Thursday, 18 April 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 assembled. The petition of the undersigned respectfully showeth that- 1. The Watsonia Army Barracks contains electronic communication facilities, operated by Australian and American personnel, that gives the United States the ability to pin-point Soviet nuclear submarines, hidden in the Oceans. 2. This would make it possible for U.S. killer-submarines to destroy all Soviet nuclear submarines, while the U.S. nuclear submarines launch their missiles in a 'first strike' attack. This makes Watsonia a potential nuclear target. A nuclear attack on Watsonia would have a disastrous effect on Melbourne. 3. The 'joint U.S.-Australian' bases in Australia endanger rather than protect us. They also add a new menace to the nuclear arms race, that must be stopped. Your petitioners most humbly pray that the Senate in Parliament assembled should close the 'joint Australian-U.S.' electronic communication facilities in the Watsonia Army Barracks And your petitioners as in duty bound will ever pray. by Senator Zakharov (from 54 citizens). To the Honourable the President and Members of the Senate in the Parliament assembled. The petition of the undersigned Australian citizens respectfully showeth that- (i) The financial situation of students enrolled at Australian post-secondary institutions is already extremely difficult and any increase in the financial commitments of students would gravely worsen their financial difficulties. (ii) The imposition of post-secondary tuition fees of comparable levels to those imposed prior to 1971 would force many currently enrolled students to discontinue their studies and deter many persons willing and able at present to undertake post-secondary study from doing so. (iii) Those students and potential students from social groups currently under-represented and disadvantaged in the education system would be most severely affected by the reintroduction of fees for post-secondary education. Your petitioners therefore pray that: 1. Post-secondary tuition fees not be re-introduced for any category of students. 2. Any form of Stamp Duty or similar system of the ''user pays'' principle in education not be introduced. 3. Emphasis should be on increasing access to education by, among other things, increasing student financial assistance. 4. The visa charges upon private overseas students be removed immediately. 5. The Minister for Education and Youth Affairs immediately clarify the government's attitude to the reintroduction of post-secondary tuition fees. And your petitioners as in duty bound will ever pray. by Senator Button (from nine citizens). To the Honourable the President and the Honourable Members of the Senate in Parliament assembled. The humble petition of the undersigned electors of the Commonwealth of Australia respectfully showeth that- 1. We are completely satisfied with the design of the existing Australian national flag. 2. We are aware it properly reflects the immutable characteristics of Australia, namely: The Union Jack-itself the creation of 3 Christian crosses-represents the nation's historical origin, and the source of its language and law. The Southern Cross on an azure blue background signifying its place in space. The large star depicting the advent of Federation in 1901. 3. We know the flag has been a source of inspiration to generations of Australians in peace and war. 4. We recall that millions of native-born Australians and newcomers to these shores from other parts of the world have become united under its proud symbolism. 5. We are certain that any change to the flag will produce division in the Australian community. Your petitioners therefore pray that your Honourable House will propose and pass a motion that ''the existing Australian national flag remains sacrosanct from change''. And your petitioners as in duty bound will ever pray. by Senator Knowles (from 66 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 Government's iniquitous and unfair Assets Test. And your petitioners as in duty bound will ever pray. by Senators Messner (from 482 citizens) and Kilgariff (from 14 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of undersigned citizens of Australia respectfully showeth- We call upon the Government of the Commonwealth to: 1. Reject a 'user pays' system of education and hence tuition fees in any form. 2. Abolish the overseas students charge and make a commitment to action to improve the Overseas Students Programme. 3. Publicly reaffirm its commitment to a free post-secondary education system, open to all. And your petitioners as in duty bound will ever pray. by Senator Bolkus (from 1,675 citizens). Petitions received. Senator TATE(Tasmania) —I give notice that, on the next day of sitting, I shall move: That the following matter be referred to the Standing Committee on Constitutional and Legal Affairs for inquiry and report as soon an possible: The desirability, feasibility and possible content of a national Bill of Rights for Australia. Senator GRIMES(Tasmania-Manager of Government Business) —Papers are tabled 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. A.C.T. Canberra Retail Markets Trust-annual report 1983-84. 2. Outlook for the Aviation Industry-Information Paper. 3. Foreign Investment Review Board-report 1983-84. 4. The training of skilled workers in Denmark, Ireland, Portugal, Spain and the United Kingdom-report of the Australian tripartite mission to study the training of skilled workers in the metal and electrical trade. 5. Housing policy-text of a statement by the Minister for Housing and Construction made in the house of representatives on 16 April 1985. 6. Chemicals and plastics industries-interim report on end-use under security by-laws-IAC report. 7. Auditor-General's report on the National Aboriginal Conference together with a statement relating to the document made by the Minister for Aboriginal Affairs. Motion (by Senator Grimes) agreed to: That leave be given to introduce a Bill for an Act to amend the Director of Public Prosecutions Act 1983 to confer additional functions on the Director, and for related purposes. Motion (by Senator Mason) agreed to: That leave be given to introduce a Bill for an Act to amend the Defence Act 1903 to provide for parliamentary approval of overseas service by members of the Defence Force. Bill presented by Senator Mason, and read a first time. Senator MASON(New South Wales)(10.04) -by leave-I move: That the Bill be now read a second time. I seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- The purpose of this Bill is to place the responsibility for the decision to send Australian troops overseas with both Houses of Federal Parliament subject to exceptions covering the movement of personnel in the normal course of their peacetime activities and the need to take swift action in an emergency. In an emergency, the Governor-General may require defence force personnel to serve outside Australia's territorial limits, provided the Government then obtains parliamentary approval within two days. The Bill excludes overseas service by members of the defence force pursuant to their temporary attachment as provided by section 116B of the Defence Act; as part of an Australian diplomatic or consular mission; on an Australian vessel or aircraft not engaged in hostilities or in operations during which hostilities are likely to occur; for the purpose of their education or training; and for purposes related to the procurement of equipment or stores. The provision for parliamentary approval of overseas service of troops applies in other countries. In Canada, the Governor-in-Council may deploy troops anywhere, any time, subject to Parliament meeting within 10 days to approve action taken. In the Federal Republic of Germany there are limitations. There is constitutional prohibition against German forces participating in a war of aggression. Participation in a collective military action for preservation of peace is permissable only if that force is deployed in a situation which, at that time, represents an illegal attack on the Bundesrepublic. In Japan, the 1947 Constitution of Japan, by article 9, provides: . . . the Japanese people for ever renounce war as a sovereign right of the nation . . . The Self-defence Forces are authorised to protect the peace and stability of Japan against direct and indirect aggression. Self-defence Force personnel may not be deployed outside Japan. This has been interpreted by successive governments as precluding participation in United Nations peace keeping and observation teams. One of the most divisive issues that has ever oppressed our history occurred between 1962 and 1971 when some 50,000 Australian servicemen from all three Services were engaged in the war in Vietnam, the result of which was a communist government for the whole of Vietnam. The hostilities almost certainly resulted also in the later destruction of the free governments in neighbouring Cambodia and Laos and the incorporation of all of what was once French Indo-China into the communist state. During that decade of war 492 members of the Australian forces were killed. Of these deaths, 187 were of young men who had no choice as to this tragic early end to their lives because they were conscripts set to fight in an unwinnable and unjustifiable foreign adventure which, judged on any standard, was a disaster and which, far from deterring the spread of communism in Asia, actually contributed significantly to it and speeded up that process. As well as those deaths many more young Australians were injured, nearly 3,000 of them. Of these more than 1,000 were conscripts. This is the area of consequence we are talking about as a result of a decision taken to involve Australia in a war without the proper consultation of its people and of its Parliament and without the right, which we are seeking in our proposed amendment, of the Parliament, as the voice of the people, to have some control over the situation. In view of this, it is worth looking at the origins of Australia's involvement in the Vietnam war. There are several versions of how Australia was inveigled into supporting the U.S. in that tragic and wasteful episode. For many years it was stated officially that Australia was there in answer to a call for help from the Government of South Vietnam. That story is now, of course completely discredited. Papers released in the United States as a result of the effective freedom of information law there indicate that the United States wanted Australia there with other countries so that the United States would not be seen to be acting alone. That was the motivation; that was why Australia was there. Of course, we were not told at the time or subsequently that that was the reason. In fact it was stated over and over again by the then Government that the government of a free country had asked us to help. But that was not true. So again we must look at the motivation of government, and its incentive to be honest, should it be left alone in such a situation without the control of the Parliament and the debate in the Parliament that would result from our proposed amendment should it become law. What are the motivations of government, the pressures on it, to conceal and to dissimilate? It is said that a nation which cannot learn from the lessons of history has no future. If history has proved anything, it has certainly proved that. So it is reasonable and rational for us to look at the history of the Vietnam war to see what we can learn from it. Australian involvement in that war before it ended was opposed by millions of Australians, certainly by the majority of Australians. It was passionately and actively opposed by scores of thousands-possibly hundreds of thousands. It became a deeply divisive issue in our community and we still bear the scars of it. It has resulted in a deep scepticism on the part of young people about the validity of our process of government. Many of them are not on the electoral roll because they fear future wars in which they might again be sent overseas through no choice of their own to fight, against their own will and against the will of the people. Australia could, of course, become involved in another Vietnam-like war in our own region, and for very similar reasons. What would happen if civil war broke out in the Philippines, due to the growing strength of the Communist New People's Army and the support it receives because of the repressive nature of the Marcos regime? Such a war, in the many islands of the Philippines, could represent a far greater and long-lasting drain on resources of those defending the present regime than the war in Vietnam. Australia should make it clear to the United States that we would not become involved in a Vietnam-type war in the Philippines. If this Bill is passed, it will at least ensure a full debate on any such move in both Houses of federal Parliament with a subsequent vote of all our elected federal representatives. This must, as it does in other countries, lead to a more reasoned basis for sending defence force personnel overseas. I commend the Bill to the Senate. Debate (on motion by Senator Grimes) adjourned. Debate resumed from 17 April, on motion by Senator Grimes: That the Bills be now read a second time. Senator PETER RAE(Tasmania)(10.06) —The Senate is debating cognately, with extraordinary haste, the Taxation (Unpaid Company Tax) Assessment Amendment Bill 1985 and the Dividend Recoupment Tax Bill 1985. These Bills were dealt with yesterday in the House of Representatives. A bit over half an hour ago I was informed that-apparently because the Government is devoid of anything to do and is incapable of having a program of business which would enable the Senate to proceed in an orderly manner with some reasonable notice being given of the anticipated order of business-these Bills would be brought on immediately this morning. It is a measure of the absolute and utter confusion which is reigning in this country and is the reason why the Australian dollar has yet again plunged to unheard of depths that the Government is so incapable of managing its affairs that it has nothing else to bring on except some legislation that was dealt with yesterday in the House of Representatives. We have two Bills, debate on which, as the shadow Treasurer and former very successful Treasurer of the former Government, Mr Howard, said in the House of Representatives, is a further edition of Blue Hills. This is a Blue Hills debate on Bills which impose what the Government knows is a totally unacceptable aspect of retrospectivity which this Opposition will not wear under any circumstances. We have a fundamental objection to the concept of the retrospective imposition of a penalty on people who took certain action at a time when they believed that the action which they took place was lawful and which they had every reason to believe was lawful-action which was taken at a time when they had no reason to believe that the Government intended to act in a way which would make their action unlawful. However, the Bills have one small difference from the previous proposals and that is that the Bills include additional features reinstating the provision which was removed by the former Government which authorises the Commissioner of Taxation to report to Parliament the names of those who fail to pay recoupment tax, and an amendment which does have some appeal to the Opposition-an amendment which would allow a successful appellant against an assessment of unpaid company tax to receive interest on any amount refunded. One of the taxation matters of very considerable concern is the huge delay that exists in relation to taxation appeals. We understand that over 50,000 appeals are waiting to be heard and that some 600 were heard last year. That is a measure of the backlog that exists under the present taxation system, which is just falling down around the ears of this Government. The problem for individuals, including companies and shareholders, is that if ultimately they are successful in an appeal when eventually it comes on and are entitled to receive a reduction in tax which has been held to have been wrongly assessed, they are not at the moment entitled to interest on the amount involved. At a time when interest rates are the highest this country has known since the Great Depression-another measure of the economic incompetence of the present Government, and the confusion which the factionalism of that Government has created in economic management, giving this country the highest interest rates it has had in the past 50 years-the matter of the amount of interest paid to a successful appellant is most important. The Opposition extends an invitation to the Government. If the Government presents to us a piece of legislation, including a provision to allow a successful appellant against an asessment of unpaid company tax to receive interest on that amount, the Opposition will support the Bill. If the Government does not wish to take that course, the Opposition will introduce legislation in the form of a private member's Bill to provide for such a course. Because of the provisions of the Constitution and the difficulties that exist, it is not possible for the Opposition to take any other course at the moment than to extend that request to the Government. If the Government does not wish to take up that request, we will take some steps ourselves to ensure that that opportunity is given. There is an element in this legislation of a rerun of the continuing saga of Blue Hills. For all the reasons outlined on many occasions in debates in 1983 and 1984, such legislation has been rightly and properly rejected by the Senate and the Opposition proposes to vote against it again. It will vote against it because it is unacceptable. It puts punitive imposts on people retrospectively-people who had no reason to believe that those imposts would be made retrospectively. I do not think there is any great advantage in going through all the reasons which have been repeatedly outlined in the debates, as they are clear. It is a simple issue: Does the Government believe in justice in a fair society, or does it not? Does it believe that in a system where people can act with some reasonable belief that what they do is lawful at the time that action should not at a later stage be made unlawful so that those people will be penalised? One faces an extraordinary situation with the present Government. The Prime Minister (Mr Hawke) throughout the most recent election campaign found himself faced by an opposition which had a clear and firm taxation policy. It came forward with a taxation policy that was developed to benefit individuals suffering the present high personal rates of taxation. Under the present system the amounts paid by individual taxpayers are the highest ever known. The present average weekly wage earner is now in the high tax bracket. The person who would have expected to be only a moderate taxpayer has become one of the major taxpayers in this country. It has become urgent that steps be taken to make the system fairer for families and individuals. The Opposition came forward with a policy involving income splitting between joint income earners without families. It also put forward a policy to provide for some rebate on child care. Both were important measures which were aimed at benefiting individuals and encouraging family life in Australia to the relief of hard-pressed individuals in the community who have had to suffer part of the major problem of high taxation imposed by the highest taxing, biggest spending Government in our history. The Opposition also said that it would redress the balance by giving genuine, real personal income tax cuts and substitute a broad-based indirect tax to provide the necessary revenue. Facing that position and without a taxation policy, the Prime Minister (Mr Hawke) found himself in considerable difficulty. A tax summit was suggested to him on a radio program while he was in Perth, Western Australia. Senator Knowles is present and can confirm that Perth is a very pleasant place to be. It was obviously the pleasant nature of the situation in Perth which overwhelmed the Prime Minister's better judgment because what he did was agree to a suggestion made to him by a radio interviewer that he ought to have a taxation summit; so flash, flash, bright idea-we have a taxation policy. That is what the Prime Minister did during the election campaign. He took up the suggestion of a radio interviewer who said: 'Why don't you have a tax summit?' The Prime Minister said: 'Yes, we will have a tax summit'. What has happened since then is that the left wing, the right wing, the Centre Left and all the other factions of the Australian Labor Party-- Senator Grimes —And me. Senator PETER RAE —And the independents, the other people and my colleague Senator Grimes. So that we all know in which faction honourable senators opposite are to be found, I quote from the Weekend Australian of 24-25 November 1984, which gives the latest list that I have available to me. That list places Senator Grimes in the independents group. There is the Right, the Victorian Labor Unity, the Centre Right, the Centre Left, the left wing, the Victorian independents, the general independents and Senator Grimes. At the moment it is very difficult to tell whose taxation policy is likely to succeed because members of the Left have had meetings in which they say: 'Our taxation policy is going to be this'. Perhaps the simplest way in which I can describe the taxation policy of the Left is to say that it is to slug a very small percentage of the population with a very punitive tax which will raise relatively little by way of revenue, but will give members of the Left some degree of satisfaction that they have punished the more successful sections of the community. It is a nasty attitude of retribution against the successful, rather than a policy for the collection of revenue for the general needs of the nation. We find headlines which say: 'The Left set to fight Hawke and Keating on indirect taxes'. We find that the Left, which has had several meetings to develop a policy, has now apparently got a policy which is in complete contradiction to the policy announced, insofar as one was announced at all, by those who were thought at one stage to be in control of the country-the Prime Minister and Mr Keating. At one time Mr Keating was supposedly a very successful Treasurer but he can now only be regarded as the man who has presided over the exchange rate crisis. That crisis has left Australia with a vote of international no confidence-a vote requiring intervention by the Government in the market place to prop up the Australian dollar by pushing up interest rates in Australia at the expense of home buyers, at the expense of business and at the expense of creating inflation in this country. All the people of this country will suffer from the incompetence of the present Government and a lack of confidence both nationally and internationally caused by the factionalism and the loss of authority of the Prime Minister and the Treasurer (Mr Keating). We find that the Treasurer has been out of the country for some weeks, apparently finding the climate in Paris much more conducive to his well-being than the climate in Canberra where the left wing of the Australian Labor Party has been meeting to develop a taxation policy. Amongst other things, this policy would involve the expansion of direct income tax to include all forms of income including capital gains-except on the family home. This policy would also impose a limit on the level of superannuation expenses and those involved in earning a living. The policy also propose raising the existing $4,595 tax free threshold but phasing it out completely for high income earners. This is another impost on high income earners and, of course, means a loss of incentive to those who might work a little harder or who might try to be a little more successful in seeking some reward for their endeavours. The proposed taxation policy also involves the removal as a taxation deduction of the so called business perks such as restaurant meals and travel expenses. One wonders what will happen at the Lodge and whether the Prime Minister will be keen to have his $100,000 or so entertainment expenses included in his income for taxation purposes. The difficulty of defining a perk and the difficulty of defining what is a real-- Senator Robert Ray —What has this got to do with these Bills? Senator PETER RAE —It has a lot to do with these Bills. These Bills are about taxation and about the general tax revenue. These Bills are about the forthcoming taxation summit. Amongst other things, the Bills are about the left wing's proposals for taxation. Senator Robert Ray —Talk about the Bills for a change. Senator PETER RAE —I will further come back to the Bills as they are part of the proposals of factions within a government which is so divided and over which the Prime Minister has so lost control. While the Prime Minister is continually pleading with the various factions in the Labor Party not to make statements, not to hold separate conferences an please to hold their tongues and not to express their differences in newspapers all over the country, we read articles such as the one in the Sun of Thursday, 21 March which stated: A Left-wing Cabinet Minister last night defied orders to Labor MPs from the Prime Minister, Mr Hawke, to end public comment on taxes and strongly attacked proposals to introduce indirect taxes. That is one example of the sort of breach taking place. I am glad to see that Senator Richardson is now in the chamber because he will have the opportunity to deny the dreadful stories spread around about a further falling out among the Government factions and that he is opposed to the Prime Minister in relation to taxation measures and other measures. Senator Robert Ray —Tell us about how well you got on with your Prime Minister. Tell us about Fraser and how you liked him. Senator PETER RAE —Mr Fraser is no longer a member of parliament and is not relevant to this taxation measure. I continue with my comment on the left wing's taxation policy which, of course, is not what the right wing or the Centre Left propose in their taxation policies. I will read from the Australian of Monday, 15 April 1985. If these statements are wrong no doubt some members of the Labor Party who attended that left wing Caucus meeting will be able to tell us their policy in relation to this fiasco which is still being called a taxation summit. It was reported that amongst other things the left wing proposed that there would be: Phasing-out of high indirect taxes on basic consumer goods. This is in direct opposition to the sort of thing the Treasurer and the Prime Minister, Mr Hawke, have been talking about. The article continued: Increasing the number of income tax thresholds for low-income earners to reduce the absolute rate of tax on low and middle incomes. Introduction of an annual wealth tax with a high exemption level and a progressive rate structure. The wealth tax proposal has been debated in this country for a very long time. I would be interested to know from my namesake and interjector Senator Robert Ray whether he is proposing to speak during this debate in order to tell us about his proposals in relation to a wealth tax or a capital gains tax. Senator Robert Ray —It is not relevant to these Bills, and you know it. Senator PETER RAE —It is relevant to the whole question of taxation and these Bills are part of the total taxation measures of the Government. The article continued: Introduction of an integrated capital transfer tax in the form of a progressive inheritance tax and gift duty. Again, that is an attack on capital and those people who are successful in this country. Such a tax is a disincentive for those who might otherwise be able to bring together some capital which generates employment and growth and rewards the entrepreneur. The Left also proposes that there should be no reduction in company tax rates-in other words, there should be no incentive to companies to go out and take some steps-- Senator Robert Ray —When did you last reduce company tax rates when you were in government? Senator PETER RAE —We did something about cutting out the double taxation rate in relation to company tax. We removed double taxation on dividends of up to $1,000. This was a positive encouragement to the small investor to participate in the ownership of shares of companies that own a quite significant section of the Australian economy. This Government, or at least its left wing has cut out that incentive and removed the opportunity for people to become small shareholders. It has put an imposition on those who would otherwise be able to share in the ownership of large parts of the productive sector of the country. It has imposed a very high rate of taxation on the income which the small investor receives from shares. So we have a situation in which company tax is paid first of all and then the dividend in the hands of the small shareholder is taxed again at a personal income tax rate. The Government is giving no relief to the small investor. It is giving the small investor no incentive to participate. The left wing proposes an increase in pensions and welfare benefits to 25 per cent of average weekly earnings in line with Labor Party policy. Senator Robert Ray —You were going to get back to the Bill. Senator PETER RAE —This is all to do with the Bill because it is all part of the question of taxation. This is one of the matters that will be discussed at the tax summit, if it goes ahead, which appears to be less and less likely because the Prime Minister, as he showed during the famous interview with Maximilian Walsh on ABC National, is becoming more and more cautious and less and less enthusiastic about a tax summit. In fact, when he was in Canada he let slip that he was not going to put his reputation-what is left of his shattered reputation-at risk by going ahead with trying to get taxation reform. He repeated that during the interview with Maximilian Walsh. Whilst there has been tremendous trumpeting about holding a tax summit, the Government is utterly divided and the Prime Minister, as he said, has no intention of committing political suicide over the issue of taxation reform, however important taxation reform may be for the country and however much it may be taking up the time of the left wing faction of the Labor Party in having private meetings to determine the taxation policy which it can put to the taxation summit, if in fact that summit takes place. The Government is simply trying to rely upon the same punitive measures which were rejected by this Parliament in 1983 and 1984 and will, I trust, be rejected again in 1985 because they are inherently unfair, punitive and illiberal in every sense of the word. They are measures which would impose a liability upon people who at the time acted in a lawful way. The measures would impose that liability retrospectively and without any warning. Senator Grimes —Let us hear about the tax dodgers who will have to pay tax now. Senator PETER RAE —Perhaps Senator Grimes does not know what the Left is doing. It might be helpful if he listened to what I have to say because he is an independent and not a member of the Left. The Left has been trumpeting around its taxation policy and I would like to help Senator Grimes know what is going on within his own Party. Therefore, if I tell him a little more about the reports-- Senator Robert Ray —Tell us about your tax policy. Senator PETER RAE —I have, but I will do so again. Our tax policy is the one on which we went to the last election. We will reduce personal income tax. We will introduce income tax splitting. We will benefit the family through the tax rebate. We will introduce broad-based indirect taxation to enable there to be relief of personal taxation which has become unduly and unreasonably high. That is a reasonable approach. Unlike members of the Government we have a tax policy which is clear, with which we are prepared to go to an election, which very nearly brought us back to government and which at the next election will ensure that we are brought back to government. It is a policy unlike that of the present Government which has been so heavily criticised, even by the person who was appointed by the Prime Minister to be the representative of Australian taxpayers generally at the tax summit; that is, Mr Eric Risstrom. Mr Risstrom says that the main proposal being put by the Government for the taxation summit is one with which he does not agree. In fact, he does not agree with the general idea of a taxation summit. Senator Dame Margaret Guilfoyle — There will be no consensus then, will there? Senator PETER RAE — There will not be, but there is obviously no consensus within the Government at the moment because, as I have been saying, the Left is set to fight Hawke and Keating on indirect taxes. The left wing has produced its own policy. I am not sure who will be speaking today for the left wing amongst the Government speakers, but I look forward to hearing the different policies being put by the different factions, so that we can all know what the different policies are, and so that we can have what might be regarded as a trial run, not only of their caucus debate but of the taxation summit. I should like to know whether the different factions will put separate submissions to the taxation summit? Will they be individually and separately represented? Senator Dame Margaret Guilfoyle laughs. I do not think it is a laughing matter. Senator Messner — Senator Richardson will tell us all about it. Senator PETER RAE — I have already invited Senator Richardson to do so. I hope that he will, because we want to ensure that the Australian people can get a better idea than they have been able to get so far about what this Government's policy is about, except about the imposition of unpaid company tax assessment and dividend recoupments through Bills, which have already been rejected by the Senate on two occasions and which contain only one reasonable proposition, which, as I have indicated already, is one which the Opposition would support if it were introduced separately. I have invited the Minister to consider the introduction of a separate Bill which would permit the provision of interest being paid to a successful appellant in relation to an appeal where unpaid company tax is ordered to be refunded. It would enable interest to be paid on that amount. As I have already indicated, if the Government does not wish to take up our proposal that it introduce such legislation, we will introduce it as a private member's Bill and hope that the Government would support it. The Government has the difficulty of trying to determine what its taxation policy on anything other than retrospectivity might be. I suppose that the reason it has introduced these Bills in such a hurry, why they have come with such indecent haste into the chamber, is that the Government wants to be seen to be doing something about taxation. The only matter on which the Government has an agreed taxation policy is these tired, worn out Bills which have been trundled through the Houses of Parliament several times already and which constitute part of the saga of Blue Hills. Last Monday's Australian, in a report headed 'Left's tax stand sets stage for clash with Prime Minister', stated: The Left claimed the Right's approach would be 'a major electoral liability which could well lead to loss of government and a further extension of inequality under a conservative government. Apparently that is the view being expressed by the left wing. I should be interested to know whether Senator Richardson now agrees with that statement and who will be speaking on behalf of the factions to confirm or otherwise these claims made in numerous and voluminous Press reports. These reports show that this Government has no taxation policy or cohesiveness. They also show the dramatic loss in confidence in the management of the Australian economy through the continually falling value of the Australian dollar at a time when the economy should be enjoying the benefits of the wage pause, of the breaking of the drought and of the economic recovery which has been enjoyed by other parts of the world. A government with any real capacity would have taken advantage for Australia from those measures for which it was not responsible and which fortuitously came within its first two years of government. Far from the Australian dollar being depressed as a result of lack of confidence because of the failure of the Government to have coherent taxation policy or any other economic management policy it would, in fact, be valued at an appropriate rate. The factionalism that is dividing and rending this Government asunder has destroyed the authority of the Prime Minister, has destroyed the confidence of the people of Australia in the authority of the Prime Minister and, through the loss of the authority of the Prime Minister, the loss of authority and confidence in the Government. The ACTING DEPUTY PRESIDENT(Senator Sibraa) —Order! The honourable senator's time has expired. Senator RICHARDSON(New South Wales)(10.36) —I am not at all sure that Senator Rae's colourful contribution had a great deal to do with the Dividend Recoupment Tax Bill and the Taxation (Unpaid Company Tax) Assessment Amendment Bill. However, a number of points that he raised during that contribution require some answer and during my speech I hope to be able to do that. The Prime Minister (Mr Hawke) and the Treasurer (Mr Keating) have announced a tax summit that will take place in a couple of months time. They have encouraged within our community a wide and vigorous debate. That is always a good thing. The fact that such a wide and vigorous debate should take place within the Australian Labor Party is simply further evidence of how we like to encourage free speech in this country and how we want to make sure that all of the options for taxing Australians in the future and for returning tax to them by way of better government services are looked at. The Bills, far from being rushed-I think the words used by Senator Rae were 'rushed into this chamber in indecent haste'-were, in fact, introduced several years ago. The Labor Party's policy speech at the last election, an election which the Labor Party won comprehensively, as usual, announced that the Bills would be reintroduced; so it was no great secret. We announced that we would continue our policy of smashing the tax avoidance industry. Simultaneously the Opposition announced its policy of continuing to prop it up. On 27 February this year, in another place, the Special Minister of State (Mr Young) foreshadowed the reintroduction of these Bills. So, far from indecent haste, here they are in the normal course of events. Why would we bring in these Bills in the first place? I have heard many speeches from people on my side of the Parliament in the last two years talking about the debacle of the Fraser Government-the ridiculous, the horrible state which Australia had got into by the end of those seven long years. Perhaps it was best summed up by Frank Costigan, the Royal Commissioner on the Activities of the Federated Ship Painters and Dockers Union, in his 1982 interim report: The tax avoidance industry . . . has developed in Australia, particularly over the last five years, at a rate far in excess of any other industry and has brought with it profits comparable only to the heady days of the Victorian goldrush. That was the real contribution of the Fraser-Howard Government to Australia during seven years. The only industry that brought with it heady days of profits, according to Frank Costigan, was the tax avoidance industry. That was the only one the former Government could get going, the only one it could prop up and the only one it could keep going. If ever, God forbid, the coalition returns to this side of the chamber, we will see another tawdry episode of its attempting to enable the rich to escape their responsibilities and to increase the burden upon the poor. Senator Messner —Are you trying to join the left wing now? Senator RICHARDSON —I am in the Labor Party, as a matter of fact. We have a broad party. It encompasses many points of view. Of course, it cannot possibly be as broad as your party. When one goes through the statements from your leading spokesmen on tax all one finds are contradictions day after day. None of you know where you are. After all those years-seven years in government and two in opposition-in spite of repeated challenges to Senator Rae, you still cannot come up with a taxation policy. Senator Hill —Fair go! Senator RICHARDSON —Fair go? I have just said that you have had nine years in which to get it together. Senator Peter Rae —I will send you a copy. You will find it informative. Senator RICHARDSON —That should have been plenty of time to produce one, but in your case it was not. The ACTING DEPUTY PRESIDENT(Senator Sibraa) —Order! There are too many interjections from those on my left. Senator RICHARDSON —Thank you, Mr Acting Deputy President. I was finding it hard to hear myself. Senator Peter Rae —Mr Acting Deputy President, I raise a point of order. We were provoked into interjecting because the speaker was not addressing you in the chair but was challenging us to respond to him. The response to him is that the Opposition does have a taxation policy which we will present to him at any time he likes to receive it. The ACTING DEPUTY PRESIDENT —There is no point of order. I suggest that there should be fewer interjections and I ask Senator Richardson to address the Chair. Senator RICHARDSON —If I may continue I will try to outline why these recoupment Bills were necessary, why the Government introduced them in the first place two years ago, why they have been reintroduced now and why the Government regards smashing the tax avoidance industry as being so important. In June of 1975-if we turn back the clock to some of those dark years-861 individuals and companies were identified as being involved in tax avoidance schemes and the tax in dispute was $973m. By June of 1983-we had gone through eight years-the number of individuals and companies had grown to 34,944 and the tax in dispute was $1.6 billion. That was the real contribution the Liberal Party made to this industry. Eric Risstrom, the Secretary of the Taxpayers Association of Australia-not someone with whom this Government has always been in agreement-has produced some figures. He estimates that the loss to Commonwealth taxation revenue during the years of the Fraser Government was $7 billion, or about $30 a week for every Australian household. Given those figures, I find it galling that anyone from the Liberal Party should come into this place and talk about taxation. Senator Messner —Tell us what you have done about tax evasion. Senator RICHARDSON —I am getting to that. Senator Messner has to have a little patience. I have left only 23 minutes of the time allotted to me, but I will get to that before I finish. Further, to prove my point about just how bad the situation was with tax avoidance and why these Bills were necessary, I refer to what Bruce Pascoe said when he was President of the Taxation Institute of Australia in 1978. He said: During the past year or two, tax avoidance became big business in Australia. It became a disease which, being allowed to go unchecked, reached epidemic proportions. What we are doing is producing a series of independent analyses which prove undoubtedly, beyond any shadow of doubt, that these Bills had to be introduced. I turn to Professor Russell Mathews, someone well known to the Opposition, who, as far back as 1980, said: Tax authorities, governments and the courts have allowed tax avoidance to flourish on such a scale as to make personal income tax a voluntary tax for the rich non-salary earner. Yet people ask why these Bills should be reintroduced. I am not sure what the Lynch razor gang ever did or whether it had much success in cutting government expenditure, but one thing it did do was to cut staff in the Australian Taxation Office. It decided to save $1.5m in salaries by cutting the number of staff in the Taxation Office. That was pretty clever stuff. By the same token, because of the Taxation Office's lack of resources, because the staff was not available, it estimated that we lost $50m that could have been recouped. So if I have said before at any time in this chamber-I think I have-that the Lynch razor gang never had an achievement, I was probably wrong. I apologise to the chamber: It did have an achievement. It managed to destroy the morale, let alone reduce the numbers, of people working in the Taxation Office to the point where they could not follow through on tax avoidance. The Commonwealth Auditor-General, in his March 1984 report, referred to the increase of more than $2 billion to $2.9 billion in six years in the amount of tax outstanding. The Commonwealth Auditor-General said: Tax outstanding as a proportion of collectable tax has risen from 9 per cent in 1976-77 to 23 per cent in 1982-83 . . . The end of this quotation is even more important. He said: . . . largely because of the amount outstanding from taxpayers involved in tax avoidance schemes. If one looks at all those independent assessments, one sees just how badly tax avoidance had grown. But they are not the only people to have commented. We know that the Fraser Government appointed Mr Roger Gyles, QC, as a Special Prosecutor to look at the promoters of bottom of the harbour schemes. Mr Gyles, in his 1983-84 report to Parliament, said: Tax avoidance and evasion of this kind in such volume is extraordinary in absolute terms but almost incredible in relative terms having regard to the small Australian economy. He further said: If there had been an adequate administrative, judicial and political response in the first place the situation would never have arisen. While those opportunities were wasted for so long, while the Government in Canberra from 1975 to 1982 procrastinated and did nothing, those tax avoidance schemes grew and grew. Senator Messner —That is just plain lying and you know it. Senator RICHARDSON —I have just gone through quotation after quotation-- Senator Elstob —I raise a point of order, Mr Acting Deputy President. 'Lying' is not a parliamentary word and I suggest that you ask Senator Messner to withdraw it. The ACTING DEPUTY PRESIDENT(Senator Sibraa) —I sustain the point of order. Senator Messner will withdraw the imputation. Senator Messner —I will withdraw that as long as he addresses himself to the real issue. The ACTING DEPUTY PRESIDENT —Order! You will withdraw, Senator Messner. Senator Messner —I withdraw the word 'lying', but the honourable senator should acknowledge the various pieces of legislation that went through this House and this Parliament as long ago as 1980 and 1978, with the Curran case and other various matters, which have obviously curtailed the tax avoidance industry. Senator Grimes —Mr Acting Deputy President, I raise a point of order. When people are asked to withdraw, they should do so without trying to make a speech. Senator Messner is on the record many times as having carried on in this way and trying to sustain arguments he cannot sustain. I suggest that if he carries on in that way in future there are other actions that the Acting Deputy President can take. The ACTING DEPUTY PRESIDENT —There is no point of order. I asked Senator Messner to withdraw unreservedly, which he has done. Senator RICHARDSON —To avoid any accusations of the kind just made, I thought that by going through a series of quotations from such people as Eric Risstrom, Bruce Pascoe, Russell Mathews, Frank Costigan and Roger Gyles, I might be able at least to wake up some people in the Opposition to what the whole of the nation can see quite clearly and they apparently still refuse to see. The Taxation Office now estimates that more than 6,000 companies are involved in bottom of the harbour schemes. The promoters of those schemes alone-just the promoters-earned $150m in commissions, and the total amount of tax that was sought to be evaded under those various schemes and arrangements was $2.5 billion. I suggest that the action the Government is now taking in trying to recoup just a small fraction of that money is very moderate and deserves support from all parties. If one wants an analysis or comparison of Australia and another country, an impression of how bad tax avoidance was here compared with in other countries, it is worth noting that the largest case of fraud against United States revenue ever heard involved $US48m. Just two of the committals currently being heard in Australia involve over $200m. That gives us some idea of the situation. Here we are, a nation of 15 million people as against 220 million or 230 million in the United States, and the United States, with all its wealth, has never heard of tax avoidance on the scale that we have been forced to put up with for so long. I give a further quotation from an independent source, the new Commissioner of Taxation, Mr Trevor Boucher. In his 1983-84 annual report he said: While the boom- the tax avoidance boom- was on, the whole tax administration system was strained and the Australian Taxation Office was unable to get done all it wished to do, and all that . . . it 'ought' to have done. One does not need to be brilliant to work out why it could not do all that it wished to do or why it could not do all that it ought to have done. The reasons were twofold. One is that it was starved of resources. I have just outlined what happened in regard to the Lynch razor gang. Worse than being starved of resources, it was deliberately starved of legislation under which it could have acted. The former Taxation Commissioner, Mr Boucher's immediate predecessor, Mr O'Reilly, frequently begged the Fraser Government to act. It was only because of the public pressure generated by the then Labor Opposition and the alarming disclosures of the Fraser Government's own inquiries that the Fraser Government was finally forced to take some action, pitiful and pathetic though it may have been. I contrast the sorry record that I have outlined with this Government's response. As I said, the Government promised in its policy speech prior to the election to continue its efforts to smash the tax avoidance industry. We have said that it will be eliminated by the Hawke Labor Government and, of course, it will be eliminated. Senator Messner —Tell us what legislation you have brought in. Senator RICHARDSON —I thought that we were debating two pieces of legislation-the Taxation (Unpaid Company Tax) Assessment Amendment Bill 1985 and the Dividend Recoupment Tax Bill 1985. They are the pieces of legislation that we are currently debating. The Hawke Government has also greatly increased the resources available to the Taxation Office in its efforts to try to track down some of these schemes. Section 260 of the Income Tax Assessment Act, which was totally ignored by the Fraser Government, is now being vigorously applied in a number of court actions. It is anticipated that the final High Court responses will produce a significant increase in the amount of revenue that can be collected. The prescribed payments system which this Government introduced-I am not sure whether it was introduced in 1984; it was probably introduced in late 1983-finally cracked down on the cash economy. Again, that was totally ignored by the previous Government. As a result, between 1 September 1983 and 29 June 1984 there were almost 56,000 applications for taxation file numbers. The applicants were people who had never had a file number and who had never paid tax. Fifty-six thousand applications were produced by the Labor Government's legislation in regard to the prescribed payments system. We have also introduced legislation to recoup taxation which should have been paid on capital profits. We are discussing two such Bills today. The Government, in an attempt to reach some sort of agreement in the Senate, has been willing to pull back from the legislation which was originally introduced. In the first Bill the Government sought to collect $840m. In the legislation that was introduced on 18 May 1983 we brought back that amount to the nominal value of the lost tax, which was $570m. That legislation was defeated in the Senate. On 23 August 1983 we sought to retrieve $270m, and that is the amount that these Bills seek to recoup. I have already mentioned the billions of dollars that have been lost to the national revenue by the failure of the Senate to pass this legislation and by the failure of the Fraser Government to act during its seven long years in office. It is pretty shameful. An amount of $270m is hardly what I would call an excessive grab by the Government. It is merely an attempt to catch the worst offenders who operate the most obvious avoidance schemes-that is, those people involved in bottom of the harbour schemes who sit in a back room and pass company documents around until someone finally throws them in a wastepaper basket. Senator Messner —You seem to know how to do it. Senator RICHARDSON —It is more than obvious-- The ACTING DEPUTY PRESIDENT(Senator Sibraa) —Senator Messner, you have repeatedly interjected. I notice that your name is on the list of speakers. I suggest that you wait until it is your turn to speak. Senator RICHARDSON —I hope that the quality of his speech is a little better than the quality of his interjections, Mr Acting Deputy President. As I was saying, this Bill attempts to recoup some of the money from the most unscrupulous people who have been avoiding their obligations. If we look at the general state of taxation collection under the Liberal-National Party Government we see that inaction in regard to tax avoidance was just one of the problems. The Lynch Budget of 1977 was based, if one can be polite, on such rubbery figures that the 'fistful of dollars' tax cuts of 1977 were withdrawn straight away in 1978. People were told: 'Ring up and find out how much you will collect'. How long did it last? Less than a year later all the money was taken back; it was plucked out of the pockets of taxpayers. Today we see yet another example of the Opposition being prepared only to protect the pockets of one group of taxpayers-those who got their money by avoiding their responsibilities in an obviously false way, and often in an illegal way. The Opposition is supporting some of those people in the Federated Ship Painters and Dockers Union who give as addresses vacant blocks of land in Melbourne suburbs. It is disturbing to think that it can support such people who are lining their pockets and those of the rich businessmen for whom they are acting. It is disturbing not only to members of the Government but, I would think, to all Australians. Under the Liberal-National Party Government taxation policy was so bad that, while wage and salary incomes increased by 121 per cent, total pay as you earn tax increased by 168 per cent. We saw a pattern develop over a very long period. Those who were absolutely unable to enter into any sort of avoidance or evasion schemes paid more and more while those who could enter into such schemes were protected. The success rate for protecting those who entered the schemes is quite extraordinary. Several billion dollars is involved. According to Eric Risstrom the figure is $7 billion, and it grows and grows. I now turn to the provisions of the Bills. I might be the first speaker, perhaps the only one, in the debate to do so. Senator Hill —You have had 23 minutes. Senator RICHARDSON —I have eight minutes left. That is plenty of time. It will be eight minutes more than Senator Peter Rae used to speak about the Bills. I now turn to the specific provisions. Senator Peter Rae —Here is the policy on taxation, if you would like to see it. There is a lot in it, too. Senator RICHARDSON —We can see through that policy about as easily as we can see through Senator Rae. I turn to the specific provisions of the Bills. By far the greatest part of the legislation relates to amendments to give effect to our decision that the restitution expected from those involved in the sale of shares of companies-or at least those who received benefits from the shares of companies which were stripped of pre-tax profits-should not be limited to the tax that ought to have been paid by the companies themselves. The Bill seeks to make sure that the owners or former owners, who escaped paying personal income tax because they received the benefits in a non-taxable capital form or by way of after-tax profits, finally will have to pay tax at the correct personal income tax rate. The recovery of that personal income tax ought to be kept to the tax related to after-tax revenue profits of the stripped company for those years of income in respect of which primary company tax was evaded. It is not an ambit claim Bill. The provisions do not seek to go on forever or to penalise anybody in some improper, illogical or excessive way. It is our view that it must be accepted that the national revenue is just as entitled to have these tax losses made good as it is to have the lost company tax made good. One does not chase simply those companies which fail to live up to their responsibilities. What one really has to do is chase those shareholders and owners who have evaded paying any personal income tax by evading being paid any profits. These Bills will insert in the existing recoupment tax law rules to fix the liability of the former owners of a stripped company and the personal income tax on those profits on which company tax was evaded. That is the broad purpose of these Bills. If the Government can achieve that with, I hope, on this occasion, the co-operation of the Australian Democrats we will begin to see some equity introduced into our taxation system. We also seek to authorise the Commissioner of Taxation to name in his annual report those persons who fail to pay any assessed recoupment tax liability in respect of the unpaid company tax to which we are now referring. If we can give the Commissioner of Taxation the capacity to name some of the people who for so long have avoided their responsibilities and forced, as I mentioned earlier, ordinary pay as you earn taxpayers to pay more to make up for their own deeds, I think we will be doing everybody a service. If the Australian people at large can look up in that report, or hear read out in the Parliament or see printed in the newspapers, the names of those who have been involved in these schemes for year after year-during the years of the Fraser Government-not only will we see a list of the people who have avoided responsibilities but also we may well see a list of those people who, if not members, are strong supporters of the Opposition parties. Perhaps that is one of the reasons why honourable senators opposite oppose these Bills so bitterly. The requirement we are asking former directors, shareholders and company owners to meet is not so onerous. In trying to recoup just $270m out of $7,000m we are not seeking to get back every dollar; much of it, of course, has gone-the ill-gotten gains have been spent and we do not seek to waste the time of the Commissioner of Taxation and his staff in running around the countryside trying to chase money that has long gone. We merely seek to get that most obvious group of people to live up to responsibilities, responsibilities that they avoided knowingly and in a shameful way, responsibilities which eventually we hope the Senate and the Australian Parliament will ensure they meet. Senator WATSON(Tasmania)(11.03) —The reintroduction of the Taxation (Unpaid Company Tax) Assessment Amendment Bill and the Dividend Recoupment Tax Bill shows the Government's persistence in trying to inflict on the Australian public its abhorrent retrospective ideas in relation to taxation. Apart from a few minor technical corrections, the first of these Bills is identical to Government Bills that were introduced in 1983 and 1984 concerning bottom of the harbour tax avoidance schemes. One of the essential criteria or features of any good taxation system is certainty before the law. The introduction of retrospectivity creates an air of uncertainty in planning. All individuals and all corporations must be able to plan not only their structure but also their operations with an assurance that the tax law will not be changed retrospectively. It is fair enough that tax laws can be changed to apply from a certain date and thereafter, but not retrospectively. Retrospectivity creates an air of uncertainty. While this whole question of retrospectivity continues companies have to face problems with cash flows. It is not doing anything to engender confidence in the Australian community at the very time that Bob Hawke and his fellow Ministers are trying to talk up the Australian economy. They are not doing it very successfully as far as the overseas operators are concerned, because the Government continues to devalue Australia's assets in terms of a lower exchange rate. The sad feature is that while the value of the American dollar is falling the value of the Australian dollar is not coming up as it should, which indicates an overseas lack of confidence in Bob Hawke's ability to govern, in Bob Hawke's ability to set in train a strong, sound and coherent taxation policy as well as an economic policy. The question of continually bringing up this matter of retrospectivity I think has some dubious overtones. For example, we will know that at the moment the Government is short on legislation but at the same time it indicates that the sitting time of the Senate will be greatly extended. Surely the motive behind this is to rush through important Bills at the end of the session. The Government believes that the Senate, in the knowledge that the other House has risen, will give the nod to what is called important legislation. I hope that the Australian Democrats will join us in passing appropriate amendments and will not succumb to the theory of 'the other House is up; the legislation must get through'. Senator Grimes —Do you have any shred of evidence for that? It is in your fertile mind, in your fertile imagination. Senator WATSON —The indications are certainly there at the moment: There is a lack of legislative program; a lack of planning. We are short on legislation. The Government has indicated that it wants an extended sitting, and that will come about. The problem is that the Australian Labor Party feels that it can get a bit of mileage out of continually pushing the anti-avoidance debate. It feels that by using the heavy hand of retrospectivity somehow it will make all people honest. The Government is just pushing the anti-avoidance barrow when it knows that as from 1980 this whole question of the tax avoidance industry has been dead. Why is the Government not focusing attention on the present system, which everybody sees to be unfair? It is over-taxing savings and reducing incentives for those who are caught in the tax net but it allows others to escape, such as those in the cash economy. This legislation pays no attention to the cash economy and the like. The indirect tax base is unduly narrow and creates distortions, particularly in the high proportions of revenue received from cigarettes, alcohol and petroleum products. This legislation fails to recognise that there is a proper balance between direct and indirect tax. We have heard various spokesmen from the Labor Party raise their voices against any form of increased indirect tax. I suppose this is natural, because they are starting to worry about the effects of inflation. They know that inflation is about to set off; that it will soon catch the New Zealand rate, which is now about 13 per cent. According to the statistics our inflation rate is relatively good. In the next few quarters it will take off and be quite frightening. What has happened? Surely the Labor Party has recognised that there is something of a tax revolt within the community. People are paying too much pay as you earn income tax. Since the 1950s the marginal rate for people on average earnings has risen from 22 to 46 per cent. This concern about the high levels of taxation they have to put up with is rising, almost to the extent of rage, within the community. What is the Government doing about it? During the election it decided upon a taxation summit. Unfortunately, some of the informed as well as the uninformed opinion and the divisiveness which this summit has caused within the Labor Party indicate a possibility that a taxation summit may not be held at all or that, if it is held, very little will come out of it. Sometimes the idea of raising matters of national interest through a properly balanced summit can have some merit, but one wonders whether the whole question of a taxation summit will have appropriate balance from all sides. What has happened at present is that it has given the spokesmen of the far Left of the Labor Party an opportunity or vehicle to push onto the Australian community their ideas of introducing a wide range of capital taxes, inheritance taxes, death duties, gift duties and so on. Let me come back to the purpose of this legislation. It empowers the Government to recover retrospectively company tax, including undistributed profits tax avoided by vendors, shareholders and promoters. It is avoided; it is not evaded. In other words, according to this proposed law that which was legitimate at the time is now wrong. Another damaging feature of the legislation is that it relates to the period between January 1972 and December 1980. It is going back a heck of a long way. A lot of people who were then involved are probably dead and buried; others are out of business or have changed their operations completely. The cut-off date is December 1980. That is the date when John Howard brought in his legislation to overcome this sort of thing. That put an effective end to all these so-called blatant schemes of tax avoidance. That is a recognition of the fact that major tax avoidance is certainly dead, except in the cash economy area. Another problem that is draconian is the proposed election of the so-called innocence clauses in the Taxation (Unpaid Company Tax) Assessment Act. It makes the provisions of that Act harsher than the Crimes (Taxation Offences) Act 1980. In fact, at that time there was a lot of debate as to whether crimes provisions should be introduced into taxation legislation at all. They were introduced because of the problems of tax avoidance. But the Labor Party now wants to put the boot in even harder. This legislation is even harsher than the Crimes (Taxation Offences) Act. In effect it deprives vendor-shareholders of the right to be relieved of that part of the recoupment tax liability where it can be shown that before the sale of the shares that person reasonably believed that the relevant company did not have that marginal tax liability. Another feature of concern about this legislation, if it is passed by this Parliament, is that it threatens the whole concept of limited liability for companies. For hundreds of years this concept of limited liability has been one of the cornerstones of the separation between the individual and the corporation. If this legislation is successful it could break down the whole concept of the difference between the owner and the incorporated organisation. But if the Labor Party were really serious about trying to do something to solve tax avoidance, it would not be bringing in this draconian legislation to catch a few people right back in 1972. The Government would be thinking about introducing compulsory identity cards. What is wrong with that? No, the Labor Party will not have a bar of that because it could impinge on individual liberties. But in relation to retrospective taxation Labor members are not concerned about individual liberties. The Labor Party has double standards. Why does it not consider the gradual introduction of compulsory identity cards as a preferable means to overcome both the taxation avoidance industry and as a possible alternative to new broadly-based indirect tax? After all, it is not novel; it is supported by Eric Risstrom, who is the head of the Australian Taxpayers Association. But the real answer lies not in gaining access to increased sources of revenue; it lies in cutting down government expenditure, in cutting out government programs. It is unfortunate that the whole emphasis in this tax debate is on getting increased sources of revenue. The focus should be shifted to the real problem of trying to reduce government spending. Until the Government gives that emphasis up, there will be problems for the Australian taxpayer. The big problem with the Federal Government at present is its concern for wealth redistribution. If one looks at all the successful economies of Asia, which are trading nations, one realises that those countries recognise that increased trade brings increased wealth and improved living standards. In Australia we are seeing reduced living standards because, with the taxation creep, more and more PAYE taxpayers are coming up into high marginal tax brackets. Average earnings now attract marginal tax rates of 46c in the dollar. All these new, strong, emerging economies in Asia-and the shift is going away from Europe with its high levels of taxation; the prosperous economies are now in the Pacific area-give a low priority to redistribution of income and a high priority to increasing their income. If Australia is to emerge from its current problems, it must give a bigger and better priority to moving away from the worrying aspect of all the debate in Australia and the attitude of the Labor Party and concentrate more on wealth creation and less on wealth redistribution. Another big problem is that the Government now recognises that there is not much more that can be squeezed out of PAYE taxpayers to obtain additional revenue. So what does the Labor Party do? It takes the view that it must look for new forms of taxes. One of those new forms of taxes is in the category of retrospective tax which comes under the ambit of today's debate. But it not only seeks retrospective taxes to pick up the additional revenue, but new taxes such as capital gains, wealth taxes and possibly the reintroduction of estate duty-all these are almost a certainty in order for the Government to do something about its burgeoning deficit, which is so worrying. The Labor Party surely must take note of some of the problems as perceived by the community. Perhaps that indicates a major shift away from some of the previous attitudes by some of the different sections or factions within the Labor Party to various forms of new tax. In fact, the Bulletin indicated that most electors feel that the general level of taxation is unreasonable. Some 40 per cent said that their first preference would be for lower income tax and higher sales tax. Surely the Labor Party will recognise that the whole level of taxation is too high. Some sections of the Labor Party are concerned about the impact of an indirect tax on the lower income tax earners, but if one examines what is happening in the Labor Party one sees that it is divided into a whole host of factions. There are the ALP Right, the ALP Centre Left, the ALP Left, Labor Unity and so on. A number of people have noted perceptible changes in the last few months within the various factions of the Labor Party in relation to the number of options. It was interesting to note that the Labor Party factions initially wanted to attack the fringe benefits of big business. However, when a few newspaper journalists came along and pointed out the fringe benefits that went with a member of parliament's salary or a Minister's office or the Prime Minister's occupation of the Lodge, the debate suddenly went quiet on attacking fringe benefits. It appears that that option is no longer open because if they attack big business fringe benefits they also have to attack the fringe benefits of their own members, benefits such as getting a ride to Parliament House in a government car and so on. That is a fringe benefit worth a few thousand dollars a year to each member that technically should be added to a member's salary. Now that it has realised that this opens a Pandora's box, this option is suddenly closed off. One of the essential canons of taxation is that it be administratively simple and easily understood by the public. This legislation is a Pandora's box of problems. One has to have a law degree to understand its legal implications. It is time we got back to a taxation system which is administratively simple, one which people can understand, a system under which people can operate with a degree of certainty, a system which is fair and just and which has horizontal and vertical equity. The Australian Labor Party seems intent on pressing for some form of capital gains tax. The revenue to be derived from capital gains tax is not all that great. That is one of the problems. If the Government is to get its revenue, it has to go a little further than an ordinary capital gains tax. The problem for Australia of a capital gains tax in the face of rising inflation is that it is going to be a disincentive to both savings and investment. Capital gains taxes were introduced in some of the older countries many years ago at a time of relatively low inflation. Adjustment will have to be made for inflation and for losses. That will effectively create a vehicle for reducing the value of the revenue raised. As I said, capital gains taxes create disincentives to both savings and investment. We have a poor record of capital raisings in Australia and we are going to put further emphasis upon and remain dependent upon foreign investment. This is one of the sad features of the low value of the Australian dollar at present. It means that overseas interests can come here and buy Australian assets at relatively low prices compared with prices ordinary Australians would pay. This is a tragedy. Pushing a capital gains tax is going to create further problems in being able to accumulate money for savings and investment. It will make us more and more dependent on foreign investment. The very people who are arguing against foreign ownership, et cetera-the Labor Party-are pushing a capital gains tax right around Australia. Can we afford further disincentives to investment, given this climate. We have to recognise that a capital gains tax not only reduces investment but also reduces the number of jobs available because the tax will fall mainly on entrepreneurs, the very people who are providing jobs within Australia. Further, it will not encourage high risk venture capital or entrepreneurial activity. Another major problem of a capital gains tax is that it discourages capital from moving from one area to another. At the very time when the Government is preaching to industry that it should become more efficient and move out of the old inefficient areas into the new high risk areas, it is talking about introducing a capital gains tax. People are not going to move out of those areas because a capital gains tax effectively locks entrepreneurs into their old industries for fear of being taxed on the capital as a result of that transfer. At the very time the Labor Party is asking for readjustment and restructuring of the Australian economy, the gurus of the Labor Party are talking about a capital gains tax that will effectively prevent capital from moving into new industries-industries that are going to be the big employers of labour-and to the small entrepreneurs. They fail to recognise that the very people who are going to pull Australia out of its economic mess are the small businessmen and the small entrepreneurs with their small amounts of capital. The big boys are shedding labour, shedding capital, moving out of Australia and moving into technology. We have to create an environment where the small businessman has the opportunity to accumulate savings to invest, to take risks and to pay tax on profits. We should not have to pay tax on capital gains and so lock out industry and prevent private enterprise. The whole thrust of government taxation legislation from back in May 1982 or so when it decided to tax lump sum superannuation has been to take capital and to take savings. I believe this is an unfair tax. I believe that the Labor Party has lost its way in relation to the tax debate and that when we have the final result of the taxation wash-up after the taxation summit, all we are going to find is increased taxes and continued high levels of government expenditure. The Labor Party will get over this tax creep or tax push by finding new avenues of taxation and at the same time further dampening down the Australian economy in an environment of higher inflation and higher interest rates. We wonder what is to be the future of Australia under this legislation. I condemn retrospective taxation legislation. I will vote against it and for the sake of Australia I hope that this legislation does not pass through the Senate. Senator HAINES(South Australia)(11.28) — I rise today as one of, I think, only nine senators in this place who have consistently opposed retrospective tax legislation. As the Senate would be aware, like other Opposition parties, the Australian Democrats' response to this legislation in the past has been divided. Senators Chipp and Macklin have joined me in the belief that they could not support any legislation which is punitive and retrospective. I hasten to add that this should not be interpreted, as Senator Walsh frequently interprets it, as indicating our support for tax avoidance. We condemn tax avoidance and I make that quite clear. Whilst doing so we believe, as Senator Watson has indicated he believes, that it is possible to argue on the principle that retrospective legislation undermines the role of law in this country and even in the area of tax avoidance sets a very dangerous precedent which can make it easier for future governments to pass retrospective legislation in other areas. All Democrat senators have been concerned with the effects of this legislation on a number of small to medium firms if they are forced to sell in order to pay their tax bills. On the one hand, it can be argued that their employment effects are still the result of ill-gotten gains, as Senator Walsh would no doubt term it. On the other hand, we would argue that it is by no means clear that government expenditure, presumably resulting from any savings that they make through retrospective legislation, will create those jobs which have been lost by the legislation. I acknowledge that my colleagues Senators Jack Evans and Colin Mason supported the legislation in the past, and I respect the point of view they took. They believe it. I respect them for holding firmly to that point of view. Their argument is that all people should pay their fair share of tax and that that overrides the principle that retrospective legislation undermines the rule of law. Nevertheless, I point out that they too have been unhappy with some aspects of this legislation and, indeed, made their support conditional on some changes. To ease the liquidity problem created by an immediate demand for money the Government agreed that provided obligation is acknowledged within 30 days of the receipt of the assessment the payments of tax could be spread over 12 months without penalty. My colleagues also were given written assurance that the full appeal conditions of the Income Tax Assessment Act would apply to people assessed to pay tax under this legislation. This includes consideration by relief boards which could reduce or remove taxation obligations completely in cases of extreme hardship. Finally, the Government agreed to amend the legislation so that the capital profits component would not be included as income assessable for tax payment under this legislation. I think that this amendment is particularly interesting because in effect the Government was prepared to give up some $200m of the potential revenue effect which it asserted would result from the legislation. It has been suggested in some articles in the media that this amendment would let the Government off the hook because some Australian Labor Party Ministers and back benchers were concerned about the unemployment effects of the legislation. This should be borne in mind, given Senator Walsh's subsequent claims that the cost to revenue has been the full $570m. I make those points because I think it is important to emphasise that we Democrats who have refused to support retrospective tax legislation are not doing it because we are friends of tax evaders, tax avoiders or tax cheats but simply because we are opposed-we have been consistently so-to legislation which operates retrospectively. We are opposed to it because we believe that citizens have the basic human right to know whether an activity is legal or otherwise before they undertake that activity. Indeed, the United Nations Universal Declaration of Human Rights makes it perfectly clear how the international community views retrospective legislation. The Declaration states: No-one should be held guilty of an offence on account of any act or omission which did not constitute an offence at the time it was committed. Nor shall a heavier penalty be imposed than the one that was applicable at the time the offence was committed. There is no qualification or ambiguity in that statement. That declaration opposes punitive retrospectivity. There is no question that the operation of such punitive actions by governments abrogates in people any certainty at all about their actions and whether those actions are within the confines of socially and legally permitted behaviour. Furthermore, of course, as Senator Watson pointed out, it makes certainty of planning within the business community extremely difficult. That in itself can have quite widespread effects on expansion, employment prospects and development in business and industry. Whether for that reason or not courts in Australia and elsewhere have stridently upheld the presumption that legislation is not intended to operate retrospectively unless the legislation specifically states that the Act is to have an impact on events which occurred prior to the passing of the law. In the past it has been assumed that that retrospective application would be beneficial to the people to whom it would be applied. I point out that those Democrats who have spoken in the past on retrospective legislation have always taken pains to emphasise that there is a difference between legislation which has some beneficial retrospective element and legislation which has a quite prohibitive or punitive element to it. We have consistently drawn the line between those two things. Quite clearly it would be grossly unfair, if a government introduced legislation which applied a retrospective benefit to pensioners or families in Australia, for us to withhold support for that. I believe it is equally wrong of us to support legislation which would punish people for doing something which they had every right to believe was legal at the time. Therefore, I must emphasise that the courts have upheld the presumption that legislation not be intended to act punitively retrospectively. That has been applied very strictly in relation to Acts creating an offence because of the manifest injustice that the alternative approach would bring in its wake. I would say that the same injustice is probable if the principle of retrospectivity is introduced and enshrined in this legislation. A recent example of retrospectivity-certainly it did not happen in Australia but in an African country-is an attempt made by the ruler of that country to introduce retrospective penalties to apply to a crime. In the instance I am speaking of the ruler was deposed before he had a chance to carry this through. His intention was to apply to something which was an offence under the law a retrospective penalty of death. Of course, that is the ultimate. Senator Rae is nodding in agreement. Senator Peter Rae —You can't get more ultimate than that. Senator HAINES —It is not possible to be more punitive than to legislate for a retrospective penalty of death for an offence. I suggest that it is not going too far into fantasyland to suggest that the taxation legislation differs only in degree. We must be aware that that is so. The question that is facing us concerns both law and morality. We must ask whether something which is legal should be made retrospectively illegal on the whim of a government. This is regardless of whether we believe that the action itself should not have been done. No matter what we may think of artificial and contrived tax schemes-or any other sort of scheme-or the people who undertake them, we cannot avoid the fact that the action was legal when it was undertaken. I suggest that the answer to the problem facing the Government of anomalies and loopholes in legislation that allow legal manoeuvres by people which may be considered unethical, immoral, or questionable, if we like, is to amend the legislation and close the loopholes as soon as we are made aware of them-not to leave the legislation sitting, as happened in this case, in somebody's bottom drawer for a number of years before deciding to do something about it. Alternatively, we can give to the Commissioner of Taxation a right, sought by a number of people in the past, to rule on the legality of a scheme which is proposed to him. At the moment he does not or will not or cannot do this. Therefore, people are left to take the advice of their accountants and lawyers who ultimately are not accountable to anyone-except that they may be fired for wrong advice-and who are forced in their turn to rely on their interpretation of the law as it stands in advising their clients. Surely we cannot expect them to read minds as well as to read the law. I suggest that it would be a help if the Taxation Commissioner were given some powers to determine the legality of a scheme put to him by a company. Of course, the Government in arguing for retrospective legislation in this case is saying that it was never intended that the Act should be used to promote artificial and contrived schemes. Apart from saying that is unfortunate, and certainly there is nothing in the Act to say that it should not be used for artificial or contrived schemes, I would have to raise a matter with regard to a few schemes that are currently operating and about which the Government appears not to be taking any action. On 9 May last year an article appeared on, I think, page 73 of Australian Business. The article, which contained a photograph of Adelaide Steamship's John Spalvins, was headed: 'Alchemy exercise for the tax man'. The article contained the sub-heading: 'Balance sheet juggling is an art form for tax minimisers, and a Who's Where in the business gives Adsteam the crown'. The article states: A good tax break is just the thing for business-provided of course that no laws are broken. But in the past couple of years, with successive governments struggling to finance growing deficits, tax avoidance has grabbed the spotlight and tax breaks for companies and individuals are by no means easy to come by. Certainly they are made a little less easy to come by if people cannot be sure that even when they act within the law as they see it they are going to be jumped on from a great height some few years later. The article goes on to say: So it comes as a surprise to find that 15 of 22 industry groupings (366 companies examined in all) show an effective tax rate significantly below the so called official 46 per cent rate. The article also states: The prima facie tax rate for companies is 46 per cent, there are a host of deductible items such as investment allowance, rebates on dividends received and plain old tax losses, which means tax provided for is rarely 46 per cent. Well, I guess all of us look to the law to keep our tax to a minimum. There is certainly nothing illegal in that. A number of charities regularly complain that they are not getting enough money because they are not classified as falling within the ambit of those organisations to which taxpayers can make a donation and then claim it as a tax deduction. Human nature being what it is, most people who make a donation to a charity or some other organisation like to do it knowing that the Government will give them a bit back in the long run. So we all use deductions that are provided for in the legislation or are implied by the legislation to minimise our tax, and nobody is screaming about that. If this practice were illegal we would have the six million taxpayers, or whatever the number is, in this country filling our gaols or taking up a lot of the time of the Taxation Board of Review. The article makes the point that not only are a lot of companies not paying 46c in the dollar but also many of them are barely paying anything at all. The article states: Adelaide Steamship, linchpin in a group of companies stitched together by John Spalvins, provides the least amount for tax of any tax-paying company in the State study. Its rate: a measly 0.11 per cent. This is because Spalvins is a keen student of efficient financing techniques. I would like the Senate to take note of that description. 'Efficient financing techniques' used by John Spalvins have managed to bring Adelaide Steamship's tax down to 0.11c in the dollar. I presume he gets a gold star, a blue ribbon or whatever the going prize is for being able to get the company's tax down as low as that. I understand from rumours in the Press that he is paid something like $400,000 to do it. One can say with some sense of accuracy that he is certainly earning his money in that regard, if nowhere else. The article states: His companies rely heavily on dividend income from each other, and these dividends provide a perfectly legal tax shelter for income earned through normal trading operations. Adsteam might be the leader in all of this but a number of other Australian companies are paying considerably less than even the most marginal pay as you earn tax rate. Adelaide Steamship pays 0.11c in the dollar. According to this article Central Norseman pays 0.31c; Jennings, 0.38c; Industrial Equity, 0.72c, Ampol, 1.59c; and EZ Industries, a whopping 9.03c. According to the list that Australian Business has supplied, companies such as Myer Emporium, CSR, the Bell Group, Hooker Corporation, Softwood, Queensland Cement and Davies Brothers are actually paying in excess of 25c in the dollar, but are all paying under 30c. Australian Business put to John Spalvins-who, by the way, also happens to be David Jones's Chairman; and David Jones is paying 17.67c in the dollar-a question asking whether or not that retailer would ever be able to achieve the fine balance between taxable profit and rebateable dividends that Adsteam does. His answer: 'All things are possible but you know we never talk about what we may do in the future'. Senator Peter Rae —A bit like this Government in its taxation policy. Senator HAINES —Indeed. I find it offensive that pay as you earn taxpayers in this country are pretty much tied to the amount of tax they pay. We can use a few things as deductions, but by and large few of us can use the law as it stands to bring our tax down to next to nothing. I place on notice now the fact that if at some time in the future a government dreams up a piece of retrospective legislation that says to Adsteam 'We didn't like what you were doing in 1984; we are going to expect you to pay more than that because we consider that your scheme was artificial or contrived, or was not what we intended when the Acts that you used were established', I will not support such legislation. In conclusion, let me repeat the reason why I will not support the sort of legislation that we have before us today or the sort of legislation that some government may dream up to catch the sort of companies that are mentioned in Australian Business. I believe that people-and that includes companies of people-have the basic right to know with certainty whether an action or activity is legal or not and they have the equal right to act secure in the belief that at some time in the future their action will not be redefined as illegal by a government out on some crusade or other-however we may feel about the actions of people against whom the vendetta is directed. The Government we have at the moment seems to have a tremendous affection for the United States of America. I suggest that it has a close look at the Constitution of that country, which prohibits punitive retrospective legislation. If we do nothing else in regard to that country, perhaps we should take a leaf out of its book and do likewise. Certainly I believe very strongly that we should do nothing to legitimate what is, I believe, a basic infringement of human rights. Senator ELSTOB(South Australia)(11.50) —Today we are discussing, once again, the Taxation (Unpaid Company Tax) Assessment Amendment Bill 1985 and the Dividend Recoupment Tax Bill 1985. A lot has been said about taxation laws but, in any enlightened community with any credibility, laws have to be fair and seen to be fair. I suppose that the laws of this country could be said to be fair and are recognised to be so by the great majority. However, taxation laws are seen by the great majority to be most unfair. It seems that taxation in this country is an option for some of the very wealthy to pay or not to pay. In the past, companies have seen fit to employ numerous lawyers and accountants to do nothing but minimise their taxation. They do so in many ways. That is tax avoidance and evasion. The Australian Democrats and Senator Watson have said how unfair retrospective taxation is. I say to these people: How unfair is it for the people who have had to foot the bill that others should have paid? What of taxation of the wage and salary earners? Mr Risstrom has said that we have lost something like $7 billion, which is about $30 a week for every taxpayer. Taxpayers have had to foot the bill for the people who have not been paying, yet Senator Watson and Senator Haines say that it is so unfair. Senator Peter Rae —I said it was unfair, too. I think it is. Senator ELSTOB —Senator Rae should tell the Australian people, the wage and salary earners, that they are footing the bill. Senator Haines has disclosed that the Adelaide Steamship Co. Ltd, and many other companies, are paying only 0.11c in the dollar. This is the outcome of the tax avoidance and evasion industries which started in the 1970s. The Whitlam Labor Government became aware of this late in 1975, but because of the pressure-- Senator Peter Rae —No, in 1974, but you did nothing about it. Senator ELSTOB —That is unfair, Senator Rae. He and his Liberal colleagues put pressure on the Whitlam Government to bring it down. We could not pass legislation then in the Senate, as we cannot today. That is the reason we could not do anything about avoidance. The Liberal Government was aware of the problem when it came to office in 1975, but because the tax avoiders and evaders were friends of that Government and of the Liberal Party, and because they are the strong and the wealthy of this country, they were allowed to evade and avoid taxation. Once started, because of peer group pressure, it continued. People belonging to clubs and organisations have others say to them: 'I am going overseas. I have a beautiful home. I have all sorts of things'. Their friends say to them: 'How do you get it?' Those people say to them: 'Why do you not work the taxation system like I do?' The peer system flows on. One is considered to be a fool or an idiot if one does not follow. That is how the situation developed. Before that time, Australians paid their tax, but because big organisations, friends of the Liberal Party, were allowed to avoid and evade taxation, the problem grew, to such an extent that even today people are doing so, as has been disclosed by Senator Haines. It is morally wrong for companies or any organisation to say: 'I am proud that I am paying only 0.11c in the dollar'. Do not tell me that is fair. If the Opposition thinks it is fair, it will not be able to bring into this place some of the community spirit that we need to make Australia a great nation, which I hope it will become. We will not have a fair and equitable system while some pay their tax but for others it is optional. That is the unfairness of it all. Senator Watson said how disgraceful it was that this Government had to bring in overseas money. I shall take honourable senators back to the Chifley era. In 1949 Mr Chifley implemented a system of paying so much money in tax and another amount into a social welfare fund. But Menzies saw fit to abolish that and put the money into Consolidated Revenue. Had that fund been allowed to develop, it would have paid for a decent pension scheme for people. Senator Dame Margaret Guilfoyle —No, not at that rate. Senator ELSTOB —Yes, it would. As people were unemployed, it would have been security for them. It would have grown into a very large fund. This country could have managed its affairs and developed mining and our other great industries, instead of depending on overseas countries. But Menzies and the Liberal Party destroyed that initiative. They have nothing to be proud of. The Liberal Government was the worst economic manager that this country has had the misfortune to have. That has to be brought home to it. The disclosure of the tax avoidance schemes was an accident. When Fraser appointed Frank Costigan he did not intend all these matters to be disclosed. It was a union bashing activity which bounced back on the Liberal Government and put it out of office. The Liberal Government was using the Federated Ship Painters and Dockers Union. I feel disgusted that such an organisation belongs to the trade union movement, but it was used by big business, and the Liberal Government, I think, was aware of that at the time. Many Opposition members were aware of it. All the disclosures were accidental. Opposition senators now have the audacity to say that they are opposed to retrospective taxation. They were the worst managers this country has ever seen. About $7 billion has been missed out on by government and others in the community have had to make up those funds. It is nothing but a disgrace. We stated in our policy that we would bring these Bills back to the Parliament and we have a perfect right to do so. I am sure they will be defeated, but fairness will prevail one day and we will have a system of taxation that will be fair to everybody, not just to a few people. Big business is coming to us. Business people have more confidence in the Australian Labor Party than they ever had-- Senator Peter Rae —Tell us about your tax policy. Senator ELSTOB —If the honourable senator saw the number of people coming into my office and every other office and congratulating the Hawke Labor Government on its economic management he would see that he has something to worry about because the Opposition's base is eroded. The economic world has no confidence in it. Business people today have some security and some hope. While the Opposition persists in knocking out this type of legislation, bringing an unfair situation to people, it will remain in opposition. Believe you me, that is where it will stay. Senator Peter Rae —Tell us about your tax summit. Senator ELSTOB —The tax summit is one of the hard things. It will not be easy, but at least we have the courage to try to make this country a more equitable society. The Opposition was afraid to do so. All it could do was hand out plums and profits. Debate interrupted. The PRESIDENT —Order! It being 12 noon, by order of the Senate I call on questions without notice. Senator BUTTON(Victoria-Leader of the Government in the Senate) —by leave-I inform the Senate that Senator Walsh will be absent from the chamber for Question Time today. Any questions which would normally be directed to Senator Walsh in relation to his portfolio or those he represents in this chamber should be directed to me. Senator CHANEY —My question is addressed to the Leader of the Government in the Senate in his own capacity rather than as Minister representing the Minister for Finance. I refer to the Prime Minister's description of legislation aimed at ensuring the supply of electricity to Queenslanders as 'unacceptable by Australian democratic standards'. Is the Minister aware that Mr Hawke said yesterday that he believed the present dispute in Queensland could be resolved without repeal of this legislation? I ask the Minister: Does this mean that the Government has changed its mind since the Prime Minister telexed the Queensland Premier on Saturday in what amounted to a demand for the repeal of the legislation because of its alleged effect on Australia's international treaty obligations? Does the Government now accept that the legislation can remain on the statute books without prejudicing compliance of the conventions about which the Prime Minister was so concerned less than a week ago? Senator BUTTON —I do recall that the Prime Minister made some remark to the effect that the legislation was unacceptable by Australian democratic standards. I do not regard that as inconsistent with what the Prime Minister said yesterday. What he said yesterday was that the repeal of that legislation, however desirable-that is how I interpret it, at least-is not a pre-requisite to the settling of the present dispute; that is to say, the dispute can be settled, in the Prime Minister's view, as I understand it, by negotiation without that being a necessary condition of the settlement at this stage. Senator COOK —My question, which is directed to the Minister representing the Treasurer, concerns the release of today's national accounts figures. Has the Minister seen those figures? Can the Minister say what picture the figures reveal of the current state of growth of the Australian economy? Is the Minister satisfied that these figures, as has been the case with other recently released economic indicators, demonstrate that the Government's economic policies are having the desired effect? Senator BUTTON —The Government welcomes the publication of today's national accounts statistics because they confirm a trend of strong economic recovery. The figures show that during the December quarter the economy grew by 1.2 per cent overall while the non-farm economy grew by 1.4 per cent. Further, the Australian Statistician has indicated that economic conditions during the September quarter were better than at first thought. The statistics also show that during the calendar year 1984 the non-farm economy grew by 5.1 per cent compared with 2.6 per cent in 1983 and 0.9 per cent in 1982. I suppose the highlights of today's figures are the clear evidence that the main area of growth has shifted to the private sector, plus figures which also confirm a marked fall in inflation. I make one other comment and say that the figures generally underline the broadening in the recovery, particularly the lift in private sector activity. In those figures there is clear evidence of a further strengthening of activity since the December quarter of 1984. Senator HILL —My question is directed to the Minister representing the Attorney-General. Following Senator Chaney's question, I refer to the claims by the Prime Minister that legislation passed by the Queensland Parliament is in breach of international conventions which have been ratified by Australia. Is the Government giving consideration to using the external affairs powers of the Commonwealth Constitution to intervene in the affairs of Queensland, as it did in Tasmania over the Gordon below Franklin Dam? Senator GARETH EVANS —The answer to that question is no. Senator SIBRAA —My question is directed to the Minister representing the Minister for Health. In view of the fact that a Government senator, incidentally from Queensland, stated that Queensland is the drug taking centre of Australia, has the Government any plans for attacking the problem specifically in that State? Why is drug taking such a problem in Queensland? Senator GRIMES —I was present when Senator Sheil made that statement and named the areas of the Gold Coast, the Sunshine Coast and Cedar Bay as the drug taking centres of Australia. I was rather surprised. I do not know how accurate his statement is, but as he is a National Party senator from Queensland I assume he knows what he is talking about. As to the second part of the question as to why this state of affairs should exist in Queensland, I do not know. I must admit, listening to the things that some Queensland Ministers and the Premier say on AM in the mornings, one wonders whether they might have been smoking something. Senator Chaney —I raise a point of order. The Minister's remark is something of a joke, but it is also in breach of the Standing Orders and I think he should be asked to withdraw it. The PRESIDENT —There is no point of order. Senator Gareth Evans —How sensitive can you get? Senator Chaney —I would like to speak to the point of order, particularly in light of the interjection by my friend over the way. Senator GRIMES —I withdraw it. Senator Chaney —The suggestion clearly was that members of another parliament had been taking drugs. I am sure it was one of the rather poor jokes that are made by the Minister, but I do not believe it is in order. The PRESIDENT —I thought I heard the Minister say the suggestion was that they were smoking something. People smoke a lot of things. I do not smoke anything. In any event the Minister has withdrawn. Senator GRIMES —Thank you, Mr President. It must be the early Question Time that is upsetting everybody. Queensland has very strict laws against people using drugs. If someone has a record of possession of marihuana in Queensland he is ineligible, for instance, to work for the Queensland Government in the Public Service. If he is already working in the Public Service he is sacked, which is a very stringent law. The Queensland police are extremely active-if one looks at the reports in the Queensland Press-at least in taking action against some groups in the community which they think might be using marihuana, heroin and so on. Despite all this and the fact that the financial penalties and gaol sentences are very severe up there, Senator Sheil tells us that drug use in Queensland is much higher than anywhere else. It seems as though the actions of the Queensland Government are not as effective as it thinks in cutting down the use of drugs. The Government has no specific programs for attacking this problem in Queensland. We had the summit which the Premiers of the various States attended. All the States, including Queensland, are working together to introduce education programs and rehabilitation programs, together with the Commonwealth's actions so far as the Australian Customs Service and surveillance are concerned, to attack the problem of drug misuse in the country. One would hope that co-operation like this would render a much more sensible, sane and rational drug policy in this country. As I said in answer to Senator Sibraa earlier, if one goes to Queensland one hears the sorts of things that Senator Sheil has said, that large numbers of people are using drugs in all those areas, despite the attentions of the Queensland police. If one goes to north Queensland one hears stories, which I cannot ratify, that the reason that drug use is so common there and that the drug trade is so active there is that the police are attacking the wrong people. Senator Chipp —There is also white slavery in the Daintree. Senator GRIMES —As Senator Chipp says, we hear claims about white slavery in the Daintree and everything else. If one goes to north Queensland one hears from the locals that the reason is that the police are attacking the wrong people; if they took more interest in certain farmers up there, who are members of the National Party, they may get to the source of the drugs much more quickly, but I gather that is against the principles of the operations of the Queensland Government and the Queensland police. I will refer the question to Dr Blewett to see whether he has any other information. Senator Chaney —Mr President, I raise a point of order. The statement just made by the Minister was clearly a reflection on National Party members of the Queensland Parliament, the suggestion being that the police were not able to pursue certain criminal matters. Again I ask that the Minister withdraw that comment. Senator Grimes —On the point of order, Mr President: I have spoken on points of order like this before and pointed out that the tradition in this place-a tradition with which I do not agree but which I occasionally succumb to-is that one can blackguard people collectively, as Senator Sir John Carrick used to do regularly when he was Leader of the Government, but not individually. I certainly did not name any individuals. I recounted the story, which I am sure all people have heard, that in north Queensland certain interests are able to get away with the cultivation of marihuana and others are not. I did not name any individual and certainly have no intention of withdrawing. The PRESIDENT —There is no point of order. I distinctly heard the Minister mention members of the National Party without mentioning members of the National Party who are in parliament. Senator CHIPP —I ask the Minister representing the Minister for Defence whether some of the F111C aircraft and the four ex-United States Air Force F111As purchased in the 1980s are wired for nuclear weapons and whether the nuclear panels and wiring have not been removed in some of the Australian aircraft. Does the wiring extend to the wing stations as well as the bomb bay? Do some models of the F111 at present in the Royal Australian Air Force have panels and wiring for a Shrike launch together with a 'nuclear consent panel' and biological and chemical weapons? Given the Government's oft-repeated commitment to the cause of nuclear disarmament, why has it not had this equipment removed? Would it be possible for an Australian Government at some future date-given the panels and wiring-to fit nuclear, chemical and biological weapons? Will the Government give an undertaking to remove such equipment from any aircraft in the Australian Air Force? Senator GARETH EVANS —I am grateful to Senator Chipp for giving me enough advance notice of this question to be able to give him an appropriately detailed answer today. As to the first two questions the situation is this: RAAF F111 aircraft were delivered with some nuclear weapons circuitry and control panels, including wiring which extends to the wing stations as well as the bomb bay. However, essential arming and release components were not incorporated and the aircraft effectively, as a result, are incapable of delivering any form of nuclear weapon. As to the third question, yes, F111 aircraft do have panels and wiring for a Shrike launch and a 'nuclear consent panel', whatever that might prove to be. However, I am told that these panels and wiring are also ineffective without the essential arming and release components, which were not incorporated into the aircraft. With respect to the F111's capability to carry and release biological and chemical weapons, no special circuitry or equipment is required for these weapons, which can be delivered by any aircraft equipped with conventional weapons systems and racks. I hasten to add that there is, of course, no intention that Australian aircraft should be so fitted. As to the fourth and fifth questions, progressive modification of RAAF F111 aircraft is removing the subject equipment as circumstances make it possible and appropriate to do so. The four reconnaissance aircraft had the equipment removed in 1980 and the equipment in the remaining aircraft is being removed as these aircraft are modified to allow fitment of the Pavetack system, that is, the infra-red-laser system. As to the question of an undertaking, I have said that no RAAF aircraft is capable of carrying and releasing nuclear weapons. To the extent that some components are part of that weapons system, they are being removed progressively. I am also advised, however, that some of the components that might be regarded as relevant in this respect are also used for conventional weapons systems. As the removal of such systems would deny these aircraft their conventional capability, no such undertaking can be given in relation to those parts of the componentry. Senator REYNOLDS —Is the Minister representing the Attorney-General aware that the Human Rights Commission is meeting in Brisbane today? Can the Minister give any details about the Commission's program in regard to considering the effects of draconian industrial relations legislation on human rights in Queensland? Does the Commission have any proposals to consult the State Government about breaches of International Labour Organisation conventions and the International Covenant on Civil and Political Rights? Senator GARETH EVANS —I am aware that the Human Rights Commission is meeting in Brisbane today. Senator Boswell —What about my right to go home? Honourable senators interjecting- The PRESIDENT —Order! I ask the Senate to come to order. Senator GARETH EVANS —I think that piece of inanity ought to be recorded in Hansard for posterity to appreciate what we have to put up with in this chamber. I am aware that the Human Rights Commission is meeting in Brisbane today and tomorrow. There is always plenty of business in Queensland for that Commission. We have had some recent demonstration of that in the report recently tabled in this place about the Queensland Community Services (Aborigines) Act. It was perfectly clear that that, along with a number of other pieces of current legislation in Queensland, demonstrates an obvious indifference to human rights considerations. I understand that the Commission will be considering Senator Reynolds's request, and those made by others as well, that the Commission look at the Queensland legislation. I am also advised that the Commission has already examined the Queensland Electricity (Continuity of Supply) Act 1985, which has given rise to clear expressions of concern about its breaching of the international instruments in question. The Attorney-General will soon be tabling the Commission's report to him on that matter. Senator MacGIBBON —My question is directed to the Leader of the Government in the Senate. I refer the Minister to the fact that mail will be delayed by the union blockade against Queensland and reports that Telecom Australia employees are considering cutting off television and computer links with that State. Are employees of Commonwealth departments or instrumentalities involved or likely to become involved in this illegal blockade action? What action will the Government take against any such employees who participate in this disgraceful attack on the rights of the people of Queensland? Senator BUTTON —Senator MacGibbon, not surprisingly, dredges the newspapers for reports of possible things which might happen. Of course, that is a freedom which he has and which is available to us all. The conclusion which he draws from those things is not necessarily correct. I believe that no employees of the Commonwealth are involved under the umbrella, as it were, of particular rumours and alleged threats which have been made. If there are, that issue will be addressed by the Government at the appropriate time. Senator MAGUIRE —My question is directed to the Minister representing the Minister for Social Security. I refer to earlier statements by the Government that it would take steps to close the gap which currently exists between the level of single unemployment benefits and the level of single pensions. Can the Minister say to what extent this gap has been closed as a result of the $2 discretionary increases awarded by the Government? How long is it likely to take for the gap to be closed completely, given current policies? Does the Government intend to accelerate the removal of the gap between the unemployment benefit and the pension for single persons? Senator GRIMES —Yes, the Government does have a policy to close the gap between the single unemployment benefit and the single pension rate. It has in fact had that policy since we came into government. In fact, at the first Cabinet meeting of the Government in March 1983-I think it was the second decision we made-we decided to give the single unemployment benefit an ad hoc increase of $4, if my memory is correct. Since then we have introduced indexation of that benefit and have given ad hoc increases in November and May each year. The gap after the ad hoc increase in May this year will be closed to, I think, $9.18, but I may need to be corrected on that. How long it will take to close that gap completely and how rapidly we will be able to do it depends, of course, on the budgetary situation and decisions made in the Budget. I do not have the capacity, nor should I, to make any predictions about that. I reaffirm to Senator Maguire that we came into Government with a policy of closing that gap. That gap has been progressively closed since and we will continue to close it until there is a parity between those two rates. Senator CHANEY —My question is directed to the Leader of the Government in the Senate and follows the question asked by Senator MacGibbon. Was the Minister saying in his answer that he believes that employees of Telecom Australia and the Australian Postal Commission are not involved in activities against Queensland and in either delaying mail or cutting off television and computer links? If that is not what he is saying, if he agrees that people employed by those Commonwealth instrumentalities or corporations are involved or likely to become involved in the blockade, what action will the Government take against any such employees who participate in this action against the people of Queensland? Senator BUTTON —It is not so much my answer which is sought to be understood; it is the question asked by Senator MacGibbon which needs some understanding, I think. It was probably drafted in Senator Chaney's office; I do not know. In the question an allegation was made about Telecom and then I was asked: 'Are Commonwealth employees involved?'. I find that an extraordinary question because Telecom employees are, of course, Commonwealth employees. Senator Chaney —What extraordinary sophistry is this? Senator BUTTON —Telecom employees are Commonwealth employees. That is true. Senator MacGibbon asserted something about Telecom being involved and then asked: 'Are Commonwealth employees involved?'. I had the gravest difficulty in understanding that question, as would anybody who understands the English language. Let me come back to the substance of the matter. Senator MacGibbon began by saying that there were stories or allegations about these things. I answered the question by saying that if Commonwealth employees were in fact involved, as distinct from allegations and stories about their involvement, the Government would address that matter at the appropriate time and decide what action would be taken. That is the substance of the answer which I gave to Senator MacGibbon. The Government's position is that we are not seeking in any way to exacerbate an already difficult situation in relation to this dispute in Queensland. On numerous occasions the Government has offered its good offices to assist with the resolution of the dispute. I understand Senator MacGibbon's excitement and desire to stir up the situation. I do not share that, and the Government will not embark upon a series of inflammatory statements here or anywhere else which may go towards exacerbating that dispute rather than resolving it, which is the most important thing we can do. Senator CHANEY —I have a supplementary question. I ask the Leader of the Government: Does the Government know whether or not Commonwealth employees, in the sense he has indicated, are to be involved? If they are to be involved, what action does the Government propose to take? Senator BUTTON —No, the Government does not know whether they are to be involved or not. It was not put to me by Senator MacGibbon or Senator Chaney, in his rather silly attempt to rewrite Senator MacGibbon's question, that Government employees were involved. We are dealing with an allegation about something which might happen. In respect of that allegation, neither Senator Chaney nor I know whether Commonwealth employees are involved. When we do we will look at the situation. Senator FOREMAN —Can the Minister representing the Minister for Transport comment on the possibility of a reduction in domestic air fares in the near future which may result from the replacement of fixed annual air navigation charges with user charges? As the Minister will be aware, the inhabitants of my home State, South Australia, would welcome cheaper air fares as they have to travel long distances to link with international flights. Senator GIETZELT —The Government is taking every opportunity available to minimise the cost of the provision of aviation facilities and services. The reason for establishing the Independent Inquiry into Aviation Cost Recovery was to realise the objective of reducing the cost of air services to the consumer as soon as possible. It was decided, therefore, to introduce a separate airport and airway charges system. The Senate may be aware that at present the airlines do not pay air navigation charges at a fixed annual rate but on a flight by flight basis depending on the route that is flown. When the changes have been made charges may be reduced and the Government is hoping that that will have some effect on air fares. These matters cannot be anticipated in the short term but it is hoped that, as a result of the Government giving further consideration to the Bosch inquiry, it will be possible to reduce airline charges. Senator COLLARD —I refer the Leader of the Government in the Senate to the fact that the Australian dollar closed at 63.7c on the American market overnight. Does the Minister believe that this could be affected by fears that there could be major disruption to the Australian economy because of the Australian Council of Trade Unions blockade against Queensland, particularly in light of the fact that Queensland contributes more to our export earnings than any other State? Will the Minister make it clear to the union movement that its actions will only worsen a situation in which financial markets around the world are becoming increasingly unimpressed with the Australian economy? Senator MacGibbon —It is 63c on the open market. Senator BUTTON —That was New York; it is a little better in Australia today. I am asked whether I or the Government will take action to impress upon the trade union movement the consequences of its alleged actions on the Australian dollar. Senator Durack —The actions are only alleged? Senator BUTTON —I said 'alleged'. The implications of the question are that the Queensland dispute is one which is first of all totally black and white, with the morality of Sir Joh Bjelke-Petersen supported in every respect by his flunkeys here in Her Majesty's loyal Opposition. Senator Boswell —I raise a point of order, Mr President. I thoroughly object to being called a flunkey and I plead with you to call the Leader of the Government to order. Senator Missen —Mr President, I too take a point of order. I too take objection to being described as a flunkey of the Queensland Government. I am not such, nor do I necessarily agree entirely with that Government's actions. I object strongly to being described in such a way by the Leader of the Government. The PRESIDENT —I suggest to the Leader of the Government in the Senate that he choose a more suitable word. Senator BUTTON —I certainly withdraw the word 'flunkey' insofar as it may have related to Senator Missen. I withdraw it against Senator Boswell because he has revealed something very important to us. I used the word 'flunkey' in the context of suggesting that he was a follower rather than a leader. I withdraw that and identify Senator Boswell as one of the leaders of the push in Queensland. I do not wish to derogate from his role in that respect. Senator Boswell —I accept that. Senator BUTTON —We have reached a degree of rapport. There were a couple of aspects to Senator Collard's question. I am just trying to make the point again, as I have sought to make on numerous occasions in this chamber, that to seek to make milage out of these things by designating black and white sides to the Queensland dispute-and the consequences are all attributed to black and not to white-is very damaging to the prospect of reaching a resolution of this very unfortunate dispute in Queensland. I do not identify myself with the implications of Senator Collard's question. Of course, he suggested on the basis of reports by certain commentators that the price of the dollar in New York last night was adversely affected by the dispute in Queensland. I think, with the greatest respect, that that is drawing an extremely long bow. But even if any part of that allegation was correct, some commentators have given some extraordinarily superficial reasons for the fall in the Australian dollar. For example, the editor of a significant weekly newspaper stated on a television program that the fall in the Australian dollar was being largely precipitated by the Government's failure to accept a view which was put forward by Senator Walsh in relation to tertiary fees in universities. That is absurd. Senator Chipp —Who was that? Senator BUTTON —Bob Gottliebsen, the editor of the Business Review Weekly. I have written to him about that matter. It is puerile. Senator Chaney —Perhaps it was Caucus taking the Budget-making process out of the hands of the Government. Senator BUTTON —With the greatest respect, that is not the way in which it was put. I think there are all sorts of reasons for the market reacting in the way in which it is. I think the basic reason, of course, is the balance of payments situation in which Australia now finds itself. One can tack on any reason one likes, if one deals with every spurious suggestion which is made about the basic position of the Australian dollar at this time. I do not accede to the view put forward by Senator Collard. Senator GILES —Is the Minister for Veterans' Affairs aware of Press reports in the Canberra Times of 13 and 14 April 1985 protesting the change of title of various art works in the national collection? Does the Minister intend to reverse the decision of the Australian War Memorial to change the title of the two art works in question, which I understand depict Simpson and his donkey? Senator GIETZELT —I am aware that there has been what can only be described as a beat-up story in the Canberra Times in respect of the painting and sculpture known as The Man with the Donkey. Suggestions have been made that somehow people associated with the Australian War Memorial-the Government, or, for that matter, anybody-have changed the title of what was commonly known as The Man with the Donkey. The suggestion is that it should have been known as Simpson and his Donkey. It is a beat-up story. Unfortunately, it was published in the Canberra Times, which has made a minor retraction from the original statement. It did receive some other media publicity. I assure Senator Giles that the artist of the original painting, Mr Horace Moore-Jones, always described his painting as The Man with the Donkey. The sculpture that was produced by Leslie Bowles was also called The Man with the Donkey. However, I think it is probably true that many people did come to regard the art works as being called Simpson and his Donkey, because of the tradition in folklore about the famous man, Simpson, in the Anzac landing at Gallipoli. I assure Senator Giles that there is absolutely no truth in the story that anybody has changed the name of the art works. It has been a popular misconception which was corrected some years ago. It is a pity that a journalist should publish material which is misleading and which causes some distress in the veteran community. I assure Senator Giles and the Senate that the correct designation of the art works is The Man with the Donkey. Senator PETER RAE —I refer the Minister representing the Prime Minister to the reported belief of the Deputy Commissioner of Taxation in New South Wales, Mr Cortese, that government revenue estimates have been grossly exaggerated and also to the advice of the Commissioner of Taxation, Mr Boucher, that revenue raised so far this financial year is 'at a level which will leave collections many hundreds of millions of dollars below Budget expectations'. In light of these very serious statements, does the Government remain confident that it will be able to meet the deficit target of $6.7 billion? Furthermore, in view of the disagreement between the Treasurer and the Foreign Minister over the provision of economic information, does the Government still intend to release the estimate of government outlays some time next month? Senator BUTTON —I know of no difference of any substance between the Foreign Minister and the Treasurer over the release of government financial papers. I will direct the part of the question regarding the estimates of outlays to the Treasurer and advise Senator Rae as soon as I can. In regard to the earlier part of the question which referred to reported comments by Mr Boucher and the New South Wales Deputy Commissioner, the fact is that it is too early at this stage of the year for financial estimates to be prepared with a high degree of accuracy. There are indications that non-pay as you earn tax collections could fall short in this year but, on the other hand, a number of revenue items could exceed the Budget estimates. I think that is normal at this time of the year. It is the Government's view at the moment that the net position is that the figures are unlikely to vary significantly from the Budget forecasts which were made last year. One other point in Senator Rae's question referred to the meeting of the target on the deficit. The Government will meet the target. Senator BOLKUS —I refer the Minister representing the Minister for Foreign Affairs to the announcement by the New Zealand Rugby Union that it would send the All Blacks team to tour South Africa and to the associated reports that Australian cricketers would also be participating in matches in South Africa. Is the Minister in a position to indicate whether the Australian Government has a response to these two reported actions? Senator GARETH EVANS —The Prime Minister has already indicated in general terms Australia's reaction. But I am able to give the following information on behalf of the Minister for Foreign Affairs: The Australian Government fully supports the view of the New Zealand Government, as expressed by Prime Minister Lange, that it is to the New Zealand Rugby Union's eternal shame that it has decided to go to South Africa. The Australian Government is especially conscious of the recent outrageous violence against black protesters and funeral marchers in South Africa at Uitenhage and elsewhere. We take the view that the tour can only give comfort to supporters of apartheid, that it will exacerbate racial tensions in South Africa and result in further violent protest. The Australian rugby team's tour of New Zealand, which is planned for later this year, does become an issue now as a result of this decision by the New Zealand Rugby Union. I note on behalf of the Foreign Minister the comments that were made this morning by the Minister for Sport, Recreation and Tourism, Mr John Brown, that the Australian Rugby Union has always acted responsibly-and he commended it for this-in adhering to the sporting contacts policies of this and preceding Australian governments. We are confident-certainly hopeful-that the Australian Rugby Union will continue to respond in this way. A further consequence arises about the 1986 Commonwealth Games in Edinburgh. The consequences of the All Blacks decision in that sphere are too far off in the future to speculate about at this stage, but obviously a profound issue of concern arises in relation to that. As far as the apparently proposed cricket tour is concerned, the Prime Minister has already made clear in Parliament the Government's total opposition to this tour by a number of individual Australian cricketers. We certainly welcome the very firm stand that has been taken by the Australian Cricket Board in that respect. Senator ARCHER —I ask a question of the Minister representing the Minister for Health. Recently the Minister answered a question concerning the establishment of a private hospital in north-western Tasmania. He gave the impression that the reason there had been no progress since a letter of 26 November from the Tasmanian Minister for Health was a lack of co-operation and a lack of information requested from the Tasmanian Minister by Dr Blewett. If this is the Minister's view, can he outline what lack of information there has been over that period and indicate whether the information, as suggested, has not been provided? Senator GRIMES —We have had a lack of information from the Tasmanian Minister for Health. Last Friday I met with a syndicate of people who wished to establish a private hospital in Ulverstone. I previously met with a group who wished to establish a private hospital in Burnie. I told both of those groups, and the Minister for Health has told both of those groups, that before considering whether we will approve the establishment of a private hospital on the north-west coast of Tasmania the information we must have, as we must have from every other State because public and private hospitals are primarily the responsibility of the States, is the view of the Tasmanian Government. We must have the view of the Tasmanian Government first of all on whether it thinks it is appropriate that there be a private hospital on the north-west coast of Tasmania; if so, what size that hospital should be and how such a hospital may fit in with the public hospital facilities which are already provided there. I know of no views having been received from the Tasmanian Government or the Minister for Health in Tasmania, certainly until a couple of days ago, despite repeated requests by the Federal Minister for Health that we should have such views. Any attempt by the Federal Government to interfere with the running of hospitals in Tasmania or any other State would create considerable reaction from the State government concerned. In every other State, when there has been a request to approve the establishment of a private hospital we have had the views of the State government on the site, the size and whether the hospital should be there at all. This is the first occasion that Dr Blewett or anyone else can remember when a State government has simply refused to give a view. I believe the reason is not hard to see. All of us who know the north-west coast of Tasmania-Senator Devlin, Senator Aulich and even Senator Tate-know what happens there. The State Government is very reluctant to give its views on anything for fear of offending the people of Burnie, Devonport, Ulverstone, Smithton or anywhere else. However, it happens to be the responsibility of the State Government and the State Minister to give a view and to give us some information, and we will continue to request it. To expect the Federal Government to make decisions on such an issue when the responsibility for the State hospital system, public and private, is primarily that of the State Government is nonsense. Senator CROWLEY —Is the Minister representing the Minister for Social Security aware of the problem confronting disabled people in sheltered employment when they marry or are judged to be living in a de facto relationship; that is, the sheltered employment allowance is considerably reduced to the spouse, usually the woman, which is financially disadvantaging and restricting her independence? Is the Department giving consideration to any change in these provisions, particularly when those spouses continue to work in sheltered workshops? Senator GRIMES —When a person who is in receipt of a sheltered employment allowance marries, the amount of the allowance that is payable to that person commences to be determined after taking into account the private income available to that new family unit for its support. This is precisely the same principle that applies, and has applied since the social security system started in this country, to all other social security payments. Therefore, when the private income of the couple exceeds $50 a week the maximum amount of the allowance is reduced by $1 per week for every $2 per week of excess income. Similarly, when the private income of a couple exceeds $98 per week the client ceases to be eligible for fringe benefits. That situation applies to all social security benefits. It certainly applies to sheltered employment allowances. It means that the total assistance given to the married or de facto couple is less than twice that available to each individually, but that is the system which has applied in this country for a long time, as I said. I will seek from the Minister for Social Security further information as to what else is available to people under the sheltered employment system-I do not have it all in my mind at the moment-but I am sure that the basic principles I have outlined are true. Senator MACKLIN —My question is to the Minister representing the Minister for Aboriginal Affairs. I refer to the Government's announcement that it plans to abolish the National Aboriginal Conference on 30 June this year. What arrangements does the Government intend to have in place on 1 July to provide a national representative voice for the Aboriginal communities in Australia? Can the Minister explain why the Government has chosen to deny the Aboriginal communities a national representative voice at precisely the time it is introducing national land rights legislation and such a voice is needed? Will the Minister explain why the moves should not be considered by the Aboriginal communities as nothing more than a blatant political manoeuvre to stop the trenchant criticism of the Government's preferred option by the National Aboriginal Conference? Senator RYAN —The implication in the second part of Senator Macklin's question is quite wrong. It is not the Government's intention to deny the Aboriginal people a national voice. I will give Senator Macklin some details of how a stronger national voice for Aboriginal people is being developed. Clearly, it is not perceived by Aboriginal people throughout Australia as being a political ploy to silence criticism. On the contrary, my colleague Mr Holding has had in place for some time plans to replace the National Aboriginal Conference-which I think has been an experiment but one which has not been entirely successful-with a more successful and effective national organisation for Aboriginal people. On 2 April Mr Holding announced that he would extend the term of office of the NAC members to 30 June this year. He made it quite clear that there would be no extension beyond that date. He has also made it clear that there will be a body to replace the NAC and it will be based on the views of Aboriginal communities; it will be based on Aboriginal communities. As Senator Macklin will be aware, the electoral boundaries under which NAC members were elected did not relate to Aboriginal communities. Some of the problems that the NAC experienced in representing Aboriginal communities throughout Australia were due to the illogicality of the boundaries for those electorates. The new body will be based on Aboriginal communities and therefore will be much more effective in representing the views of those communities at a national level. The actual structure of the organisation is a matter for continuing discussion between the Minister and Aboriginal people throughout Australia. I remind Senator Macklin that Mr Holding took those decisions following consideration of a report by Dr Coombs on the role and future structure of the National Aboriginal Council, the circulation of a report from a joint NAC-DAA task force and after advice from the heads of agencies within the Aboriginal Affairs portfolio. There was a meeting of major Aboriginal organisations on Friday, 12 April, to consider the structure of the proposed re-organisation and there are to be continuing consultations with organisations and with local communities in the evolution of the new structure. It is the Government's intention to announce the structure of the new organisation to replace the NAC on 30 June. The Government believes that an effective national independent representative political structure capable of advising the Government and of putting forward a national perspective on Aboriginal issues can be developed on the basis of deriving its authority from and being accountable to local groups, communities and their organisations. I, and I hope Senator Macklin, wait with great interest to see how this newly effective body will emerge. I am sure that the views of Aboriginal communities on national land rights legislation and all other issues with which they are concerned at present will be much more strongly and effectively put under the new arrangements. Senator MACKLIN —As a supplementary question, I refer to that part of my original question where I asked: Will there be a national voice available for Aboriginal communities on 1 July this year? Senator RYAN —I have already answered that in the affirmative. I: SURVIVORS Senator COLSTON —I direct a question to the Minister representing the Minister for Defence. Referring to an article in the Courier-Mail on 10 April 1985, I ask: Were some survivors of the Voyager, after it and the Melbourne collided, required to repay money that the Navy had given them to replace wages that had gone to the bottom of the sea with their ship? Are the reports in the Courier-Mail accurate about a gaoled survivor going insane and another survivor spending his life in and out of mental institutions? What support did the Navy give to the Voyager survivors, including medical and mental health assistance? Senator GARETH EVANS —Claims by Voyager survivors for loss of personal effects, including cash, were, I am told by the Minister for Defence, settled by the making of ex gratia payments. The amount of cash claimed by a survivor was accepted as being the actual loss. These payments were made some months after the collision. An explanation of the newspaper report referred to by Senator Colston may be that survivors who were granted leave after the collision were immediately advanced cash which subsequently would have been debited to their pay records. Insufficient details are provided in the reports in the Courier-Mail to enable identification of the survivors who are alleged to have been incarcerated or admitted to mental institutions. It is the case that all Voyager survivors who remained in the Navy were entitled to full medical treatment for injuries sustained in the collision. Injured survivors who established eligibility received compensation by way of benefits under the defence forces retirement benefits legislation, compensation under the Commonwealth Employees (Compensation) Act and settlement of their common law claims. Senator PARER —My question is directed to the Minister representing the Minister for Housing and Construction. In view of the remarks made by Senator Gareth Evans and the Prime Minister in respect of the possible cricket tour of South Africa, how does the Government reconcile these principles with the recent decision by the Minister for Housing and Construction to grant a contract worth in excess of $11m to L.T.A. Doval, a wholly South African owned company, for work on aprons and taxiways at the new Brisbane Airport, particularly when a reputable local company tendered a price which was 0.3 per cent higher than that of the South African owned company? Senator RYAN —The question which Senator Parer has just put to me is the first time I have heard this assertion regarding a contract with a South African company. I shall refer the question to my colleague the Minister for Housing and Construction and get a reply for the honourable senator. Senator ELSTOB —My question is directed to the Minister representing the Minister for Foreign Affairs. As the Australian Government has indicated to the United States Government that it will not participate in the Strategic Defence Initiative research program, is the Minister able to confirm whether Australia will, in any case, receive ongoing information on the program? Does the Australian Government consider it necessary to monitor the strategic defence initiative program in order to maintain and streamline Australia's disarmament policies? Senator GARETH EVANS —The Government has said on a number of occasions that it does not endorse the United States Administration's strategic defence initiative, or SDI. There are a number of reasons for that. They have been spelt out by, among others, myself in this place in an answer on 21 March, when I pointed to the Government's view that the SDI program would, far from being a saviour to the world so far as the avoidance of nuclear war was concerned, be likely by its very nature to contribute substantially to a destabilisation of the present nuclear environment. The arguments were more fully set out by me on that occasion and in particular in the booklet circulated last year by Mr Hayden entitled 'Uranium: Joint Facilities and Disarmament and Peace'. I believe that the rationale for our position is well-established and clearly articulated. The Government has not yet responded to Secretary Weinberger's invitation to express interest in participation in the SDI research program but will reply in due course. The Government has every confidence that the United States Administration will continue to keep Australia informed of United States initiatives in this area. The strategic defence initiative and the comparable Soviet weapons research program have fundamental implications for the nature of deterrence and thus for the strategic balance between the super-powers. As Senator Elstob's question suggests, these matters are of enormous importance to Australia's security, including our disarmament policies. For these reasons the Senate can be very confident that the Government will continue to monitor closely all relevant developments in this area. Senator MESSNER —My question is directed to the Minister representing the Minister for Social Security. Is it a fact that valuers acknowledge that the value of assets, whether farms, bonds, shares, real estate, et cetera, fall when interest rates rise? Are interest rates rising as a result of the Government's deliberate policies to shore up the Australian dollar? Does the Minister recognise that these changes in asset value would change the situations of people as assessed under the Government's assets test? What action is the Minister taking to adjust pensioners' payments to take account of this change, especially given the fact that the ongoing and further weakness of the dollar will place further upward pressure on interest rates and so make such adjustments very frequent? Senator GRIMES —One should congratulate Senator Messner on his imagination. I will ignore the assertion concerning interest rates which he put into the middle of his question. Under the assets test people whose assets fall in value, as Senator Messner knows, can ask for a revaluation. As a result of asking for that revaluation it will be granted and their pensions will be adjusted. I will refer the technical details of the question to the Minister for Social Security for a more detailed answer. Senator TOWNLEY —I ask a question of the Leader of the Government in the Senate both as Leader of the Government in the Senate and as Minister representing the Prime Minister. Did the Government have any contact with the Australian Cricket Board concerning the possibility of cricketers going to South Africa prior to the Board requesting players to sign a statutory declaration? Is it to become the usual action of this Government to threaten those who do not do exactly what the Government wishes with special examination by the Commissioner of Taxation? Senator BUTTON —I am not sure what precise contacts have been made, if any, by the Government with the Australian Cricket Board. The Board has, as I understand it, quite independently of the Government, expressed a view about the desirability or undesirability of cricketers travelling to South Africa in what is alleged to be an independent capacity. All that the Government has said about that is that we welcome the stand taken by the Australian Cricket Board. Another part of Senator Townley's question suggested that in some way the Government was offering threats to particular cricketers who might take part in that tour as individuals. I do not interpret anything that has been said in that way. There was a comment about cricketers making some financial bonanza out of the tour and the comment was made that this Government would ensure that they paid tax on any earnings that they received. Senator Townley has voted on numerous occasions in the Senate to make sure that people who ought to pay tax do not pay tax. I hope he is not suggesting that there is anything wrong with the Government saying that people who earn income from an activity in South Africa or elsewhere should pay tax on it, and that is all that has been said. 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 Grimes) read a first time. Senator GRIMES(Tasmania-Minister for Community Services)(1.01) —I move: That the Bill be now read a second time. I seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- Mr President, I am very pleased to be able to speak in support of this legislation which will provide a statutory basis for the involvement of the Commonwealth in soil conservation. It has long been a belief of mine that the Commonwealth has an important role to play in actively encouraging and co-ordinating the conservation of our land resources. In the long term it is the capacity of these resources to sustain use which will determine the well being of our primary industries. This Bill will allow for the provision of financial assistance for soil conservation projects undertaken by the Commonwealth, by the States, or by individuals and non-government organisations. It also provides for a Soil Conservation Advisory Committee to provide advice to the Minister concerning the allocation of financial assistance and the Commonwealth's role in soil conservation in general. The problems of land degradation in Australia are extremely severe and costly. There can be no doubting the seriousness of the problem. Our country is not well endowed with land resources, at least not from an agricultural perspective. Our soils are fragile and limited. It is our responsibility to husband these scarce resources in a manner that reflects the fact that they are finite and cannot be taken for granted. Yet the damage is already widespread. Erosion, salinity and tree decline are afflicting over half of all agricultural land and poisoning major water ways in this country. Regardless of the historical reasons for the loss of this most vital resource, it is of the utmost importance that the pattern be halted and prevented from recurring in the future. Furthermore, wherever possible, attempts should be made to restore degraded land. There is already a strong awareness in all sectors of the community that we have reached a critical point in the process. Should land degradation continue at the level experienced in the past, there is no doubt that the longer term economic welfare of this nation will be placed at grave risk. This Government recognises the problem as one of, if not, the most important in the natural resources area and one which is clearly beyond the resources of State Governments alone to tackle effectively. The national dimension of the problem calls for an adequate response by the Commonwealth in the interests of the long term welfare of the nation. This government has a longstanding commitment to safeguard the nation's agricultural resources. Since attaining office we have moved quickly to fulfil this commitment. In fulfilment of one of its major pre-election agricultural policies, the Government established the National Soil Conservation Program. I would like to take this opportunity to briefly discuss this initiative. The Program aims to develop and implement national policies for the rehabilitation and sustainable utilisation of the nation's soil and land resources. In essence, this is being done by enhancing the expertise and administrative authority already available in the States and Local Governments and by encouraging the efforts of farmers and the general community. The Program's philosophy is consistent with that of the National Conservation Strategy, namely, that Australia should maintain the essential ecological and life-support systems, such as soil regeneration and protection, on which human survival and development depend. As such, the Program represents a major practical attempt to achieve objectives set out by the National Conservation Strategy. The National Soil Conservation Program is not just concerned with providing funding to other bodies to spend on soil conservation. It embodies its own policies and philosophy which seek to provide a national approach to combatting land degradation in Australia. It recognises the basic interdependence of soil, water and vegetation and the role each plays in land stability. Land is perceived as a complex entity made up of each of these resources and the interactions between them. It also emphasises a preventative rather than a corrective approach. The Program is based on five major objectives. (i) That all lands in Australia be used within their capability; (ii) That land capability assessment and whole catchment/regional land management concepts be used as a basis for land planning; (iii) That all land users and levels of Government meet their respective responsibilities in achieving soil conservation; (iv) That effective co-operation and co-ordination occur between all sectors of the community, disciplines and agencies involved in the use and management of land and water resources; and (v) That the whole community adopt a land conservation ethic. These objectives provide the National Soil Conservation Program with its direction and act as a guide in project selection. They are not set in concrete and may change as the Program develops and progress is made. I am pleased to be able to report that the Program has received a high level of support from the public. This support has translated into active co-operation from primary producers, conservation groups, State and Local Governments as well as academics and researchers. A major task of the Program is to continue to raise the level of public awareness about this often insidious problem of land degradation. Of course it is in the interests of all Australians that the damage caused by land degradation is minimised. Not only does it undermine productivity but also results in severe off-site costs that are borne by the public at large. No where is this more drastically obvious than the lower reaches of the Murray-Darling system where water quality is often very poor as a result of erosion and salination occurring throughout the catchment. The Bill establishes a Soil Conservation Advisory Committee which is constitute as an expert and impartial body charged with several responsibilities. The main function of the Committee will be to provide advice to the Minister on projects to be funded under the National Soil Conservation Program. It will also provide advice on priorities and strategies for activities by the Commonwealth relating to soil conservation. As such, it will allow the Commonwealth to have a co-ordinating function in soil conservation-not in competition with the States but complementing and co-ordinating efforts nationally. This Committee will provide an opportunity for non-government groups such as producer organisations and public interest groups to have an input into how the problem should be tackled by the Commonwealth. The Department of Primary Industry will, through appropriate processes, publicise the fact that applications may be made for financial assistance for proposed or existing soil conservation projects. The Committee will consider such applications and advise the Minister as to which candidate projects should be funded out of moneys appropriated under the Bill and on areas where soil conservation projects need to be commissioned. It will also make recommendations as to the terms and conditions that should apply to the agreements under which the assistance should be paid. This selection process would normally take place annually. The Soil Conservation Advisory Committee will also assess the success of projects funded by the Commonwealth and of the workings of the Act itself and will report through the Minister to Parliament each year. The total appropriation under the Bill, as I have already stated, is not fixed at any level. While it would be true to say that it would be almost impossible to provide too much support for soil conservation, I would like to make it clear that the Bill is not an attempt to have the Commonwealth shoulder the entire responsibility for soil conservation-this is neither possible nor desirable. The Commonwealth, by establishment of the National Soil Conservation Program and by providing financial assistance under this Bill, is seeking to act as a catalyst to stimulate improved soil conservation by those with more direct responsibility in this area. The Bill provides that separate appropriations be made for the States, for Commonwealth Departments and for other persons-such as research or education bodies, tertiary institutions, or private companies or researchers. The relative size of the three appropriations will reflect the general capacity of each sector to contribute to the national soil conservation effort and the probability therefore is that the States will be the major and the Commonwealth the minor recipients, with the other group falling between. Funds appropriated for use by organisations and individuals will be paid into a trust account to be known as the National Soil Conservation Program Fund. Payments for projects, other than State or Commonwealth projects, will be made from this Fund. These projects will be more numerous and usually smaller than State or Commonwealth projects. Experience has shown that in such cases the flexibility offered by a trust account is necessary to ensure efficient use of the Budget allocation. Individuals and organisations may not always be able to conveniently operate in conformity with the budget cycle while at the same time efficiently managing a project. For example, a project undertaken by an academic institution will usually operate on a calendar year, not on a financial year basis. The Fund will also serve as a repository for gifts and bequests where appropriate, and for paying the expenses of the Soil Conservation Advisory Committee. The Bill provides that financial assistance be subject to a number of conditions, and that each project further be subject to an agreement. The conditions specified in the Bill relate generally to accountability for funds, observance of the agreement, repayment or withholding of funds where there has been misuse or error in the conduct of the project or the handling of funds, provision of records and reports, and the fate of revenue or windfalls derived by the recipient of assistance. In short, the Bill provides for the sort of responsible control that would be expected where Government expenditure is being incurred. The agreements between the Commonwealth and those undertaking projects with the use of financial assistance provided under the Bill will be more specific documents which, in addition to containing any of the conditions set out in the Bill, will specify the financial assistance to be provided and describe the purpose and nature of the project in question. I should like to make it clear that the soil conservation projects that can qualify for financial assistance under the Bill are not limited to actual construction works and field activities. Soil conservation consists of prevention as well as correction, and projects involving education, publications, training, demonstrations and research will all be considered by the Advisory Committee. Indeed, given that conservation is a national issue and that the Commonwealth is able to bring a perspective that is not always available to the States, I expect that the Bill will prove particularly effective in this regard. It is difficult to provide any quantifiable financial impact of the Bill. The Commonwealth has made $4 million available to the National Soil Conservation Program in the current financial year but I have earlier indicated that there is no fixed appropriation under the Bill. Administrative costs within the Department are currently in the order of $180,000 a year, about half of which includes the services of officers seconded from State soil conservation services to assist in the development of the National Soil Conservation Program. When these secondments are terminated in about two years, the cost will therefore be approximately halved. However, with the passage of this Bill, the expenses and allowances of the Advisory Committee (as determined by the Remunerations Tribunal) will have to be met. It is estimated therefore that administrative costs to the Commonwealth will eventually settle at about $120,000 per annum and that this will not vary significantly even if the amount of financial assistance for soil conservation were to be considerably increased. On the positive side, the benefits of the National Soil Conservation Program are expected to be considerable. It is not possible to predict a likely figure for the savings in terms of future productivity and reduced off-site costs, but they are certain to greatly exceed any outlay by the Commonwealth. Before concluding this speech, I would like to emphasise the Commonwealth's commitment to soil conservation and the place of this Bill within that overall commitment. Historically, the Commonwealth Government's involvement in soil conservation has been on an in-and-out basis. The previous Government opted out of soil conservation completely so that at the time the present Government took office, there was no involvement at all. This Government turned around that disastrous decision and established the National Soil Conservation Program. The National Soil Conservation Program, as I have explained, has the overall aim of ensuring that the use of our land resources takes place on a sustainable basis. The Bill, limited as it is to the provision of financial assistance, is only a part-albeit a significant part-of the Government's commitment. This significance extends beyond the actual benefit that will accrue from projects undertaken by means of financial assistance provided under the Bill. The previous Government justified its dilatory attitude to soil conservation on the grounds that because the direct constitutional responsibility for land use rests with the States, the Commonwealth need not become involved. However it is now obvious that the magnitude of the land degradation problem is such that a national perspective must be obtained, with the Federal Government providing a means of co-ordinating this perspective, as well as making its own direct contribution to soil conservation. This Bill is one means of ensuring this. If future Governments refuse to commit funds to soil conservation this can no longer occur by convenient administrative measures; it will require a conscious and public act not to appropriate monies under the Bill. Any failure by future governments to appropriate funds will be explicitly reflected in the Annual Report of the Soil Conservation Advisory Committee. The Bill is therefore explicit and enduring evidence of this Government's commitment to the National Soil Conservation Program and to the fight against land degradation. I commend this Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. 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 Grimes) read a first time. Senator GRIMES(Tasmania-Minister for Community Services)(1.02) —I move: That the Bill be now read a second time. I seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- This Bill proposes to continue bounty assistance to the industry producing injection-moulding machines for the production of plastic goods, and parts for such machines, for a further four years. The bounty will be paid at the rate of 20 per cent of value added in the first and second years, reducing to 10 per cent of the value added in the third and fourth years. Since 23 May 1979, local production of the machines and parts therefor has been assisted by a 15 per cent duty and a phasing bounty which was to have expired in May 1984. In January 1983, following representations by the remaining local manufacturers, Johns Consolidated Ltd and Battenfeld (Aust) Pty Ltd, the industry was referred to the Temporary Assistance Authority (The TAA) which concluded that short-term assistance was not justified. However, in view of the performance of the local industry, the Government decided that an immediate review of long term assistance arrangements was necessary. A reference was sent to the Industries Assistance Commission on 30 June 1983 seeking a report on or before 29 February 1984 on what long term assistance arrangements should be provided to the industry. Further, in view of an earlier submission to the TAA by the Department of Defence, in which that Department expressed concern at a situation where Australia's injection-moulding machine manufacturing capacity might disappear, the Commission was asked to provide additional advice on the assistance required should the Government decide to maintain the industry on defence strategic grounds. Pending the completion and consideration of the Commission's report, the Government also decided that short term assistance was required, and it proposed that temporary assistance by way of an additional bounty be paid to the industry from 10 June 1983 until 22 November 1984. The Commission presented its report to the Government on 28 February 1984. In its report the IAC commented that the Australian market for injection-moulding machines expanded by 50 per cent between 1979-80 and 1981-82, but, in 1982-83 fell back to about the level existing in 1979-80. Local production of injection-moulding machines fell by some 65 per cent in the four years to 1982-83, due mainly to the demise of Johns Consolidated Ltd and to an increase in imports. The Commission further stated that in terms of current dollars, total competitive imports increased by over 100 per cent in 1981-82 relative to the previous two years, and although imports declined in 1982-83, the level was still double that observed in 1979-80. The Commission also stated that there had been considerable changes in the industry since 1979, and that these had resulted in the only remaining local manufacturer, Battenfeld, maintaining market share but with relatively low levels of profitability. The Commission reported that the adjustment difficulties associated with the quite significant reductions in assistance since 1979 had been exacerbated by the difficult economic conditions that characterised the early 1980's. This factor, combined with evidence suggesting that local manufacturers could eventually be competitive with tariff-only assistance, and the fact that with assistance of this order local production could be regarded as relatively economically efficient, influenced the Commission to recommend further assistance to facilitate adjustment to the long term rate of 15 per cent. To minimise the direct cost of assistance to user industries and to facilitate adjustment to the long-term rate the Commission recommended additional assistance by way of a bounty. The level of bounty assistance requested by Battenfeld was slightly higher than the level recommended by the Commission. However, the Commission considered that assistance at the level recommended would provide Battenfeld with the opportunity to restructure its operations, while at the same time not shield it from the pressure to adjust to the relatively low long-term tariff rate. The Commission also concluded that no additional assistance would be necessary to maintain the industry on defence strategic grounds. On 10 October 1984 the Government announced it had accepted the Commission's recommendations that bounty assistance to the industry be continued for four years and that the long term duty rate of 15 per cent continue to apply. This Bill will provide over the next four years a bounty equal to 20 per cent of value added in the first two years and 10 per cent in the third and fourth years, with an upper limit of $0.6 million per year for the first two years and $0.4 million for the remaining two years. The bill allows the upper limit to be varied in a particular year to cover unforeseen circumstances provided the total bounty does not exceed $2 million over the four year period. The government proposes to closely monitor the performance of Battenfeld to ensure that the intent of the assistance arrangements is achieved and the department of industry, technology and commerce will report to the Minister annually in this regard. Finally, the Bill includes a number of provisions in Part III which are designed to update the administrative provisions in the existing Act. These provisions are modelled on a number of provisions in recent Bounty Acts. Financial Impact Statement The cost of bounty assistance between 10 October 1984 and 9 October 1988 will not exceed $2 million. I commend this Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. Motion (by Senator Grimes) proposed: That the Senate do now adjourn. Senator MacGIBBON(Queensland)(1.03) —I am forced by the rapidly deteriorating circumstances in Australia to take the opportunity presented by the adjournment to bring the actions of the Prime Minister (Mr Hawke) into focus. The Prime Minister has many failings but since time is short I will deal with only the two most topical and most serious. They relate to the Queensland industrial troubles and to statements by the Prime Minister in relation to the Australian Taxation Office and the earnings of cricketers. In relation to the Queensland industrial troubles, we have a Prime Minister who is inciting and encouraging the breaking of laws. He has the unanimous support of his Cabinet. The Prime Minister is supporting industrial anarchy. This industrial anarchy is not on a small scale but on a vast scale. It is not on a local scale but a national scale. It is not a minor economic penalty; it is threatening the whole of the national economy. In one sense, the scale does not matter at all. We have a Prime Minister who, for the first time in the 85 years since Federation, is actively and flagrantly supporting the breaking of the law. He is right behind the Australian Council of Trade Unions and their call to their 160 associated unions to target companies in Queensland with industrial action-companies which he mistakenly thinks are Queensland companies but which in fact are national companies. Despite the dissembling that we had from the Leader of the Government (Senator Button)-his disgraceful dissembling in answer to a question from me and from Senator Chaney only a few minutes ago-the Commonwealth is actively letting its employees, in the form of Telecom, run their own anarchy against the taxpayers of Australia. Section 45D of the Trade Practices Act is being broken by this massive secondary boycott. The Australian Constitution is being broken. There is not a word from the Prime Minister. The Prime Minister takes several oaths when he takes office and he is breaking those oaths of office. The Prime Minister solemnly swears: I do swear that I will well and truly serve Her Majesty Queen Elizabeth the Second, her heirs and successors according to law, in the office of Prime Minister. How can he serve the monarch according to law if he will not uphold the law? It is absolutely impossible. There cannot be a selective application of the law. Nobody can say: 'Look, we will only apply a certain number of laws on the statute book. We will leave the others because we do not like them'. But, this is precisely the peacemaking move the Prime Minister put to the Premier of Queensland yesterday, it is in all of today's papers. He is saying to the Premier of Queensland: 'Don't worry, we do not want you to repeal the laws'-as if he had any right to request a Premier of a State in a federal system to repeal the laws-'Just don't bother applying them and it is all going to be all right'. We live by the rule of law. If we do not have a rule of law we just have the law of the jungle-the strength of the strongest right arm. While that is very much in accord with the ethos of the Australian trade union movement, it is not in accord with the ethos of Australia or of the Western democracies of which we are a part. We simply cannot run a society if we have no rule of law. How could the police forces in any of the States apply the law if they had to go to the Premier of a State or a Prime Minister and say: 'Please, sir, which laws can we apply today; whom can we arrest?' It is an absolute nonsense. We do not have to think long about it to know that we cannot operate that way. What would happen if I encouraged people in this place by saying: 'Do not pay your tax money; do not obey the taxation laws. Taxation is theft'? Senator Elstob —You do. Senator MacGIBBON —No, I do not. I have always upheld the rule of law in relation to tax and that is why I am critical of your colleague Mr Dawkins and the way he went to the bottom of the harbour for a few million dollars. If we do not uphold the law we have anarchy. We have a Prime Minister who is supporting the breaking of the law. The second very important sense where he is breaking the law is in the way in which he is using the whole of the resources of the Commonwealth against a State. That is absolutely untenable in a federal system. I know a federal system is the most difficult form of government to have in a country. That is why it is impossible for the Australian Labor Party to cope with it. The technical and intellectual difficulties are beyond them. We have a Prime Minister saying: 'I will use all of the resources of the massive Commonwealth of Australia to beat, bludgeon and suborn one little State government'. If we do that, we do not have a federation. Senator Elstob —That is what the Russians do in Poland. Senator MacGIBBON —I know it is a Soviet technique you are advocating. The Government supports the Soviet techniques with its foreign affairs and all the rest of its anti-United States bias. While we have a federation, the Commonwealth of Australia, we cannot set the resources of the Commonwealth against one State. This leads me to speak here today because I really wonder whether the Prime Minister has taken leave of some of his faculties. I cannot really believe that a Prime Minister would wilfully and consciously not uphold the law. The second very serious problem is the threat to tax the cricketers. I find that absolutely untenable. I have no objection to people paying tax. As I reaffirmed earlier to Senator Grimes, people have an obligation to pay tax in accordance with the law. But that is not what the Prime Minister said. I have taken the trouble, having read about it in the newspapers, to get a transcript of the Press conference of 17 April. Senator Townley —What did he say? Senator MacGIBBON —Yes, Senator Townley, I will say what he says. The PRESIDENT —Order! If Senator Townley wants to interject, he should interject from his own place in the chamber. Senator MacGIBBON —The Prime Minister said at his Press conference: Another point I want to make on it-I notice in reading about the rumours, there's some suggestion that the players who would accept would be beneficiaries of a very considerable amount of money because it is . . . negotiated in a way which would avoid the payment of income tax in Australia. Can I just say this to those to who may be contemplating this offer, because it's been made, that the Australian Tax Office will be looking extraordinarily closely at any arrangements with a view to ensuring that tax to be paid in Australia in that can at all possibly be done they should not be contemplating the acceptance of any such offer if they are- I apologise. It is a straight verbatim transcript of the Prime Minister and he does talk like this. He went on: . . . contemplating the acceptance of any such offer if they are on the basis that there will be any slackness as far as the Australian taxation authorities are concerned. Had the Prime Minister said, 'I hope the Taxation Office will apply their beady eyes to the affairs of these people who go and play cricket in pursuit of their professional careers', I would have had no objection, nor would anyone in Australia. But, what we have here is a direct threat by a Prime Minister to direct the Australian taxation authorities to look at the financial affairs of these people. The parallels between Mr Hawke and Mr Nixon are quite chilling. You will remember that President Nixon used the business of tax audits against his political enemies. This is precisely the point that Mr Hawke is taking. He is using the threat of taxation sanctions, or directions to a statutory authority which he has no legal right to direct. Those statutory authorities are independent. He is threatening these people with a taxation audit because they are his political enemies. We know what happened to President Nixon and President Nixon was under stress. It is interesting to reflect and ask the question: Is Mr Hawke under stress? The answer to that must be very definitely yes. Is it big stress? Yes, it is big stress. He has the Queensland industrial troubles that he cannot resolve. He has the cascading dollar. The Hawke socialist dollar is worth 63c today in New York. We have the tax debacle. We have Senator Gietzelt and the Left coming up with one plan that is totally opposed to that of the Treasurer. In foreign affairs we have a disaster. We had the MX missile agreement where the Prime Minister broke his word; we have the ANZUS problems. We have the whole business of the United States relationship in tatters. We have fights in the Party with Mr Howe breaking Cabinet rules and not being allowed to speak on a capital gains tax. We have Senator Gietzelt with his own far left fanciful things. Above all, we have the ever-present challenge of Mr Hayden breathing down Mr Hawke's neck and itching and scheming to get into the big seat in the corner office. Yes, Mr President, Mr Hawke is under enormous stress. We have had two examples of gross and marked behavioural aberrations by this Prime Minister within the last week and they are of great importance to Australia. My suggestion is that the Prime Minister needs to get hold of himself and get back to the basics in administering this country. The correct procedure for the Prime Minister is, if he does not like the law of the land and that is perfectly within his province, to take the appropriate steps; that is, to change the laws of the country. After all, he is the Government and it is a simple matter for a Prime Minister, if he is so concerned about a piece of legislation, to alter that legislation. It is absolutely untenable for a Prime Minister to go around selectively picking parts of the law out and telling other people they need not follow those parts. It is absolutely un- tenable for a Prime Minister to go around and bludge on his political enemies by using statutory authorities to operate against them. I suggest that the Prime Minister get back to basics and do the right thing for the first time. Senator GRIMES(Tasmania-Minister for Community Services)(1.16) —in reply-Mr President, I hate to disappoint Senator MacGibbon, but I am afraid that the Prime Minister (Mr Hawke) is not going to lose any sleep over his speech, one of these many speeches we hear from Senator MacGibbon espousing his far right views, indirectly supporting governments like the government of South Africa and therefore the apartheid system. He made personal attacks on the Prime Minister, as he often does, and also as he frequently does, on the Minister for Foreign Affairs (Mr Hayden). I remind Senator MacGibbon, as I have reminded him before, that there are some countries which he supports, like South Africa, where such attacks would not be tolerated at all. I will speak briefly on the first item, the matter of the Queensland industrial dispute. The Prime Minister has on several occasions contacted the Premier of Queensland and said: 'Look, you should talk to me and you should talk to the trade unions about what is happening out there instead of taking this confrontationist attitude'. Premier Bjelke-Petersen has refused. The Prime Minister has not, by word or deed, encouraged the actions taken by people outside of Queensland. Senator MacGibbon considers that activity as acting against the law. Where was Senator MacGibbon when the truck drivers and owners blockaded the Hume Highway for several days, blockaded the city of Sydney and Premier Johannes Bjelke-Petersen came out in support of them and urged them? Where was Senator MacGibbon and what was he saying then? He was saying nothing. Who is being selective? Senator MacGibbon is obsessed with his mad League of Rights nonsense that he goes on with in this place and obsessed with the fact that the vast majority of the people in this country know and respect the Prime Minister and hardly any of them know Senator MacGibbon, or will they ever. Maybe they should know about his activities when he was out of this country for so long and maybe they should know whom he really represents in this place. I turn now to his comments about the Prime Minister's comments about the cricketers who have allegedly signed contracts to go to South Africa for considerable amounts of money. It was reported to be said by those who arranged the contract that they had so arranged the contract that the cricketers would not have to pay taxes in this country. They were going to avoid taxes and all the Prime Minister said was: 'Of course, as in any form of tax avoidance, the Taxation Office in this country should make sure that they pay their full taxes'. Senator MacGibbon is always happy to get up in this place and oppose legislation which is aimed at people who have avoided taxes, who have hurt the taxpayers of this country, making sure that those people get their just deserts instead of causing the pay-as-you-earn taxpayer in this country to pay so much extra taxes. I suppose the sensible thing to do, and had it been later at night I would have done so, would be to ignore the right wing ravings of Senator MacGibbon, but I think every now and again when he gets up and makes these personal attacks about the Prime Minister someone should respond to them. I have responded to them today, but I know they will not end and I am not expecting them to end. We do not expect the ravings of people like Senator MacGibbon to end because he cannot control himself. He is the one who is filled with envy; he is the one who is filled with a sense of frustration because on two occasions the Prime Minister has led the Party of which I am a member to be the government of this country. All the predictions of Senator MacGibbon about all the problems that that would create have not been borne out. The adjournment debate is usually held when everyone has gone home at night; it is just on the odd day that we have the adjournment debate in the middle of the day. I suppose the adjournment debate is the best time for Senator MacGibbon to indulge in his ravings. No-one takes any notice of them, very few people ever report them and I think the Senate would be much better occupied in getting on with the Estimates, which are far more important to this country than the views and expressions of Senator MacGibbon. Senator MacGIBBON(Queensland) —Mr President, I claim to have been misrepresented. Senator Grimes —You cannot take it. You get up and dish it out and you cannot take it. You are absolutely pathetic. The PRESIDENT —Order! The honourable senator claims to have been misrepresented. I call Senator MacGibbon. Senator MacGIBBON —Mr President, I will ignore the maundering of Senator Grimes. The PRESIDENT —Please explain the misrepresentation. Senator MacGIBBON —I just make the point that I have never in this place or in any other circumstance defended the position of South Africa. That was the charge that Senator Grimes made on two occasions. I find the principle on which the Government operates in South Africa quite abhorrent and I have made that very clear on many occasions. Senator Grimes's other personal attacks on me make no imprint whatsoever, but I do object to his lying in that way. The PRESIDENT —Order! The honourable senator will withdraw that word. Senator MacGIBBON —I withdraw. Question resolved in the affirmative. The PRESIDENT —Before the Senate adjourns, I advise honourable senators that Estimates Committees D, E and F will meet after lunch. Estimates Committee D will meet in committee room 6, Estimates Committee E will meet in the Senate chamber and Estimates Committee F will meet in committee rooms 1 and 2. Prior to the sitting of the Committee, the bells will be rung for three minutes. Senate adjourned at 1.23 p.m. The following answers to questions were circulated: Senator Gareth Evans —On 16 April 1985 (Hansard, page 1036) Senator Reid asked me, as Minister representing the Minister for Defence, a question without notice concerning the award of medals to Australian servicemen who have served or are serving in the Sinai with the Australian peacekeeping force. In reply I undertook to seek an answer from the Minister for Defence. The Minister has provided the following response: Last year, in accordance with a Government decision, an Interdepartmental Committee was established to review honour and awards for Defence Force personnel. A specific task of the Committee was to consider the need for any new awards for Defence Force personnel in the Australian system. The need for an Australian award for the recognition of service in peacekeeping and other military but non-warlike operations such as the MFO in the Sinai was considered by the Committee and its views on the matter have yet to be considered by the Government. Senator Mason asked the Minister representing the Minister for Defence, without notice, on 25 March 1985: I ask the Minister a supplementary question. Will the Government check the information that has been given to me, that in fact these weapons are now at the stage where they might be still used but are rusting away and that the unserviceability issue which the Minister raised in such a derisive fashion is, in fact, due substantially to the engines. Senator Gareth Evans —The Minister for Defence has provided the following answer to the honourable senator's question: The hulls and turrets of the Centurion tanks are in long term storage and should remain in a serviceable condition for some considerable time. They are not rusting away. Regular inspections are conducted to ensure their preservation and where necessary programmed maintenance is carried out. Should the need arise to re-introduce the hulls and turrets of Centurion tanks into service, it will be necessary to replace the present engines, the weapon and fire control systems and to extensively refit the crew compartment. These requirements were taken into account when the decision was made to place Centurions into long term storage.