in something like the Income Tax Assessment Act than there are equities. But we do not repeal the entire thing simply because some people manage to avoid paying income tax and others do not. In her speech Senator Walters complained about the fact that somebody can have a reasonably modest farm and be penalised under this test, yet somebody else living in Canberra in a luxurious home is not penalised. I can assume only from that that she would have preferred to see the family home included in the assets test, in which case of course we would face a more massive anomaly in price differentials between various capital cities. The previous assets test, the one that existed until it was repealed by a Liberal government, contained a worse anomaly than any that has been mentioned today. I refer to the notional 10 per cent income that was assumed to come from assets. Unfortunately, the current Government originally intended to include that in its assets test but, following the report of the Gruen Assets Test Review Panel, it was excluded. It is probably fair enough that the previous assets test system was repealed because it contained that sort of anomaly, although one presumes that it could have been amended in some other way. However, at that stage that was not ideologically possible in the Liberal Government's camp. One presumes that by wanting to do away with the amount of money which the Government apparently will save, which is of the order of $100m, the people who are supporting the repeal of the assets test want to see families and individuals on low fixed incomes suffer from not being able to benefit from increased pension entitlements while others can go along blithely ripping off the system as they were able to do under the income-only means test. This presumably is in line with the attitude that some of the Liberals have to the application of an all-encompassing sales tax, including a tax on such things as the necessities of life. I refer to necessities which people on low fixed incomes and pensions have no choice but to buy but which take a significant percentage of their incomes. I do not know of a formula, and I have yet to hear from anybody else who does, which can be implemented to offset the damage of these purchases to people on pensions and low fixed incomes. There seems to be no real compassion or concern in the minds of some people on this side of the House for the damage that can be done to low income earners when a government cannot afford to raise pensions because people who should not be entitled to a pension and who do not need a pension are in some way able to rip off the system and claim one. This is an attitude which has been expressed by several members of the Liberal Party-this apparent approval of the ripping off of the system. On the other hand, some of their colleagues take strong exception to this. I suggest that Senator Messner and Senator Walters go back and look at what one of their Liberal colleagues in another place said about the implementation of the assets test. The South Australian member for Mayo, Alexander Downer, in a widely reported article in the Australian of 9 June last year, headed 'Assets test ''shows courage'',' said: The Government is absolutely right in introducing an assets test. . . . The Government has had the courage to address that issue. . . . This vast growth in the welfare bill by some 22 per cent a year has been a principal, if not the principal, cause of the quite alarming growth in Government outlays as a proportion of GDP and, correspondingly, in taxation as a proportion of GDP. He went on to say: If this problem is not addressed, future generations in the workforce will have to meet an ever-growing burden to maintain the current retirement policies. Quite apart from the question of whether it is equitable for one generation to bear a greater burden for its aged population than earlier generations, we are concerned over the impact of this burden on the development of the Australian economy. Evidence suggests that retirement policies may end up by diminishing considerably the economic performance of Australia, thereby reducing the overall welfare of all Australians. If the Government is to opt for assets-based welfare for pensioners, it should be consistent and extend the principle throughout the social welfare area. . . . It would be folly, however, to reject the assets test outright, as it is the only avenue which leads to effective control over the spiralling costs of retirement policies. I suggest that some of his colleagues in the Senate chamber think a little on that. Less than a year ago Mr Downer said: It would be folly, however, to reject the assets test outright, as it is the only avenue which leads to effective control over the spiralling costs of retirement policies. His opinion was shared by the Young Liberals who some weeks later slammed the Opposition stand on the assets test plan, saying that the Liberal Party's rejection of the assets test was 'unfortunate' and that 'middle class welfare will have a field day'. If that is not enough, we have the comments from members of the Confederation of Australian Industry and from Mr John Elliott, who praised the assets test in an article which appeared in the Australian Financial Review, in June 1984. I presume that these people are card-carrying members of the Liberal Party and members of the Party whose opinions carry some weight. Certainly John Elliott's do, and I would have thought that the very fact that not all members of the Liberal Party supported the repeal of the assets test was of some concern to members of this chamber. These people all clearly realise that there are other ways of ending an anomalous situation than by throwing the baby out with the bath water. One way, of course, is simply to make an amendment where an amendment is possible if it is the Act itself which is causing problems. Another is to issue an instruction to departmental officials so that the Government's wishes are complied with rather than some fancy legal opinion that is dug up by enthusiastic members of the Department of Social Security and so that excessive evaluations are not undertaken by members of the Australian Taxation Office. Yet another way is to introduce some kind of review system. Review systems are not unknown. The Administrative Decisions (Judicial Review) Act establishes one such system. The Administrative Appeals Tribunal is another. It is possible to amend the Social Security Act to provide for the establishment of an assets test anomalies tribunal to consider claims for exemptions from the assets test on the basis of the test having an anomalous effect upon the claimant. This need not set a precedent for a whole class of cases. In fact, we have a tribunal in the Veterans' Affairs Department that considers exemptions. The amendment would establish a tribunal and provide it with guidelines for the consideration of particular cases and for the making of determinations granting exemptions based on the principle, for example, that pensioners should not be deprived of their pensions where their ownership of assets does not confer the benefit such ownership would normally confer. That is an anomaly. That anomaly affects some people who own farmland which is not productive during a certain period. It affects people who reside in cottages for the aged or in nursing homes and who consequently do not have an asset. Those sorts of ways out of an anomalous situation ought to be considered before we leap into repealing an Act which will leave us right back where we started, with a situation that is clearly as anomalous as the previous income-only means test system. Under the previous system people who had large sums of money could salt them away in non-income bearing deposits of one sort or another, live off the capital, and draw maximum pension and full fringe benefits, while people on fairly low incomes, often low fixed incomes, were not in that position of luxury. However, apparently that sort of anomaly does not concern the Opposition. It would prefer to go back to the old system than to sit with a system which large numbers of members of one of its own parties believe is far more just, far more equitable and far less anomalous than the situation which existed previously. With the sorts of alternatives available to them, I cannot understand how members of the Opposition can justify jeopardising the promised pension increases to all pensioners in order, apparently, to curry favour with a small section of their own constituency. If members of the Opposition are seriously concerned about the impact of legislation on people, including wealthy people, how can they justify their past two years of support for certain money Bills and taxing measures and for their own Leader's statement that he intends to support capital gains taxes, death duties, wealth taxes and sales taxes in the same way that they supported changes to superannuation taxes and wine taxes simply, apparently, in order to give the current Prime Minister (Mr Hawke) enough rope to hang himself? The fact that it is also likely to financially hang a large number of other people in the community, including the Opposition's natural constituency, seems not to weigh with it. Worse, it would seem that some members of the Opposition would prefer to see millions of pensioners and children in low income families deprived of pension increases in order to get extra money for a few wealthy people who have been able to arrange their assets in order to qualify for a pension when it was income-only tested. Senator Walters mentioned that the Government, by the assets test, was hurting only those who were most vulnerable and needy. I suggest that, by depriving the three-quarters of a million children who currently are living in families below the poverty line of a much needed increase by attempting to deprive the Government of its $100m savings, the Opposition is affecting an exceedingly vulnerable section of the community. However, the Opposition clearly is not interested in this aspect. I can assume only that is because it believes that it does not get any votes from that section of the community anyhow, so it does not matter. Senator Messner indicated a concern earlier today in Question Time about what he saw as an unfortunate aspect of the assets test, that is, that access to property may need to be given to tax officials in order that they may value the property at a reasonable level and not put some highly inflated, city-based assessment on it when a quick viewing of the property would indicate that it was not worth that at all. I share much more the attitude of the pensioner groups to this kind of access. Their belief is that, as long as pensioners have the right to approve a request to visit and there is no invasion of privacy, there is nothing wrong with it. Certainly, Senator Messner's apparent outrage contrasts rather strongly with the sort of intrusion into people's homes that took place under the previous Government's income-only testing through what was fondly known then as 'the size 10 thong and bed-sniffing brigade', comprising officials from the Department who wandered into people's homes, particularly those of supporting mothers, to make sure that they were not having some uncalled for male company or getting some uncalled for male support that meant they were ripping off the social welfare system. I remind members of the Opposition that innumerable bounty Acts give rights of inspection that are positively horrendous and about which the Senate Standing Committee for the Scrutiny of Bills regularly complains. So the pensioner groups have a far more realistic and fairer attitude to the need for access, under certain circumstances, by departmental officials of one sort or another than Senator Messner seems to have. That is not to say that we do not have a long way to go in the welfare sector and in providing assistance to people in need in their retirement, or even prior to it. We could start by looking at lifting the exempt income level. We could go on by having a look at what it really costs to support a child and raising the children's supplement to something nearer the cost that is borne by people in poverty who have children. We could look, a little more rationally and a little more genuinely than we have done at the need to implement a national superannuation scheme. The fact is that successive governments over the last few decades have not done that at all. They have overlooked the fact that in 1938 legislation was passed and assented to but never proclaimed which would have solved this whole sorry mess if it had been implemented. That legislation went through with the full support of the Liberal Party and was promulgated by the then Senator Wilson, who was the father of one of my South Australian colleagues. Had we proceeded with that legislation, I venture to say that we would not be in the mess we are in now. We would not be arguing about whether means tests should be applied only to income or whether they should be applied to all other assets because a scheme would have been nicely in place whereby we had a universal system operating and those things all would have been irrelevant. The fact is that since the war, governments, Liberal or Labor, have done very little to look seriously at implementing a scheme of that sort. It is neither my intention nor that of my Party to support the repeal of legislation which corrects serious anomalies which existed under a previous system and which would throw us right back into that anomalous system when there are other avenues of correction available to us. We have the Government's assurance that those anomalies which are brought forward of the sort that Senator Walters brought up today and of the sort that I brought up with the Minister some weeks ago regarding people on properties and people in aged cottages, respectively, will be looked at and corrected. If Senator Walters is correct that some officious departmental official slapped a $20,000 goodwill amount on somebody's property, I am appalled. I imagine that that is something that could be very readily corrected by a rocket to the person concerned. It is clearly not something that was ever intended under the Act. Senator Walters will at least acknowledge that fact. Such action is right outside the intention of the Act. There is no way that goodwill should be applied to something like that. Senator Walters —Taxation does valuations, often well above government valuations. Senator HAINES —That is precisely the sort of reason why there should be some opportunity for ministerial discretion or, better still since Ministers of one sort or another cannot always be relied upon, for some kind of tribunal or anomalies commission. That is certainly the way we prefer to go. We do not prefer to go from one reasonably anomaly free situation back to a highly anomalous incomes test only system. Senator COLLARD(Queensland)(4.52) — We are debating the Social Security and Repatriation (Abolition of Assets Test) Bill brought forward by my colleague, Senator Messner. Since I have been in parliament, no one thing has so galvanised the community as the assets test. We are getting calls from concerned constituents all the time. It is a matter of great discussion among people in the community, particularly those approaching retirement. At one stage people used to look forward to retirement after a lifetime of work. They now look to retirement in a rather terrified manner. They are quite concerned about what is likely to happen to them. Any kind of assets or incomes test, by its very nature, is discriminatory. The assets test is proving itself to be more discriminatory every day. Senator Messner, in his second reading speech, and Senator Walters in her contribution, have indicated that this is so. The assets test is also unworkable. That is being brought to light every day. It will not be long before people start to make other arrangements. We then get to the stage in which the assets test is of not much use. As Senator Messner has said, instead of encouraging people to rely on government we should encourage them to make other arrangements for their retirement. All the things that helped to make this country great-hard work, pride in workmanship, thrift and initiative-should be encouraged. Instead, people will have to think twice about whether they go down that track. What point is there for them to do that? Why should they put away money, work hard and branch out if, when they reach retirement and look forward to the security that most other people in the community have, they will be denied such security? Why would anybody work hard and put money aside? It must be accepted that in their lifetime they have probably contributed more to this country in many ways, not the least of which would be their taxation payments, than they would ever hope to recoup in the remainder of their life by receiving a pension. The assets test is discriminatory. It discriminates particularly against small businessmen and farmers. The Australian Labor Party still does not understand the rural sector. It has proved that time and again, but no more so than with the assets test. It does not understand what it is like to be assets rich and income poor. That does not seem to get through to the ALP, yet such conditions prevail, particularly in the rural community. Senator Messner, in his second reading speech, brought up the anomaly of the farmer whose property is unable to generate income sufficient to support him and his spouse in retirement and their son or daughter and his or her family who have been working on the property for little remuneration. The plan is usually that the son or daughter will take over the property and continue its operation. They are usually unable to afford payments to the parents because of the low rate of return on such properties. That is not unusual. Because of the deprivation provisions of the legislation, the parents are unable to qualify for the pension and legally transfer the farm to the children, which is usually the only practical action to be taken. The Government provides the infamous pensions loans scheme or, as it has become affectionately known, the pay as you die scheme. This allows pensioners in this situation or with other illiquid assets to borrow the pension with interest of 13.5 per cent during the lifetime against the security charge being applied to the farm. In the best of circumstances, an example of which Senator Messner quoted, and assuming a life in retirement of 15 years, this could build up to a debt of $400,000. It could become a considerable problem for the inheritor to refinance, probably causing the eventual sale of the property and the destruction of the intention to maintain the family farm operation. In that circumstance the security charge becomes a quasi death duty, does it not? Let us consider the diabolical bind in which the farmer finds himself if he has transferred the legal ownership of the property to the children. Not only is he caught by the deprivation provisions of the assets test; because he no longer is able to effect a charge on a property owned by his children, but he also is unable to qualify for the pension loans scheme. His only resort is to seek a pension under the hardship provisions about which Senator Grimes talked. However, if he finds that his assets are in excess of $5,000, a modest savings account, he will not be eligible under that provision either. As Senator Messner said, there is probably no cleverer three-way attack on farmers yet devised by the Government than this. Concern has already been expressed by Senator Walters about the valuation of home and farm and about how it is arrived at. The Prime Minister (Mr Hawke), in his policy speech of 13 November 1984, said: And I give four unequivocal commitments about the assets test: The first is that they will never see social security inspectors in their homes. He gave three other commitments that are not relevant to this argument. He gave the unequivocal commitment that pensioners would never see social security inspectors in their homes. I do not know how a phone call would be viewed, but we are getting many complaints about the phone calls from people who will not identify themselves but ask questions. Those who are aware of what is going on ask who is speaking and find out that it is an officer of the Department of Social Security. If it came to a fine point of law, it could not be said that social security inspectors had entered pensioners' homes, but such phone calls negate the intent of the Prime Minister's promise. There certainly seems to have been a change overall in the modus operandi. The Minister for Community Services (Senator Grimes) in a news release put out on 26 September 1984, said: Let me again make it quite clear that there will be no home inspections. The valuers whose services we use will be working to the Social Security Act, not the Tax Act. On 6 November 1984, in reference to Mr Peacock, the Minister said: He knows that, under the Social Security Act, public servants are not permitted to enter pensioners' homes without their permission. That rule applies now and will continue to apply after the election. Under the assets test, I state categorically that 'there will be no entering of pensioner's homes to value, or check valuations, of their personal effects and household contents. The assets test form does not even ask for details of such items'. He continued: I also guarantee that valuers from the Taxation Office will not be entering pensioners' homes without their permission. A new aspect has entered this argument. It was stated on 26 September that valuers would be acting only under the Social Security Act. Now it is said that valuers from the Taxation Office will not be entering pensioners' homes without their permission-a complete departure from the original proposal which also indicates that taxation valuers have entered into the argument. There is now no entry without permission and there are tax inspectors, all in addition to the unequivocal commitment of the Prime Minister. Now the Minister for Veterans' Affairs (Senator Gietzelt) and the Minister for Social Security (Mr Howe) are quoted in the Press as asking for visits of tax officers. So, the longer the assets test runs, the worse it becomes for those who are unfortunately finding themselves involved. In the southern States-it does not pertain so much in Queensland-we have many soldier settler farms. That is a different story which I shall discuss shortly. We have this idea of taxation inspectors and the 'drive past' method of valuation. As I understand it, a lot of these soldier settler farmers in Victoria and in New South Wales are on irrigated land and a drive past valuation cannot possibly take into consideration water rights which are an essential part of the valuation of these properties. We have quite a departure from the original commitment. I do not know whether Social Security inspectors are entering homes at this stage, with or without permission, but they are certainly making phone calls and tax inspectors are on the job. We also have three types of valuation-valuations for local government rate purposes, valuations provided by local valuers, and tax inspectors, unbeknown to the people owning the properties, driving past and making valuations without any discussions with the owners as to who owns what on the property, what equipment is leased and what is on hire purchase, and without even worrying about the water rights. A lot of these places are soldier settler farms. Those ex-servicemen who have assets have made a double contribution to this country, a contribution that we all accept. They have been prepared to bear arms in the defence of this country. Some have gone overseas and have paid a greater price than a lot of us will ever be asked to pay. On top of that they have come back and worked hard to build up their assets for their future and the future of their families. They have made a double contribution and they are getting hit again. My colleague Senator Messner and I put out a joint release some time ago saying that at least World War I veterans should be absolved from the assets test completely. Senator Grimes cited the rorts going on. The Opposition will not say that there are no rorts. How can we? There are rorts in every aspect of society. If we get down to the lower levels-if we want to put it that way-the wage earners, there are rorts in sick pay, in workers compensation and so on. Of course there are rorts, and I am not justifying them in any way. But the examples enunciated by Senator Grimes are extreme and the $100m which he is claiming the Government has gained certainly would not be coming from those people. It would be coming from the small businessmen, from the farmers and from the ex-servicemen who, in their own way, have been battlers just as much-or more so. They have worked harder and longer hours than probably any other section of the community and, in doing so, they have employed the greatest number of people in employment in this country. Let us not forget that major contribution they have made to this nation. The small businessman and the farmer employ the greatest number of people in this community. They have been very much battlers. They would not have got where they are or accumulated a few assets had they not battled damn hard, harder than most people in nine-to-five jobs will ever realise. The attitude that Senator Grimes enunciated seems to be typical of the attitude of the Australian Labor Party in general: 'Nobody has any right to be successful and, if they are successful, let us get into them'. This country is on a downhill slide. Most thinking people accept that, yet this Government is crucifying the very section of the community that can get this country going again. It is a ridiculous attitude for the Government to take and, as I said earlier, it is completely discriminatory and unworkable and is proving more so. We have more and more public servants, a non-productive section of the community, tied up in looking at the assets test, seeing that it works, spying on people and so on. It is an abomination on this land, and I fully support the Bill that has been brought forward by my colleague Senator Messner. Senator GIETZELT(New South Wales-Minister for Veterans' Affairs)(5.07) —This debate on the Social Security and Repatriation (Abolition of Assets Test) Bill 1985 is the culmination of a long debate. It is 18 months since the Government introduced in the 1983 Budget its proposal to impose an assets test. We have seen attempts by the Opposition, by Senator Messner in particular, to create not only opposition to the Government's proposals, but also a great deal of confusion and concern unnecessarily in the Australian community. The Opposition senators who spoke and asked questions on this matter in the intervening period sought to suggest that the Government was introducing legislation that was discriminatory, which suggestion was repeated by the previous speaker; that the Government was introducing legislation which would cost more than it was worth and which would employ a great bevy of public servants; and that the Government would raise no funds at all. Senator Grimes and I were subjected to searching questions and debate about the sums of money which the Government would collect in its attempt to have a redistribution of wealth and to establish a system under which, by the standards of the Opposition parties, people should be able to provide for their own existence and subsistence. Everything that has happened since those accusations were made has justified the Government's position. We have seen unprincipled, unmitigated and hypocritical attempts by the Opposition to misconstrue and thereby to confuse the very sections of the community that it believes ought to be protected. It is amazing that in the operation of assets test legislation the projections of the Government have been more than adequately reached. The early results have completely vindicated the Government's approach. We said that we would be concerned with those sections of the Australian community in the welfare area-and I stress that the welfare area means the two and a half million Australians who rely almost entirely on government benefits for their existence and their living standards-and our position has been vindicated and our projections have been reached. The savings have been made, they are substantial, and are very close to the estimates that were made. It will be remembered that the Prime Minister (Mr Hawke) suggested that something like 2.2 per cent of the Australian people in receipt of government benefits in the form of welfare payments would be affected. That was an estimate which was subsequently reached-it was something around 2.4 per cent. That was a remarkable achievement, in view of the limited information on pensioner asset holdings that was available during the planning stage of the assets test. We said at the time that only a small minority of pensioners would be affected. I said that only a small proportion of service pensioners would be affected by the test and that the great majority would be completely unaffected in the ultimate, that is, when the savings were recorded and made. I said that the great majority of beneficiaries would receive their benefits as scarce welfare funds were redirected to the genuinely needy. In respect of my Department I said-and I was subjected to numerous questions on this-that something like 15,000 people could be affected by the assets test. As it turned out, 13,387 had their service pensions affected; 6,494 were cancelled and 6,893 were reduced. As we predicted, this has shown that more than 90 per cent of those in receipt of pensions are unaffected. That has been borne out by the facts. It was a great relief when the average pensioner found that he did not even have to return the first form that was sent out. I was derided by Opposition senators when I said that something like $30m would be saved by the Department of Veterans' Affairs. However, today's estimate shows that $29.5m has already been saved in the first operation of the scheme. We believe that in addition to that, because of wealthy pensioners-those with considerable assets-there will be a saving of $10m on the amount projected on the basis of the way in which the graph was moving up in 1984. That is, the would-be new applicants have not bothered to apply because they have realised that the Government's legislation means that their applications would not be worth while. We were told that the administrative costs would outweigh the savings, but that of course has been proved wrong. The Government's estimations were correct and the Opposition's projections have been destroyed. The administrative costs in my Department have been only $3m in the year, and that takes account of the number of treatment savings as well-service pensioners are able to avail themselves of treatment facilities. The total savings in a full year will be between $40m and $45m in my Department. As the Minister for Social Security (Mr Howe) has indicated, his savings will be approximately $100m. I listened yesterday to three maiden speeches and I have also noted the speeches of other Opposition members over the last year or two, all of whom have gone on the public record as preaching economic restraint and calling on the Government to implement a reduction in the deficit and to reduce the size of government. They have taken the philosophical position of small government, a reduction in public sector spending and the like. One finds it difficult, therefore, to appreciate this because the Opposition parties do not seem to know where they are going or to have any understanding of fiscal responsibility. They have not suggested where there should be cuts in public sector spending, and when the Government does take steps to realise that objective, we are subjected to opposition of the type that Senator Messner in particular has introduced. We have seen an irresponsible attempt by the Opposition parties to make short term political gain by abandoning their so-called philosophical position. As other speakers have said, if it is good enough to have a means test in respect of incomes-and that has always been associated with welfare payments-it is good enough to apply the same principles to assets. Senator Collard made a great deal of critical comment about assets being taken into account, but up to 1976 the means test was in the pensions legislation and no attempt was made to abolish it. If it is good enough to have an incomes test in respect of welfare payments, it is proper also to have regard to assets, because it is from assets that one gets income. As the whole legislation has unfolded and as we have seen its development, it has been understandable that the pensioner communities at large have moved from being somewhat concerned, as a result of the propaganda and the attitudes taken by the Opposition and some sections of the media, to a position where they now accept that the Government's propositions were sensible, fair and reasonable, having regard to the Government's overall strategy of reducing the deficit and directing welfare funds where they should go-that is, to the needy. It is not hard to appreciate the position of the Australian Council on the Ageing. The Chief Executive Officer, Mr Cliff Picton, has said that the figures have vindicated the Council's support for the assets test when it was proposed in 1983. He went on to say: This order of savings in expenditure should enable the Government to keep faith with the poorest pensioners who rely on the pension payment as their sole income. It is hoped that the Government will now move quickly to honour the election promise to increase pensions to 25 per cent of average weekly earnings. Of course we cannot do that unless we either have more taxes or take away benefits from other sections of the Australian community. The Government in its wisdom-I believe correctly so-has taken the view that there were sections of the Australian community who were able to accumulate sufficient assets in their lifetime to provide for their retirement. We pay credit to them. Therefore, I find it hypocritical that Opposition senators, who purport to stand for fiscal restraint and needs-based welfare, should abandon their so-called principles at the slightest scent of some political advantage. This puts in a revealing light their supposed reaffirmation of liberal philosophy that we have heard so much about during their recent alpine frolic at Thredbo. Of course, one has to look at their public position. I remind the Senate what the present Leader of the Liberal Party said when he made his run for the leadership against Mr Fraser back in April 1982, almost three years ago. He said that the success of the Liberal Party depended on imaginative, growth oriented policies and political leadership with a capacity and a will to understand and to relate to the community. When he was talking of social services, what did he say? He said that government had a clear duty to protect and assist those in genuine need. He favoured a fundamental reform of taxation and government expenditure. He said that claims on the public purse needed to be rigorously assessed on the criterion of meeting genuine social need. Of course, he was only re-emphasising what a previous Liberal Treasurer had said a short time prior to that when he referred to the millionaire pensioners. We are aware that millionaire pensioners have been beneficiaries of both the Department of Social Security and the Department of Veterans' Affairs. It is improper for those people to have access to a needs based welfare system when we have two and a half million people living on something like $160 a week and enjoying meagre assistance in the form of fringe benefits. The Government, committed as it is in the prices and incomes accord to raise living standards, saw the need to make sure that our welfare system was based on need. It set out to save sufficient funds so that we could meet our important political and moral commitments to raising the living standards of those who rely solely upon the welfare payments from the Commonwealth Government. I remind honourable senators opposite that the service pension is a welfare payment. It is the age pension paid five years earlier for those who serve in a theatre of war. The Government has a commitment to that section of the veteran community. But, as I indicated recently in a speech in Queensland, the figures show that 92 per cent of those in receipt of a service pension receive less than $50 a week on top of their base pension. In fact, 49 per cent of those in receipt of the service pension have no supplementary income whatsoever. The Government, committed as it is to the redistribution of welfare and the raising of living standards, had set about the process of saving money and taking from those who were able to provide for their retirement in order to meet its commitment to raise the standard of living to 25 per cent of average weekly earnings. Our capacity to assist people to live in dignity is governed to a great extent by our success in ensuring that scarce welfare funds are not frittered away on those who have substantial independent means. That is why there is very little protest from pensioner organisations and organisations such as the Australian Council on the Ageing. Senator Haines has said that the income test is 'the most inequitable system that any political party ever devised for determining those eligible for the pension'. If that is a fair comment, and I suggest it is, it is equally equitable to have a system applying to a person's assets. Service pensioners themselves have co-operated fully with the test procedures. Barely one per cent of the forms sent out in my jurisdiction are still to be returned. About 70 per cent of those losing the pension just ticked the box when they sent the forms back to the Department because they realised that their assets were in excess of that determined by the legislation. They did not bother to argue the toss; they realised that they were in the area to be affected and were prepared to accept it. I think that, in itself, by and large establishes the validity of our policy. The Government took the hard and principled decision in respect of the assets test. I believe that any government worth its salt, when it viewed the growth in the welfare payments and the age component which is growing rapidly in the Australian community, would have acted responsibly, whatever its political colour. I believe that the previous Ministers for Social Security and Veterans' Affairs would have been forced to take somewhat similar action to that which this Government took, having regard to the tremendous growth in government spending in these areas. I pointed out previously that Senator Messner said three years ago: All welfare, whether in aged or repatriation areas, should be based on need. He warned that, with big proportional growth in the number of aged expected, looking after Australia's aged would become more and more expensive. What did the current Leader of the Opposition (Senator Chaney) say in this place when he was the Minister for Social Security? He said: I am concerned that since the change from the means test to the income test in 1976, there appears to have been a marked increase in the number of people, some with quite substantial amounts of money, who are contriving to make themselves eligible for the pension by participating in artificial income-avoidance schemes and by placing significant sums in non-interest-bearing accounts. Such practices restrict the Government's ability to provide assistance to those in genuine need. That was exactly what I pointed out in the early days of the debate on the assets test. On another occasion in 1981 he said: The Social Services Act already contains provisions which are designed to counter attempts to circumvent the income test. However, due to the proliferation and active marketing of sophisticated and contrived schemes in recent times, these provisions have been found to be inadequate in certain respects. He said on another occasion: There is a growing practice of avoiding income for pension purposes, or even more commonly for pensioner fringe benefits. There is no essential difference regarding these income-avoiding schemes (which are designed so as to obtain a pension), as far as the general community effect is concerned, between this and tax avoidance. It is, quite simply, the welfare face of the income-rigging coin. We have plenty of evidence that the Opposition parties were aware of this problem. Former Treasurer Lynch, a senior member of the former Government, Mr Peacock, Senator Chaney, Senator Messner, Senator Dame Margaret Guilfoyle and many others are on the public record drawing attention to the magnitude of the problem. But it took this Government to have the courage to do something about it. Contrary to what was said in the intervening period since the 1983 Budget, the Government's stand has been vindicated. Substantial savings have been made and those savings will result in due course in a higher standard of living. We have had statements from a whole range of other public minded citizens. The Executive Director of the Business Council of Australia said almost a year ago: The government deserves support for attempting to tackle this politically difficult problem now. . . It is important that the government gets community support for tackling the hard and thankless task of expenditure restraint through means testing welfare. It would be disappointing if any sector of the community, through vested interest or for short term political advantage, were to make the test of reform more difficult. Senator Haines of the Australian Democrats referred earlier in the debate to what was said by Alexander Downer, who I understand is now a South Australian Liberal member of the Parliament. He said: The latest version of the assets test proposed by the government offers a much more equitable formula than has previously been produced. I pay tribute to those public-minded citizens who sat on the assets test panel, who looked at the problem and who came up with certain recommendations for the Australian Government. Mr Downer went on to say: It would be folly . . . to reject the asset test outright, as it is the only avenue which leads to effective control over the spiralling costs of retirement policies. One could go on and on with statements from the Confederation of Australian Industry, from John Elliott, who is another prominent member of the Liberal Party of Australia and from many other public figures, including officials from the Young Liberal Movement such as Mr Birrell and Mr Crawford. They all talk about the need for government to have a needs-based welfare system. In the few minutes I have left to speak on this matter I want to take up the point raised by Senator Collard who, though properly concerned, has over-emphasised the problems facing those who live in rural communities. For example, about 160 people have appealed through my Department to the review panel on the basis of hardship relating to rural properties. I understand that several hundred are also involved in appeals concerning the Department of Social Security. The assets test legislation asks that the 15 per cent who it is perceived may have assets in excess of the amount set down in the legislation, fill in a second form. In probably less than 1,000 cases is there conflict between the assessment made by the pensioner of the value of property and the assessment made by the valuer appointed by the Australian Taxation Office. Of course those cases will now go to adjudication, to arbitration, to establish whether the assessment of the owner or the assessment of the valuer from the Taxation Office is correct. In the event of the matter not being resolved it is proper, in the interests of both the applicant or pensioner and the Government, that some other valuation be established. I reiterate that the Government is committed to what the Prime Minister said: No Department of Social Security-I can add Department of Veterans' Affairs-inspectors will be going into pensioners' homes. But if we have to resolve a conflict of assessments of the property owner and the Taxation Officer valuer, obviously there will need to be another assessment. How we reach that point in a way that does not invade the privacy of the individual and does not involve intrusion into the home but does reach a solution may need some consideration. We have two and a half million pensioners and we have less than 1,000 appeals based on hardship. We are trying to establish a system by which the matter will be satisfactorily resolved. The great majority of cases have already been resolved because in excess of 90 per cent of pensioners have not been affected at all. Only a very small number of cases, probably around 0.001 per cent, still involve a conflict between the application of the legislation and the owner of the property. That problem has to be resolved. We have to work out a system by which the interests of both parties are protected. I assure the Senate that in no way will we be intruding upon the privacy of any person, but we will probably have to revert to a third party for valuation. Senator Collard asked why we could not use the valuations of the Valuer-General in each State or of valuers from local authorities. That is fair comment, except that we are aware that in various parts of rural Australia there are great differences in valuations from one year to the next; there are variables which are not easily identified. Some States have a two-year valuation and some have a one-year valuation. This is important because a $10,000 variation in the value of a property may affect whether a person maintains his pension or loses a portion of it. The Government is committed to finding a sensible formula that will in no way disadvantage pensioners if there is a difference of opinion relating to a valuation so that it will have the co-operation and understanding of everyone affected. I finish as I began by saying that the Government's projections in respect of the assets test have been borne out. There will be a considerable saving; we are talking now of around $140m or $150m. In due course that money will be allocated back to the two and a half million pensioners. Considerable advantage will go to the overwhelming majority of those people who rely for their livelihood upon a pension or benefit, whether it be a social security or service pension or benefit, and that will meet an important social and political commitment for which this Government stands. Senator HARRADINE(Tasmania)(5.37) —The Social Security and Repatriation (Abolition of Assets Test) Bill 1985 is one of the simplest well-drafted Bills that I have seen come before the Parliament. In simple terms it is designed to repeal the assets test. I congratulate Senator Messner for the clarity also of his second reading speech. It sets down very succinctly the problems which many people in Australia are facing and the confusion which surrounds the assets test. I, along with probably every other member of Parliament, have received representations about this matter. Senator Messner details in his second reading speech specific problem areas. I indicate in particular that family farms and pensioners in aged persons homes are matters on which constituents, and others, have consulted me. Senator Messner said also in his second reading speech that there are two options available to the Opposition. He said: It can propose legislation to correct the anomalies or it can seek to obtain the passage through both Houses of Parliament of legislation to repeal the assets test upon gaining control of the Parliament. One of the problems with this piece of legislation, as Senator Messner would appreciate, is that it has Buckley's hope of being passed by the House of Representatives. I am concerned-and I indicate now that I will be voting against the Bill-that it does throw out the baby with the undoubtedly confused and dirty bath water. I would have preferred to see legislation come forward proposing to correct the clear anomalies that exist in the legislation. I feel that the repeal now being proposed is not appropriate and, thus, I will vote against it. It also is impracticable because it will not pass the House of Representatives. Glaring anomalies are now emerging as a result of the assets test being just in place, the examination of the question by thousands and thousands of pensioners, the filling out of forms and the consideration of those forms by the Department of Social Security and the Department of Veterans' Affairs. Were those anomalies addressed in a Bill to amend the legislation, that would highlight the real problem and enable members of this chamber to stand up and be counted and to vote to remove those anomalies. It would enable members of the House of Representatives to do the same, because I know that on both sides of the Parliament there are people who have concerns about the operation of the assets test. I see nothing sacrosanct about assets as compared with income. I understand and am very conscious of people's problems with the assets test at this time. I have personal knowledge of problems in the farming area and in the aged persons area. I am also concerned about the problems associated with aged people who are living on the block owned by their children. Senator Messner rightly pointed out the problem of the granny flat situation. People do not want to shell out money for a granny flat on their children's property because they may have other children and may wish to dispose of their assets in an orderly way at the time of their death. That is another question that concerns us all. I congratulate Senator Messner for bringing that forward because it highlights the problem. It is a result of the problem, as he says in his Bill. However, on the ground I have already stated, I must vote against the Bill. Senator MESSNER(South Australia)(5.43) —in reply-I deal, firstly, with the remarks of Senator Harradine because he has raised a point which is at the core of the decision the Opposition parties took in order to introduce this legislation. We chose to repeal the principal legislation, rather than to seek amendments to deal with the various anomalies, for two reasons. The first is that the anomalies are far more numerous than could be fixed by a simple piece of legislation. The second, and more important, point is this: As honourable senators know, the Opposition parties have maintained a position of in principle objection to this legislation since it was first announced by the Government. There is one particular item of the most severe impact in principle upon one sectional group in the community which can be remedied only by a repeal of the assets test legislation. That impact is upon farmers. My second reading speech-I thank Senator Harradine for his remarks in regard to the clarity of it-referred to the situation in which farmers find themselves if they are caught by the deprivation provisions of the legislation and, in the meantime, following the normal pattern of business and farming arrangements, have transferred their business, their farm and their land, to a son or a daughter to carry on. In that situation, given that we are not talking about the very wealthy farmers but about the average battling farmers, the son cannot raise money sufficient to be able to service an outside debt in order to finance the care of his father in his old age, nor can the father seek a loan under the so-called pay as you die scheme because he has surrendered the asset to his son. Consequently, he is unable to give to the Government a security over the property in order to draw the pension under the pension loan scheme. He is in a catch-22 situation, which he cannot get around. I am afraid that that cannot be fixed by legislation. Earlier today Senator Grimes said: If people are in a hardship situation-and the case I have just outlined may be considered to fall into that area-they should approach the Department of Social Security and seek assistance under the hardship provisions. However, if they have disposable assets outside of the farm or whatever, of more than $5,000-one really does not need a lot in one's house or one's bank account to add up to that figure-they cannot qualify for the pension under the hardship scheme. So, there is a third block to the farmer. I believe this has been designed deliberately to hit that section of the community. Senator Gietzelt —Nonsense! Senator MESSNER —The Minister did not address that in his remarks, nor did Senator Grimes, yet it is spelled out clearly in my speech. Neither Minister has said anything about it, nor has any other speaker on the other side. There must be some reason for the Government not disclosing to the Senate why it is not seeking to amend the legislation. I say that there has to be a fundamental attack on the legislation. If the Government will not face up to its responsibilities-if it has to be dragged squealing and screaming into the House of Representatives for that to occur-then I am prepared to force this issue as far as I can in the Senate. That is why we need the support of the Australian Democrats and of Senator Harradine in order to achieve the passage of the legislation, at least through the Senate-to push the Government to the limit. Time and time again, through the whole sorry history of the introduction of the assets test, the Government has been forced on to the defensive before it has finally given in and retracted, changed its mind and then made some alteration to the scheme. That is the history of the last 18 months or so. I could quote numerous examples of how that has occurred, and this is another example. The Government acts only under pressure. When it is forced by the Opposition parties to recognise the truth and the strength of the case, it will go forward and do something about it. It takes that kind of pressure to bring the Government to its senses, and we are in the situation today where we are forced to do the same thing. I turn to a few of the arguments the Government has put forward today. It seems that the Government relies for its defence on two key points: Firstly, that it has raised more than it estimated by virtue of the assets test and that, somehow, this is a very significant breakthrough; and, secondly, that it is making what it calls the rich pay in order to be able to provide more resources to look after the poor. Let us examine these points. The Government's first and most senior promise at the election in 1983, since repudiated, was to increase the average base rate of pension to 25 per cent of average weekly earnings. It has failed on this ground. Senator Gietzelt —That was over three years. Senator MESSNER —We are now well into the third year, Senator. Government members are very sensitive on this point. I know why they are sensitive. Even if the assets test produces $100m-which the Government claims it will; and I will come to that in a minute-the Government will need $1,000m to raise the pension to 25 per cent of average weekly earnings. So what is the Government telling us? If the assets test raises only $100m, the Government then has to raise another $900m. Does that not raise fears of what the Government might do with the assets test now that it is in place? This is worrying a lot of people in the community. The Government is seeking another $900m from the assets test after this event. Even if that were not so, Senator Gietzelt admitted in his remarks today, in his very poor defence of the subject, that what it was all about was not looking after the poor; it was about reducing the deficit. He said that the Government introduced it to reduce the deficit. What is the Government's intention? Since August of 1983 we have not been able to establish clearly what the Government is on about. We are obviously getting no clearer to the point now either. Let us return to the case of the farmer, because I would like to make the point about the so-called $100m saving. Consider a farmer with a $160,000 property, other than his house, that is producing around $8,000 or $9,000 in income a year. He intends to give the property to his son who can continue the business after the farmer's retirement. Two families cannot live off $9,000; so, quite rightly, he applies for a pension which would bring the total income for the two families to around 75 per cent of average weekly earnings, a princely sum. Two families cannot live on that amount when that 75 per cent, small as it is, is reduced to only $9,000. So what is the option for that farmer? He has to sell the property. What is the immediate consequence? The immediate consequence is clear. The son and his family are forced on to unemployment benefit. How much will that cost the social security system? Is it not absurd? Of course it is. The Government asks us to swallow that it is somehow gaining a net increase of $100m. It is not true. That is not even the net cost to run the assets test anyway, which, by the Government's own admission, is of the order of $30m. This Government is trying to hoodwink people because it believes that by sprouting rhetoric and throwing out emotional phrases about how the rich should pay for this and that, it will gain the support of the people. Let us just consider that point of rhetoric; that is, how the rich will pay. Senator Grimes gave us a synopsis of several different cases of so-called rich people who were taking advantage of the pension system. It seemed like a truncated version of the famous Senator Gietzelt list of 124 pension cheats that was discredited about 18 months ago. Senator Gietzelt —It was not. Senator MESSNER —I refer the Minister to the evidence given to the Senate Standing Committee on Social Welfare on the retirement income inquiry where his whole argument was knocked to pieces. I hope that he will look it up. Let us just take one case because I was not able to copy them all down as Senator Grimes spoke. He mentioned a case, which sounded horrific, of a man with $400,000, interest free, lying in a family trust and he was getting the pension. What the Minister did not say, of course, was how that $400,000 came into existence. He might have been a fellow with an ordinary size farm, but because of the values applying in a particular district, he transferred the money into a family trust in such a way that he transferred the ownership to an entity so that he could provide for his sons and daughters to work the property while still retaining a vehicle to receive some income from the farming operation. In other words, it was a simple debt. We have demonstrated that farmers are not finding it easy to pay one family's income off a farm, let alone two; so how can they service that properly? Therefore, exactly the same situation has arisen as I mentioned earlier. I would like to know how the Government can throw around figures such as $400,000 or $500,000 worth of assets, without telling us what those assets are and what the circumstances of those assets coming into existence have been. I ask the Government formally to provide us with a breakdown of the classes of people who have lost their pensions, the gradings of wealth in those categories which have led to the loss of their pensions and what those assets represent. I think we will find that the most significant groups of people who have lost their pensions are indeed the battlers, the small businessmen, the farmers who are in the small category and certainly not, by any stretch of the imagination, in the wealthy category. Having attended meetings along the north-west coast of Tasmania last week I have been absolutely astounded by the response from people who have been concerned about the assets test. They all have average size dairy farms and their assets would exceed no more than $200,000. Their incomes were of the order of $10,000 a year. These are the kinds of people who are being affected. The Government will not acknowledge it; it will stick to its rhetorical line of the Left and keep sprouting this nonsense about ripping it off the rich. Senator Robertson —Get your facts straight. Senator MESSNER —Some of it is right, anyway. Senator Grimes mentioned some of the anomalies. I did describe those in some detail in the course of my remarks, but I would just like to mention one other aspect before I sit down; that is the point about the valuations of farming properties. It has become quite clear that the Government had absolutely no idea what it was going into when it set up its machinery to look after the review of valuations for properties. Apparently the Government does not even have in existence suitable regulations and arrangements for the valuations of properties where, in the circumstances that Senator Gietzelt has outlined in his remarks, the valuations have been challenged. I and every other senator on this side of the House have had practical situations put to us, where people have come to us and said: 'I sent in a valuation according to the local valuation from the Valuer-General. I got back information that indicated that the valuation had been increased by 50 per cent, and I have lost my pension. I then went to the Department of Social Security and sought a review in accordance with the arrangements'. What is the answer? The answer is 'Oh, you will have to wait because we do not have the valuers who can do the job', 'We cannot get into people's property', 'We cannot do this', 'There is just no machinery for it', or some other reason. One can see quite easily that this might spin on for another six or 12 months before anything is done about it. As a result these people will be suffering by virtue of not having any income for that period. I think that is a disgrace. I suppose that one can only say that it is all part of the tragic history of this procedure that started on 21 August 1983 with all its disastrous overplay. I wish to address some remarks to Senator Haines, who always has a mortgage on intelligence in this place and who is one of the brighter members of the Senate-by her own claim. She made a great deal of the fact that the anomalies are something which she would like to change by virtue of altering legislation. My first question is: Where is her amending legislation? My second question is: If she is so concerned about the affairs of pensioners, why was legislation not brought before the Senate on the first day of its sittings? As I said earlier, there is only one proper approach to this problem that is so fundamental as it affects a particular section of the community, that is, the farmers: We have to repeal this legislation, have passage of the Bill through the Senate and put pressure on the Government to wake up to itself and get something done. If that argument does not appeal to the Australian Democrats they have nowhere else to go. Senator Haines referred also to my colleague Alexander Downer, the honourable member for Mayo. She quoted some remarks that he made about nine months ago when he was the Executive Director of the Australian Chamber of Commerce. She claimed that he supported the assets test, as of course she does. Mr Downer has certainly been involved in a number of very well-publicised cases in Senator Haines's State of South Australia which indicate the absolute stupidity of the Government's legislation. He is quite clearly convinced that the Australian Labor Party was wrong on this issue, as has been demonstrated by several Press releases. I will not read those out in any detail as it has already been done. I suggest that Senator Haines might do better to have a talk to some of her constituents in South Australia and people in other parts of Australia to find out what are the serious problems with the current legislation. She will then realise that this Government will be forced to act only if the ultimate pressure is exercised. She has the ability to do that by joining with the Liberal and National parties here today in supporting the passage of this legislation and putting the pressure on the Government in the House of Representatives. It is interesting that Senator Haines's great solution to the problem is a national superannuation fund. Senator Haines —I did not say that at all. Senator MESSNER —The honourable senator did say that. There is an echo from the other side of the chamber very much like the echo we heard earlier this week emanating from Mr Howe and Senator Gietzelt, those far left members of the Australian Labor Party who think the great solution to all problems, in particular the tax problems, is a national superannuation scheme. That is the kind of approach of the Australian Democrats, who have just no idea about the realities of the situation. If they have a mortgage on intelligence they are about to be sold up and lose out altogether. Senator Puplick —Foreclose Senator Haines. Senator MESSNER —To foreclose Senator Haines is a very good suggestion. In conclusion, I merely reiterate this simple point: We in the Liberal and National parties stand to repeal the Government's legislation because we believe it attacks thrift, it attacks frugality and it attacks incentive for people to do their own thing. We believe it is wrong in principle on those grounds alone. But the more important point is that the legislation itself attacks particular sections of the community unfairly. It destroys the opportunities for those groups to rejuvenate themselves. For that reason we oppose the assets test in principle and we are seeking its repeal. I hope that the Senate will vote in favour of our legislation so that we can bring the Government to its senses. Question put: That the Bill be now read a second time. The Senate divided. (The Deputy President-Senator D. J. Hamer) Ayes . . . . . . . . . . . 27 Noes . . . . . . . . . . . 35 —— Majority . . . . . . . . . 8 —— Baume, B. R. MacGibbon, D. 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. Collard, S. J. Scott, D. B. Durack, P. D. Sheil, G. Guilfoyle, Dame Margaret Short, J. R. Hamer, D. J. Teague, B. C. Hill, R. Vanstone, A. E. Kilgariff, B. F. (Teller) Walters, M. S. Knowles, S. C. Watson, J. O. W. Lajovic, M. E. Withers, R. G. Lewis, A. W. R. Aulich, T. Jones, G. N. Black, J. R. McIntosh, G. D. Bolkus, N. McKiernan, J. P. Childs, B. K. Maguire, G. R. Chipp, D. L. Macklin, M. J. Coates, J. Mason, C. V. J. 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. Evans, Jack Sibraa, K. W. Gietzelt, A. T. Tate, M. C. Grimes, D. J. Vigor, D. B. Haines, J. Walsh, P. A. Harradine, B. Zakharov, A. O. Hearn, J. M. Crichton-Browne, N. A. Coleman, R. N. Jessop, D. S. Colston, M. A. Townley, M. Georges, G. Rae, Peter Giles, P. J. Chaney, F. M. Button, J. N. Reid, M. E. McClelland, DouglasArcher, B. R. Foreman, D. J. Question so resolved in the negative. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Gareth Evans) read a first time. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(6.13) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- The purpose of this Bill is to amend the Honey Levy Act (No. 1) 1962, the Honey Levy Act (No. 2) 1962 and the Honey Levy Collection Act 1962 to allow honey producers to pay honey levies annually rather than monthly as now required by the legislation. The Honey Levy Act (No. 1) 1962 imposes a levy on honey produced and sold in Australia. The Honey Levy Act (No. 2) 1962 imposes a levy on honey produced in Australia and used in the production of other goods. The Honey Levy Collection Act 1962 provides the mechanism by which these levies are collected. Levy collections for 1984-85 are expected to exceed $300,000. The money is used to finance the operations of the Australian Honey Board and to provide funds for research, administered by the Honey Research Committee. Levy returns are presently lodged by more than 300 levy payers each month. Of this number, over 90 per cent are producers, the remaining 26 are honey dealers. Most of the honey sold in Australia is sold through dealers. In the current year, for example, it is estimated that the levy paid on returns lodged by honey dealers will be about $285,000. The balance of around $22,000 will be paid by producers. This means that the average monthly payment by each producer is about $6. Such payments are administratively expensive and inconvenient for both Industry and Government. The proposed changes are intended to alleviate the situation by reducing the costs and volume of paper work associated with collection of the levy under the legislation as it now stands. This Bill seeks to achieve those aims by removing the need for producers to lodge monthly returns, requiring instead the submission of a single annual return. In keeping with this change, the present monthly exemption limits of 50 kilograms contained in the Honey Levy Acts Nos. 1 and 2, are to be expressed in annual terms for producers, that is, 600 kilograms per year. Payment of levy will be due on 28 February of the following year. The requirements for the payment of levy by dealers will remain unaltered. They will continue to lodge monthly returns as at present. Under these arrangements more than 90 per cent of the levy will continue to be collected monthly. The uncollected balance, however, represents a deferral of payment rather than a loss of revenue and most of the $22,000 involved will be collected during February of the following year. It is expected that this deferral of the receipt of a small proportion of levy will not create a significant problem for the Australian Honey Board or the Honey Research Committee. The impact of these changes on receipts therefore will be minimal. In the long term, the level of annual collections will vary little, if at all-probably by less than $1,000, or about a quarter of one per cent of the total. There could be a fall in the amount of revenue collected arising from producers who occasionally sold or used over 50 kilograms of honey in a month, not now having to pay levy if they do not sell or use over 600 kilograms in a year. The changes are seen as a being of advantage to both Government and Industry. The Department will benefit considerably by a reduction in the administrative effort now required to process a large number of returns for a small amount of levy. Producers will be relieved of the task of completing return forms monthly and the costs associated with making numbers of small payments. The changes in the Honey Levy Collection process outlined above have the support of both the Federal Council of Australian Apiarists' Associations and the Australian Honey Board. The proposed date of effect is 1 January 1986. I commend the Bill to the Senate. Debate (on motion by Senator Peter Baume) adjourned. Debate resumed from 19 March, on motion by Senator Gareth Evans: That the Bills be now read a second time. Senator MACKLIN(Queensland)(6.15) —We are debating the Trust Recoupment Tax Assessment Bill 1985, the Trust Recoupment Tax Bill 1985 and the Trust Recoupment Tax (Consequential Amendments) Bill 1985. The controversial retrospectivity of these Bills to 1 July 1980 has already been dealt with in the debate that has taken place so far. The Bills have a considerable revenue expectation, about $10m, and hence are important Bills. They have been introduced previously. In fact, they were introduced into the House of Representatives on 9 October last year but did not reach the Senate and lapsed when the Houses were dissolved. The Australian Democrats will support the actual policy content of the Bills in that they deal with new generation trust stripping schemes which allocate income from a family trust to a tax exempt charity. However, the income is not payable to the charity for some time-often, in some of the more extreme circumstances, after 80 years-and thus I think it can be fairly seen by most people that by that time the donation at present values would be absolutely worthless. Yet the trust beneficiaries in the present circumstances have a considerable tax advantage. I think most people would say that the scheme represents a way around the existing legislation and that consequent amending legislation needs to be passed. Part IVA of the Income Tax Assessment Act, which is the new anti-avoidance section of that Act, is to be applied under this legislation from May 1981. Section 260 of that Act, the old anti-avoidance section which Gyles in his report believes should be used against blatant tax avoidance schemes, has not been tested against these schemes; neither has Part IVA, to which I have just alluded, been tested against these schemes. In other words, the suggestion made in Gyles's report, that he believed there would be every prospect of success if section 260 were used, has not yet been tried. In fact, I believe and all my colleagues believe that both this Government and previous governments have been negligent in not making use of those sections. Of course, for quite some time the stated proposition was that they could not be used. Senator Peter Rae —Don't you think that the change in the constitution of the High Court has made some changes to the prospect of success of 260? Senator MACKLIN —I am not about to embark on a social analysis of the High Court of Australia and its political or other judgments. Indeed, I believe it would be disorderly for me to do so and I will not be disorderly and go against the Standing Orders. The ACTING DEPUTY PRESIDENT(Senator Haines) —Thank you, Senator Macklin. Senator MACKLIN —Madam Acting Deputy President, I would not be disorderly while you are in the chair. The situation is clear that we should take Gyles's recommendation at face value. We should proceed to use those sections, which he maintains are available to us under the current Act against these types of schemes. Relying on his judgment-his was a very extensive judgment-action against many of the schemes which the Government had hoped to catch by the retrospective legislation, both this legislation and other retrospective legislation, would be successful. Indeed, as honourable senators know, I have stated that in every speech I have made on these issues, even prior to the Gyles report being submitted to this House. Governments as early as the 1970s, and this includes the Whitlam Government, have been aware of the need to legislate against the tax avoidance industry. It is their neglect that has been the major cause of the lost revenue. This Government has sought to make amends by retrospective taxation. The point at issue is that if this Government had been really serious with regard to the other tax Bills-it certainly is not with these tax Bills-it would have called a double dissolution. It was open to the Government to call a double dissolution on the other Bills. As we now know, if the Government had done so this chamber would have seen the second joint sitting in the Federation's history. It would have passed those Bills because the extra numbers in the House of Representatives would have overwhelmed the Opposition.That is the settled fact. If the Hawke Government really had been serious about the whole exercise it would have called a double dissolution. It would have had the numbers to pass the legislation at a joint sitting. Let us be very clear that the exercise with these Bills-not with the other Bills-is a political exercise. It is not an exercise with regard to tax recoupment. The report of the Special Prosecutor, R. V. Gyles, QC, attacked governments for not using section 260 of the Income Tax Assessment Act to prosecute those who use- Senator Watson —Not the Government; the Tax Office. Senator MACKLIN —It attacked the Australian Taxation Office, then, for not using that section to prosecute those who used blatant and contrived tax avoidance schemes. I believe that this vindicates our belief that existing anti-avoidance sections of the income tax Acts have not been properly tested in the courts. Senator Watson —They are doing it now. Senator MACKLIN —They are doing it now, but they have not done it in the past. We believe that testing in the courts ought to take place. In order to fight tax avoidance it is not sufficient to pass legislation and use it. We also need the staff to be able to carry out those tasks. We know now from reports that the Australian Taxation Office is a good, income-returning operation. We have a fair indication that each extra member of staff will pay for himself by the work that he does. I am not quite sure we could say that with equanimity about many other areas. The Treasurer (Mr Keating) has announced an increase in the number of staff for the Taxation Office. That increase ought to have occurred earlier, but we certainly applaud the increase the Government has announced. The only question that we believe arises seriously with regard to these Bills is whether the Commissioner of Taxation should be given additional weapons in this area, including retrospective powers, to pursue tax evaders. As is well known, a number of my colleagues believe that the types of tax avoidance schemes covered by these and other Bills justify retrospective legislation to enable the Commissioner to collect those taxes which have been so blatantly evaded. Others amongst us believe that legislation which retrospectively makes illegal an act which was legal when it was carried out is offensive and reprehensible. Our colleagues have been consistent in that. Those who have voted with me have been consistent on every retrospective tax Bill that has come forward, as have a number of others, such as Senator MacGibbon, who is in the chamber at the moment. For that reason, some Democrats will be supporting this Bill and some opposing it. In many ways the division in our Party and in other parties reflects the division that undoubtedly exists within the community. Our parliamentarians, as always, will vote in accordance with their consciences and will not leap from one side to the other in this debate, as have quite a number of honourable senators who are still in this chamber and who have managed to satisfy themselves that they can vote both for and against the legislation according to a variety of principles. Undoubtedly, if the amendment which is to be moved during the Committee stage by the Opposition were successful and were accepted by the Government, the revenue which would be collected would be very small indeed. The reason for that is very clear. When the then Treasurer, Mr Howard, made his announcement people took heed. At least, most people took heed; some fools did not. Hence, if the Liberal amendment is adopted, one will find that very little revenue will be raised. Senator Watson —That should not be the principle. Senator MACKLIN —No, it should not be the principle. However, it seems to be a factor supporting the proposition I put forward, that is, that when people are acquainted with the fact that the law is to be changed they are then in a position of knowledge and understanding. They are in a position to take action. If they fail to take action, that is their problem. If they continue with tax evasion exercises which the Government has clearly indicated it will legislate against, legislation which on past record the Parliament would support, that is their problem. It is up to them to do what they will. However, until such announcements are made I will continue to oppose the retrospective nature of this legislation. While it certainly is very tempting to go down that track, I believe that the ultimate effect would be to bring the law into disrepute. As I say, that view is not held by all of my colleagues. They will be pursuing what has been their consistent vote. Unfortunately we are still reflecting in that the deep divisions on this issue which exist within the community. Sitting suspended from 6.28 to 8 p.m. Senator WATSON(Tasmania)(8.00) —I wish to speak in condemnation of the persistence of the Australian Labor Party in bringing in time and time again legislation which has a minor retrospective thrust about it. I have no argument with the principal thrust of the legislation. The ALP cannot claim any originality in this legislation, other than in its retrospective elements. After all, the legislation basically continues John Howard's theme. Therefore, I speak in support of the amendment foreshadowed by my colleague from Tasmania, Senator Peter Rae, which would change the date from 1 July 1980 to 12 May 1982. After all, that was the date on which John Howard gave notice of the intention to legislate against the rather dubious practice of tax stripping. The Senate has before it three Bills, two of which are the Trust Recoupment Tax Assessment Bill and the Trust Recoupment Tax Bill, which is a rates Bill. The first illustrates the very clear distinction between the philosophy or attitude of the Government and that of the Opposition on retrospectivity. The Liberal Party of Australia and the National Party of Australia stand for prospective changes to law, especially income tax law. On the other hand, the ALP stands strongly in favour of retrospective tactics. It then seeks to apply highly punitive rates in addition to the usual provisions available under the existing Act. The ALP seeks to justify retrospectivity and apply it, coupled with punitive rates, in certain circumstances. It applies some woolly criteria, saying that it believes retrospectivity is just when applied to blatant tax avoidance schemes. Nowhere does it give us a comprehensive definition of what it regards as a blatant scheme. Senator Peter Rae —A Dawkins scheme, perhaps? Senator WATSON —I will not go into the personalities and practices of some members of the ALP. I think they have been well documented, but the point is well taken. In whose eyes is a scheme blatant? Is it in the eyes of the Commissioner of Taxation or in the eyes of certain members of the left wing of the ALP? This creates a further danger of uncertainty. What is a blatant scheme? The ALP then says that such blatant schemes will be taxed retrospectively whenever they are discovered. Discovered by whom? Discovered by the Australian Taxation Office or by some backbencher who believes somebody has claimed a tax deduction for something that may have been allowed under section 51 but which he believes to be a blatant avoidance scheme and that the taxpayer is not entitled to that loss or that deduction? What does the ALP do? It ignores all the given rules of, for example, three or six years or whatever. It says the law can be applied any time. It plucks a date out of the air. Some people were lucky. In this case the Government picked 1 July 1980. What about all those so-called blatant and contrived schemes that operated before then? The Government would say that there were not many before that date. But who is to say that in future it does not pick a date ten years prior? So it opens up a Pandora's box of uncertainty for the taxpayer because we could have certain circumstances in which the Commissioner believes a scheme could be difficult; it has his tacit approval and he allows it to proceed for years on end. Suddenly, a group within the ALP could say that the scheme was blatant. That group could say that people were starting to use these deductions and that although they are allowed under the Act it believes they come into its category of blatant schemes. Because there is no definition, there is no certainty, it creates all sorts of problems for taxpayers. There must be certainty before the law. It has been a tradition of taxation law and all sorts of law that a person should be able to plan his affairs with some certainty while operating within the law. This is the point. All taxation arrangements are made within the law. I think we fail to distinguish between tax avoidance and tax evasion. We all recognise that tax evasion is quite abhorrent, but tax avoidance is a different matter. It is a well recognised principle that people can arrange their affairs within the law naturally to minimise their tax obligations. There should not be anything wrong with that. We acknowledge that from time to time one or two people, groups and companies obviously use pretty artificial sorts of devices. There has been plenty of opportunity for these to be picked up. This element of retrospectivity is unfair not only to taxpayers but also to the community. Both the Government and the Opposition acknowledge that the type of activity outlawed in this trust stripping legislation is unsatisfactory. We must point out that Mr Howard's anti-avoidance provisions in Part IVA have been effective. They have caught most schemes. Even the present Minister for Trade, Mr Dawkins, as late as 29 April 1983 acknowledged this, with a rider that some stripping operations could be exceptions. Mr Howard, on 11 and 12 May 1982, said that Part IVA may not work. Honourable senators will recall that Part IVA was the new general anti-avoidance provision which was introduced to supplement the old section 260 which was designed to prevent tax avoidance undertakings in schemes which were shams and so forth, schemes which were devoid of reality and which had the general purpose and intent of diminishing a person's tax obligations in an unreal manner. Mr Howard said then that should this new Part IVA not work against these trust stripping operations, the Government would introduce remedial legislation. Of course, that would apply to trust income of current and subsequent years. Mr Howard, having given notice, said he would introduce legislation to ensure that these sorts of operations would get caught. It was new legislation which would operate from 12 May 1982. This Government has not demonstrated to the Parliament or to the community its justification for the selection of an earlier date. This earlier date of 1 July 1980 is to be introduced for all the wrong reasons. Presumably operators before that date will get off scot-free. I do not want to allow this opportunity to pass without drawing attention to at least one of the fairly punitive rates in the second Bill. This Bill would impose in certain circumstances an income tax rate of 75 per cent. That is an extremely high rate. We must bear in mind that it is a rate and not a penal rate. I draw a distinction between the two. I think we are entitled to be given reasons why 75 per cent has been chosen. Why is the Government sticking so firmly to this applying of retrospectivity? I think it is pretty much a gimmick, because the true reason for the introduction of retrospectivity time and again is not to get a trigger mechanism for a double dissolution of the Senate. Not many of us will be frightened by that because on our side we stand by principle. This principle of retrospectivity is pretty important to the Liberal Party. The true motive of the Australian Labor Party is to get a lot of cheap media publicity by trying to attach tags to the Liberal Party and trying to say that we are the party that supports the tax cheats and so on. Without respect for the media, it runs this line- Senator Walsh —You always have been. Senator WATSON —The way the Minister carries on brings no credit to him, because it makes cheap gutter politics devoid of accuracy and designed to appeal to the lowest common denominator. I hope that in this forthcoming tax summit the Government will try to do a little better than that. But in the euphoria of contradictory statements preceding this tax summit all that is being given to the community is complete confusion as to what will happen, because we have heard from spokesmen for all the different factions. It was interesting to hear the debate on tax yesterday in which-Senator Dame Margaret Guilfoyle and Senator Peter Rae spoke about this-members of the Liberal Party spoke as a team. Members of the Labor Party are now speaking as representatives of factions, the factions that want high indirect taxes, the factions that want death duties, the factions that want wealth taxes, the factions that want capital gains taxes and so on. The fact is that John Howard's record on tax cheats and avoiders is impeccable. Despite the introduction in recent years, principally from our side, of highly complex anti-avoidance legislation to catch up with this sort of unsatisfactory activity, I think we will find now that the Taxation Office is going back to basics and applying the old section 260, looking at the transactions and in many cases-- Senator Chipp —It was a good section. Senator WATSON —Yes, and it still applies. As I said four years ago and as I say today, the Taxation Office is now applying section 260, but for some reason it was getting bad advice a few years ago from its legal advisers. Admittedly, the High Court of Australia was not helping at all at the time. The point is that the Taxation Office is now looking at some of the records and is finding that some of these transactions were sham operations through and through-lack of adequate records; money failing to leave the bank account, let alone going overseas or coming back as may have been required; no payment of stamp duty, and so on. The old section 260 cuts the core out of these sorts of sham operations and the Taxation Office is, therefore, collecting the revenue. I am not saying that new provisions are not required, as provided in this legislation, but a lot more could have been done earlier and a lot more can be done even now in attacking the so-called sham cases under existing legislation. Another precedent the Taxation Office is using is known as the Ramsay decision from the United Kingdom, whereby the Taxation Office looks at the whole of the arrangement to determine the purpose of the scheme or undertaking. As a bit of free advice, I ask why it is not applying that sort of idea under section 26 (a) of the Act under which profit making undertakings or schemes are assessable. The Taxation Office says that it has run into trouble in picking up a lot of undertakings in which people ostensibly try to apply funds of a capital nature which would, in ordinary circumstances, be revenue attracting under section 26 (a) of the Income Tax Assessment Act. I hope that some of the principles enunciated in the Ramsay decision-that case involved outright anti-avoidance-can be applied to section 26 (a) to clear up any misunderstanding and to catch people. I should certainly like a response from the Minister for Finance (Senator Walsh) about this matter because I believe the principles of the Ramsay decision-- Senator Walsh —It would do what? I am sorry, I did not hear you. Senator WATSON —It was the Ramsay decision of the United Kingdom. The Taxation Office is already applying that decision in respect of some of the sham transactions and is picking up some of the trust stripping operations which would otherwise probably have been caught under this legislation. The purpose of my participation in tonight's debate is to draw attention to the abhorrence of retrospective legislation. Therefore, I support the amendment to be moved by my colleague Senator Rae, and hope that the Australian Democrats will support it. Senator WALSH(Western Australia-Minister for Finance)(8.17) —I have not heard all of this debate but I understand that the Senate will divide in the way is has divided in the past, since this Government has been in office, on Bills to force tax evaders to pay the tax they ought to have paid long ago, with this minor variation: Because there are a few people in the Senate now who were not previously here and there is an increase in total numbers, whereas the vote in the previous Parliament had usually been tied on this sort of measure, the amendment moved by the Opposition is likely to be carried this time by two votes. Senator Harradine always exercised the crucial vote in the past to protect the tax evaders. He will not be in that position tonight. Senator Peter Rae —I think you should withdraw that. Exception has been taken to it. Senator WALSH —It is true. I shall withdraw it if the Deputy President instructs me to do so and certainly under no other circumstances. The DEPUTY PRESIDENT —Senator Walsh, you should withdraw it. It was a reflection on Senator Harradine. Senator WALSH —I withdraw if you tell me to, Mr Deputy President. The fact remains that Senator Harradine is the only person, apart from members of the Liberal and Country parties who were under party discipline at the time, who voted for the same clause in Malcolm Fraser's 1982 retrospective tax legislation and voted against it when it was reintroduced by this Government in 1983. That is a fact that the Hansard record will show. It was exactly the same proposition. He voted for it under the Fraser Government when his vote was not critical. He voted against it under this Government when his vote was critical, given the way it was known that other honourable senators would divide on that question; and members of the Liberal and Country parties who had voted for the Fraser Government legislation in 1982 were, of course, under party discipline to do so, which discipline not all of them accepted. Senator Peter Rae —Some members of the Liberal Party voted against that. Senator WALSH —I said that. The fact that Senator Harradine no longer exercises a crucial vote might lead some other people to reassess their position. The fact that this legislation has been introduced and, indeed, that a tax avoidance scheme has been uncovered and is known to have been operating subsequent to May 1981 demonstrates that Part IVA of the Act, passed by the Fraser Government in 1981, has not, as Mr Howard and the Government of the day asserted-I think the Opposition of today still asserts it-closed off income tax avoidance. The very fact that this scheme has been uncovered and that because of its use some $9.5m had been lost in revenue prior to the former Treasurer identifying it in May 1982 demonstrates that Part IVA-the alleged grab-all, completely effective anti-tax avoidance provision-has not been effective. About $9.5m was lost in revenue because of the use of the contrived arrangements against which this legislation is directed before the former Treasurer made a public announcement that he would legislate against it. The defence of the former Government was that retrospective legislation against fraudulent schemes was not necessary because Part IVA had closed them off. It has now been demonstrated that Part IVA has done no such thing. As I and my colleagues have said on many occasions, what will close off tax avoidance and tax evasion-and at the margin it is very hard to tell the difference-is a credible threat of retrospectivity. If the threat were credible it would not even have to be used because the would-be tax evaders and avoiders and the bevy of parasitic accountants and lawyers who support them now would not attempt to set up contrived arrangements to avoid paying tax if they knew that sooner or later the Parliament would legislate to force them to pay the taxes that they had avoided. There would be no incentive for that sort of activity. But as long as the Senate or, in this case, I expect, slightly more than half of the Senate continues to behave in the way that it has behaved since this Government came to office, the tax avoiders will know, and so will the bevy of parasitic accountants and lawyers who work for them, that if they can just devise some new scheme that has not been tried before, some contrived arrangement which manages to hide or turn taxable income into some form of non-taxable receipts, they will be able to avoid taxation. When the Senate votes the way it used to vote in 1982 when it passed one piece of retrospective tax legislation, that sort of anti-social activity will cease because it will be known that there can be no financial gains in the long term to those who perpetrate it. Senator Watson asked a specific question which I did not hear properly and I did not understand, but I will endeavour to get him a reply in writing from the Treasurer (Mr Keating) or the Commissioner of Taxation at some time in the future, if that is satisfactory. From what I have been told, the amendment to be moved by the Opposition tonight will be carried. That means that of the estimated $10m which this Bill would have recovered had it been passed as it was introduced into the Senate only $500,000 will now be recovered. It could be argued, of course, that it is not worth proceeding with legislation for only $500,000. In one sense that may be correct. However, unless the Act is amended retrospectively to May 1982-instead of July 1980 to which it should be amended retrospectively-there is no guarantee that these schemes will not be revived. It might be worth putting on the record the essential elements of these sorts of schemes. They were schemes under which donations were made to charities, claimable in full against taxable income, but the money was not paid over for about 80 years. That meant that the value of the donations at the time of payment would be a very tiny fraction-something less than 1 per cent if immediate past rates of inflation continue-of the amount deducted from the taxable income at the time the donation was ostensibly made. The schemes provide that one makes a donation, claims the tax deduction and actually pays the money over in 80 years time when it is worth something less than 1 per cent of what it is worth today. Very clearly that is a highly contrived arrangement which the unholy coalition of three parties and, I expect, one Independent-although, since his vote is no longer crucial, perhaps Senator Harradine will not bother to vote on this occasion-will ensure that people who took advantage of that contrived arrangement will be allowed to keep the money. Assuming the amendment is carried, I intend to proceed to move the third reading of the Bills. The Bills will then have to go back to the House of Representatives and the Government will have to reconsider its position. From my brief discussions today with the Treasurer's office it seems to me that the Government and the House of Representatives will, very reluctantly and under extreme protest, accept the amendment which I am informed is likely to be carried here tonight. Question resolved in the affirmative. Bills read a second time. The Bills. Senator PETER RAE(Tasmania)(8.27) —During the second reading debate on the Bills with which we are dealing cognately, I indicated that in respect of the Trust Recoupment Tax Assessment Bill 1985 I would move an amendment in the following terms: Page 6, clause 5, line 39, leave out '1 July 1980' and insert '12 May 1982'. The reason for doing this was made abundantly clear during the second reading debate. It is simply to date back the retrospective operation of the particular legislation about which there is no contest-I wish to emphasise that fact-to the date upon which the then Treasurer, Mr Howard, announced clearly that action would be taken to amend the legislation to recoup any trust income stripping as well as trust capital stripping which had been engaged in in breach of the intention of the legislation which had been first introduced in 1978 and amended in 1981. In May 1982 it was announced that further amendment would be made as necessary. In other words, as it was discovered that people were breaching the intention and the spirit of the legislation, an announcement was made to the effect that anyone who did so from that date did so at his own risk of being subjected to the retrospective change of the law. That is what is perceived by many people-and I am one of those who firmly believe it-as being a fair and justifiable way in which to operate a society. That is, that people must observe the law as it stands or as they may reasonably anticipate it to be, bearing in mind the clear statement which has been made by the government of the day which has the capacity to implement it or is likely to be able to implement it. Where that statement has been made, people act at their peril. But if no such indication has been given, it is an impossible society if people behave within the law and find that retrospectively that which they did which was lawful-they had no warning that it may be unlawful-has been made unlawful. We believe that that is a fundamental undermining of the basis upon which a fair, stable and law abiding society can exist. In those circumstances I shall move an amendment to change the operative date from the date of 1 July 1980, plucked out of the air by the Government, to the date upon which the clear warning was given by the then Treasurer that, effective as of 12 May 1982 legislation would be introduced to recoup from people who engaged in the practice which I described in my speech at the second reading stage, which the Minister for Finance (Senator Walsh) has just summarised in his speech in reply to the second reading debate and which is agreed on both sides of the chamber is objectionable behaviour. The difference is that we believe the legislation should be dated from the date upon which clear warning was given and people were put on notice that if they continued to engage in such behaviour they would be subjected to a recovery of the gain they had obtained. I move: Page 6, clause 5, line 39, leave out '1 July 1980', insert '12 May 1982'. Senator WATSON(Tasmania)(8.32) —Given that the Parliament will reject the operative date proposed by the Australian Labor Party of 1 July 1980 and substitute the date of 12 May 1982 as proposed in Senator Peter Rae's amendment, I ask the Minister for Finance (Senator Walsh) to confer briefly with his adviser and tell us how much so-called revenue lost as a result of not making the legislation retrospective to the Government's date but to 12 May 1982 will be picked up as a result of the application of section 260 of the Income Tax Assessment Act dealing with sham arrangements and the application of the Ramsay decision. As he well knows, the Australian Taxation Office is applying such decisions to some of the schemes that would otherwise have been caught by the net before the Parliament today. Could we have that figure, please? Senator WALSH(Western Australia-Minister for Finance)(8.33) —In response to Senator Watson's question, the estimate of the revenue that will not be collected because the amendment that Senator Peter Rae has just moved is carried-I assume that it will be-is $9.5m. There is no estimate of the amount that may be recovered by the application of some other section of the Income Tax Assessment Act and, of course, there is absolutely no guarantee that section 260 will be effective at all. In assessing that one has to make judgments about what sort of High Court may exist at some time in the future when a case may or may not be brought. Even if the present High Court of Australia may be disposed to take a somewhat more rational view or, should one say, a view less lenient to crooks than the High Court has taken in the past, there is no guarantee that such a High Court will continue to exist in the future especially, I imagine, if the Liberal Party of Australia should get back into government. Essentially, the difference between the positions of the Government and the Opposition, as shown by Senator Rae's amendment, is that the Government has said that if it is discovered that people have been plundering the public purse they will be required to pay money back no matter when they did it. Senator Rae has said that if it is discovered that people are plundering the public purse they will be told: 'Those who plundered the purse yesterday and earlier can keep the money and those who plunder today and thereafter will have to pay it back'. That is the essential difference between the Government and the Opposition, as demonstrated on this issue. The Government, of course, will vote against the amendment. I understand, however, that it will be carried. I will then proceed to move the third reading. Senator PETER RAE(Tasmania)(8.35) —I just wish to say that in no way do I accept the description just given by the Minister for Finance (Senator Walsh) of the difference in attitudes. The difference in attitudes is one of respect for the law as it exists. When emotive terms like 'plundering the public purse' are used, it is a matter of whose description of 'plunder' we adopt. Should we accept the law's description or Senator Walsh's description-the description of the government of the day which can proscribe actions retrospectively according to its whim or the law as it is properly made by the parliamentary process and interpreted by the courts? That is the question. It is not as Senator Walsh put it. Senator JESSOP(South Australia)(8.36) —I find it quite incredible that the Government and Senator Walsh in particular should suggest that people who enter into some taxation arrangement on the advice of their lawyers and their accountants, quite legitimately within the law, should now be required to pay retrospectively for that which they undertook to do within the law many years ago. This bone of contention has existed in this Parliament for a number of years now. I find it incredible that the present Government failed to act upon the bottom of the harbour tax evasion scheme when it discovered it to exist in 1970 in the time of the then Attorney-General, former Senator Murphy. Senator Walsh —Not in 1970. Senator JESSOP —It was about that time when the Australian Labor Party was in government. It failed to do anything about it. The only government to start action on this matter was the Fraser Government. An article in today's Australian Financial Review states: The Special Prosecutor on the bottom of the harbour tax avoidance, Mr Roger Gyles QC, has complained to the Federal Government that it has failed to deal with one of the principal points contained in his last annual report. The report, which was for the year to 30 June 1984, was tabled in Parliament last year. However, in his final report for the period from June until September, when he relinquished his position as a special prosecutor, and which was tabled yesterday, Mr Gyles repeated his criticism that the Tax Office was not prepared to co-operate with him. This gives the lie to claims of the Government with respect to actions that have been taken in relation to people who are costing the revenue through schemes that they have entered into. It seems to me that the previous Labor Government failed to take action under the Crimes Act, several sections of the Income Tax Assessment Act and the Companies Act, all of which need overhauling and all of which make measures such as we are discussing at the moment probably unnecessary. It causes me a lot of annoyance to hear the Minister say that we are protectors of crooks. I think that is a scandalous statement to make. Senator Walsh —Scandalous, but it is true! Senator JESSOP —I suggest to Senator Walsh that he recall that it is unparliamentary to suggest that we on this side of the chamber are protecting crooks. The Fraser Government was the only one that took any real initiative in this matter. He fails to recognise that fact. I am suggesting that retrospectivity should be constitutionally enshrined to make it illegal for any government to bring in retrospective taxation measures. The Australian Labor Party seems to be the champion of the ordinary people, the workers of Australia as it calls them. I believe that the Government is failing to recognise that many of the average working people could well be involved in some of these so-called actions that it describes and is trying to deal with. In fact, the Labor Party has a history of trying to rob the rich to pay the poor, and it seems to forget that quite often in trying to do that it hurts the people who it purports to represent. An example of that existed some years ago with respect to death duties, when 97 per cent of the revenue accrued was derived from estates of $50,000 or less. I suggest that the Government ought to pay due regard to the need for us to be more responsible with respect to the introduction of retrospective taxation measures. I voted against such measures during the time of successive governments. I remain consistent. I said when the Fraser Administration suggested measures of this character that I would support them provided a clear message was sent out to the electorate that from a particular day onwards these methods of minimising taxation would be dealt with by legislation. That is why the amendment offered to the Senate by the Opposition is fair and reasonable. A clear message went out to the people from the then Treasurer, Mr Howard, that these matters would be dealt with. As the amendment says, retrospectivity should apply from 12 May 1982. The suggestion that we go back beyond that is untenable, unfair and in my view quite irresponsible. I recall that in a debate on this issue Senator Townley suggested that a Bill be introduced into this Parliament which would alter the Constitution to prevent such retrospective legislation being brought in in the future. I believe that at a referendum that would receive tremendous support from the public of Australia, similar to the support received with respect to the fundamental constitutional changes advocated by the Government at the time of the last Federal election. I suggest that Senator Walsh ought to choose his words very carefully. Senator Walsh —I did. Senator JESSOP —He did? I suggest that Senator Walsh chose his words irresponsibly when he said that this side of the chamber is not concerned about revenue raising through taxation measures. That is wrong. We on this side of the chamber have repeatedly made the statement that we want to do all we can to deal with the so-called crooks who are trying to find ways and means of evading taxation as that evasion costs the average Australian far too much. I object to the way in which Senator Walsh puts his point of view in this place and suggest that he consider very carefully the Opposition amendment, which I understand will be carried. I hope that the Government will recognise the folly of its ways and the importance of taking a retrospective view, going back to 1982. I suggest also that the threat of such legislation has been responsible for people throughout the community thinking twice before entering into any new schemes. We have a responsibility in this area, and the Opposition would support the Government in closing any existing loopholes that enable people to evade their taxation responsibilities. I suggest that the Government has another look at the Crimes Act, the Companies Act and several sections of the Income Tax Assessment Act in a sincere attempt to come to grips with this problem. I do not think the bottom of the harbour measure introduced by the Fraser Government was necessary. The closing of these loopholes ought to have been pursued through the other pieces of legislation I have referred to. I commend those thoughts to the Minister and I hope that when he rises again he will be careful about what he says about us supporting crooks in the community. Senator WALSH(Western Australia-Minister for Finance)(8.46) —Before we get carried too far into fantasy land we ought to have a look at what the people who set up these schemes were doing. Let us look at what these people, whom the Opposition regards as hard working, moral paragons of virtue, were actually doing. They were donating via a trust to a charity amounts they claimed as deductions from current taxable income, but the money was paid to the charity 80 years hence. The deduction was claimed today; the money was actually paid over 80 years hence. In a nutshell that was what they were doing. Senator Peter Rae apparently sees that as a philanthropic transaction or at the very least an innocent and non-contrived transaction; I see it as plundering the public purse. I use that phrase advisedly, Senator Jessop, and I stick to it. Senator PETER RAE(Tasmania)(8.47) —Senator Walsh has again repeated his emotive term 'plundering the public purse'. That is his description of something which at the time was lawful, however socially and economically reprehensible it may have been. It was lawful at the time. He would wish to make it retrospectively unlawful. That is the simple difference between us. We are not talking about plundering the public purse. There is no real dispute as to whether it was a desirable or undesirable practice, it is a matter of whether it was a lawful or an unlawful practice. Senator HARRADINE(Tasmania)(8.48) — Many of us are often tied up with other work of the Senate and tonight I was involved until shortly after 8 o'clock with a committee. I understand that in my absence Senator Walsh, in characteristic fashion, instead of dealing with the question at hand, descended into an unfounded smear attack upon myself. He was required to withdraw his allegation. I thank the Deputy President for obtaining that withdrawal in my absence and also those who sought the withdrawal. To set the facts right, Senator Walsh- Senator McIntosh —I raise a point of order. We are in Committee. Personal explanations can be made at a later stage. The TEMPORARY CHAIRMAN(Senator Townley) —Order! There is no point of order. Senator HARRADINE —I acknowledge that what Senator Walsh accused me of was irrelevant to this legislation. I would hope that the Deputy Whip is not attempting to deny me the opportunity at this appropriate time to lay the record straight. Senator Walsh was not referring to anything to do with this legislation. He was referring to votes on the so-called innocence provision, section 3 (12) of the Taxation (Unpaid Company Tax) Assessment Act, and he accused me of inconsistency in my voting on that section. The facts are entirely different. Senator Sheil —Was he wrong again? Senator HARRADINE —He was certainly wrong again. The facts are on my side and are a matter of public record. I invite the Committee to examine what I said on 16 December 1983, at page 3974 of Hansard: I have maintained a consistent approach based on certainty before the law and fairness. It was one thing last year to vote against the inclusion of a clause which conferred certain rights to expect certain treatment in accordance with let-out or innocence provisions; but it is entirely another matter, 12 months later, to deny to taxpayers their right to relief which, under the law, they are entitled to expect. They are two different questions altogether. That is what I said on 16 December 1983. If honourable senators compare that with what I said on 12 September 1984, they will see that I have maintained a consistent approach throughout. I said: The position in respect of sub-section 3 (12) last December was entirely different from what it was in 1982 because the 'innocence clause' was not in the legislation in 1982. At that time I considered that section 3 (12) was not necessary, but once it went in it provided an expectation to taxpayers that they would have their assessments made accordingly. Therefore, to remove that right was an entirely different matter altogether. I invite the Committee to examine the record to see whether I have been inconsistent, as Senator Walsh has alleged, or whether I have been consistent. It is there in the record. It is one thing-I emphasise this-to vote against a right which did not previously exist, which was my vote in 1982, but once that right is enshrined in statute and a legal expectation has been raised, it is entirely another matter and another consideration to vote for its removal. Senator WALSH(Western Australia-Minister for Finance)(8.53) —The plain facts are that in 1982 Senator Harradine voted to remove from the Fraser Government's legislation a specific clause 3(12). In 1983 he voted against precisely the same proposition. His vote in 1982 was not crucial; in 1983 it was. The apologia he has just presented-and the apologia varies from time to time-is that because that clause was left in the 1982 Bill it generated an expectation there would be an exemption for a particular class of vendor-shareholders. There was an expectation by all vendor-shareholders, promoters, and directors who sold off companies to promoters, prior to the 1982 legislation that they all would get away with it. The logic of the argument Senator Harradine has presented is that he should have voted against the 1982 Bill in its entirety. I do not know whether it is his logic that is faulty or whether it is something else, but I do remember that when he was before the Federal Executive of the Labour Party in the early 1970s and was asked whether he had ever been a member of the National Civic Council, he said he could not remember. I do not believe people forget things like that. Senator HARRADINE(Tasmania)(8.55) —Mr Chairman- The TEMPORARY CHAIRMAN(Senator Townley) —Order! Senator Harradine, we are not here to discuss your previous voting pattern as much as to get this legislation passed or not passed. Senator HARRADINE —I understand that, Mr Temporary Chairman, but I wish to respond to what was said. I indicate clearly to the Committee that what Senator Walsh has just said is incorrect; it is wrong. He said that I voted to remove from the Fraser Government's legislation clause 3 (12). Clause 3 (12) was not in the Fraser Government's legislation. Senator Walsh —Of course it was. Senator HARRADINE —There was no relevant Act of Parliament in existence at the time. How, then, could I vote to remove clause 3 (12) from legislation that was not in existence at the time? That is the very point I am making. Senator Walsh —Tell us whether you were a member of the NCC. That only requires a simple yes or no. Senator HARRADINE —I will come to the question of the relevance of this matter. Poor old Senator Walsh has changed his ground. He is defeated on that. He knows that what he has said is wrong, so he is starting his catcalling. Honourable senators will recall Senator Walsh's previous attempts to smear when he suggested that I voted against retrospectivity only when my vote was crucial. My vote is not crucial tonight; it will not make any difference. I can walk out of that door tonight and Senator Peter Rae's amendment will be carried. My vote means nothing on this. I will, however, be voting for Senator Peter Rae's amendment, consistent with my opposition to this principle, which I believe undermines certainty before the law. If this type of retrospective action-to clothe with a penalty actions which were legally taken previously-is allowed by this chamber to be placed in legislation by this Government, then a future government can direct retrospective legislation which will seriously affect other people in the community. Even State governments could do the same thing. Senator Walsh —They often have. Senator HARRADINE —I put this example to Senator Walsh, in all honesty. What if a State Government suddenly whacked out a scheduled disease under the workers' compensation legislation? That would be reprehensible because it would have retroactive effect. I believe there is a serious matter to be considered here, and we ought to be considering it as maturely and with as much intellectual honesty as we can muster, without descending into catcalling. Senator JESSOP(South Australia)(8.59) —I remind the Committee that the Fraser Government at least took some initiatives with respect to the income tax Act. Between 1978 and 1980 it amended 25 sections of the Act. I suggest that the present Government look- Senator Harradine —It is not this Act. Senator JESSOP —I know that. I just want to say something about the negligence of the present Government in coming to grips with the matter of taxation and its failure to recognise the inequity of retrospective taxation. I referred earlier to Special Prosecutor Roger Gyles, who has just submitted his last annual report. I quoted from the Australian Financial Review of today's date. I would like to finish that quote. The article states: His final report was addressed to the former Attorney-General, Senator Evans. In relation to his endeavours to launch civil remedies for bottom of the harbour tax cases, Mr Gyles told Senator Evans: 'I am concerned, however, that neither your tabling statement, which contained a lengthy statement emanating from the Australian Taxation Office, nor the annual report of the Commissioner, meet the point of my criticism. 'It was that, given the impossibility of adequately taking and co-ordinating civil remedies with existing resources, the Commissioner was nonetheless not prepared to co-operate with me in seeking to obtain and organise resources sufficient to carry out the task. 'The lack of subsequent response and action would indicate that the Government-- that is, the Labor Government- has a similar view. 'An increase in staff of the Australian Taxation Office devoted to general audit (investigative) work is simply irrelevant to the particular problem. 'This is, of course, a matter of policy both for the Commissioner of Taxation and for the Government.' That is a condemnation of the negligence of the present Government with respect to taxation matters. I suggest that the Government would do well to reconsider the report of the Special Prosecutor and take some action with respect to his constructive recommendation. Question put: That the words proposed to be left out (Senator Peter Rae's amendment) be left out. The Committee divided. (The Temporary Chairman-Senator J. Haines) Ayes . . . . . . . . . . . 32 Noes . . . . . . . . . . . 30 —— Majority . . . . . . . . . 2 —— Archer, B. R. Lajovic, M. E. Baume, Peter Macklin, M. J. Bjelke-Petersen, F. I. Parer, W. R. Boswell, R. L. D. Puplick, C. J. G. Brownhill, D. G. C. Rae, PeterCarrick, Sir John Reid, M. E. (Teller)Chipp, D. L. Scott, D. B. Durack, P. D. Sheil, G. Guilfoyle, Dame Margaret Short, J. R. Haines, J. Teague, B. C. Hamer, D. J. Townley, M. Harradine, B. Vanstone, A. E. Hill, R. Vigor, D. B. Jessop. D. S. Walters, M. S. Kilgariff, B. F. Watson, J. O. W. Knowles, S. C. Withers, R. G. Aulich, T. Jones, G. N. Black, J. R. McIntosh, G. D. (Teller)Bolkus, N. McKiernan, J. P. Childs, B. K. Maguire, G. R. Coates, J. Mason, C. V. J. 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. Evans, Gareth Ryan, S. M. Evans, Jack Sibraa, K. W. Gietzelt, A. T. Tate, M. C. Grimes, D. J. Walsh, P. A. Hearn, J. M. Zakharov, A. O. Crichton-Browne, N. A. Coleman, R. N. Chaney, F. M. Colston, M. A. Messner, A. J. Georges, G. MacGibbon, D. J. Giles, P. J. Collard, S. J. Button, J. N. Missen, A. J. McClelland, DouglasLewis, A. W. R. Foreman, D. J. Question so resolved in the affirmative. Amendment agreed to. Bills agreed to with an amendment. Bills reported with an amendment but without requests; report adopted. Motion (by Senator Ryan) proposed: That the Bills be now read a third time. Senator PETER RAE(Tasmania)(9.11) —I am glad that the Government has indicated that it will in the House of Representatives accept the amendment and the judgment of the majority of the Senate. I am glad that those people who acted in an anti-social, anti-economic efficient and unconscionable way after the announcement made by the then Treasurer, Mr Howard, on 12 May 1982 will be required to refund to the Treasury the amounts which they obtained by means of a device which it had been indicated would be legislated against should it exist. The situation, therefore, is that this legislation will be carried and will be implemented from the date upon which the announcement was made that it would become effective. I believe that to be a desirable situation. It is supported by all sides of the chamber except that some honourable senator in the chamber would have desired it to go back further. At least it will mean that behaviour which it had been announced clearly would be outlawed will be outlawed. Question resolved in the affirmative. Bills read a third time. Debate resumed from 20 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. That the following words be added to the Address-in-Reply '', 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; (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 (c) it endorses a rigid, centralised wage determining structure which imposes the same cost burdens on commerce and industry regardless of ability to pay''. Senator TATE(Tasmania)(9.12) —In the two or three minutes left to me I wish to conclude my remarks concerning a national drug strategy for Australia. I had emphasised the importance of the community dealing with both legal and illegal drugs because the abuse of both drugs is a cause of great distress in the community. When we look at the statistics we see that, in 1983, 200 deaths could be attributed to the abuse of opiates and 20,000 deaths to the abuse of alcohol and tobacco. We know that our hospital beds and graveyards are filled with many more victims of legal drug abuse than illegal drug abuse. Unless we tackle the broad range of drug abuse which occurs throughout Australian society and makes it such a drug-ridden society we will leave ourselves open to the charge, particularly from the young, that we are acting in a hypocritical manner. Once that charge is made by the young people they will not listen to the preventive and educative programs which are necessary in order to dissuade them from the abuse of the consequent addiction to drugs. It is essential that we as politicians not become obsessed with heroin abuse and its dependent crime, whether it be robbery with violence, breaking and entering or prostitution, which in the big cities such as Sydney and Melbourne leads to an outcry from the populace for more severe and more draconian penalties. It is my belief that Australia has virtually exhausted the heavier penalties route. If we are to punish drug traffickers, we need a more sophisticated approach which looks to the monetary benefits which they accrue from their nefarious trade. We need to confiscate assets upon conviction and freeze assets, even whilst prosecution processes are under way, to stop them from being dissipated. My concluding remarks, I recall, were that we as politicians though are unlikely to come up with the answers unless we listen to those community organisations, those voluntary groups and those individuals who are prepared to work so arduously in the concrete, practical situation of assisting those who are suffering from drug abuse, whether it be abuse of the legal drugs such as alcohol or illegal drugs such as marijuana and the derivatives of the opium poppy. In this respect I pay tribute to Mr Frank Perry, Chairman of the Prisons Alcoholics Anonymous Committee at Risdon gaol in Hobart. He organised the very good seminar on drug abuse, its attendant problems and the possible avenues of treatment and prevention. I pay tribute to those community groups that gathered on that occasion in Hobart. They were the Youth Advocacy Council, the Community Health Service, Lifeline, Community Welfare, the Cancer Committee, the alcohol clinic doctors and staff, community youth support scheme organisers, the homemaker service, the youth shelter, the Tasmanian Aboriginal Centre, the Community Learning Centre, Alcoholics Anonymous, men's shelters and hostels, the Salvation Army alcohol rehabilitation program and the prison educator. With all those persons gathered together under the chairmanship of Julian Punch we found we had a most useful exchange of views. I hope that Mr Frank Perry gets the credit which he deserves for organising that seminar. Senator MISSEN(Victoria)(9.16) —In speaking to the Address-in-Reply I want firstly to say that we have already heard in this debate a number of speeches from new senators who will contribute very valuably to the work of the Senate in coming years. I congratulate them on their speeches. I make particular reference to my colleague Senator Jim Short, who comes to this chamber after serving a period of apprenticeship in the House of Representatives. It is obvious from his very fine maiden speech that he will be making a great contribution to the work of the Senate. In the course of his excellent address he pointed out, among other things, the very substantial debts which this country is incurring. He was able to point to the very great dangers that lie ahead of us. When he was speaking about the extent to which debt will be incurred and is being incurred and the effect on our posterity I could not help thinking about the remarks which Groucho Marx once made on this subject. When asked about posterity and what he was doing about it he said: 'Why should I worry about it? What has posterity ever done for me?' I do not suggest that Senator Short will take that view but it appears to me that the present Government takes that view because it is increasing the burdens for the posterity of this country. It may be that this Government of ours is a Marxist government. Perhaps it is a Groucho Marxist government rather than a Karl Marxist government. Nonetheless, it is facing the future in a way which does not account for the difficulties it is now creating for future generations. I support the amendment which has been moved by Senator Chaney to the Address-in-Reply motion. The Governor-General's Speech, of course, is a speech which puts into the Governor-General's words many things which the Prime Minister (Mr Hawke) has decided should be said. As Senator Chaney has pointed out, it is a curious speech because it appears to take no account of what has happened in this country in the last four months. It takes no account of the disastrous consequences which have occurred as far as we are concerned not only in foreign affairs but also elsewhere. I remind honourable senators of part of the terms of Senator Chaney's amendment which criticises the situation and the Government's program in this way: (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 The amendment which Senator Chaney moved goes on to deal with a number of other salient matters in respect of the economy of this country but I will be concentrating substantially on the serious questions of the Australian community's loss of reputation arising from the Government's mistakes over the last few months. We have before us in this session a program which one might say is a conservative, pragmatic program. It lacks flair and any attempt to deal with the most urgent and serious matters which are facing this country. We should pause for a moment to remind ourselves that this is the first opportunity that most of us have had to comment on the situation in this country since the election of 1 December 1984. We knew then that the Government was proceeding to an early poll in order to obtain, it hoped, an early re-endorsement, because of the difficulties it foresaw within a very short period. Now we can understand why it went for such an unnecessarily early election. It was so that the Prime Minister could, with his charismatic appeal, or so he thought, go to the Australian people and receive an overwhelming endorsement. As we all know, he did not receive that overwhelming endorsement. Indeed, it was a very near miss for the Government. Of course, the Australian Labor Party was able to hold together during that election period. We know that within its ranks and factions there are gross and enormous divisions. We know that those divisions existed but that the members of the Labor Party looked forward to another meal ticket by being re-elected. Because of the prospect of a meal ticket being offered to them, they were prepared to keep quiet before the election. But they have not been prepared to keep quiet after the election. They have very carefully proceeded with their own views, and the leftist forces in the Government have humiliated the Prime Minister since that time. They would not have dared to do that before the election. If the people had known then what they know now, the Government would not have been re-elected. Of course, we have also seen the slide in the value of the Australian dollar and the slide in many other aspects that were glowingly put before the people in the course of the election campaign. Despite the advances and the great opportunities which were expected for this country in the next few years, we now see that most estimates are that the Government is not facing up to major issues and its performance will probably not lead to a very good result in the next few years. We saw various features in that election campaign. Of course, one was the magnificent performance by Mr Andrew Peacock as Leader of the Liberal Party of Australia. The Government thought that that would not happen but it did happen and it resulted in a very near loss for the Government in the election. We saw also the smashing of the idea that Mr Bob Hawke was the idol whom the people would follow under any circumstances. Certainly, that has been broken for all time and he is seen as an ordinary politician held together by a group of ordinary politicians of various factions. He no longer has that charisma of leadership. We also saw in that election the bonanza enjoyed by the Nuclear Disarmament Party. It rose from nothing, and I suppose will return to nothing, but with the assistance of the media, hundreds of thousands of dollars of publicity and its quirkiness which appealed to the media it was able to have quite an influence in that election campaign and, indeed, had one senator elected. We noted the arrogance which that organisation displayed by coming to the people on one policy issue and suggesting that it had all the ideas, that its emotions were pure whereas nobody else's were pure and for that reason its members should be elected. It is thanks to the wisdom of the Australian people that by and large that appeal was rejected. One can say that at least the Australian Democrats went before the people with policies in many areas. They were very often policies which they hoped would appeal to people but which they knew they would not have to implement. But at least they did come forward with policies in various areas whereas the Nuclear Disarmament Party had but one idea in mind. I am afraid that in that election campaign we also saw the temporary destruction of any prospect of constitutional change in this country. That was due mostly to the fact that the Labor Government decided to bring constitutional amendments forward at the time of the election. One of those proposals, the interchange of powers one, which had unanimous endorsement from the Australian Constitutional Convention not so very long before, was defeated because of the obscurity and the political involvement surrounding it. It was put forward by a Labor Government as a popular make-weight for another proposal which was unpopular. The Government stands condemned for the fact that it destroyed prospects for decent constitutional change in the near future. I hope that will not be more than a temporary decision by the people. Since the election we have seen the unfolding disaster which the Hawke Government has displayed, particularly in respect of its refusal to undertake its obligations to the United States of America in respect of the facilities for the testing of the MX missile. The result of the Prime Minister's backdown in this area is that we will not give that assistance. In fact, one can say rightly, as the Prime Minister does say, that at present the ANZUS pact on which we so dearly depend is inoperative. In the last few days I have seen that the former Attorney-General, now Minister for Resources and Energy (Senator Gareth Evans)-I want to make it quite clear that he is the former discredited Attorney-General; he is still discredited and he is still former- Senator Ryan —He is not here, also. Senator MISSEN —He is not here. I cannot help that. He does not often seem to be here to listen to speeches by members of the Opposition. Senator Ryan —Well, why would he? For goodness sake, he would have something better to do with his time. Senator MISSEN —That is very interesting. I am told that he has much better things to do than to attend Parliament. The problem with the mentality of Government senators is that they think that attendance in Parliament is not important and that they have more important things to do. Senator Ryan —It depends on who is talking. Senator MISSEN —I suggest that attendance in Parliament is the major responsibility of members. I will not be distracted by Senator Ryan's warblings. Senator Ryan —I thought you had. Too late. Senator MISSEN —I was being generous here and I insist on being generous if it kills me. The ACTING DEPUTY PRESIDENT(Senator Haines) —Order! Senator Missen, you will draw yourself back to the genuine topic of your speech. Senator MISSEN —I will draw myself back. I am pointing out that, unlike the Prime Minister who suggests that ANZUS is inoperative, yesterday Senator Gareth Evans told us that in fact it is still intact. Are we not very lucky that in this community Senator Evans did not become a doctor instead of a lawyer? If he had become a doctor we can imagine him attending a person who had two broken arms and a broken leg and probably saying cheerfully to him: 'You are still intact'. Of course, that is how intact the ANZUS Treaty is at present. We have seen that the strength of the Western world is very dependent upon the support which is given to our major ally. That includes periods of difficulty as well as periods when it is easy. I remind the Senate of the way that this was put some years ago by Senator Chipp. Of course, back in 1969 he was a Minister on our side of the House. He was dealing then with the ANZUS Treaty and the importance of it. Of particular importance was the fair sharing of burdens involved in the defence of the free world. In a speech which Senator Chipp made on 22 May 1969 in the other House with respect to the Treaty he said: If we set any store by that treaty what sort of morality is it to accept what the treaty gives and to give nothing back in return? We on this side of the House believe that we have this sense of morality. If we enter into a treaty for the security of the people of this country for the rest of this century, we cannot have it one sided. We have to give and take. That was a very worthy comment. I am only sorry that Senator Chipp has not remained firm to that view on the ANZUS Treaty. I also point out, in regard to the importance of the activities and decisions which were made and forced upon the Prime Minister, something that was said by someone appointed by the Prime Minister. I refer to the Ambassador for Disarmament, Mr Butler, who in an interview on 5 February 1985 was asked what would be the effect of Australia's participation in tests to develop the MX missile and how it would aid the cause of disarmament in any way. He replied. . . . Participating in tests to aid the development of MX missiles, that is exactly what I am talking about. That is a fairly extravagant interpretation of what we have been asked to do and I gather has been agreed to. The question was then asked: But could the Americans proceed with their plans without our assistance? His answer was: I don't know. But my concern is disarmament and I think the question that you are posing is: Where does this leave us with disarmament. I put it back to you the other way. Where would we be in seeking to pursue real means of disarmament with the United States if we refused them the right to land a couple of planes in Australia, which they are going to use to monitor this missile shot? Now, our credibility would be completely reduced. We know, of course, that that is what has happened. When the Prime Minister decided to keep his factions together and had to withdraw the offers which we had made so publicly throughout the world, it had the effect that the Ambassador pointed out. We have done many of these things, of course, under New Zealand influence. It is rather strange that New Zealand should be figuring so largely in debate in Australia now. Since the War we have taken very little notice of and certainly have not endeavoured to follow the leadership of New Zealand. We have seen the failures New Zealand has experienced, such as the failure to increase its population and its failures when it relied upon Britain to take its trade. So it fell behind and its standard of living decreased. We have seen what I might call the effect of the two fat boys from New Zealand, who have both had some influence. Mr Muldoon, in his worst moments, would come to Australia, as he did for the Commonwealth Heads of Government Meeting, and throw his weight around and suggest that Australia and others-- Senator Ryan —That is a most unfortunate metaphor you are pursuing. Senator MISSEN —I am not worried about that. The honourable senator and I do not have the problem of fatness. Senator Puplick —The Minister has a fixation on these things, apparently. Senator MISSEN —The Minister may have a fixation, yes. However, firstly there was Mr Muldoon, and now there is Mr Lange who is, of course, regarded as some sort of infant. Senator Ryan —Who? Senator MISSEN —Mr Lange is the name, the Prime Minister of New Zealand. I am glad that the honourable senator has not heard of him. It is the first encouraging thing I have heard from her side of the chamber for some time. Let us realise that Mr Lange's election has been encouraging not only to the nuclear disarmament people but also particularly to the Soviets. He was elected on 14 July 1984, and the following day Radio Moscow's domestic service expressed the Soviets' appreciation of what was happening and its importance for the South Pacific. It said: Implementation of New Zealand Labour's election pledges might set off a chain reaction leading to the collapse of the ANZUS block. The example of New Zealand might also be followed by Australia. That is what I think we fear and what I am sure the Americans fear. If we take notice of New Zealand's decision, not letting it stew in its own juice and suffer the consequences-if it will not assist its allies it cannot expect its allies to assist it-then this is a result that it may suffer. But we should not follow. We must ensure that there is not this following reaction in Australia and that we do not take New Zealand's idea as one we should follow. We have clear obligations under our Treaty, and we certainly should not repudiate our arrangements with the United States. I remind honourable senators opposite of the importance of ANZUS and of the reasons for its value, which Mr Beazley, the Minister for Defence in their own Government, recently enumerated. An article in the National Times for the week 8 to 14 March stated: Mr Beazley said he believed that there were five areas of defence and foreign policy where this relationship was significant. First was intelligence co-operation, which was enormously important to Australia. Second was the opportunity for Australian direct influence with the United States which the Government used 'quite vigourously' to get an understanding of American global strategy in nuclear terms and an input for Australia's views on arms control. Third was special access to American equipment purchases and favoured-nation treatment in that regard. Fourth was the opportunity to exercise with armed forces with perhaps the highest technology in the world. Fifth was co-operation in defence science matters. These matters must not be prejudiced, although they have to an extent been prejudiced because the United States now has reason to fear the extent to which our country necessarily will remain firm. I know the Prime Minister has said that he believes in the maintenance of the ANZUS alliance and that we should allow the ships of that alliance to come into the country. However, one must remember that Mr Hawke had different views a few years ago. I refer you, Madam Acting Deputy President, to the fact that an advertisement appeared in the National Times on 13 August 1976 'For an Independent and Non-Aligned Australia'. One of the hundred or so signatories to that was Mr R. J. Hawke. Included in that list were a great number of left wingers, communists and all kinds of persons well known for espousing leftist causes. This is what they gave their names to: We, the undersigned consider that: Military alliances are a source of international tensions They lead to subordination of weaker nations to bigger powers, and often involve the aligned nations in military interventions. Honourable members should especially note the following: Foreign military bases on our soil are detrimental to Australia's safety. They constitute a threat to other nations, make this continent a potential nuclear target, and could be used by the USA contrary to our wishes and safety. USA-Australian alliance dragged us into the Vietnam war. Australia's military arrangements with the USA, Singapore, Malaysia and Indonesia could involve us in military actions in South East Asia in support of unpopular regimes . . . . in new Vietnams. Therefore, we the undersigned-- honourable senators should remember that the undersigned included Mr R. J. Hawke- support the campaign for an independent and non-aligned Australia which stands for: Mutual respect for the territorial integrity and sovereignty of all nations; equality of national rights; opposition to military alliances, foreign military bases and military interventions; and support for national and social liberation. I know that the Prime Minister has changed his mind since then. However, one can imagine that, after the Prime Minister had so humbly to withdraw his promises of assistance, the United States of America cannot feel the same confidence it felt previously. Ten years ago the Prime Minister had those views. I am glad he converted to other views, but can one feel that he has the strength to uphold the undertakings Australia must give to its ally? It is factions of the Australian Labor Party that are being served, not the national interest. Therefore one feels that the trust the United States has given and the very noble and sensible attitude it adopted, because it saw in the Prime Minister of this country someone who appeared to be trying to do the right thing but failed, so did not humiliate him to the nth degree, cannot be felt that any longer. Since the election we have had a great deal of talk about this matter. We know that even the Prime Minister, since he changed his mind, has gone on record-this was on the Tuesday before 8 March this year-and publicly proclaimed that he would not be 'a Prime Minister of a country . . . where issues of central continuing importance to our security are at risk'. He specifically referred to 'the hosting of the joint facilities in Australia' and to 'visits of American ships to our ports'. The Prime Minister has felt it necessary to emphasise that fact and even to threaten that he would not be the Prime Minister if these things were threatened. We know that the threat is there. It comes from the left wing areas of the Labor Party. Unfortunately, that threat continues. A couple of days ago we read in the newspapers that the Prime Minister had done rather well in a foreign affairs debate in the House of Representatives, and I thought I would read his speech to see what he said. It is a speech filled with a great deal of obscurantism and very curious logic indeed. He was trying to maintain that when the United States did not repudiate him, but said 'All right, you will not carry out your undertakings; we will go ahead without you', it was not something we should worry about. The Prime Minister referred to a journalist called Middleton who said that the United States Congress was considering a draft resolution which would call on the United States to bring ANZUS to a formal conclusion. Middleton said: At the Congressional hearings the Assistant Secretary of State Wolfowitz indicated his opposition to such a move. Later on, Middleton said: At the same hearings Mr Wolfowitz and a Senior Defence Department official, Mr James Kelly, considered that the New Zealand ban had not given the Soviet Union the strategic edge in the South Pacific partly because of the maintenance of strong military ties with Australia. From that, the Prime Minister concluded: There we have representatives of the United States Administration saying that these adverse results have not occurred. Not at all. What they said was that they had not yet given the Soviet Union the strategic edge or brought the Treaty to a formal conclusion. The Prime Minister is quite wrong to think that these matters mean that our position and standing in the world are not prejudiced to a considerable degree. I wish I had been able to make these remarks before the Victorian election. Victoria has a Premier who has long sought to intervene in foreign policy and has tried to stop ships from coming into Victorian ports. He has had a great deal to do with undermining the Prime Minister's once strong stand in this area. The pressure he has exerted has been such that unfortunately it has led to a loss of confidence. That same Premier has now indicated that he has put up a proposal to help the milk producers in Victoria. That proposal has been turned down by the Hawke Government and the Premier has shown that he is not worthy of the trust which the people recently put in his hands. I fear that what we have seen is only the beginning of withdrawal of our support. In the last few days this Government has insisted that it will withdraw our people from the Sinai and that it will go back on our undertakings in that area. Demands are constantly being made for us to withdraw in other areas. No one in this chamber wants this country to do only what America wants all the time. I welcome the motion that our country must stand up and express views. If it does not like what the United States does in Nicaragua or what is happening in the Philippines it should say so. We must take a stand because we are supporters of the United States and we will be listened to when we criticise some of its policies, as we should. Unfortunately, if we go too far and are not careful enough there will be a continuation of the demand that we withdraw one thing after another. Ultimately, we might withdraw our support for American bases and thereby destroy the very deterrence which is the saviour of Australia and other democratic countries in the world. We are faced always with the call for unilateral disarmament. The Australian Democrats constantly tell us that they are not for unilateral disarmament. In fact, by the decisions they have made on the withdrawal of support for the missile testing and by refusing to help the Americans they have shown they support universal disarmament. They have a part to play, but they will not play it and have said they will go their own way. Before it is too late their attention should be drawn to where their policies would take Australia. It is important that the Western world see that the Soviet Union is brought back to the field and takes its part at the negotiating table. Earlier today I spoke on Afghanistan and what we should do there. The gallant resistance in Afghanistan may ultimately force the Soviets back to the negotiation table. We know that negotiations are starting and that they will be important only if they are based on American strength and on the idea that the allies of the United States will support it. This country has lost a great deal of clout already. We have lost much of the respect which the American public had for us. We cannot criticise the American public which feels it should protect its own people and its position. I remind honourable senators of something which Senator Gareth Evans said in debate here on 25 February when talking about this general matter. He said: The other particular point that needs to be made under the general heading of the counter-productivity of the Democrats legislation is simply this: To get ourselves into a position where that alliance is put at risk is not only debilitating for all the reasons that I have mentioned already but also it would undoubtedly have the effect of removing entirely such clout or such influence as Australia does have with the United States both in terms of bilateral discussions and perhaps more immediately obviously in the context of debates and treaty negotiations in international forums. Sometimes Senator Evans can be right. Sometimes he can express these views. Senator MacGibbon —Strange! Senator MISSEN —Yes, it is strange, but passing strange. But let us give credit where credit is due. I am always of that opinion. Let us say that we ought to follow that lead. Since the election the Government is a government in decline. It is now falling apart and its individual members and sections are now in for the kill; they are in for what they can get. They are past the situation in which they need a meal ticket for the next election. They now want to have an influence. We in this Parliament and this country must ensure that Australia sticks firmly to its alliances and its principles and that we do not allow the country to be discredited by further terrible disasters brought on by the Hawke Government since its re-election. Senator MacGIBBON(Queensland)(9.45) —The Senate is debating the Address-in-Reply to the Governor-General's Speech. The Governor-General's Speech is written by the Department of the Prime Minister and Cabinet, so it is no disrespect to the Governor-General when I say the the Speech presented this year in this chamber was the worst in living memory. The kindest comment on it came from Senator Chaney when he said it was a speech written for 1964, 1963 or 1962. That is not surprising because it was written very much by yesterday's men. It was written by the people who believe in enormously high deficits because they believe that the only way to solve problems, real and imaginary, is to throw money at the problems. If the problems are not solved by that, they throw more money. I deal with two points made in the Speech. Passing quickly through the opening part of the Speech which deals with the Australian Labor Party in the usual self-adulatory terms in which it always looks at itself, I come to the first major section which deals with the economy. That Speech does not tell the truth. It does not say that the Australian economy is in a desperate position, which it is. We are borrowing more and more money every year. The Labor Government cannot learn the facts of economic life. Ever since Federation, it has followed a path of big spending and big busts. That is why the Labor Party has been in power for only about a quarter of the time since Federation. With the Hawke Government we see a re-run of the Whitlam years. I would like to put the deficits in perspective because figures are not a strong point with people on the other side of the House. There is some degree of imprecision over the real deficit position of the last 10 years. The Fraser Government in 1975-76 inherited a mess from the Whitlam years. We had a deficit then of $3.5 billion. The year after, the deficit was $2.7 billion. In the following years the deficit figures were, respectively, $3.3 billion, $3.42 billion, and $1.1 billion. The Fraser Government was all the time bringing in restraint until such time as we got down to a deficit of $0.5 billion. In the last year of the Fraser Government the deficit did blow out as a result of the bushfires in Victoria and the severe drought. However, it blew out to only $4.4 billion. Labor came into office with the breaking of the drought, the lift in commodity prices overseas, and a surge of funds coming into the Treasury, yet it managed to run a deficit of $7.9 billion. It ran a deficit in good times that was about twice that of the worst years with which the Fraser Government had to cope. Last year in this chamber the Minister representing the Treasurer forecast an estimated deficit of $6.7 billion. That was a rubbery estimate brought in because of the certainty of an election later in the year. I do not know what will be the real deficit by 30 June this year, but it will certainly be a lot more than $6.7 billion. It will be more than the $7.9 billion of the previous year. I saw an estimate from somebody in Hill Samuel Australia Ltd. I have always found Hill Samuel to be a rather conservative and accurate merchant banker. It estimated that the deficit this year could well blow out over $11 billion. If the Government can have that sort of deficit in good times, what will it be in the bad times to come? The point is that there are serious structural problems with the Australian economy. Those problems relate exclusively to the productivity of the work force in this country. There is nothing wrong with the work force. It can work as hard, as intelligently, and as productively as the work force of any country. The problem is that the systems imposed on it by government and by the unions inhibit that work force and the productivity of which it is capable. Faced with these serious industrial difficulties, what is the Australian Labor Party doing except borrowing more and more money? It has come up with some cake for the masses and it is talking now about a taxation review. I think a taxation review is necessary, but it is only a supporting measure in fixing the economy. What has happened with the Labor Party? All the Ministers, such as Senator Grimes, Senator Ryan and the Minister for Social Security (Mr Howe) in another place, are talking about the need to redistribute wealth in this country. They make the unquestioned assumption that we are a wealthy country and that all we need to do is redistribute this wealth. Good Lord, how are we a wealthy country when we are running deficits of the magnitude we are running and if we have to borrow money to stay alive, not to build such things as the Snowy Mountains scheme or to undertake capital investment plans that will benefit productivity in the years ahead but to pay pensions and to pay for welfare schemes and things like that, and borrowing to the extent of $7m, $8m or $9m a year? We are talking about tax reform to fix such problems. We have to get to the heart of the matter. Sure, I think something needs to be done with the tax system. We need to provide an incentive to individuals and to business. In the chamber, even today, a Minister of the Crown told us that we do not need to provide incentives to individuals and that they are prepared to work for less and less money, just as somebody yesterday said that, because a sales tax was placed on wine and wine sales went up as a consequence, it would be a good thing to double the tax and then we would sell more wine. That is absolute nonsense. People will work for reward. They will not work to keep Ministers of a Labor government in white cars, swanning around the country. They just will not work when that happens. The tax system has to provide an incentive to the work force and to businesses. The second thing that a tax scheme has to do is be fair. It has to be spread across the community. Part of that will involve a movement from a direct to an indirect tax system. When I first became a member of this place nearly seven years ago I was preaching the need to shift some of the taxation load from direct to indirect sources, and the same people sitting opposite me now were deriding me then. It is strange that from Labor Party sources now we are getting information on the need to move to indirect taxation. I am glad that they have learned, but I am sorry that it has taken them six or seven years to pick up an essential point. The only thing we can be sure of is that, when the Labor Party reforms the tax scheme, it will shift the mix but we will end up paying more at the end of the day. Tax reform stands for nought unless there is this fundamental change in society, unless the serious structural problems in the economy are addressed; and these problems, as I said before, relate to productivity. The Labor Party has never addressed the problem of productivity and it never will, because the heart of it lies in a reformation of the union system. For a government that is beholden for its money, for its support and, to a large extent, for what passes as its ideology to a union movement, there can be no change in that sacred cow. We have to free up the labour market. That means that there has to be a radical change in union practices. Just as we set up a market for capital-we have done everything we can to prevent monopolies arising with respect to control of capital so that people with money cannot grind off the faces of the poor-we must also set up a market for labour. In simple terms that means that, if people want to work, if a mutually attractive contract can be set between an employer and an employee, those two parties shall be free to enter into the business arrangement that they need without recourse to a union or an arbitration system. The bottom line is that people simply will not work if they are not satisified with their remuneration in a welfare state such as Australia is today. Creating this market in labour involves getting rid of compulsory unionism. Every government in Australia, this Government, the State governments and the predecessors of this Government, have all practised a de facto form of compulsory unionism. They have collected union fees from members and have given preference to union labour in a variety of ways. There is no necessity for that to be carried out. People should be free to join unions if they wish but they should also be free to decline to do so. It should be possible in any industry to have union labour in some factories and non-union labour in other factories, as in the United States of America. It is a matter of choice for the management and for the individual. We must also get rid of the centralised wage fixing practices. There is no reason why a profitable employer should be able to impose the wages that he pays his staff and employees on less profitable companies in the same industry. We have to change the Conciliation and Arbitration Commission and reduce its powers to the level where probably all it does is set minimum wages. The community recognises the need for this change. Two sorts of movements go through a society. The long term one is like the swells in an ocean, the short term one being the peaks running on the swells-the wave motion. The waves are like the pop stars and the Hawkes-things that come and go overnight and disappear-but the swells are long term. I argue very strongly that there is a movement now in the community that has been running since the early seventies, a movement which recognises that we cannot go on the way we are and survive for the rest of this century. The community knows that standards of living in Australia have gone down. It knows that at the turn of the century we had the highest income per person and the highest standard of living of any country in the world. It knows that we have gone back to about the seventeenth or twentieth position and it knows that we are going down further. It recognises that the way we did things in the 1930s, the 1940s and the 1950s is no longer appropriate in the 1980s and the 1990s. I argue that it was a recognition of this factor that threw the Labor Government out after its wild spending in the Whitlam years. The Australian community voted Fraser in because it thought there was a prospect of change and, when the Fraser Government failed to fulfil the expectations of the community on tax reformation and control of unions, it was thrown out. I think that movement is still running, is far stronger today and will culminate in the removal of this Government. It is part of the world-wide pattern. If one looks around the world, one sees that in Western democracies the movement is towards smaller government, towards less taxation, towards making life easier for people by removing government regulations. We have gone through this great surge towards welfarism that carried us from the 1920s through the 1930s and reached its peak in the 1960s. Now the movement is going the other way. We have recognised that we have gone too far. I was very interested to read an article by Peter Robinson last Sunday in the Sun Herald. He had just spent the last four weeks going around Australia and he sensed this need for a change in the community; and I sense it. Like Winston Churchill, I am prepared to trust the people because I believe this feeling in the community will manifest itself in the removal and rejection of this Labor Government and its policies because the Government is incapable of responding to this community demand which involves a change in the union patterns of the country. The second point that I wish to speak about briefly is foreign relations. In the Governor-General's Speech there was this wonderful paragraph on page 7: In its second term the Government expects to continue to enjoy a mature relationship of mutual respect and close co-operation- savour the words- with our major ally the United States of America. The relationship between Australia and the United States under the Anzus Treaty remains as firm as ever. The ANZUS Treaty is now almost extinct. While a large part of the blame for that rests with the socialists in the New Zealand Government, the hands of the Australian Labor Government are in no sense clean. I would like to recapitulate briefly on the 18 months of this Government and its relationship with the United States. As soon as the Government was elected in March 1983 we had all the anti-ANZUS whinings coming from Mr Hayden and the Ministry-ANZUS needed to be rewritten; ANZUS was unfair to Australia; ANZUS no longer had any relevance to Australia. One would have thought that it was Senator Chipp talking. Then we had the very tense August meetings in Washington between Mr Hayden and Mr Shultz. We had the problems at the end of 1983 when Australia double-crossed the Association of South East Asian Nations by leading it to believe that we would support the recognition of the coalition government in the vote in the United Nations. Then we had Mr Hayden turn around and accuse the United States of having stirred up the ASEAN group to protest about it when the great protest came. We have had the persistent problems of the disarmament talks. I was very interested to see Mr Hawke admit this week that the advice he had been receiving from the Department of Foreign Affairs had been to the effect that the comprehensive test ban treaty had been very badly handled and was discomforting the Americans. That is not surprising. We know that but the Labor Party will not admit to it. Then we had the MX missile test backdown-the solemn contract entered into between the United States and Australia in good faith abrogated at the last minute because of the whinings of the left wing. Senator Peter Baume —Abrogated on its merits? Senator MacGIBBON —No, not on its merits at all, just on the ideology of the Left. The Soviet-line Ministry got into Mr Hawke and said: 'You break that contract or we will break your neck'. It was as simple as that. Then of course in the recent ANZUS debate we have had the failure of the Australian Government to support the United States and to argue the case for New Zealand participation in honouring the Treaty. A minor point that has come up-although I expect it to be a major point in the years ahead-is the rejection of the strategic defence initiative. Only today in this chamber we had the Minister for Resources and Energy (Senator Gareth Evans) telling us how terrible it was to have a strategic defence initiative and how the Labor Government would not support it. What is wrong with having a defensive position? What is morally correct about living under the doctrine of mutually assured destruction? That is a doctrine which says: 'If you attack us and kill us, we will kill you before we die'. That is exactly what we are reduced to with the mutually assured destruction theory. I would rather live by that theory than have none at all. But the strategic defence initiative raises the possibility for the first time that, instead of ensuring our safety by having the means of delivering a fatal blow to someone else before we die, we will have the capability of a purely defensive system. If it works, we will have the capability of putting a curtain around the countries that are party to the agreement, denying the entry of any sort of nuclear missiles to them and being able to deny the entry of those missiles without resorting to nuclear weapons in return. We might be able to do it by particle-beamed weapons or by high velocity, high energy missiles or something like that. Conceptually, it is a far preferable path to follow than the path of mutually assured destruction. It is also a far more moral position because we pose no threat since it is purely a defensive system and not an offensive system. If the strategic defence initiative works, there is no way in which it will be possible to take any retaliatory action of a harmful nature against any other country. The moral argument, as well as the intellectual argument, is overwhelmingly in favour of the strategic defence initiative. What has happened? The Labor Party will not have a bar of it. It will not have a bar of it because the Soviets are upset and they are concerned that the Americans might get ahead of them. Of course, anything that upsets the Soviets also upsets the present Labor Government. Some of the arguments against the strategic defence initiative need to be demolished in the few minutes that I have left. First of all, the Labor Party says that it is wrong to militarise space. From the first day that the Soviets launched Sputnik many years ago, the Soviet activities in space have been directed primarily to military purposes. Since the early 1970s they have perfected hunter-killer satellites, something that the Americans have not done. They have even experimented with orbiting nuclear bombs. One of the other arguments used against the SDI is that it is only a sectional defence; it will only protect against intercontinental ballistic missiles. As I understand it, conceptually-it is still in the planning and research phase-the strategic defence initiative will explore the possibility of surveillance of and counters against armed or manned aircraft, cruise missiles and submarine-launched ballistic missiles. Another argument used against the SDI is that it may be and almost certainly will be an incomplete system. In other words, it may not be able to guarantee 100 per cent defence against missiles that are launched against the countries involved in it. That may be true. But the thing about the SDI is that it can be progressively introduced. As it is progressively introduced, the second strike capability can be run down quite safely with intercontinental ballistic missiles as the technical problems are overcome until such time as 100 per cent capability is reached with the defensive powers. This business of having a staged introduction is a very attractive feature. Another argument used against SDI is that it might infuriate the Russians and encourage them to resort to a first strike capability before the system is in place. That argument shows a complete lack of understanding of what the mutually assured destruction philosophy is about. Mutually assured destruction envisages a second strike capability, and a second strike capability will be in place in any case. If the Russians double, triple or even quadruple their number of ICBMs, there will be enough residual power left in the American ICBM capability with the triad they have of land-based ICBMs, sea-based missiles with their nuclear submarines and the Strategic Air Command manned bomber system to guarantee an effective and punishing second strike capability. Over and above everything else, the proposal for the SDI is just to investigate and set up a research program-a very comprehensive and a very expensive research program, but something that Australia is morally bound to support. It will not cost us anything but it has enormous benefits for humanity because it is the only practical way we can see to run down the dangerous arms race, run down the supply of nuclear weapons and ultimately, if it can be made to work, reduce to a minimum the number of nuclear weapons on this earth. As I said at the outset, the Governor-General's Speech is a speech for yesterday by yesterday's men. Nothing of relevance to the future of Australia has been touched in that Speech, nothing that in any way deals with the serious structural problems of the Australian economy. It will be left to the Liberal and National parties, whenever this Government fails, to rectify those matters and put Australia on a path to recovery and prosperity for the decades ahead. Debate (on motion by Senator Grimes) adjourned. Motion (by Senator Grimes) proposed: That the Senate do now adjourn. Senator PETER BAUME(New South Wales)(10.10) —I want to say a few words tonight about the Australian Air League. The Australian Air League is a youth organisation established in 1934. In 1984, in just the last few months, it celebrated its fiftieth year and its golden anniversary. It was founded in Manly in Sydney by Mr George Robey. I well remember in my youth seeing the Manly squadron of the Australian Air League exercising in the parklands just north of Manly. It is now a Federal youth organisation, stronger than ever, open to boys and girls and entirely voluntary in its operation. My association with the Air League is with the Marrickville squadron in Sydney, part of my electorate. This squadron numbers about 40 people and is a quite remarkable group. As patron of the squadron I see it regularly and I have watched youngsters in that squadron develop and progress while having fun and enjoying themselves in the Air League activities. They do so in an area of Sydney which is tough and in which community organisations are at a premium. The Australian Air League is valued in that district. It is valued by parents and by the people who take part in it, and it has the service of a series of dedicated officers who give much of their time to the activities of this group. Very early in my time as patron, the Air League hall in Marrickville was badly damaged and almost destroyed by fire. There was a strong possibility at that time that it could have meant the end of the squadron as it had nowhere to meet and no way of carrying on its activities. Over the next year I saw a dedicated group of adults and youngsters rebuild, renovate and improve that hall. I was able to go back to the opening of the rebuilt hall and see the delight of the squadron in what it had been able to achieve. The squadron has gone from strength to strength and is presently the champion Air League squadron in my State of New South Wales. It is a real pleasure to be patron of a group such as this. It is not always easy for these squadrons to operate, nor is it always easy for them to get established. Further out in my State at Mount Pritchard in south-west Sydney, another squadron is having a struggle to get going. It tried to build a hall for its Air League activities for the benefit of the youth in the district. The hall is half complete. The Air League has run out of money. Vandals in the area are destroying that part of the hall which has been constructed and the community effort which has been provided already is being undone by a series of raids at night when material is removed and the hall is damaged. I have tried, I must say with some success, to interest my colleague from another place-not my Party colleague but Mr Grace, the new member for Fowler-in the plight of this Air League squadron. I have tried to involve the City of Fairfield in trying to get something done for this Australian Air League group, but so far without much response. Finally, I have tried to obtain community employment program funds to allow this group to complete the construction of this hall. To that end I have written to the Minister for Employment and Industrial Relations, Mr Willis, and his department. I must say that so far there has been little response but hope springs eternal and I hope that some day I will hear from the Minister and from the City of Fairfield. Hopefully, I may even hear that they have some interest in what happens to this Australian Air League squadron, because the officers care, the parents care and the boys just want the hall to be completed. As a community we do not honour sufficiently those volunteers who provide so much of the recreational and training infrastructure for our society. In the Parliament we have recently established a Baden-Powell Fellowship to enable parliamentarians to support the spirit of guiding and scouting. The Boy Scout and Girl Guide movements are the largest youth movements in the world. I am delighted that so many parliamentarians from every party and from both chambers have elected to be associated with the Baden-Powell Fellowship but for smaller groups like the Australian Air League, too often little is done to recognise what they do and their achievements. The Air League Golden Jubilee in 1984 was a time when much more honour could have been given to this body than it received. The year, 1985, is the Golden Jubilee of my squadron, the Marrickville squadron of the Australian Air League. I invite all my New South Wales Senate colleagues to join me in offering congratulations to the Australian Air League and particularly to the Marrickville squadron for a job of community service well done and continuing to be well done. Senator TOWNLEY(Tasmania)(10.16) —Earlier today I was talking about the economy and the nuclear fuel cycle of which, of course, Australia is part. I said that it would be foolish for Australia not to take advantage of being able to sell uranium to other countries because uranium is a reasonably common mineral. Once contracts were signed with other countries and not with Australia, we would have a lot of trouble getting back into the act. I want to talk, too, about the economy. I commend to everyone a reading of Senator Short's speech of yesterday because it contained some most pertinent facts. I have noticed that at last many financial writers are recognising the danger that faces Australia because of our Government's continuing overspending, because of our deficit. I do not refer only to the present Labor Government. When Mr Fraser was in government he attempted to control the situation but I do not believe that that is happening now. I believe that there is a learning curve with deficits and that it takes a while for members of any government to learn just how important it is to control their spending. I have yet to see evidence that the Hawke Government has learnt that lesson. Senator Jessop —State governments, too, have a responsibility. Senator TOWNLEY —Of course, as Senator Jessop says, State governments have a responsibility. I do not absolve any of them from the spending that they are undertaking. All of them have to do something about the amount of money that they are spending. I have before me some figures showing the indebtedness, and the per capita liability of the international banking community of selected countries in 1983. The countries are Australia, Poland, Brazil, Argentina, Mexico and Chile. These figures were prepared for me by the Department of the Parliamentary Library Statistics Group. I seek leave to have the chart incorporated in Hansard. Leave granted. The document read as follows- PER CAPITA LIABILITIES TO THE INTERNATIONAL BANKING COMMUNITY, SELECTED COUNTRIES: 1983 Per capita Country Liabilities Population liabilities ($US million) (millions) ($US/person) Australia 18,444 15.37 1,200 Poland 10,923 36.57 300 Brazil 62,227 129.66 480 Argentina 25,852 29.63 870 Mexico 68,432 75.10 910 Chile 12,098 11.68 1,040 Senator TOWNLEY —As anybody looking at that chart will see, Australia in 1983 was more indebted than any of those other countries. They are the bad boys, perhaps, of international indebtedness, and we are the worst of the lot. The only one that comes close to us is Chile. The position has changed somewhat from the previous year when Argentina was closest to us. Now Chile is closest. We are more indebted than any of those countries, and I believe that these figures represent the situation before we add the indebtedness that has come about due to the borrowings of this financial year. Certainly, over the last two years we have stupidly borrowed more than $15,000m. That is, as I believe others have stated, roughly $1,000 per man, woman and child per year. The headline to an article in the Sydney Morning Herald a couple of days ago read: 'Government borrowings hit a 30 year high', yet we hear glib talk about another $6m being borrowed in the coming year. I believe that that is quite dangerous for this country. It is easy to see why the value of our dollar has dropped relative to other currencies as well as to the United States dollar and with this, of course, the living standard of every Australian. Senator Jessop —What will that mean to our interest repayments? Senator TOWNLEY —I will get to that in a moment. I think that is something that has to be addressed by the Government. The interest rates that apply to the individuals in this country who own or who aspire to own a house will have to rise from their already high levels if governments-I include the State governments-and their agencies continue to compete so heavily for the available funds. It is no wonder that some people are asking whether we will follow the economic slide experienced by countries such as Argentina. We now spend 20 per cent more each year on our bill for interest on borrowings than we do on education. Our interest bill in the August Budget was estimated to be $5,600m, almost as much as the defence budget. I expect that, because of the change in the economic factors brought about as people start to realise just how silly our government spending is, when the figures are finally tallied we will be spending as much on interest as we do on defence. As an engineer used to analysing figures I have to say that the trend of interest payments is a very nasty one. Unless something drastic is done this country will soon be spending 20 per cent of its gross domestic product on its interest bill. Of course tremendous problems are involved with such payments. If our export incomes fall, if our exports fail, we will be in deep trouble. I suggest most strongly that the spectre of our huge Budget deficit, and our huge debt should become the main point of discussion at the summit that will be held shortly. The Prime Minister, Mr Hawke, is overseas pointing Canada in the right direction, making sure that its economy goes well. Senator Jessop —Is that going to cost another $400,000? Senator TOWNLEY —I will get on to that in a moment. His real responsibility is here, looking at just what should be done in our next Budget to make sure that the country does not go the way of Argentina. Senator Kilgariff —He is looking for a quiet two weeks. Senator TOWNLEY —Sometimes I think it is better when he is out of the country but the situation in Australia is getting so serious that all of us have to give every bit of thought to how we can save this country from the economic disaster that I believe, and others who are now reading the international papers and who see what happens in other countries believe, may occur. Senator Jessop —Whenever he goes overseas the value of the Australian dollar goes down. Senator TOWNLEY —I have not plotted a graph of his overseas trips in relation to the Australian dollar but I will do that when I get a chance. Just today I got a statement from the Real Estate Institute of Australia in which its President, Mr Kevin Sullivan, said certain things. If it is the wish of the Minister for Community Services (Senator Grimes) I will read the statement but it is just a straightforward one page document and I seek leave to incorporate it in Hansard. Leave granted. The document read as follows- GOVERNMENT EXPENDITURE 'AN OBSCENITY' The tax summit should be about government expenditure, Mr Kevin Sullivan, President of the Real Estate Institute of Australia, said today. 'We are told that the tax summit is to be about tax reform, and we certainly need that. But if governments at all levels reduced their spending there would be a simple tax reform-less income tax to meet insatiable government demands for spending money. Mr Sullivan said public sector spending in real terms had been allowed to rise steadily year after year and this had forced taxation to intolerable levels. 'Today, some 42 per cent of the nation's income is gobbled up by governments. Ten years ago it was about 32 per cent,' Mr Sullivan said. 'During the last election campaign the Prime Minister promised that government spending would rise at a lower rate than economic growth. This will be hard to achieve: last financial year the real growth in the economy was 5.7 per cent but the real increase in federal government budget outlays was 7.7 per cent; this financial year a real growth of 4.5 per cent is estimated compared with a real increase in government spending of 6.1 per cent. Mr Hawke's promise calls for an increase in government spending of no more than 3 per cent. But the real problem is that we are being conditioned to rises in government expenditure. We should be demanding that government spending falls in absolute terms.' 'Then our taxes could fall too,' Mr Sullivan said. ''To quote a word from the Prime Minister's vocabulary, government spending has become an 'obscenity'.'' Mr Sullivan said. Senator TOWNLEY —It is my belief that whoever is in government has to cut government expenditure in real terms, in both State and Federal spheres. If we do not those not yet born will have every reason to despise us. Mr Hawke was lucky to take over with the wages pause in place and the breaking of the drought came just after he took office, but his charisma will not save him if he does not control government spending this year and every year he remains in office. Many people have made rude remarks about the next matter I want to talk about tonight, but I will not comment on them. I object most strongly to the way in which the Leader of the Government in Senate (Senator Button) used a Boeing 707 aircraft as his personal carriage to the recent funeral in Moscow. Senator Grimes —Oh, Jesus! Senator TOWNLEY —It is all right for Senator Grimes to say whatever he said-I will not repeat it-but some distinguished Australians, regular world flyers, are starting to use these aircraft as though they are taxis. When they were bought the ruling was that they were to be used by the Prime Minister only outside Australia. I was against their being used by the then Prime Minister, Mr Fraser. At the time I felt that the spending of millions of dollars was not warranted, and I was apprehensive that other Ministers would not be able to keep their fingers out of the till, as it were, and would not be able to resist the temptation to use money from the public purse to travel in the biggest VIP aircraft around. Senator Messner —It was a good security question. Senator TOWNLEY —I will get to the security question in a moment. The fact that Senator Button was representing the Prime Minister in this case does not make this misuse of VIP aircraft any better. The pretext that if Ministers do not use the VIP aircraft they will inconvenience people on commercial aircraft does not wash with me one little bit. Who is going to worry about Senator Button? Do honourable senators say that someone will try to apprehend him on his way to Moscow? Saying it was a matter of security is not good enough. Senator Peter Baume —What did the Labor Party promise before the election? Senator TOWNLEY —I will get to that in a minute, too. Surely we are not saying that Senator Button would require the same protection as the Prime Minister. Who on earth is kidding whom? The picture of a 707 in turbulence with Senator Button in it is frightening. We would have the little bloke floating around in a big aeroplane; they would have to tie him down. How much would it have cost to fly by Aeroflot from Paris to Moscow? Why did the Government not send somebody with a bit of stature, such as the ex-Labor Prime Minister, Mr Whitlam? If the Government could not make up its mind who was to go from here in time to catch commercial flights, why did it not ask Mr Whitlam to go? I am sure he would have loved it. Senator Jessop —They could have looked up to him. Senator TOWNLEY —I do not want to get personal, but if Senator Jessop says that they could have looked up to Mr Whitlam, I believe him. He is not one of my favourite people in the world but I still think for the sake of saving about a third of a million dollars, which is what we are talking about, it would have been a very good idea. This country cannot afford to have Ministers tripping around the world in big aircraft. I hate to exaggerate, but I believe those aircraft cost over $3,000 an hour to run. Senator Messner —It is $6,000. Senator TOWNLEY —Someone says $6,000. I do not know whether that is right or wrong. I will try to look it up in the Estimates when those figures are before us. The fact is that Senator Button should have had more sense, decency and consideration for the Australian people than to use a huge aircraft like that to go to Russia. As I said, if he could not make up his mind in time why did the Government not get Mr Whitlam to go with Aeroflot? I am sure he would have loved to fly by Aeroflot from Paris to Moscow. It probably would be a direct flight. It was not being done for security, for the safety of others, but to inflate the ego of small people. It is a scandalous waste of taxpayers' money. If that matter is allowed to go on unnoticed, where will it stop? He is not the only Minister who has used the 707s, against the original decision of the Government which bought them. The list of VIP flights should be tabled much more regularly than at the six-monthly intervals it is now. That enables Ministers to hide behind the time delay to prevent us from seeing exactly what they are doing. I would like to see what a lot of Ministers are doing, but tonight I am talking particularly about the scandalous waste of money in sending one person to Moscow in a 707 which, I am informed, costs $6,000 an hour to run. I was against the purchase of those aircraft, because I knew that Ministers would use any excuse they could think of to expand their use and to get their hands on those aircraft. If one looks at what has been happening with VIP aircraft over the last few years, one will see a pattern. We have some BAC-111s, which are the biggest and cost a fair bit to run. The next ones down are the Mysteres. If someone goes to the airport and there are two aircraft there, they always say: 'I will have the big one'. It appears that way. Senator Jessop —You may not get the choice. Senator TOWNLEY —You may not get the choice, I agree entirely, but why on earth are the hours on the BAC-111s going up and the hours on the Mysteres not going up? Senator Messner —That is interesting. Senator TOWNLEY —It is very interesting. It has happened over the last few years, while our government was in power as well, so I am not being one-sided about it. If we let this go, we will gradually see the 707s being used for Ministers to float around Australia, until eventually the 707s will be so busy that somebody will say: 'I need a bigger one; I want a 747'. Some of the Ministers cannot keep their hands off the big aircraft, and they say to the public: 'Get lost; hang the expense'. For the record, let us talk about what it costs to run the VIP fleet in a year. About a year ago it was costing about $15m per annum to run the VIP fleet to look after our very important-in their eyes-Ministers. They will say it is for training flights. I wish I had $15m to train in an aircraft. The way I fly, I might need it. To put it into perspective, we have 76 senators and 148 members of the House of Representatives. If we give each of them about $50,000 a year, that comes to $12m a year for the salaries of all members of the Parliament. The cost of running the VIP fleet is $15m a year, spread over some few Ministers. That is a good indication of what is happening. Imagine the screams if somebody suggested doubling the salaries of all members of parliament, but that is what the public is spending, in one way or another, by way of the VIP fleet. Let me be perfectly clear that I am not for a moment suggesting that we do have our salaries doubled, Senator Grimes. I believe we are very well looked after at the moment. Senator Grimes —I would not do that to you. Senator TOWNLEY —The equivalent of that amount is wasted in VIPs. I leave it to the Senate and to people outside to judge whether we are getting value for money. I see the answer to that question as a clear 'No'. Senator GRIMES(Tasmania)(10.34) —I join with Senator Baume in congratulating the Australian Air League, and particularly what he describes as his squadron, the Marrickville Squadron, on its fiftieth anniversary. I hope the Mount Pritchard Air League solves its problems. I will pass on Senator Baume's remarks to the Minister for Employment and Industrial Relations, Mr Willis, to see whether we cannot get a reply for him, which I expect he should have had by now. Senator Townley raised two subjects. I will certainly bring to the attention of the Treasurer (Mr Keating) his erudite words on the deficit. I think I am the only person in the whole Parliament who does not claim to be an economist, but I might suggest that the presentation of raw figures, in the way Senator Townley did tonight, without making a distinction between public and private borrowing, does not mean a lot. One wonders, in the developmental stages of some larger countries, what the overseas debt would have been at the time they were borrowing money to develop the country. I will leave that to the Treasurer and others to respond to. I was interested to hear Senator Townley again speaking about the VIP fleet. I thought he had forgotten about it while we were in government, but he has brought it up again. Senator Button was asked to go to Mr Chernenko's funeral by the Prime Minister (Mr Hawke). It was impossible at the time, as I well remember, to get a commercial flight to Moscow, and it was decided that he would go on a 707-the planes Senator Townley does not like, and which we did not like once, but they seem to be all right now. I understand Senator Townley's anxiety about the use of VIP aircraft by Ministers. I know that he took over from ex-Senator Turnbull in this place in making a hobby horse of this issue. Firstly, I must point out that it is not only Ministers who travel in the VIP flights. A gentleman at Government House also uses the VIP flights, as do senior officers in the forces, and they are used for training and other purposes. Secondly, the thought that I, as Minister for Community Services, or Senator Messner when he was Minister for Veterans' Affairs, or Senator Baume when he was Minister for Education, could go out to Fairbairn and say 'I do not want that little Mystere or that 748, I want that BAC-111' is an interesting thought, but I can assure Senator Townley that it is not what happens. Usually, when I go out there I end up in one of the propeller-driven aircraft, although I must admit that one night I went out there to get on a plane and I was embarrassed to find I had been given a BAC-111. I felt a little like Senator Button in a 707. The first thing to decide is whether we need a VIP flight at all. Governments in this country, since the time of Sir Robert Menzies, have suggested that we do. I must say that it is very convenient at times when one needs it, although it is hard to get on them these days. If Senator Townley believes we do not need a VIP fleet, that is his judgment, but a lot of other people have a different judgment. Secondly, if we are going to have a VIP fleet, the question is whether we should not have more modern aircraft. The present aircraft are highly fuel inefficient, have a poor range-- Senator Townley —Are you suggesting better ones? Senator GRIMES —No, I would not dare suggest that. Anyone who has heard what the pilots think of them would wonder whether we should not, perhaps, change to smaller, faster, more efficient planes. I dare say that nothing will convince Senator Townley one way or the other. I think it is time we all went home to bed, so I will leave my remarks there. Question resolved in the affirmative. Senate adjourned at 10.38 p.m. The following paper was tabled: Defence Act-Determination 1985 No. 11. The following answer to a question was circulated: Senator Button —On 27 February 1985 (Hansard Page 244) Senator Foreman asked me, as Minister representing the Minister Assisting the Prime Minister for Youth Affairs, a question without notice relating to recommendations in the report of the Kirby Committee of Inquiry into Labour Market Programs concerning the Australian Youth Service. The Minister Assisting the Prime Minister for Youth Affairs has provided me with the following additional information in answer to Senator Foreman's question of 27 February: The Kirby Committee sees an Australian Youth Service as providing a focal point for co-ordinating local youth services and a place where young people can go for advice, assistance and referral. The Committee has recommended that there should be widespread consultation on the role and function of an Australian Youth Service. The Government has agreed that the implications of that recommendation need to be fully examined and has established an AYS consultative team consisting of senior officers of the Office of Youth Affairs and the Department of Employment and Industrial Relations. This consultative team is currently consulting in each State and Territory with all parties and will soon be calling for written submissions. The consultative team's report will then be considered by the Government.