Monday, 20 May 1985 The PRESIDENT (Senator the Hon. Douglas McClelland) took the chair at 2 p.m., and read prayers. The Clerk-Petitions have been lodged for presentation as follows: Nuclear Disarmament To the Honourable the President and the members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth and in concern for peace support: 1. A move towards unity, co-operation and peaceful co-existence amongst all peoples of the earth. We pledge our agreement to an immediate bilateral freeze of the development and deployment of all nuclear weapons and to speed negotiations to dismantle all such weapons of mass destruction under the supervision of a neutral peace-keeping force. 2. The establishment of a Ministry for Peace to focus our energies towards non-violent resolution of world conflicts, encouraging our government to pursue its own independent polices in foreign affairs, non-aligned to any one polarity, with the aim of bringing about lasting and peaceful co-existence world wide. 3. The establishment of a Senate Select Committee on Nuclear Disarmament and Peace to examine and debate all submissions by way of petitions and proposals and to assist in the creation of the Ministry for Peace. And your petitioners, as in duty bound, will ever pray. Peace on Earth and Goodwill to all Humankind. by Senator Macklin (from 489 citizens). To the President and members of the Senate in Parliament assembled. We the petitioners of N.S.W. view the proposed siting of the second Sydney airport at Wilton with great alarm. Your petitioners therefore pray that Wilton not be considered as a site for Sydney's second airport. by Senator Mason (from 3,476 citizens). To the Honourable the President and the members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That we, the undersigned, who have great concern for the protection of the unborn child, call upon the Government to reject the Vinson Enquiry recommendation that an Abortion Clinic be established in Canberra. And your petitioners most humbly pray that the Senate in Parliament will reject this recommendation. by Senator Reid (from 876 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: The financial plight of grape producers, their families and their respective local communities. Your petitioners therefore humbly pray that the Government act now during the 1985-86 Budget considerations to: Remove the sales tax impost on all Australian produced wine. Make funds available for the establishment of an institution to administer the restructuring of the grape producing industry. Place revenue raising imposts on all imported wine and wine spirit. And your petitioners as in duty bound will ever pray. by Senator Brownhill (from 32 citizens). 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 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 18 citizens). To the Honourable the President and members of the Senate in the Parliament assembled. The petition of the undersigned shows: That human embryos deserve legal protection to enable the development of their full human potential. Your petitioners request that the Senate, in Parliament assembled, should pass Senator Harradine's Bill to prohibit experiments involving the use of human embryos created by in vitro fertilisation. And your petitioners as in duty bound will ever pray. by Senators Scott (from 101 citizens) and Sibraa (from 124 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of the Commonwealth of Australia respectfully showeth: That in the light of the Labor Governments failure to act to correct the anomalies in the Assets Test on pensions bring to its notice and due to have effect from the 21 March, 1985 the Labor Government's legislation should be repealed before it has an unduly unfair impact on pensioners, and calls upon the Australian Democrats to support Senator Messner's bill for the abolition of the Assets Test. Your petitioners must humbly pray that the Senate in Parliament assembled should immediately seek the passage of the Social Security and Repatriation Assets Test Abolition Bill to repeal the Labor Governments iniquitous and unfair Assets Test. And your petitioners as in duty bound will ever pray. by Senator Messner (from 81 citizens). To the Honourable the President and Members of the Senate in Parliament assembled. The petition of the undersigned citizens respectfully showeth that they 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 student charge for all categories of overseas students. (3) Publicly reaffirm its commitment to a free post-school education system. And your petitioners as in duty bound will ever pray. by Senator Primmer (from 233 citizens). To the Honourable the President and members of the Senate assembled. The petition of the undersigned respectfully shows that: We, the undersigned electors, are deeply concerned at the possibility of an increase in indirect taxation currently being considered by the government. To pose a broadly based consumption tax would mean a proportionately greater burden on low income groups and worsen their already precarious and impoverished position. Women who are supporting mothers, together with their children, are acknowledged as the largest single group force to exist below the poverty line. As beneficiaries of an already inadequate government pension, their futures would be even more jeopardised if there were to be a change towards increased broadly based consumption taxation. Your petitioners therefore pray that the Federal government not adopt the proposed shift towards increased indirect taxation. And your petitioners as in duty bound will ever pray. by Senator Zakharov (from 14 citizens) Petitions received. Senator CHIPP(Victoria-Leader of the Australian Democrats) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) commends the Leader of the Opposition in the Senate, Senator Chaney, for his action in disassociating the Opposition from the racist views of Mr George Crawford of the Australian Labor Party (ALP), concerning the intake of refugees from Vietnam; and (b) applauds the courageous action of the Leader of the Government, Senator John Button, in denouncing Mr Crawford's views on behalf of the ALP. Senator BOSWELL(Queensland) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes that the May Economic Statement contained the following decisions adversely affecting the people of Queensland, the Northern Territory and Tasmania: (i) termination of the subsidy of diesel fuel costs to Queensland charter boat operators on the Great Barrier Reef, (ii) termination of the western Queensland air service subsidy, (iii) delaying of work on the Darwin, Townsville and Brisbane Airports, (iv) reduction of the Tasmanian Freight Equalisation Scheme, and (v) deferral of the extension of the Special Broadcasting Service to Darwin; and (b) condemns the Hawke Labor Government for applying budgeting and economic strategies in a blatant political manner, which amounts to a declaration of economic warfare against States and Territories who support free enterprise government. Senator GRIMES(Tasmania-Manager of Government Business) —I table papers in accordance with the list circulated to honourable senators and I seek leave to have the list incorporated in Hansard. Leave granted. The list read as follows- 1. Corporate Affairs Commission of the Australian Capital Territory-Annual report 1983-84. 2. Life Insurance Commissioner-Annual report 1983-84-pursuant to section 11 of the Life Insurance Act 1945-together with a half yearly financial and statistical bulletin. 3. Australian Egg Board-Final report 1984-85-pursuant to section 6 of the Egg Export Legislation Repeal Act 1984-together with the text of a statement by the Minister for Primary Industry relating to the report. 4. Christmas Island-Annual report 1982-83. 5. Christmas Island-Annual report 1983-84. 6. Canberra Theatre Trust-Annual report 1983-84. 7. Building and Construction Industry Long Service Leave Board-Annual report 1983-84. 8. Australian Political Exchange Committee-Annual report 1983-84. 9. Central Land Council-Annual report 1983-84. 10. The Australia-Japan Foundation-Annual report 1983-84-pursuant to section 25 of the Australia-Japan Foundation Act 1976. 11. Electric motors and generating sets-IAC report. 12. Organic anionic surface-active agents and preparations thereof (developing country preferences)-IAC report. 13. Interim report on fertilisers-assistance for the consumption of fertilisers and short term assistance for the production of phosphate fertilisers-IAC interim report. Senator CHANEY —I refer the Leader of the Government in the Senate to today's report that intervention by the Prime Minister's office has blocked release of a paper prepared by the secretariat of the Economic Planning and Advisory Council on economic prospects over the coming five years. Is it true that the EPAC projections include an unemployment rate of just under 8 per cent by 1988-89 and reduced real economic growth? Is it also true that the paper suggested that unemployment could be reduced to between 6 and 7 per cent if a tighter wages policy were enforced? What point is there in setting up an allegedly independent body like EPAC if, when it produces an unpalatable report, that report is suppressed? I further ask the Minister whether, in the interests of open government and informed economic policy debate, he will try to have the EPAC report released. Senator BUTTON —The submission from the EPAC secretariat to the EPAC meeting on Friday was in the form in which the EPAC secretariat wanted it to be. There was no interference with the decision made by the EPAC secretariat about the form of that submission, as suggested in the Australian Financial Review article. It is true that at the Council meeting on Friday it was suggested that further work should be done on certain aspects of that document. The Director of EPAC, Mr Miller, indicated today that the material which formed the basis of the Australian Financial Review article today was based on only working drafts of the study and not on any final paper for presentation to EPAC. He indicated also today that he believed that it would be some considerable time before the office could be satisfied that the technical base of the work which has been done was both sound and sufficiently well understood for the public release of projections of this kind to be constructive in the development of economic policies. Senator Chaney asked me some mini-questions-if I might put it that way; not referring to their intellectual content but to the fact that they were subordinate to the other part of the question about projections in relation to employment. As I understand it-and I answer this part of the question within the overall context of the document as a working draft-the projection concerning unemployment varied between something in the order of 7.8 per cent and 5 per cent. That figure depends upon a wide range of economic decisions and-- Senator Dame Margaret Guilfoyle —And wage costs? Senator BUTTON —Including wage policy, of course. It also includes a wide range of other decisions relevant to that employment figure. As this document was a working draft which has not even been to EPAC in its final form, I cannot accede to Senator Chaney's final suggestion that in the interests of open government, or whatever, the document be tabled. Senator JONES —My question is directed to the Minister representing the Minister for Employment and Industrial Relations. Is he aware of the report circulated by Australian Associated Press of a speech made on 15 May to the Queensland Small Business Development Corporation by the former Treasurer, Mr Howard, in which he defended Queensland's economic management and described attacks by the Prime Minister on the Queensland Government as scandalous? In view of the economic performance of the previous Government while Mr Howard was Treasurer, how much credibility can be placed on his remarks, and what is the true state of the economy in Queensland? Has the Minister's attention also been drawn to a further portion of Mr Howard's speech in which he praised Queensland's new industrial laws and said that a future Federal coalition government would proceed with moves to deregulate labour? Senator WALSH —I am not aware of the specific report to which Senator Jones referred but I know of many similar reports which demonstrate that the Queensland Government is attempting to hide its own economic failures behind a smokescreen of industrial confrontation, most of which has been provoked by the Queensland Government; indeed, to the point where 73 per cent-I believe it was-of the working days lost through industrial disputes in Australia during February were lost in Queensland. So Queensland, with something like 20 per cent of the national population- Senator Boswell —It is 16.1 per cent, actually. Senator WALSH —Senator Boswell's figure of 16.1 per cent makes it even worse. I was going to be generous and use a multiplier of only 3 1/2 but, as a result of that interjection, I now know that the correct multiplier is 4 1/2, that the number of working days lost in Queensland through industrial disputes is 4 1/2 times as high as it ought to have been to be on average with the rest of Australia. Senator Boswell has sought to further emphasise the point that there must be something very much wrong in the State of Queensland-a conclusion which even casual observers of the political, commercial, industrial and economic scene in Queensland would have come to some time ago. The most recent campaign by the Queensland Government is designed to divert attention from the Premier's propensity to fraternise with known crooks and charlatans like Milan Brych, Dr Shrian Oskar, Stephen Horvath and Sir Edward Lyons. The PRESIDENT —Order! The Minister is getting away from the question asked by Senator Jones. Senator DURACK —My question is directed to the Leader of the Government in the Senate. I refer to the utter confusion which has arisen beause of various statements from the Treasurer, the Minister for Finance, the Prime Minister and the Minister for Employment and Industrial Relations over the Government's position on discounting the consumer price index for the effects of the depreciation of the dollar at the September national wage case hearing. Will the Leader of the Government, in his capacity as Minister representing the Prime Minister, clear up the confusion by saying whether the Government will or will not argue for discounting at the September hearing? Senator BUTTON —One thing is very clear and that is that the Government has said that the effects of a devaluation are most likely to be felt in the March quarter of 1986 and that the Government's position in relation to discounting at the case to be heard before the Australian Conciliation and Arbitration Commission is that we will reserve our decision on this matter. The Government feels-this is clear from a number of statements which have been made-that the impact in the September quarter this year will not be significant. Having said that, it is fair to say that the Government is pretty cool about the issue. Senator Durack —Just confused. Senator BUTTON —No; cool, I said. We do not feel any need to get particularly agitated about this matter at this time. We will have a better idea of the effects of devaluation by the time the Arbitration Commission meets in September. Although, as I have indicated, the likely results of a devaluation are not expected to be felt significantly in the September quarter, we will examine the position with regard to that hearing at that time. That has been indicated on a number of occasions by all the Ministers to whom Senator Durack referred in his question. Senator MAGUIRE —My question is directed to the Minister representing the Treasurer. Do the latest retail sales figures suggest that consumption spending this financial year will exceed the forecast made in the August 1984 Budget? Is the $7.60 weekly reduction in personal income tax from last November now acting to increase the level of retail sales? Senator WALSH —With regard to the last part of the question, it is somewhat speculative to attribute the level of retail sales to the increased after-tax income which all Australians, particularly wage and salary earners, enjoy as a result of the November 1984 tax cuts. However it would be reasonable to conclude, as Senator Maguire has, that that would be one factor. That may be speculative, but it is a fact that retail sales in the March quarter of 1985 were, in nominal terms, 8.9 per cent higher than they were in the March quarter of 1984. That means a real increase-one cannot be positive about this because the deflated figures have not yet been arrived at-in retail sales of something between 3 and 4 per cent, and probably closer to 4 per cent, for the March quarter of this year over the March quarter of the previous year. Another major indicator of consumer demand, vehicle registrations, also points to buoyant conditions. In Senator Maguire's State of South Australia motor vehicle registrations in the March quarter of this year were a massive 17 per cent higher than they were in the March quarter of the previous year. That reinforced and indeed extended the very firm growth in consumption spending which was recorded in the December quarter. All of those indicators suggest that the 1984-85 Budget forecast of 2 3/4 per cent growth in consumption spending is likely to be exceeded. With that sort of consumer demand providing a firm base for real growth in its own right, and with investment demand very strong and the forecast of private investment rising, we look forward to a third successive year of very strong economic growth, in marked contrast to the dismal record of our predecessors throughout their term in government on average and in particular in the last one year or two years of their term in government. Senator MASON —My question is addressed to the Minister for Resources and Energy. It concerns the continuing experiments at the Australian Atomic Energy Commission at Lucas Heights into the centrifugal enrichment of uranium using the gas uranium hexafluoride. Is it a fact that when this highly dangerous radioactive and toxic gas was released in an accident at Lucas Heights on 6 July 1984 there were no filters on the laboratory exhaust systems and that the methods and materials used were unsatisfactory in other respects? What does the Government intend to do to provide sufficient funds to the AEC to install readily available safety and exhaust filter measures? When will the Government recognise that Lucas Heights was not built for and is not suited to experiments in centrifugal uranium enrichment which is a complex and highly dangerous technology? Will the Government direct that these experiments be discontinued immediately? Senator Townley —The problem was the fluoride, not the uranium. Senator GARETH EVANS —I am indebted to Senator Townley for the assistance I am getting. The PRESIDENT —Order! Will the Minister answer Senator Mason's question. Senator GARETH EVANS —On 21 August 1984 my predecessor, Senator Walsh, tabled in the Senate the report of the committee established to examine the accidental release of uranium hexafluoride at the Australian Atomic Energy Commission's research establishment on Friday, 6 July 1984. That report contains details of the incident and measures recommended to avoid the recurrence of any similar incident. The committee recommended more detailed investigations be undertaken with a view to effecting improvements, where appropriate, including the ventilation and filtration requirements in laboratories handling uranium hexafluoride. As to the fact that no filters were installed in the ventilation system of the laboratory in which the incident occurred, the ventilation officer of the AAEC's Health and Safety Division has been requested to assess the ventilation and filtration requirements in laboratories handling uranium hexafluoride. The Atomic Energy Commission's centrifuge enrichment research is being phased down to reflect government policy in this area. The current thrust of the Commission's enrichment research program is concerned with the developments of safeguards for centrifuge research and development plants. This project is part of Australia's program of assistance to the International Atomic Energy Agency and is due for completion by the end of this year. I note that the main safety consideration with uranium hexafluoride is its chemical rather than its radiological nature, which seems to be the point of Senator Townley's contribution to this answer. Although details of what funding the AAEC may receive in 1985-86 have not yet been announced, I am confident the Commission will be able to carry out urgent health and safety programs from within its approved budget. Senator MASON —I ask a supplementary question. Am I to understand from the Minister's answer that experiments similar to the one which resulted in the accident are, in fact, continuing and will continue without any physical or chemical exhaust filter system having been installed? Senator GARETH EVANS —I am not sure whether precisely similar experiments are taking place. What I am sure about is that the report simply recommended that further investigation of the ventilation and filtration requirements take place, and that investigation is occurring. Senator SIBRAA —Can the Minister for Resources and Energy advise the Senate whether the threat of retrenchments from the Kembla Coal and Coke operations in the Wollongong district have been averted by a further 12-month extension of the original agreement between the company, the unions and the relevant governments? Senator GARETH EVANS —Yes, I am able to confirm that a meeting last week of the company, union representatives, Joint Coal Board and the New South Wales and Commonwealth Government officials has resulted in an agreement that there be a further extension for 12 months of the agreement reached last year to avoid retrenchments from Kembla Coal and Coke operations on the south coast. It should be recorded that the extension of the agreement is a major achievement in co-operation between all the parties involved, addressing a number of aspects of the company's very difficult circumstances. The unions and the KCC management are to be especially commended for their part in creating the conditions which have allowed that agreement to continue. Also, we need to recognise the role of the Australian Coal Consultative Council in creating the forum in which the parties could consult on the establishment of the agreement. The PRESIDENT —Before I call the next questioner, I draw the attention of the Senate to the presence in the Presidential Gallery of certain members of the Pacific Island branches of the Commonwealth Parliamentary Association who are at present undertaking a study tour of Australia. On behalf of all honourable senators, I extend to the members of the delegation a warm welcome to Australia, to Canberra, and in particular to the Senate. Honourable senators-Hear, hear! Senator TOWNLEY —I refer the Minister for Finance to the paper from his Department which canvasses a broadening of the direct tax base, some extension of sales tax, minor reductions in personal income tax, capital gains taxes and death duties. Did the Minister ask his Department to prepare the document as an alternative to the draft White Paper on tax reform which Cabinet has been considering? Does the Minister see his Department's package as a viable compromise position, especially for those Ministers and the Australian Council of Trade Unions, who are increasingly concerned about the problem of compensation for those affected by any new broadly based consumer tax? Senator WALSH —I asked the Department to prepare a paper, not that specific paper. Senator GILES —My question is directed to the Minister for Community Services. What are the immediate and longer term implications of the measures announced in the May statement which affect existing and prospective nursing homes? In framing these measures, has any account been taken of recommendations of the many committees of inquiry into nursing homes, particularly of the Senate select committee which reported recently on the administration and financial organisation of nursing homes in Australia? Senator GRIMES —In developing policy on the future of the nursing homes program in Australia we, as a government, are considering all the reports that have been brought out on the matter of nursing homes, in particular the report of the Committee that was chaired by Senator Giles, the report of the House of Representatives Standing Committee on Expenditure-the McLeay report-and others. We believe that if we are to proceed down a rational path it is best to ensure that all those reports which have gone carefully into the matter are considered. The changes in the May statement will make very little difference in the short term and will be only part of the many changes that will be made in the long term to the development of the nursing homes program. The particular change initially was the one introduced to ensure that people who have approvals for funding under the projects for homes for aged and disabled people do not hang around on the waiting list for months and sometimes even years. What we have said is that after 18 months organisations which may not have been able to commence funding will be dropped from the list unless then can show reasons why they should stay on the list. The Government cannot afford to hold a commitment such as this for an indefinite period while we have new forward programming arrangements. At the same time, we have to ensure that funds are directed to the most needy, that we improve the equity and coverage of institutions and that we also improve our capacity to provide new services. It is for those reasons that we have determined that organisations with approval in principle for in excess of 18 months will be advised that their approvals may have lapsed if their projects are not brought to the tender stage within six months. This may stimulate some organisations to move forward, but it will also mean that many of the organisations which are not going to proceed will acknowledge this. The other main change is freezing of the nursing home benefit available in Victoria, South Australia and the Northern Territory. For some time this Government and other governments have been concerned about the disproportionately high cost of nursing home beds in Victoria and South Australia, in particular, and in the case of two nursing homes in the Northern Territory which apply the same fees. In Victoria the fees are over 70 per cent higher than in Tasmania and over 40 per cent higher than in New South Wales. This is largely due to State government regulations and provisions in this area. We do not believe that the Federal Government should be up for indefinitely increasing funds in this area when we have no say in the determination of awards or conditions in those States. I believe that the States are well aware of that and will accept it. Similarly, we have decided not to increase the benefit levels for government nursing homes in, as usual, November. Government nursing homes equally are the responsibility of State and Federal governments. They supervise their costs and decide what fees the patients in those homes will pay. Up until now, government nursing homes have received favourable treatment compared with private nursing homes. For example, the benefits paid to private homes are subject to reductions where the minimum patient contribution and the maximum benefit would exceed the Commonwealth approved fee. However, Commonwealth homes are not subject to that reduction and, therefore, have always been paid the maximum benefit applicable. A further measure that was taken was to increase the patient contribution to 87 1/2 per cent, which applied for many years but which was dropped to 85 per cent last October, to take into account the very steep 50 per cent jump in supplementary assistance which was provided for pensioners in rental situations. However, it was decided in the May economic statement to revert to the previous practice which had been followed by governments for many years. So these changes will not be radical as far as the planning and provision of nursing homes in the future are concerned. That will involve a much more detailed examination of the situation as it exists and much more radical changes to the system than have been decided on in the May statement. Senator SCOTT —My question is directed to the Minister for Finance and refers to the tax package of the Department of Finance. Is the Minister aware that Mr Eric Mayer of the Business Council of Australia has strongly condemned the proposal? Does the Minister agree with Mr Mayer that a broadening of the direct tax base, in association with only minor reductions in personal income tax, would perpetuate, in Mr Mayer's words, 'the strong disincentives for personal effort and reward for enterprise inherent in the current income tax system'? Senator WALSH —No, I am not aware of Mr Eric Mayer's criticism. From the question I was asked, I do not know whether Mr Mayer was critical of the entire proposition put up in the departmental paper or whether he was critical only of some particular aspects of it. An infinite number of packages and proposals can be put together. Similar packages have been put together by other people. On the question of incentive, I remember reading some years ago some material from the Brookings Institution which, after an assessment of the available evidence, concluded that whether high marginal tax rates were a deterrent or an incentive for greater effort was terribly subjective. The evidence was so mixed that no conclusion could actually be drawn. I have noticed the propensity of the ultra-conservatives, the Right, or whatever one likes to call them, to believe that there is nothing wrong with high effective marginal tax rates for people on low incomes via withdrawal of benefits in association with an income tax per se. They do not seem to be nearly as disturbed about that as they are about high marginal tax rates for people on upper incomes. That probably tells us more about the prejudices of the individuals concerned than it does about an objective judgment of the effect high marginal tax rates on effort. Senator McINTOSH —My question is directed to the Acting Minister for Foreign Affairs. It concerns a report in the Age of 14 may in which it was stated that 79 Irian Jayan refugees from the Blackwater camp in Papua New Guinea were to be repatriated to Jayapura that day. Is the Minister aware whether these refugees are being repatriated voluntarily or is it a matter of forced repatriation? Is he aware how long Papua New Guinea officials will stay with the repatriated refugees after their arrival in Jayapura? Is the Minister aware of any arrangements which have been made for West Irians who do not wish to be repatriated or whether the United Nations High Commissioner for Refugees is involved in the repatriation? Senator GARETH EVANS —It is the case that last week the Papua New Guinea authorities repatriated another 50 border crossers who asked to be returned to Irian Jaya. Papua New Guinea officials and leaders from three of the border camps travelled with this group of border crossers to their villages in Irian Jaya. As well as observing the present repatriation exercise, it is the intention of camp leaders and Papua New Guinea officials to contact members of an earlier group of Irianese who were voluntarily repatriated in December last year. The UNHCR representative in Papua New Guinea observed the repatriation in Vanimo but he did not travel to Jayapura. That is as much information as I have about the specific circumstances of last week. To the extent that I have not answered all of Senator McIntosh's questions I will follow them up further. But a little more ought to be said generally about the border crossing situation. There are about 10,000 border crossers from Irian Jaya in camps and along the border in Papua New Guinea. The view of the Australian Government is that the border problem, including the repatriation of the border crossers, is one for Papua New Guinea and Indonesia to resolve. As Mr Hayden said in Papua New Guinea, Australia does not wish to be intrusive and both countries understand this. Naturally, we have a continuing humanitarian interest, reflected in our $1.5m contribution to the UNHCR for its relief efforts in the border camps. During Mr Hayden's visit to Papua New Guinea in February, Prime Minister Somare, Foreign and Trade Minister Giheno and other Papua New Guinea Government leaders and officials briefed him fully on the situation. The Papua New Guinea Government's approach, publicly stated by Mr Giheno, is that those border crossers who are true refugees will be referred to the UNHCR. Traditional border crossers and others there because of current circumstances will be encouraged to return. Mr Giheno stressed that there was no timetable for this and that it was a matter for the Papua New Guinea and Indonesian governments to work out. He noted the need to work very cautiously and not to rush things. That is the Australian Government's perspective on this matter and what we are doing within the limits of our capacity to monitor the situation. Senator JESSOP —I direct my question to the Minister for Finance. No doubt he has noted the Prime Minister's comments regarding Caucus changing its mind and, in particular, his remark that 'Caucus has been known to change its mind on some matters. They used to have a view on uranium once.' Is the Minister confident that he will be as successful in persuading his Caucus colleagues to agree to tertiary fees as he was in obtaining agreement to the Cabinet position on uranium? Senator WALSH —I am not going to express confidence or lack of confidence in anything. Senator Jessop quoted the Prime Minister's words. I am not sure what the Prime Minister had in mind, but I will see whether I can find out whether he has anything to add to it or whether there is anything he wants to clarify. Senator CROWLEY —Is the Minister Assisting the Prime Minister on the Status of Women aware of the number of conferences, seminars, discussions, et cetera addressing topics of women and taxation, women, taxation and social security, and related matters, and the considerable participation of women in these discussions? Given this amount of preparation for the tax summit, can the Minister say what representation of women there will be at the summit? Is the Minister satisfied that women's interests will be adequately represented by these proposals? Senator RYAN —I am aware that there has been widespread discussion on the impending tax summit amongst women's organisations. In fact, I have participated in quite a lot of these discussions myself. I think it is only to be expected that there would be such widespread interest and discussions because this tax summit will be an historic event in many ways. One of the ways in which it is very important is that for the first time the effect of the taxation system on women will be under serious consideration and for the first time women, as beneficiaries of programs funded by taxation revenue, as taxpayers and as people who are dependent on the income of taxpayers, will have an opportunity to put forward considered views in the debate which the summit will allow. There will be a proper expression of women's views on taxation at the summit, as there has been in the lead up to the summit. For example, the Prime Minister has ensured that the National Women's Consultative Council will have two representatives at the tax summit. The Prime Minister has also invited the Women's Electoral Lobby and the Australian Federation of Business and Professional Women each to send a participant to the summit. Invitations have also been sent to Economic Planning Advisory Council member Ms Lois Cutts and tax academic Dr Patricia Apps. It is also expected that women will represent some of the organisations invited to the summit, both as participants and observers. The voice of women has been heard well before the tax summit. At the last count, 13 women's organisations had sent submissions on taxation to EPAC. In addition, the Office of the Status of Women has been actively involved in the drafting of a White Paper on taxation to be released prior to the summit. I expect that, once the White Paper is released, that action in itself will inspire further submissions to be made by women. In conclusion, this tax summit will be extraordinarily important for all Australians, but perhaps it will be particularly important for women because it is the very first time their needs, desires, aspirations and responsibilities in relation to the Australian tax system will be fully taken into account. Senator PETER RAE —My question is directed to the Minister for Finance and concerns last week's mini-Budget and the following Economic Planning Advisory Council meeting, and all the associated calculations and scrutiny of financial data which, presumably, has given the Government the opportunity to assess exactly where the economy is going. On that assumption, I ask: What impact will the decisions announced last week have on the rate of growth of public debt, the rate of unemployment, interest rates and inflation? I further ask: What rate of unemployment, inflation and interest rates would be regarded as acceptable to the Government by the end of this calendar year? Senator WALSH —As I am sure Senator Rae knows very well, it is not possible to give anything like a precise answer or even an imprecise answer to most, if not all, of those parts of the question, at least not without adding a number of qualifications. It is possible to say-indeed it is tautological-that in the absence of the spending cuts announced last Tuesday and if other things had remained equal, either public debt would be $1.25 billion more or the Government would have funded its transactions in some way other than borrowing or raising revenue, such as borrowing from the Reserve Bank of Australia. With respect to the second part of the question, on unemployment, so many factors are entailed in determining the level of unemployment that I do not think it is possible sensibly to attribute any level of unemployment to any single policy. The same applies to interest rates and inflation rates. If it would make Senator Rae feel any better, I am willing to make a comment about those three things collectively. As a result of the devaluation of the dollar, employment is likely to be higher than it would otherwise have been. Interest rates, other things being equal, are probably likely to be somewhat higher than they would otherwise have been and, likewise, the inflation rate is likely to be somewhat higher than it would otherwise have been, at least in the short term. Whether that mixture of desirable and undesirable factors-undesirable considered in isolation-is sustained depends on what happens further down the track. At this stage I am certainly not willing to state what level of inflation or interest rates would be satisfactory to the Government or to me at the end of this year. There is every indication-there were strong indications even before, and those expectations have been heightened-that further substantial progress will be made in the growth of employment. Whether that is reflected in a reduction in the unemployment rate will depend on the participation rate as well as the absolute level of employment. Since this Government has been in office total employment has grown by some 350,000, from memory, in line with the target which the Government set for itself of 500,000 additional jobs within its first three years in government. In spite of the blip in the statistics in the last couple of months, revealed in the Australian Bureau of Statistics survey, which, at least in the short term, has long been recognised as being unreliable, there is no reason to believe that that target will not be met. Senator PETER RAE —I ask a supplementary question. In view of the fact that the Minister prefaced his answer by saying that as a result of devaluation certain things would happen, am I to take it that he is not prepared to answer the question at all or does he not expect there to be any impact as a result of last week's mini-Budget? Senator WALSH —If last week's economic statement were taken as a one-off exercise and if nothing else were to happen, the public debt and public sector borrowing requirement would have been higher, and it would be reasonable to expect some upward pressure on interest rates and on inflation. Unlike the previous Government, and in particular the previous Prime Minister, I do not want to sound too simplistic about these issues and to suggest that there is, for example, a simple and inexorable correlation between the size of the public sector borrowing requirement and interest rates because there are numerous examples and a great deal of empirical evidence which demonstrate that those correlations have not always held either in a 1:1 ratio or, indeed, in any positive ratio at all. Senator FOREMAN —My question is directed to the Minister representing the Minister for Communications. As the first domestic communications satellite is to be launched very soon, can the Minister say whether the possibility of aggregating regional markets is being considered as a means of ensuring that people who live outside the capital cities will have the benefit of extra broadcasting and television services? Senator WALSH —I do not seem to have any information on the question Senator Foreman has raised; so I will have to refer it to the Minister and see whether he can provide the answer required. Senator TEAGUE —I refer the Minister for Finance to comments by his colleague Senator Bolkus last Monday at the Canberra College of Advanced Education in which he rejected the Hawke Government's economic and political philosophy. In particular, he damned the Government with the rebuke: Some of us still yearn for the politics of idealism and principles. Does the Minister agree that the present Government lacks ideals and principles and, if not-particularly in light of his answer to Senator Peter Rae just now-in what way does he disagree with Senator Bolkus? Senator WALSH —I have not read the speech of Senator Bolkus but I certainly do not agree that this Government has abandoned ideals and principles. In all governments trade-offs or judgments are made in regard to the conflict which sometimes exists between sticking to ideals and principles and what is practicably achievable. When making a judgment about the correct degree of trade-off inevitably people will arrive at slightly different conclusions, something they are perfectly entitled to do. Senator HEARN —I refer the Minister representing the Acting Minister for Veterans' Affairs to recent public comments by Senator Macklin relating to changes to veterans' entitlements in the Treasurer's May economic statement. Can the Minister say whether Senator Macklin is correct in his claim that repatriation beneficiaries have suffered disproportionately to the rest of the community as a result of the measures announced in that statement and whether in his comments he has accurately described those measures and their effects on veterans' entitlements? Senator RYAN —I am advised that the comments by Senator Macklin in regard to the veterans' entitlements are in many respects grossly inaccurate and misleading. His first claim, that veterans have borne a disproportionate share of expenditure cuts, is without foundation. I refer honourable senators to the answer to Senator Macklin's question to me last Wednesday which was incorporated in Hansard during the adjournment debate last Thursday. This answer shows that veterans in effect bore 5 per cent of cuts even though the Department of Veterans' Affairs accounts for 5.1 per cent of Budget appropriations. When Senator Macklin referred to specific measures in the statement he made a number of misrepresentations. Transport entitlements for sick veterans travelling to and from repatriation hospitals are unaffected, contrary to his claim. Pharmaceutical benefits of service pensioners with service related disabilities are also unaffected. Those without such disabilities are covered under the national health scheme on the same basis as other pensioners. There are no cuts in veterans' spectacles entitlements and none are proposed. In fact, veterans will now have direct access to optometrists. Cuts in dental entitlements are anything but drastic and relate only to non-service related dental treatment. This will be limited to $300 per pensioner per year, which is still very generous by community standards. Veterans will now have access to dental prosthetists for the first time. There will be no cutback in the care of veterans in psychiatric institutions, merely a review in the light of falling demands for such services. Further, Senator Macklin belittled the view that the High Court judgment in the O'Brien case has serious implications for pension determination and spending. Senator Chipp —Mr President, I raise a point of order. I put the question to you, sir: Is this not an abuse of Question Time? Senator Gareth Evans —Ha, ha! Senator Chipp —Ministers may laugh contemptuously if they want to, but I remind them that they do not have control of this chamber. The Minister is now on her second page. Would it not be more appropriate for this matter to be handled by way of a ministerial statement so all honourable senators may debate it? The PRESIDENT —Order! The Minister was asked a detailed question about repatriation benefits and statements made by Senator Macklin. I do suggest to the Minister that her answer is getting a bit lengthy and I suggest that she confine it to the immediate details raised in Senator Hearn's question. I also point out that after Question Time Senator Chipp, if he so chooses, may seek leave to move that the Senate take note of the Minister's answer. Senator RYAN —Mr President, I decided to give a detailed answer to the detailed question because there has been so much concern and anxiety caused amongst veterans because of the misrepresentation of the statement. If non-Government senators run around giving grossly inaccurate accounts of Budget decisions it is the responsibility-- The PRESIDENT —Order! The Minister will confine her remarks to the answer to Senator Hearn's question. Senator RYAN —Yes, Mr President. I have corrected most of the inaccuracies in Senator Macklin's statement. The final one related to the O'Brien case. Legal advice to the Government runs contrary to Senator Macklin's view about pension determination and spending and says, in effect, that if no action is taken to negative the decision the repatriation pension determining process will become a farce. Senator Macklin also suggested that the onus of proof in repatriation legislation will be reversed. I stress to honourable senators that section 25 of the Repatriation Act-- The PRESIDENT —Order! The Minister is going far beyond the question. I ask her to bring her remarks to a conclusion. Senator RYAN —Yes, I was doing that, Mr President. Section 25 of the Repatriation Act specifies that no onus of proof will fall on the claimant. Senator Chaney —I ask the Minister to table the paper from which she has quoted. The PRESIDENT —Will the Minister table the document from which she has quoted? Senator RYAN —Yes, it will be of great interest to honourable senators and to veterans. The PRESIDENT —The Minister has tabled the document. Senator JACK EVANS —My question is addressed to the Leader of the Government in the Senate. Has the Minister seen the weekend news report claiming that a $1 billion contract awarded by a former Western Australian State Liberal government to a Korean group-ICC Construction-to lay gas pipelines in Western Australia was at least $32m more than it should have been by any comparison with other sections of that pipeline? As this is not the first such scandal at State government level, will the Government initiate an inquiry into secret donations to State branches of national political parties by companies which are granted government contracts to determine whether decisions made by State governments are unjustly influenced by such donations? At a time of stringent cuts to welfare, education, housing and health programs, can the Government ignore the tremendous waste of public funds at State level in Western Australia and other similar extravagances in Queensland, Victoria, the Northern Territory and, no doubt, other States under various political colours? Senator BUTTON —No, I did not see the weekend report in the newspaper. Senator Walsh —That is an old story. Senator BUTTON —Senator Walsh interjects and says that it is an old story. In relation to the last part of the question, of course, it is an old story. There have been numerous attempts to have a proper investigation of the Bjelke-Petersen Foundation in Queensland, for example. Certainly, the Government would favour such an inquiry, but it is very difficult to determine what the vehicle for it would be. I do not know whether we should go raking over the coals of previous Liberal governments in Western Australia when there is so much to be done in relation to other, current governments. I will direct the question to the Prime Minister as it is asked of me in my capacity of representing the Prime Minister. I will see whether I can provide a more detailed answer. Senator ZAKHAROV —My question is addressed to the Minister representing the Minister for Aviation. In view of a number of representations regarding the lack of a commuter air service between Sale and Melbourne, I ask the Minister: When was the airport at Sale closed to commercial passenger services? What was the reason for the termination? Has any investigation been made into the current viability of such a service in view of the apparent demand? Senator RYAN —The West Sale airfield was transferred from the Commonwealth to the Sale Aerodrome Committee during 1983 under the aerodrome local ownership plan. I am advised that at the time of transfer a commuter air service was operated between Sale and Melbourne by a company trading as Northwest Airlines. However, this service ceased in October 1983. Apparently some seven or so other operators have also attempted to operate air services between Sale and Melbourne over the last 15 years, but these have proved unsuccessful. I point out that the Commonwealth has no jurisdiction in the economic regulation of intrastate air services. This matter is entirely the responsibility of the respective States. I am advised that within Victoria air services are not subject to any form of economic regulation, so that any operator who wants to operate air services to Sale is free to do so. The question of the viability of such services is therefore a matter for examination by any prospective operator. Senator BOSWELL —Is the Minister representing the Treasurer aware of the latest Australian Bureau of Statistics figures which show that in the first three months of this year Queensland, with 16 per cent of the nation's population, accounted for 21 per cent of all new building approvals, 30 per cent of the national value of all non-housing building projects and 23.7 per cent of the total value of all building projects in Australia? Does he agree that these figures are indicative of a healthy, prosperous economy? How does he explain these figures in the light of the continued unjustified attacks on the Queensland economy from various Labor critics? Senator WALSH —I am aware of the fact that 73 per cent of the working days lost through industrial disputes in the month of February were lost in the State of Queensland. I am aware of the fact that Queensland has the highest unemployment rate in the Commonwealth-higher even than Tasmania. It has the highest rate of children born out of wedlock-a fact which I would have thought would have concerned the pseudo-moralistic, pseudo-Christian Government of Queensland. Senator Boswell —I take a point of order, Mr President. I asked a question on housing. The Minister is turning this Question Time into a farce, as he always does. I call on you to call him to order and to reprimand him. The PRESIDENT —Order! There is no point of order. I ask the Minister to relate his remarks to Senator Boswell's question. Senator WALSH —Certainly, Mr President. I can only speculate as to why Senator Boswell jumped up so quickly when I mentioned the number of children born out of wedlock. The PRESIDENT —Order, Senator Walsh! Senator WALSH —With regard to the building statistics, I think the chief one cited was that for building approvals. I do not happen to have the figures here with me. I will look at them when I get back to my office. The figures may or may not be correct. I am not sure whether Senator Boswell knows how to read an Australian Bureau of Statistics table. If he does, that puts him one or two steps ahead of some of his South Australian Liberal Party colleagues who do not seem to be able to read a table on wine sales and changes in wine sales in one year compared with those the previous year. As I said the other day, those senators appear to be both innumerate and illiterate. Senator Grimes —But not legitimate? Senator WALSH —I have no knowledge of whether they are legitimate or not. I will look at the tables and check out Senator Boswell's numeracy and literacy. Even if those figures are correct, of course it is a well known fact that something is very wrong in the State of Queensland, politically, economically and in almost every other way one can think of. Senator ARCHER —Has the attention of the Minister representing the Minister for Primary Industry been drawn to the fact that the northern prawn fishery has, following severe economic problems, undertaken a self-help program involving a licence buy-back scheme, which scheme was ratified by legislation passed through this chamber on Tuesday last? Is he aware that the industry has agreed to contribute $1m this year as first payment in an effort to survive? Further and finally, is he aware that increases in fuel costs during May alone amount to an extra $45,000 per year on the average prawn trawler and that, unless such a selective impost is relieved, some fishermen will have grave difficulty in meeting their commitment to that scheme? What steps will the Government now take to restore the good faith exhibited by the fishermen in the implementation of their buy-back scheme? Senator WALSH —It is not entirely correct to call the northern prawn fishery scheme a self-help scheme. It is a joint government and industry scheme aimed at removing the surplus capacity which is the fundamental cause of the problems that many of the fishermen have in that area. Fuel prices, which are frequently cited, are really a symptom rather than a cause, and continuing very high levels of subsidy for fuel prices will not, of themselves, overcome the industry's problems. I am not sure of the accuracy of the precise figure that Senator Archer quoted. There has been some increase in fuel costs delivered to that area; there is a prospective increase in the near future. As a result of that decision the Government has decided-I cannot find the note of the precise amount-that an additional amount will be made available to accelerate the boat buy-back program, thereby coming to grips with the industry's real problems; that is the fishery has been over-fished for a considerable length of time and there are too many boats. This response makes much more sense both in the industry's long term interest and in the public interest than would any alternative policy of continuing to pay subsidies in one form or another to the people operating in that area without redressing the industry's fundamental structural problem. Senator CHANEY —Has the Minister for Finance seen reports that the Australia and New Zealand Banking Group Ltd and the National Australia Bank Ltd have lifted their prime rate to 17 per cent, that being the rate that applies to business lines of more than $100,000? What real interest rate does that represent? Is it a real interest rate of about 12 per cent or more? Is it the highest real interest rate for 50 years in Australia? Senator WALSH —I have not seen the particular report to which Senator Chaney refers, but I will take his word for it that there is such a report. The real rate of interest depends on what we decide the deflator is right now and that is something we will not know for some time. Arguments could be mounted about the various ways of interpreting what the deflator is; for example, whether we should multiply the quarterly rate by four, take a quarterly rate as against the quarterly rate in the previous year or take the accumulation of four quarters or a whole year figure and compare it with the previous year's figure. Notwithstanding that, the figure would probably be of the order of 5 to 6 per cent or something like that and, therefore, the real interest rates are at about that level. I do not know whether that is a record, but in the short term at least it ought to be noted that the nominal interest rate is at least as important as the real interest rate. I do remember that the nominal interest rate just before the dying days of the Fraser Government for short term lending went above 20 per cent. For most of the last 12 months the Fraser Government, as well as having the highest level of unemployment that had been seen for 50 years, had the highest level of inflation that had applied for six years. Unemployment and inflation were both in double figures, and both rising. That was a real record. No other government in Australia's entire history has managed to achieve that record; that is, to have inflation and unemployment both in double figures and both rising and, simultaneously, nominal interest rates also at record levels. At the same time, gross domestic product had been falling by more than it had been known to fall since the Second World War. Senator CHANEY —I wish to ask a supplementary question. In light of the Minister's strange answer, is he saying that the very high real interest rate at present is not a matter of concern to him or to the Government? Senator WALSH —Senator Chaney is trying to put words into my mouth. What I said was that at least in the short term the nominal interest rate was probably more important than the real interest rate. Of course the Government is concerned about real interest rates and if that level of real interest rates persists the Government will of course be concerned about it. Senator MACKLIN(Queensland) —by leave-I move: That the Senate take note of the paper tabled by the Minister for Education (Senator Ryan) during Question Time this day relating to veterans' entitlements. The paper that Senator Ryan tabled has a number of items in it which suggest basically that the comments I made were grossly inaccurate and misleading. In particular, she refers in the paper to the O'Brien case and says: Senator Macklin belittles the view that the High Court judgment in the O'Brien case has serious implications for pension determination and spending. In fact, what I said and what I also said in my Press statement was that it does have serious implications for the determination of pensions, particularly the means of altering section 47 in terms of the reverse onus of proof. The judgment in the O'Brien case is very clear and very interesting. I shall read from the High Court judgment itself and then I will look at the section in the economic statement which says that basically in the O'Brien case-although that case is not mentioned by name, but it is in the explanatory memorandum put out by the Department itself-there is a situation in which the Government is actually looking at honouring its promises. However it then goes on to talk about the problems that have arisen with recent High Court determinations. It says this: These decisions, particularly a decision made this year-- that decision is the O'Brien case- mean that such pensions may have to be granted even where there is no evidence whatsoever-- I repeat those words 'even where there is no evidence whatsoever'- linking disabilities or death to war service. This is the section from the High Court judgment: With all respect and despite the valiant advocacy of the Solicitor-General, we consider it to be a surprising conclusion-that is that it does not have any connection-In our opinion, it flies in the face of commonsense to say that anxiety neurosis which is occasioned by reason of the separation of the respondent from his wife because of his war service at a time when she is in desperate need of his company is not attributable to war service. In other words, the judges say they find it surprising and indeed, flying in the face of commonsense, to suggest that something which has been caused by his war service cannot be attributed to that war service. The O'Brien case very clearly says the exact opposite to what the Government has put in its economic statement. I suggest that it is not I who has been misleading and inaccurate; it is the Government in its own documentation on this matter. Senator Ryan said, by way of an interpolation in her response, that there was unrest and concern within the veteran community. Before I put out my statement my office was inundated with calls, as I am sure were those offices of any other senators who actually work in this area. On Friday last week-which, as honourable senators know, was the only Friday available to us-I spent most of the morning in the psychiatric ward of Greenslopes Hospital because a large number of Vietnam veterans who are in that ward had called me and asked me to come out and talk to them because of their concern. It was only right and proper, bearing in mind what those people have done at the behest of this country, that I should have acceded to that call. My visit was very interesting. I found out that, the previous day, the veterans had had a visit from officers of the Department of Veterans' Affairs yet they were totally confused as to what their entitlements were. The reason for that is very clear: The people in the Department, the people at the end of the hot lines which have been established, have no idea themselves of what is to happen to those veterans. So it is absolute humbug for the Minister to come in here and say that I am stirring up concern. It is the Minister who is stirring up concern. If departmental officers and veterans knew what was going on, the veterans probably would not be so concerned. The Government has to tell its decisions to the veterans. It is the Government which has to make sure that the veterans do not have those types of concerns by giving them full and frank information about what is to happen. I give the Minister for Community Services (Senator Grimes), who is at the table, an example. One of the veterans asked, during my visit: 'How am I going to get to hospital? I cannot drive a car'. He had calipers on his legs. He said: 'When I asked the departmental people yesterday, they said that I was not entitled to any Commonwealth transport'. When I checked, I found out that that person was entitled to Commonwealth transport. So the information the veterans received the previous day from officers of the Department was incorrect. I suggest that the people who are supposed to be going out doing the briefings ought to have the information. To say that I have been spreading alarm and unrest is absolute garbage. That is precisely what officers of the Government's Department of Veterans' Affairs have been spreading, because they have been misinformed. I suggest that there is a great deal of concern in this area. Quite frankly, I think that concern is justified. The Government has given a categorical promise in this place to me, in answer to a question-an answer given by the Minister for Veterans' Affairs, not by the Minister who is acting in his place-that any changes to the Repatriation Act that were to be brought into this chamber would, firstly, be done with full consultation with the associations and the Returned Services League and, secondly, would not be done until the Budget session. Yet we have these changes brought in here and it is said that, as a matter of urgency, they are to be made now. That is the type of promise that has been given and broken. That is why the veterans are concerned. They do not know what effects these changes will have on them and they want to have some time to study them. That is fair enough. The Minister at the table, when in opposition, was arguing those self-same things. He knows that there has to be reasonable consultation with those groups so they know what is going on and so they can look at the fine print. This Government and the various organisations involved have been taking part in discussions now for over 18 months regarding changes to the repatriation legislation. We were due to receive the reports of these discussions in this chamber this week or next week and then to have them laid on the table. That is now not to be the case. The change which concerns people most is the change to the onus of proof provisions by which we are moving away from a situation in which veterans had no necessity to go into a court or tribunal and to argue; it was for the other side to show that certain conditions were not caused by war service. In the last couple of years I have been on quite a number of platforms with Senator Gietzelt at conferences of various ex-service organisations at which he has said categorically that no changes would be made to section 47 of the Act, that no changes would be made to the onus of proof provisions. Yet legislation has been introduced into the House of Representatives to do precisely that. The material before us is obviously an attempt to justify an area that is now littered with broken promises to veterans. At least one of the things that this Government could do to allay veterans' fears-the Minister in the chamber knows they are out there-would be to lay the legislation on the table until the Budget session to allow the Returned Services League and all the veterans' organisations to go through it carefully and make sure that there is nothing adverse. If the Government believes that there is nothing adverse in the legislation, why not give those associations the time to look at it and find out for themselves? If the Government does this those organisations will be able to go to their members and say 'Do not worry', and there will not be any concern. In closing, I point out that I would be very interested in an exercise that could cut $123.6m from the veterans' budget without affecting them. Senator CHANEY(Western Australia-Leader of the Opposition)(3.16) —I do not wish to prolong this debate because the Senate will in the remaining weeks of sitting have an opportunity to debate the substantive legislation which the Government will bring in to implement its mini-Budget decisions. But I comment on the fact that the Minister responsible for these matters in this chamber, the Minister for Education (Senator Ryan), came in to Question Time with a prepared statement, which has now been tabled, which included a reference to Senator Macklin and which referred to his comments as being in many respects grossly inaccurate and misleading. Senator Ryan would not be the first Minister to come into this place with a prepared statement to give somebody a good telling off, but the answer she gave in Question Time following this brief was a significant attack on Senator Macklin. It is, I think, a matter of regret that, when Senator Macklin moved to take note of the answer after Question Time, Senator Ryan left the chamber. I express on behalf of the Opposition, the view that if Ministers are prepared- Senator Lewis —To dish out these serves. Senator CHANEY —If Ministers are prepared to dish out these serves, as Senator Lewis said, and if they come in to Question Time with prepared statements, they ought at least stick around to face the music and hear what will be said. I regard Senator Ryan as having been thoroughly discourteous. It is the second time in the recent sittings that she has refused to face a debate on a matter for which she is responsible. She is failing to do her job. Quite frankly, if she is not prepared to face up to it she should not be taking the money. I do not think the veterans of Australia, the people she represents or anyone else will be impressed by her performance. I record on behalf of the Opposition our real regret that the Minister is not prepared to face up to criticism, respond to it and do the job that any Minister of the Crown should be prepared to do. Senator GRIMES(Tasmania-Minister for Community Services)(3.18) —There are two characteristics of politicians which are least attractive to the general public. One is righteous indignation, which we have heard from Senator Macklin this afternoon, and the other is pomposity, which we have heard from Senator Chaney. So I will indulge in a bit of hyperbole. Senator Puplick —See whether you can do them both in the one go. Senator GRIMES —I will try to do the whole lot. Senator Chaney gave us a lecture on manners. I have been in the unfortunate situation in this session of the Parliament of being the Minister on duty on the adjournment. I have sat in the chamber during the adjournment debate and listened to all sorts of nonsense from honourable senators opposite frequently attacking Ministers and other honourable senators on this side of the chamber. I will check when I get back to my office, because I have kept a note, but on at least five occasions a senator has made his speech and gone home to bed without waiting for any reply. Perhaps Senator Chaney could talk to senators on his side of the chamber about manners and decency. Senator Chaney —It is also a question of responsibility on the part of Ministers. Senator GRIMES —Is it the responsibility only of Ministers to hang around? It may be that Senator Ryan had something important to do. If, every time a Minister pours a bucket on someone, he or she had to stay around for half an hour afterwards to see whether someone will cry, Senator Walsh would never leave the place. Senator Chaney would have never left the place when he was in government. Let me talk about other things in this place. If every time a Minister says something unkind about a senator on the opposite side and that senator moves that the Senate take note of the answer and gives us a quarter of an hour of nonsense- Senator Haines —Ten minutes. Senator GRIMES —It was more than 10 minutes, it was nearer to a quarter of an hour. If every senator spoke for a quarter of an hour, as Senator Macklin did, we would do nothing else in this place. There are a couple of issues which Senator Macklin gets up and bleats about in this place with what I call phoney righteous indignation. One issue is Aboriginal affairs. The other day he made an impassioned speech about how he would give land rights to the Aborigines, no ifs or buts, no problems. Then we said: 'Would you give them the right to mine uranium?' In a little voice, sotto voce, he said: 'Yes'. Then Senator Jack Evans jumped at him and tried to make him sit down, so we asked him again, and he again said: 'Yes'. He carries on like that. In the next couple of weeks we will have him getting up and making sanctimonious speeches about the evils of uranium mining. He does exactly the same thing about veterans. For anyone to get up in this place and claim that the Government should not be concerned about the consequences of the O'Brien case and the $500m expenditure that is likely to arise, is absolute nonsense. It is nonsense to get up and say 'We want to take legislative action as a result of the O'Brien case' and to say that this will deprive the veterans of this country, and not be concerned that it will deprive the taxpayers of this country. Why does Senator Macklin not do it when the legislation comes up? Are we to have this again and again and again? Why does Senator Macklin not respond to Senator Ryan's answer on the adjournment? He will not do any of those things. The reason Senator Macklin got up here today is that the light up there says 'broadcasting' and he is under the illusion that there are a million people out there listening. No-one is listening. This motion has been put forward by Senator Macklin for a few headlines, and I suggest that the best thing we can do is get it out of the way and keep it off the Notice Paper. Question resolved in the affirmative. Senator CHANEY(Western Australia-Leader of the Opposition) —by leave-On 14 May an answer was given by the Minister for Community Services, Senator Grimes, in response to a question by Senator Cook. That case was a similar sort of animal to the one we have been discussing, in the sense that the object was to give a serve to Mr Barry Blaikie, who is a local member of parliament in the south-west of Western Australia. Senator Cook's question referred to an article in the South Western Times, which is a well known newspaper circulating in the Bunbury-Busselton region of Western Australia. It raised allegations about what Mr Blaikie was doing in that area. Senator Grimes, in the course of his reply, suddenly dropped in another name. He said: The second thing is that the article in the South Western Times was written by Mr Bruce Breslin, a well known Liberal Party member in the area who was a candidate for Liberal Party pre-selection. This is a classic setup of a local Liberal member cooking up a story to get his name in the paper . . . I had representations from Mr Bruce Breslin over the weekend about this matter. He asked me to put it on the record in the Senate, where the allegation was made, that the story referred to in Senator Cook's question and Senator Grimes's reply was not written by him. It was written apparently, by another journalist on the South Western Times. I understand it was not on the byline, but in any event it was certainly not Mr Breslin's article. That raises the question of how his name came to be mentioned at all, because it was not actually mentioned in the question, but I do not know that we will ever find that out, unless the Minister chooses to tell us. The clear inference from the way Mr Breslin's name was mentioned and the context in which it was mentioned was that Mr Breslin, a professional journalist, was party to a cooked up story. Whatever argument one might have about the rest of the answer, I think that Mr Breslin has been unfairly treated by the suggestion that he, a professional journalist, was a party to something that might be described as a rort. It would certainly be described as such by the Minister. So on behalf of my constituent and in response to his representations, I want to put those facts on the record. On the face of what I have been told, it would appear to me that the comments made in respect of Mr Breslin are unjustified and are an inaccurate attack on him. I believe that in those circumstances it would be appropriate for the Minister to withdraw those comments and to apologise for any reflection on Mr Breslin. Senator GRIMES(Tasmania-Minister for Community Services) —by leave-Senator Chaney was good enough to warn me that he was going to make a statement. Therefore, I also had some inquiries made. Senator Haines —Don't be rude about anybody else or we'll be here all day on this. Senator GRIMES —I say to the honourable senator that there are two groups in the community who can dish it out and should be able to take it-one is politicians and the other journalists. I hardly think that a remark such as the remark I made is much of a professional reflection on a journalist. I had some inquiries made after Senator Chaney spoke to me about the fact that Mr Breslin did not write the article. Indeed, that is true; he did not write it. I apologise for that much. However, Mr Blaikie gave the information concerned in the story to Mr Breslin, who gave it to another journalist, who wrote the story. So his hands are not completely clean in this matter. That is the information as I have it. I think that it is a bit much to suggest that I have in some way done something terrible to a journalist in suggesting that he might have connived in writing a story. Journalists do it every day of the week. Senator LEWIS(Victoria)(3.27) —I move: That the Senate take note of the paper. I wish to refer to some aspects of the report. The Commissioner reported in his 1982-83 report that staffing and establishments were not adequate for the Corporate Affairs Commission of the Australian Capital Territory to discharge its functions fully. Apparently, in response to those comments, at the commencement of the year under review the Secretary to the Attorney-General's Department authorised an increase in the number of operative staff to 69. The Commissioner reported: Our lack of establishments cover for this new figure throughout the year has meant that we would not have been able to utilise it fully. If one can read through the Public Service jargon, because the Commissioner does not want to upset the Government by stating bluntly what the situation is, in effect, he is saying that on one hand the Commission was given an increase of 69 in operative staff but that its establishment was not increased. So the Commission was not able to employ the extra 69 staff. The Commissioner continued: The overall situation in 1983-84 did not change very much . . . He went on: . . . a complete re-organisation of the Branch towards the end of the financial year gives hope that the situation will be remedied for 1984-85. The financial year 1984-85 will be over in a little over a month. It seems to me strange that commissioners in charge of complicated and difficult operations, as is this Commissioner, report in such a manner. He indicated that he was desperately in need of staff. This was recognised by the Department, but nothing was done about it. One of the difficulties he mentions is created by the reliance on postal services and the difficulties in the Australian Capital Territory in connection with the regular delivery of mail. Finally in regard to this report I wish to raise the question of the cost of the operation. A statement of revenue in the report shows that the total net revenue accruing to the Commission for the year of the report was $2,834,931 but I cannot find, in any succinct form, any statement of the cost of running the Commission. I suppose that these would be recorded in some other document, or it may very well be that if I were an accountant and had the time and the necessary calculating equipment I could work out for myself the cost of operating the Commission. I do wish that when people file these reports they set out a simple statement of revenue and expenditure so that those of us who are charged with the responsibility of looking into these matters are able to see what the true situation is. Question resolved in the affirmative. Senator PETER RAE(Tasmania)(3.31) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator LEWIS(Victoria)(3.32) —I move: That the Senate take note of the papers. It is interesting that the annual report for Christmas Island for 1982-83 is being tabled at the same time as the annual report for 1983-84. I have not been able to ascertain any explanation as to why the annual report for 1982-83 is so late being tabled. I do hope that the Minister for Territories (Mr Scholes) makes a statement in the other place explaining the reason for the delay. Christmas Island is very dependent upon the phosphate industry. It is probably the only industry that will ever exist on the island, so it is of vital concern to its development. In the 1982-83 report it is mentioned that the Phosphate Mining Company of Christmas Island has announced that the latest estimates indicate that there are sufficient reserves of A grade phosphate deposits to sustain a further 10 years of mining. Previously it had been forecast that A grade deposits would be exhausted by the end of 1985. So we are really looking, as a result of the annual report of PMCI, at another 10 years of production for the A grade phosphate reserves. There is a statement in the 1982-83 report that the company is seeking to expand Asian markets for phosphate. However, the 1983-84 report says: In the 1982-83 financial year PMCI had incurred a deficit of $4.5m on its trading operations. During 1983-84 the financial position of the company worsened as a result of a downturn in the world demand for phosphate, the relatively high cost of Australian shipping-- which, of course, we all know about- extension of the phosphate subsidy to imported manufactured fertilisers and big increases in costs. The Government indicated that it would not subsidise the mining operations unless the company returned to economic viability. Steps were taken, with the aid of PA Consulting Services management consultants, to see what could be done about returning this company to viability. The then Minister for Territories, Mr Tom Uren, visited the island and arranged an agreement for a program of voluntary reduction of work staff. I congratulate him for achieving that reduction. I might say, though, that the payments for redundancy entitlements are very substantial. A redundancy entitlement of three weeks pay per year of service up to 45 weeks was increased to four weeks for every year up to 60 weeks. So workers were looking at getting redundancy payment of 60 weeks pay. I raise the problem of manufactured fertilisers because of my concern to keep this island part of Australia's territory. I point out to the Senate that our sovereignty over this island is not recognised by Singapore or Indonesia. If this industry fails and we are left with an island with only a handful of public servants perhaps visiting irregularly in order to maintain our sovereignty over it, this country will be very badly served. I believe it is essential for this Government to look properly at the development of Christmas Island and some sort of permanent industry for it. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! The honourable senator's time has expired. Senator PETER RAE(Tasmania)(3.37) —I had rather hoped that the Manager of Government Business (Senator Grimes) might have been able to reply to the question raised by Senator Lewis in relation to the fact that two Christmas Island annual reports are being tabled together, which means that the 1982-83 report is one year and five months late and the 1983-84 report is only five months late. The Senate as a whole expressed its regret about such a situation when it was drawn to its attention how lax a number of authorities had become in reporting to the Parliament. We thought that the attention of the Standing Committee on Finance and Government Operations and the attention of the previous Government and the present Government following that Committee's reports would have meant that we did not have these reports coming in very late, and particularly without any explanation. Not only these two reports but also the following three reports on the list are well overdue. The other three reports are at least five months overdue. There appears to be a growing laxity in the enforcement of the rules of timeliness in accountability. A report delayed is a report of historical value rather than anything else unless it is an indication that there is something seriously wrong. The Senate Committee found that when late reports were referred to it there was usually some good reason why they were late, that reason being that something was horribly fouled up. A good indication of who is in strife is who cannot get their reports in on time. I simply draw attention, as Senator Lewis did, to the fact that one of the Christmas Island reports is one year and five months late and the other is five months late. There is no explanation and in the absence of an explanation I believe that at the earliest opportunity they ought to be referred to the appropriate committee for investigation and report as to the reasons for the delay in their presentation. Senator GRIMES(Tasmania-Manager of Government Business)(3.40) —As long as I have been a member of the Senate, Senator Peter Rae has been commendably assiduous about late reports. He will not be surprised to know that I have no personal knowledge of any of them. It seems that about six reports are very late. I will make it my business to refer the matter to the relevant Ministers. I certainly agree that it would not hurt if those reports were referred to the relevant committees, but at the moment I have no information on the matter. Question resolved in the affirmative. Senator PETER RAE(Tasmania)(3.41) —I move: That the Senate take note of the paper. To this and the following reports I will not make comment. Senator Grimes has given an undertaking in respect of the reports which are late. Therefore, I will not comment on each of them. However, I do not want to be taken as having accepted them without comment. Question resolved in the affirmative. Senator SIBRAA(New South Wales)(3.41) —I move: That the Senate take note of the paper. I wish to make some remarks about the Australian Political Exchange Committee's annual report because recently I chaired an informal meeting of the Joint Committee on Foreign Affairs and Defence. A number of members of the Committee at the meeting had the opportunity to speak to Mr Sandy Holloway, who was until recently the Counsellor at the Australian Embassy in Washington. He spoke to Committee members on the program and how he saw it operating from the United States side of the picture. It is an exchange program between young political leaders in the United States and Australia. I believe that this year the program is being broadened to include Canada and the People's Republic of China. The United States runs a similar program which now includes Japan and a number of countries in Western Europe and, quite interestingly, has recently involved the Soviet Union. A prominent role in the organisation has been played by a former senator, Sir Robert Cotton, who was until recently the Australian Ambassador in Washington. He was responsible for soliciting support from a number of private companies for the program and has been an enthusiastic supporter of it. I hope that when he returns to Australia he will be able to fill an important role in fund raising from the private sector to keep this program going. The Australian Committee was established in 1981. It is serviced by a small secretariat from the Department of the Special Minister of State. To date, there have been six exchange programs, three to the United States and three from the United States to Australia. This year, the first group will visit Canada from Australia and a group will also go to the People's Republic of China. The Committee is hopeful that in the future we will also be able to send delegations of young political leaders to the Association of South East Asian Nations region and also to India. The real strength of the United States program to Australia has resulted from the participants being selected by both the Republicans and the Democrats in the United States. They have been able to pick people at a relatively young age, people whom the Australian Embassy could not possibly select for other programs that we run. I refer now to the special overseas visitors fund program, a traditional program that has picked people from the United States and brought them to Australia. This program is operating much more efficiently because by the time we see young people in the United States who are rising through the political system they are usually too busy to come to Australia or, if they have the time to visit overseas, they have shown a preference towards Western Europe or Japan. The experience of our Embassy in the United States is that when the young Americans return they have a favourable impression of Australia and an understanding of our political system. For example, the last group was here during the Federal election campaign and went around during the campaign with both Liberal Party and Australian Labor Party candidates. The program is also important because until recently there was a large group of Americans in senior positions in public life who had served in this region in World War II and therefore had an attachment to Australia and the South Pacific. Those people are now passing from the scene. The present generation, aged 18 to 34, now make up one-third of the total population of the United States. They have no attachment at all to Australia or the region. I well remember being in Washington with a delegation when Cyrus Vance, the then Secretary of State, said that he would be the last Secretary of State who had served in Australia and the South Pacific. Therefore, this program is filling a vacuum. I attended a dinner last week for former members of Australian delegations to the United States. This year's delegation was also present. I am pleased to say that Senator Black from this side of the chamber will be leading that delegation. This program deserves government support and private support. On behalf of the Joint Committee on Foreign Affairs and Defence, I have written to the Government to make sure that we get the vital funding-approximately $50,000 from the Government and $50,000 from the private sector. It is an excellent scheme; it deserves the Government's support. As I said earlier, I hope that when Sir Robert Cotton returns to Australia he will play an important role in fund raising. At the moment the bulk of private fund raising is being carried out by Esso Australia Ltd, CSR Ltd, Caltex Oil (Australia) Pty Ltd, Amatil Ltd, Ansett Transport Industries Ltd, G. J. Coles and Co. Ltd, Kraft Foods Ltd, and the Herbert Evatt Memorial Foundation. Senator TEAGUE(South Australia)(3.48) —I concur with the views expressed by Senator Sibraa, the authoritative Chairman of the Joint Committee on Foreign Affairs and Defence. I am sure that Senator Sibraa speaks for both sides of the chamber in commending this program. In the way in which it looks forward to the middle and long term by such provisions, it is an excellent scheme. In particular, I welcome the inclusion of the People's Republic of China in the exchange program. I look to that continuing to be a flourishing part of the program. It is an appropriate additional way-along with so many bridges between our two countries-of reinforcing the closer economic, community and trade relations symbolised by the recent visit to Australia of the General Secretary of the Chinese Communist Party, Mr Hu Yaobang. He was welcomed by both sides of this chamber and by the public generally. I urge that Indonesia be amongst the countries given priority as additions to the scheme. I believe that you, Mr Acting Deputy President, have on several occasions drawn attention to the need for Australia to more clearly understand Indonesia and for Indonesia to more clearly understand Australia. We should see progress in this field. When I speak of Indonesia, I do not speak only of the relationship between the Indonesian Government and the Australian Government, or indeed, between IPO, the ASEAN Interparliamentary Organisation, and this Parliament, but essentially I speak of the relationship between the Indonesian people and the Australian people. There are too few bridges of understanding and communication between us as neighbouring countries. This scheme may yet provide another bridge that will lead to a growing number of important links. In Melbourne this morning at the first Convention of the Indonesian Cultural and Educational Institute I was able to give a paper in the presence of the Indonesian Ambassador and the leaders of Indonesia-Australia relations in terms of public service, trade and, especially, academia. I am sure that that Convention, representative of all parts of Australia, would concur in the view that I express here in the Senate. I take this opportunity to consolidate the very welcome words spoken by Senator Sibraa in relation to this paper and in congratulating the participants in the Committee, which I understand is taken very seriously by the President of the Senate and in which he has a personal interest. I encourage him in the way he has contributed to this program and I look forward to its continuing to prosper. Question resolved in the affirmative. Senator COONEY(Victoria)(3.51) —I move: That the Senate take note of the paper. The Central Land Council is made up of Aboriginal people. The Chairman, Vice-Chairman and members of the executive are all Aboriginals. It is a most successful Council, as the schedule set out as table 2 on page 19 of the annual report shows. The Aboriginal people, in the conduct of that Council, have earned and certainly deserve great praise. Having perhaps given less than adequate attribution to the Aboriginals who have run that Council, I will proceed to mention a couple of ways in which the people of European descent have helped that Council. There is mention in the report of Mr Geoffrey Eames, who was assigned by the Central Australian Aboriginal Legal Aid Service to work for the Council when it was set up. Mr Eames has earned great glory, not only in this area but also in the general area of bringing legal services to people who would otherwise not have them available. He was one of a group of lawyers in Victoria who set up the Fitzroy Legal Service, which has served as a model for legal aid since then. Mr Eames was followed in the Territory by Mr Ross Howie who is presently at the Victorian Bar and who made great sacrifices in terms of his career and the financial reward that he would otherwise have obtained from his career had he not gone there. He did what I suggest not only lawyers but also other professional people should do, that is, devote themselves to clients not for the financial return they might receive but for the good they can provide for their clients. He was followed by Mr John Coldrey, who, again, made great sacrifices although, I must say, since returning to the Victorian Bar Mr Coldrey has taken silk and been appointed Director of Public Prosecutions in Victoria, so perhaps the sacrifice he made has been well rewarded. Other people from the Victorian Bar have made contributions. Mr Michael Dodson, a barrister who has Aboriginal connections in the sense that he was born an Aboriginal, has returned to the Territory after serving at the Victorian Bar with some distinction. Other people, although not directly connected with the Central Land Council, have gone from the Victorian Bar to assist Aboriginals in the Territory. I mention Peter Farris, Mr Hore-Lacey and of course Mr Frank Vincent, QC, who has since been appointed to the Supreme Court of Victoria. In talking of those people from the Victorian Bar, I do not overlook the contributions made by people such as Mr Philip Toyne and Mr Snowdon who are presently working with that Council. I should like simply to place on record the contribution made by lawyers from the Victorian Bar. Lawyers are often subject to criticism. The Minister for Community Services, Senator Grimes, spoke earlier about what politicians and journalists often have to put up with. Lawyers are sometimes subject to the same sort of criticism and I simply want to acknowledge that one can point to instances which show the contributions that these people make to the community. Questions resolved in the affirmative. Senator HARRADINE(Tasmania)(3.55) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator COLLARD(Queensland)(3.56) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! The time allotted for consideration of Government papers has expired. Senator FOREMAN(South Australia) —In accordance with the provisions of the Public Works Committee Act, I present the report relating to the augmentation of the taxiway system at Sydney (Kingsford-Smith) Airport. Ordered that the report be printed. Motion (by Senator Robertson) agreed to: That the time for presentation of the report of the Select Committee on Volatile Substance Fumes be extended to 8 October 1985. 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)(3.58) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- Section 66 of the Constitution prescribes, subject to the Parliament otherwise providing, a maximum annual sum for the payment of salaries of Ministers. Following the Remuneration Tribunal's 1984 review national wage case decisions automatically apply to offices within the Tribunal's jurisdiction, including Ministers of State. The purpose of this Bill is to amend the Ministers of State Act to increase the maximum annual sum from $610,000 to $630,000 to cover the effect of the 2.6 per cent national wage case handed down by the Australian Conciliation and Arbitration Commission on 3 April 1985, for the remainder of this financial year and the next. The date of effect of this amendment is the date prescribed in the national wage case decision, that is, the first pay period commencing on or after 6 April 1985. Further information on the clauses of the Bill is contained in the explanatory memorandum which is being circulated to honourable senators. I commend the 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)(4.00) —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 provide the Australian Shipping Commission with additional capital of $70,541,000. This additional capital is required to provide the Commission with a capital structure appropriate for a commercial enterprise and marks a further step in the Government's program of revitalising Australia's shipping industry. The Government's objective is to provide a sound base for the development of an efficient, competitive Australian shipping industry. Within this broad framework the Government is committed to ensuring the long term viability of its own shipping organisation. An efficient, profitable, commercially-oriented Australian National Line is necessary to the overall effectiveness of the Australian shipping industry. When this Government came to office in 1983, ANL was in a desperate situation. Not only was the Line financially bankrupt, with millions of dollars owed to its creditors, but management was ineffective, the organisation inefficient and its industrial relations record was poor. The previous Government had starved it of capital funds and had not given it sufficient freedom to operate as a commercial organisation. The ANL management structure needed overhaul. The Government responded to these problems in a positive, co-ordinated way. In 1983 we provided ANL with an emergency capital injection of $90 million to meet its immediate financial crisis. This injection consisted of $30 million in cash and $60 million for the conversion of outstanding Treasury loans. We also agreed to roll-over remaining domestic Treasury loans totalling $50.5 million as they fell due. We amended the Australian Shipping Commission Act to give ANL greater commercial freedom and to enable the top management to be strengthened. We created new positions of Part-time Chairman and Managing director, and appointed to them people with extensive commercial experience. We took important steps to improve industrial relations in ANL and the shipping industry generally. The new ANL management has taken up the challenge set by the Government. It has rigorously overhauled and rationalised its organisational structure. It has critically reviewed all its commercial operations. In the light of this review some unprofitable services have been terminated. A program of disposing of uneconomic vessels and terminals has been commenced. Steps are being taken to improve the productivity and profitability of its vessels and terminals. The effects of these tough decisions are now appearing, as clear evidence that the Government's policies are working. ANL declared an operating profit of $3.3 million in 1983-84 compared to an operating loss of $18.8 million in 1982-83. We freely acknowledge and appreciate the contribution that the unions have made to achieving this result. But much more remains to be done before ANL can free itself from the legacy of past mismanagement. Continuing support and co-operation from the unions is needed to achieve this in what are tough market conditions for the shipping industry. The extent of this task is revealed by its 1983-84 Annual Report. Past management had masked its actions by adopting accounting practices that over-valued the Line's assets and did not record the lease liabilities it had incurred. Abnormal adjustments were necessary to correct this and reveal a truer asset situation. The result was a declared accumulated loss of $129.5 million as at 30 June 1984. This meant that its accumulated losses had exceeded its capital and reserves by $3.7 million. ANL was still technically bankrupt. The Government determined last year that ANL's capital structure should be examined in greater detail, to enable responsible decisions to be taken on its longer term financial viability. A committee of officials was instructed to carry out this examination. It included representatives from the Departments of Transport, Finance, the Treasury and the ANL. That report, the most comprehensive ever undertaken on the Line's finances, makes it clear that ANL operates in a very competitive environment both internationally and domestically. It has very high debt servicing charges, a legacy of past government policies. And its margin of revenues over costs is low. In 1983-84 this margin was less than 1 per cent. ANL is thus particularly susceptible to downturns in trading conditions, exchange rate movements and losses from industrial disputes. In the light of this report the Government decided to tackle ANL's financial problems at their source. The Line's high indebtedness, the result of the past Government's approach to financing ANL's expansion into overseas trades, was the key problem that had to be solved. The $70.5 million capital injection the Government decided on does this in two ways. First it allows $50.5 million of existing Treasury loans to be converted to capital. This, by reducing interest payments, provides a significant contribution to ANL's cash position. Secondly, the remaining $20 million will be used to repay a Treasury on-lent loan falling due on 1 June 1985. This cash injection will help ANL get over a projected cash deficiency in 1985-86 and 1986-87. At the same time ANL's capital base has been re-established on a properly commercial basis. The Government now believes that the $70.5 million that this Bill will provide when enacted will put ANL into a position where it has the flexibility and incentive necessary to pursue improved commercial performance, to continue to restructure its activities and to seek out profitable new business opportunities. In saying this it should be made clear that ANL has not been given a feather-bedded path to future prosperity. The international shipping industry remains severely depressed with fierce competition coming from foreign shipowners in a very depressed market at least in the short run. On the Australian coast, competition is also increasing, for example as new services start across the Bass Strait. There can be no doubt that ANL and its employees have a difficult task ahead of them. In short, the Government has made what it considers to be a major effort to revitalise ANL. It has remedied the undercapitalisation that past Governments should never have allowed to occur. It is now up to ANL management, its employees and the unions. It has been made clear to each that the Government expects continuing improvements in ANL's performance to generate and provide the cash required for investment in new ships and equipment and to pay dividends. The Government is confident that this legislation provides the basis for a commercially viable national shipping line that will benefit all ANL customers, the Australian economy, and Australians generally. I commend the Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. Bills received from the House of Representatives. Motion (by Senator Grimes) agreed to: That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of all or several of the Bills being put in one motion at each stage and the consideration of all or several of such Bills together in the Committee of the Whole, and as would prevent the reading of the short titles only on every order for the reading of the Bills. Ordered that the Bills may be taken through all their stages without delay. Bills (on motion by Senator Grimes) read a first time. Second Readings Senator GRIMES(Tasmania-Minister for Community Services)(4.02) —I move: That the Bills be now read a second time. I seek leave to have the second reading speeches incorporated in Hansard. Leave granted. The speeches read as follows- DAIRY PRODUCE MARKET SUPPORT LEVY BILL 1985 The purpose of this Bill and the other related Bills is to establish new marketing arrangements for the Australian dairy industry. The Australian dairy industry is once again faced with a serious financial crisis. This crisis affects the dairy industry in all States. However Victoria and Tasmania which produce a higher percentage of milk for manufacturing purposes are the worst hit. Victoria produces nearly 60 per cent of Australia's total milk production of which 87 per cent goes into manufactured products much of which is exported. While new marketing arrangements are not a panacea for the industry's present troubles, they are nevertheless essential if a proper basis for a return to long term industry profitability is to be established. It should be remembered by honourable senators that the Commonwealth's involvement in the dairy industry is essentially limited to the manufacturing sector. Market milk, for largely historical reasons, has been the responsibility of individual State Governments. The division of the industry along State lines and between market and manufacturing milk sectors makes the development of sensible policies for a national dairy industry extremely difficult. It has also led to the situation where there are two broad classes of dairy farmers-those with access to the more lucrative market milk sector and those supplying the manufacturing sector where returns are heavily influenced by developments in the international market. One result of this division is that some farmers are receiving farm gate returns of around 11c/litre while others receive over 30c/litre for producing effectively the same product. Let me outline for honourable senators, very briefly, some key facts which illustrate the genesis and dimension of the problem facing the industry today. Export prices for Australia's major dairy export items have plummeted-butter, for example, by over 30 per cent in just the last two years. The basic cause of this collapse in world trade prices has been the irresponsible production and export subsidy practices of a number of major dairy producing countries, particularly the EC. Unfortunately, despite strenuous efforts, there is little that Australia can do to change these practices in a fundamental sense. However the Australian industry's position would not have been nearly as serious if it had not been for the corresponding, rapid increase in our own milk production in recent years. From 5.2 billion litres in 1980-81, Australia's milk production is expected to reach six billion litres in the current production year. But why should such an increase have been occurring while world trade prices were collapsing? There are two basic reasons. First, in a somewhat irresponsible and cynical exercise the previous Government increased the minimum support level (known as 'domestic value for levy purposes' or DVLP) for butter by around 40 per cent in the two year period from July 1980 to July 1982. Other dairy products also received similarly large increases. This would have been sufficient in itself to stimulate our own 'milk lake', remembering that there is a production lag of at least two years before supply responds to changed market signals. The second reason is that even when world prices began to decline present marketing arrangements continued to encourage production increases. I will expand on this point in my second reading speech on the Dairy Legislation Amendment Bill. In the meantime honourable senators may care to contemplate the insanity of a marketing arrangement which rewards individual manufacturers for continuing to produce for export, when these exported products in some cases return less than half the cost of production of the milk used in their manufacture. This situation also was not helped by State governments, particularly the previous Victorian Liberal Government, which effectively encouraged increased milk production by such measures as freely granting licences to new entrants into the industry. This was despite the harsh lessons of the mid-1970s and the realities of the market. That the present arrangements introduced in 1977 are inequitable and inefficient is generally accepted. In essence these arrangements stimulate over-production, while discouraging domestic consumption; the correct product mix for both the domestic and export market is made difficult to achieve; exports to the worst possible markets receive the greatest assistance; imports are encouraged and the industry is constrained by the heavy hand of regulation. It is sometimes claimed that as the present arrangements cost the Government very little, why all the fuss? Well, in the past two years the Government will have committed in direct budgetary contributions around $18 million to the dairy industry. This is on any basis a very significant outlay. But this is only the tip of the iceberg. The real cost of the present arrangements is far greater. Australian consumers, in effect, support the dairy industry through paying higher prices for their dairy products than would be the case in the absence of the marketing arrangements. I hasten to add that given that world market prices are grossly corrupt, this Government accepts that it is both reasonable and appropriate for the dairy industry to receive a measure of assistance in the form of higher domestic prices. However, in the present situation of a growing exportable surplus much of the assistance provided by consumers is wasted. In effect, Australian consumers are, through low priced exports, simply subsidising foreign consumers. This makes no sense either for the industry or for the unwitting Australian consumer. The cost of the present arrangements extends even beyond these readily quantifiable factors. In a speech to the National Agricultural Outlook Conference in Canberra earlier this year, Sir Roderick Carnegie, Chairman of CRA, expressed his concern at the tendency in Australia for economic gain to be sought through essentially political processes-'playing the system'-rather than true entrepreneurship. As the Industries Assistance Commission (IAC) and others have highlighted, the truly numbing complexity and the web of regulation which characterises present dairy marketing arrangements encourage, within the industry, precisely the type of activity of concern to Sir Roderick. In its November 1983 Report on the Dairy Industry, the IAC pointed to many of these defects in the present arrangements and put forward recommendations for fundamental changes to the industry's marketing arrangements. The industry considered these, for various reasons, to be unacceptable and developed an alternative approach centred on an entitlements scheme. Given the considerable role and powers of the States in this industry, the issue of new marketing arrangements during 1984 and 1985 was the subject of extensive debate within the Australian Agricultural Council (AAC). Despite four formal meetings AAC was unable to reach agreement on new arrangements. While regrettable, this should not surprise anyone familiar with the political history of dairying in Australia. AAC was not even able to agree on the present arrangement introduced in 1977. In fact there is a history of vigorous disputation between States on dairying going back 50 years or more. The aim of the Government's new arrangements is to lead to a more truly national dairy industry. This Government accepted its responsibilities and has made the hard decisions, commensurate with its powers. Not to have done so would have condemned the industry to a future of recurring crises with increasing dependence upon Government assistance for its survival. In taking its decision on the new arrangements, the Government's basic objective was the development of a more efficient and profitable industry, able to respond as quickly as possible to changing market conditions and technology. The Government seeks to achieve this through reducing the burden of regulation, while maintaining a level of support for domestic prices. In contrast, proposed marketing arrangements put forward by the industry sought to achieve reform by imposing further Government regulation on an already heavily regulated industry. This would have added to the industry's cost structure, increased its rigidity and seriously reduced its ability to compete against fair imports and in the export market. The new arrangements, the key features of which are incorporated in the Bills I am placing before the Senate, will replace, from 1 July 1985, present stabilisation and equalisation arrangements with a system of market support for the dairy industry funded by a levy on all milk and a levy on certain dairy products. A number of other significant changes to present arrangements are also being made, including the termination of export pooling, and the system of allowances to manufacturers; repeal of the unproclaimed Dairy Industry Assistance Act 1977 and Dairy Industry Assistance Levy Act 1977; upgrading of the financial and operational capabilities of the ADC; and a reduction in other unnecessary regulation which constrains the dairy industry. The Government's marketing arrangements have a 'sunset' provision set at 30 June 1991, with a major review being held within four years of commencement of the arrangement. Arrangements contained in the four Bills are augmented by two other measures agreed to by the Government. The Government has decided to continue underwriting arrangements but, as recommended by the IAC, in respect of export returns only. Average export returns in each year will be underwritten at a level of 90 per cent of a three year average of export returns. This is expected to lead to a similar level of assistance as under present underwriting arrangements. Importantly, the Government recognises that the Dairy Industry is yet again going through changes. As an integral feature of new dairy marketing arrangements the Government commits itself to helping individual farmers and factories adjust to this change. It needs to be recognised by honourable senators that structural adjustment in the industry is inevitable, no matter what form of marketing arrangements is adopted, given the present level of domestic production and the depressed international market. The Government accepts its responsibilities in this area, and is willing to work closely with State Governments and industry to ensure that adjustment occurs in a fair and efficient manner. When Mr Kerin announced the new dairy marketing arrangements on 22 March, he indicated that the Commonwealth was willing to participate with the States in an adjustment assistance program for the industry of up to $40 million. This is in addition to adjustment assistance already available to the industry under continuing Rural Adjustment Scheme measures. The Government has also recognised that pressures will be felt at the factory level, as adjustment to lower production levels and new product mixes takes place. The Commonwealth has made it clear that the adjustment assistance program will not be limited to farmers. Rather, we are quite prepared to extend adjustment assistance to factories. There is widespread acceptance in the dairy industry that production must come down (incidentally, despite reports suggesting that the Government's plan has a specific production target this is not the case-rather we are putting in place arrangements under which production will be free to adjust to profitable market opportunities). In recent weeks different sections of the industry have expressed interest not only in the Government's proposed adjustment assistance program but in pursuing their own totally industry-funded adjustment programs. These programs are directed at easing and speeding the process of adjustment at the farm level, but more work needs to be done to fully develop these ideas. The Government is certainly willing to listen to such ideas and indeed, will facilitate their development if requested. The Minister for Primary Industry has already sought the views of State Governments on the form of the structural adjustment program. Consultations between Victorian and Commonwealth officials have commenced and the Government is prepared to initiate similar consultations with other State Governments, their industries and unions. The industry has expressed concern over imports of subsidised and dumped cheese. The Government's position on this is clear-we will not allow dumped or subsidised cheese to damage the Australian industry and if existing arrangements do not work satisfactorily other measures will be considered. While on the subject of imports a great deal of nonsense has been spread over alleged secret deals with New Zealand. There is simply no truth in this. The Government's arrangements do not interfere with the existing arrangements negotiated under the previous Government with respect to trade in dairy products between New Zealand and Australia. Before turning to the particulars of the Dairy Produce Market Support Levy Bill 1985 I would like to make some further comments on recent developments in regard to the arrangements. The announcement of the Government's new marketing arrangements for the dairy industry on March 22 was met with howls of protest and instant rejection by most, but not all, of the industry and State Governments. Yet, just 8 weeks later there has been a very real reversal with virtually all segments of the industry now supporting the basic thrust and essential elements of the Government's arrangements. Importantly, the industry appears now to have recognised the need for change, as proposed by the Government. The initial reaction of the industry was not altogether unexpected given that the Government's legislation represents the most significant change to the industry's marketing arrangements in 50 years, and is based on a reduction in regulation with greater exposure to market forces. While accepting the thrust and essential elements of the Government's plan, a number of amendments have nevertheless been proposed by industry. These amendments reflect the industry's concern with the impact of the transition from the present heavily regulated arrangements to the new market orientated system. The Government is sympathetic to this concern and has taken appropriate action, as I will outline shortly. But the Government does not believe that the proposal by sections of the industry for a temporary retention of export pooling is an appropriate mechanism for dealing with any transitional difficulties. I will return to this matter shortly. The Government had already accepted that transitional arrangements were necessary, and consequently included as an integral element of the new arrangements supplementary market support payments, funded by a levy on a limited number of dairy products. The phase out of the levy and hence the supplementary payments is by means of a formula. This formula is designed to abate the rate of phase out if adjustment is occurring rapidly in the industry. Following a re-examination of the elements of the formula, the Government decided to make a minor, but significant, change to the formula. By increasing the constant of 0.4 in the formula to 0.5 the rate of phase out of the dairy products levy will be reduced, thereby providing the industry with a higher support level for domestic prices for a longer time period. The industry has also sought amendments to delay the cessation of export pooling. Following an extensive review of this point, the Government is very firm in its view that export pooling should cease on 1 July 1985. It just makes no sense at all to persist, even on a temporary basis, with a mechanism which has the debilitating effects of export pooling-to do so would simply create further adjustment difficulties a year or two down the track. The Government is however aware of concern at the impact the termination of export pooling may have, indirectly, on manufacturers' financing arrangements and the cash flow situation of farmers. In essence, underwriting, in combination with export pooling, has over the years enabled the Australian Dairy Corporation (ADC) to provide manufacturers with interim stabilisation payments and loans to assist stockholding at a higher level than would otherwise have been the case. Under the new arrangements there will be no stabilisation payments. While the ADC's financial powers are significantly expanded under the new arrangements, the transition to a more commercially oriented system could lead, in the first instance, to loan levels by the ADC to manufacturers being significantly lower than the combined stabilisation payments and loans that would have applied under the current system. This could possibly lead to a lowering of opening prices to farmers. Therefore the Government agreed to two further measures to alleviate this transitional, financing difficulty. First, the Government will guarantee up to $10 million, to enable the ADC to lend at a higher level to manufacturers and hence raise opening prices. Second, an amendment has been made to enable the collection of the levy on all milk (i.e. the market support levy used to make market support payments) to be delayed. A delay in the time for collection of the levy would improve the cash flow position of manufacturers in the early part of the forthcoming season and enable the payment of higher opening prices to farmers. Although the receipt of the levy by the ADC would be delayed as a result, this should not cause difficulties given that demand for funds for the purpose of making market support payments will be small in the early months of the season. I believe the measures I have outlined, and which have been adopted by the Government, address the key concerns of industry while preserving intact the thrust and key elements of the new arrangements. As I have said earlier, industry's concerns are essentially with the transition from the old to the new arrangements and the Government has adopted a considered and eminently reasonable approach to this matter. Now let me turn to the Dairy Produce Market Support Levy Bill 1985. This Bill provides for the imposition of a levy on the milk fat content of relevant dairy produce (whole milk and whole milk products). The maximum levy rate is 45 cents per kilogram of milk fat, with the operative rate being established by regulation following a recommendation by the ADC. The levy is payable by the producer of the dairy produce. The use of a levy on all milk to provide funds for supporting domestic prices of dairy products is more equitable and efficient than the present system's sole reliance on levies on a limited number of dairy products. Such a levy was recommended by the IAC and is supported by AAC and the industry generally. There are no direct financial implications for the Commonwealth. Costs associated with administration of the market support levy are to be met from levy receipts. I commend the Bill to honourable senators. DAIRY LEGISLATION AMENDMENT BILL 1985 This Bill contains amendments to the Dairy Produce Act 1924 and the Dairy Produce Sales Promotion Act 1958. The most significant provision is that which discontinues export pooling for production on or after 1 July 1985. Since existing export pools will continue until finalised, appropriate savings provisions have been provided in the Bill. Given the long history of export pooling I can understand the concerns of sections of the industry at the prospect of its abolition. I briefly mentioned the problems stemming from export pooling in my speech on the Dairy Produce Market Support Levy Bill 1985. However it is difficult to overemphasise the distorting and debilitating effect of export pooling on the industry. Its termination is the only means to ensure that manufacturers produce only for those markets which are seen as profitable seek to maximize prices from individual sales and actively seek new, profitable markets and seek to produce the best product mix. Any system which allows a manufacturer to export at well below the cost of production of the milk he uses in manufacturing a dairy product, and yet still end up with a profit on the sale must generate overproduction and other distortions. Under export pooling, we have been continuing to produce butter and cheese for export for a return, in some cases, of only around 5c/litre for the milk used. This is clearly absurd from the industry's viewpoint but in fact quite rational from an individual manufacturer's viewpoint. I must say that I find it difficult to understand how some honourable senators who claim to believe in the virtues of private enterprise and individual initiative can support the continuation of an arrangement whereby the benefits of an individual exporter's efforts in finding and developing a profitable market are, in effect, appropriated and spread equally across all dairy exporters. Exports will continue under the Government's plan. Indeed by removing the existing distortions in support levels provided to dairy products, and with presently non-prescribed products now being eligible for market support payments (and supplementary market support payments) a very concrete encouragement is given for the development of new products and new export markets. This will, of course, not happen overnight and our heavy dependence on exports of traditional bulk dairy products will continue for some time. The present system of allowances to manufacturers whereby the industry as a whole bears certain costs (eg interest, storage charges) incurred by individual manufacturers also creates serious distortions and is to be terminated from 1 July 1985. For example, with the aid of a freight subsidy paid for by industry moneys, some Victorian manufacturers have been able to sell butter in Queensland cheaper than in Victoria. A number of amendments have been made to the Dairy Produce Act 1924 designed to increase the commercial and operational flexibility of the Australian Dairy Corporation (ADC). These include: expansion of the means by which the ADC can raise money to include a wider range of contemporary financial instruments a specific provision to enable the ADC to engage in futures trading within appropriate guidelines a provision to enable the ADC to invest money which is temporarily surplus in the short term money market as appropriate empowering the ADC, subject to certain conditions and with Ministerial approval, to borrow from internal sources (i.e. from Funds which it administers) rather than externally a specific power for the ADC to act as an agent for manufacturers in respect of export sales an ability for the ADC to sell, with Ministerial approval, on the domestic market a clarification of the power of the ADC to lend money to manufacturers of dairy products; and a clarification and upgrading of existing provisions relating to the ADC's power to purchase and dispose of assets. As well, and in accordance with the Government's general approach of reducing wherever possible the burden of regulation on industry, a number of other regulatory restraints have been repealed. These include the licensing of exporters, although I should stress that the need for exporters to obtain an export permit under the Export Control Act 1982 remains the ADC's powers to establish conditions relating to contracts for shipment of dairy products (this has not been exercised in recent years) the power of the ADC to control exports for the purpose of ensuring adequate domestic supplies (this is not consistent with the broader aim of encouraging manufacturers to develop a firm commitment to exporting). Finally, a provision is included which requires the ADC to credit any surplus and debit any deficit, stemming from sales it makes in its own right, to the Market Support Fund. The ADC is funded by a levy on milk production. There are no direct financial implications from this Bill for the Commonwealth. I commend the Bill to honourable senators. DAIRY PRODUCE MARKET SUPPORT BILL 1985 This Bill contains many of the essential features of the new marketing arrangements. The Bill provides for collection and administrative arrangements for the market support levy imposed under the Dairy Produce Market Support Levy Bill 1985 and the dairy products levy imposed under the Dairy Industry Stabilisation Levy Amendment Bill 1985; the establishment of a Market Support Fund and the payment of market support payments; and the establishment of a Supplementary Fund and the payment of supplementary market support payments. As I mentioned in my second reading speech on the Dairy Produce Market Support Levy Bill 1985, the Government has made an amendment to this Bill which will enable a longer period of time to be allowed before the market support levy has to be paid during the initial months of operation of the new arrangements. This amendment is designed to help ease the transition from the old arrangements to the new. Under the new arrangements market support payments will be used to increase export returns to an export target figure, thereby increasing the domestic price at which a manufacturer would be indifferent between an export sale and a domestic sale. Consequently market support payments provide, as do existing arrangements, a measure of domestic price support. When combined with supplementary market support payments, which I will discuss shortly, the level of support provided to domestic prices of major dairy products in 1985/86 will be of the same order as it is now. The rate of market support payment is, for dairy produce prescribed for this purpose, the difference between the export target price and the estimated average export price for that produce in the current year. The export target price is calculated as 130 per cent of the average export price for the relevant dairy produce in the past 2 years and the year in which the target price is to apply. Market support payments for non-prescribed dairy produce are to be determined by the Australian Dairy Corporation (ADC) having regard to the rates of market support payments applicable to prescribed dairy products. The market support payments will be paid from a Market Support Fund established by legislation principally to receive funds collected from the market support levy. The system of market support payments proposed under which the assistance to each type of dairy product is approximately uniform, and the funds for this purpose are raised on a broader basis, are widely accepted as being both more equitable and less distorting than present arrangements. All the dairy products which are exported will benefit directly, and a base level of support is provided for the industry as a whole. At the same time the funds for this support are sourced from all milk produced, rather than through a levy on a limited number of major dairy products as is presently the case. The Government's mechanism is, honourable senators will be interested, essentially as recommended by the Industries Assistance Commission (IAC) and adopted by the Australian Dairy Industry Conference for their recommended marketing arrangements. However the Government is proposing a number of changes to the IAC's recommendations, including a higher level of market support (30 per cent against 20 per cent), for support to be slightly countercyclical as a result of the use of a three year average rather than the current year only (this means the industry will get more support when it is most needed) and additional support for a transitional period. Provisions to enable the ADC to establish special market support payments in particular circumstances are included, along with provision for the ADC to guarantee a rate of market support payment in advance of actual export. This latter provision recognises practical commercial features of trade in dairy products. As I have already mentioned, supplementary market support payments will, as a transitional measure, be paid to manufacturers to raise export returns above the export target price level (or its equivalent for non-prescribed products). This will provide further support for domestic prices of dairy products. These supplementary market support payments will be funded by the proceeds of the dairy products levy with a new Supplementary Fund being established to receive the proceeds of this levy. Supplementary market support payments will be determined as a percentage of the export target price and consequently are paid in line with international prices relativities for dairy products. A number of provisions relating to the administration of the arrangements are included (e.g. access to premises, provision for returns and information to be supplied). Penalty provisions are also necessary and have been included in respect of both non-payment of levy and offences in relation to applications for payment and in relation to returns. One point to note is a provision for a court to be able to order that any payment falsely obtained be repaid, as well as imposing a penalty. Procedures for the consideration and review of decisions directly affecting the right of an individual are also incorporated. The funds for the making of market support payments and supplementary market support payments will come from industry sources and hence there are no direct financial implications for the Commonwealth. Any underwriting contributions by the Commonwealth will be paid into the Market Support Fund. Underwriting arrangements agreed to by the Government are however not provided for in legislation. Any payments required as a result of underwriting will be by means of an appropriation from Consolidated Revenue. As honourable senators will appreciate the amount of underwriting contributions, if any, cannot be determined in advance as they will relate to the actual market circumstances arising from time to time. As I noted in my speech on the Dairy Industry Stabilization Levy Amendment Bill, this Bill also provides for the repeal of the Dairy Industry Assistance Act 1977 and the Dairy Industry Assistance Levy Act 1977. I commend the Bill to honourable senators. DAIRY INDUSTRY STABILIZATION LEVY AMENDMENT BILL 1985 This Bill amends the Dairy Industry Stabilization Levy Act 1977 and is an integral element in the overall package of marketing arrangements. The Bill imposes a levy on certain dairy products produced at a factory, with butter, butteroil and cheddar cheeses likely to be the only products to, in practice, attract a significant levy. The rate of the levy will be determined by regulation in the first year and for subsequent years by a formula which is detailed in the legislation. As I mentioned in my second reading speech on the Dairy Produce Market Support Levy Bill 1985 the Government has amended this formula in such a way as to further reduce the rate at which the levy will be phased out in order to ease the transitional burdens on the industry resulting from the introduction of the new arrangements. Funds from the levy will be used to provide further support for domestic prices of dairy products in addition to that funded by the levy on all milk under the Dairy Produce Market Support Levy Bill 1985. Levies imposed under this Bill form a part of a transitional arrangement designed to ease the movement over time to a lower level of support for domestic prices of dairy products. The levies will be phased out under the formula, with the speed of the phase-out being affected by the extent to which production and/or market milk prices fall. The aim of the formula is to abate the rate of decline in levies and hence support for domestic prices, if milk production or market milk prices fall rapidly. A rise in either market milk prices or production would, incidentally, under the formula have the same effect as no change in these factors. This is necessary to ensure that support for domestic prices of manufactured dairy products is not adversely affected by the actions of one or more State Governments in increasing market milk prices. Honourable senators will be aware that the regulation of the market milk sector of the industry has been and remains the responsibility of State Governments. However the Government, in the Dairy Produce Market Support Bill 1985, provides for the repeal of the Dairy Industry Assistance Act 1977 and the Dairy Industry Assistance Levy Act 1977. These Acts which were passed in 1977 but never proclaimed have been seen by the dairy industry as inhibiting inter-State trade in market milk. In the view of the Government it is inappropriate for the Commonwealth to impose artificial impediments to rational sourcing of milk, whether it be market milk or manufacturing milk. The only direct financial implication for the Commonwealth is the cost associated with collection of the dairy products levy which will be in the vicinity of $120,000 per annum. Given that the Commonwealth in the past has met the cost of levies imposed under the Dairy Industry Stabilization Levy Act 1977 and the imposition of the levy under this Bill is for a limited time period, it was not considered appropriate for collection charges to be met from levy receipts. I commend the Bill to honourable senators. Debate (on motion by Senator Kilgariff) adjourned. Bills received from the House of Representatives. Motion (by Senator Grimes) agreed to: That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of all or several of the Bills being put in one motion at each stage, and the consideration of all or several of such Bills together in the Committee of the Whole, and as would prevent the reading of the short titles only on every order for the reading of the Bills. Ordered that the Bills may be taken through all their stages without delay. Bills (on motion by Senator Grimes) read a first time. Second Readings Senator GRIMES(Tasmania-Minister for Community Services)(4.05) —I move: That the Bills be now read a second time. I seek leave to have the seconding reading speeches incorporated in Hansard. Leave granted. The speeches read as follows- SALES TAX LAWS AMENDMENT BILL 1985 This is the main Bill in a package of 6 Bills that together will amend the sales tax law in a number of important respects. Included in this Bill are measures necessary to counter arrangements under which wholesalers are avoiding sales tax by selling goods by retail under agency and other marketing arrangements. The Bill also reflects this Government's firm resolve to stamp out tax evasion. Substantial sales tax evasion has recently come to light based on abuses of the present procedures for registration of sales taxpayers and their right to obtain goods free of tax by quotation of a certificate number. The Bill therefore contains a number of measures designed to strengthen the existing sales tax registration and quotation procedures. Some proposals of the former Government announced on 20 August 1981 that will correct deficiencies in the existing machinery and liability provisions of the sales tax law are also covered by this Bill. I turn now to the details of each measure. Indirect Marketing Arrangements Mr President, this Government's views on tax avoidance are well known. We came to office on a promise to smash tax avoidance in all its forms. Sales tax has not been immune from the influence of the promoters of tax avoidance schemes. But sales tax avoidance is, once it takes hold in a particular industry, cancerous in its growth. The level of sales tax payable directly affects the ultimate price of goods and its avoidance by one firm in an industry gives an unwarranted competitive advantage in the marketplace to that firm. Others in direct competition with that firm are often forced to engage in similar sales tax avoidance or go under. One particular avoidance arrangement that has gained currency relies on the fact that sales tax is generally payable on the last wholesale sale in the marketing chain. The amount on which the liability for tax is calculated is intended to include all the costs and profit-margins of those in that chain up to, but not including, the retailer. Known as agency schemes, these arrangements are based on a wholesaler appointing a normal retailer as agent. As a result the wholesaler technically becomes the retailer for the purposes of the sales tax law. Prior to entering into the scheme, the wholesaler's goods would be sold to the retailer who, as owner of the goods, would sell them to customers of the retailer's store. Under the scheme, the wholesaler retains ownership of the goods, but places them in the retailer's store alongside the retailer's normal stock. The retailer, as agent of the wholesaler, then sells the goods to those same customers of the retailer. This complex and highly artificial arrangement is claimed to have the result under the existing sales tax law that sales tax is payable, not on the wholesaler's former price to the retailer, but on the price at which the wholesaler purchases the goods. This price is, of course, much lower and excludes all of the marketing costs of the wholesaler and the wholesaler's profit margin. The cost to the revenue of these arrangements is estimated to be at least $200 million per annum. There is another variation on the same theme. In this case, the wholesaler obtains permission to use a section of the retailer's store from which the wholesaler's goods are sold direct to the public. Again the goods are displayed alongside the retailer's goods. From the retail customer's point of view there is no distinction to be seen between the two. As with an agency arrangement, the wholesaler assumes for sales tax purposes the mantle of a retailer. Floor-plan arrangements, like agency arrangements, are claimed to exclude from the taxable sale value of the goods concerned the wholesaler's costs and profit margin. The considerable savings in sales tax sought to be obtained by these schemes are used to achieve a competitive edge in the particular market for the wholesaler's product and to inflate the profits of those firms engaging in them. Those wholesalers who, on principle, resist the temptation to enter such schemes and who continue to market their goods in the traditional manner suffer as a result. That is not a situation that this Government will tolerate. At the same time, the Government recognises that some businesses have for many years, and for genuine commercial reasons, sold their goods to the public through agents and, to a lesser extent, under floor-plan arrangements. While there is no sales tax avoidance purpose present in this situation, the revenue is affected in the same manner and to the same degree. The Government sees no valid reason for excluding from the amendments those who, although their use of agency and floor-plan arrangements can be justified on sound commercial grounds, benefit from similar reductions in the amount of sales tax payable. For this reason, the amendments will not require that there be a sales tax avoidance purpose, nor will they be retrospective in effect. Mr President, under amendments proposed in this Bill, where any person other than the manufacturer of goods, sells goods by retail under these arrangements-referred to in the Bill as indirect marketing arrangements-sales tax will in future be payable on the fair wholesale market value of the goods. In other words, the sales tax advantage sought to be achieved will be removed. This is to be done by treating persons who sell goods under indirect marketing arrangements as wholesale merchants for sales tax purposes. A similar result to this is already achieved in the case of a manufacturer under the existing law. Some consequential changes to the Sales Tax Regulations will be required and these will be submitted to the Federal Executive Council for approval after this Bill has been passed by the Parliament. The new basis for taxing sales for goods under indirect marketing arrangements will apply to sales of goods made after the date of Royal Assent to the Bill. This will allow time for those who will, under the Bill, be now treated as wholesalers to become registered for sales tax purposes. Registration and Quotation Procedures Mr President, once a person becomes registered as a sales taxpayer, that person has to meet a number of obligations that arise under the sales tax law. There are, also, certain privileges associated with being a registered sales taxpayer. The most significant is the ability to purchase goods sales ''tax-free'', in certain circumstances, by quoting the number of the sales tax certificate that is issued upon registration. Substantial sales tax evasion is occurring because registered persons are abusing this privilege by quoting, or purporting to quote, a certificate number when purchasing goods in situations where they ought not to do so because they do not intend to meet their sales tax obligations. At the same time, unregistered persons are known to be quoting bogus numbers when purchasing goods and obtaining those goods without payment of the sales tax due on them. So far as the vendors of the goods are concerned, it is more often than not a case of complicity by studied indifference to the false quotation. Those vendors claim that, under the present law, they need not be concerned about whether or not the purchaser's quotation is lawful. A feature common to such practices is that payment is made in cash of a substantial amount and the purchaser often gives a false name and address to avoid being traced. These fraudulent practices are of the worst kind. Every taxpayer in Australia is a victim of the unprincipled participants in these frauds. The cost to the revenue is estimated to be upwards of $200 million annually. Action is currently being pursued by the taxation office, with the assistance of the Australian Federal Police and the Director of Public Prosecutions, to bring the participants in the frauds before the criminal courts. That is, however, a long and complex task and the Government cannot, and will not, stand idly by while the criminal law takes its course. Stricter administrative arrangements are, in the Government's view, called for. Measures in this Bill will, therefore, strengthen the registration and quotation procedures in several ways to counter these evasion practices. First, the maximum level of security that the Commissioner may require from a registered taxpayer, or a person seeking registration, where he considers the revenue is at risk, will be increased from its present level-set in 1930-of $2,000 to $25,000. Secondly, the Commissioner will be authorised to refuse or revoke a sales tax registration where the basis of the application was false or misleading, or where the security is not provided when called for. Thirdly, the Commissioner has to be given the authority to prohibit a registered person from quoting his certificate where the Commissioner is satisfied that the person has abused, or has aided or abetted others to abuse, the certificate quotation procedures. Another feature of the new arrangements will be that the Commissioner will be authorised to publish in the Government Gazette, or to circulate vendors with, details of certificate numbers that have been cancelled, revoked or withdrawn. The most significant measure against evasion to be put in place by this Bill, Mr President, will be a positive duty on vendors of goods not to accept quotations for sales tax purposes if the circumstances surrounding the transaction appear to be suspicious. More particularly, in future a person will be liable to make good any sales tax evaded where, upon receiving a quotation from a purchaser of goods, there are reasonable grounds for believing that- the purchaser is not a registered sales taxpayer; the quotation is unlawful; the quotation is false or misleading; or the certificate number quoted has been published or circulated by the Commissioner. Where a suspected quotation turns out to have been valid, the Commissioner will be able to remit or refund any tax payable or paid by the vendor. As a corollary to this measure, a collector of customs is to be authorised to retain imported goods that have been the subject of a quotation, where the collector entertains doubt about the bona fides of the quotation, until sales tax is paid. Decisions of the commissioner in relation to registrations or quotations of certificates that will be made under these new arrangements are to be subject to the usual rights of objection by affected taxpayers with a further right of review by the Administrative Appeals Tribunal. These changes will also operate from the date of Royal Assent to the Bill. I turn now, Mr President, to mention certain proposals of the former government that are also the subject of the Bill. The proposals are among those announced by the Deputy Leader of the Opposition as Treasurer on 20 August 1981 and which my colleague, the present Minister for Trade, indicated in a statement of 30 March 1983 that we would proceed with. Drafting resources have not permitted some of the more complex proposals of the former government to be included in this Bill, but those of an anti-avoidance nature have been included and the remaining proposals will be made the subject of a later Bill. The first measure I mention concerns a technical problem with the definition of ''manufacture'' contained in the sales tax law. One particular aspect of that definition has been exploited by some manufacturers in a way at variance with the intention of the legislation. This will be overcome by a re-expression of the definition in this Bill. This measure will, as announced by the former government, apply with effect from 20 August 1981. This change is expected to lead to the recovery of approximately $1m in avoided sales tax. Another measure will bring the provisions of the sales tax law relating to returns and payment of sales tax on imported goods into line with the customs law and procedures. This is to be achieved by applying, from the date of Royal Assent to the Bill, sales tax on imported goods at the rate applicable at the time the goods are entered for home consumption under the customs law. The transitional provisions applicable to certain anti-tax avoidance amendments of the sales tax law made in 1978 have also been found to have an unintended operation. These transitional provisions are, as announced by the former government, to be terminated with effect from 20 August 1981. This termination will prevent further intermediate revenue losses. Finally, the Bill provides for a broadening of the information gathering power of the commissioner to ensure that it extends to access to goods and gives taxation officers the right to examine, take samples of and analyse goods. The opportunity is also being taken to ensure that persons are required to provide reasonable assistance to the commissioner in the exercise of this power, thus overcoming in relation to sales tax a limitation on the information gathering powers of the taxation office imposed by a recent decision of the High Court. Mr President, an explanatory memorandum containing detailed explanations of technical aspects of the Bill is being made available to honourable senators and I do not therefore propose to further address the matters covered by the Bill. I commend the Bill to the Senate. SALES TAX (No. 5) AMENDMENT BILL 1985 This Bill is closely related to one of the measures contained in the Sales Tax Laws Amendment Bill 1985, about which I have just spoken. By part six of that Bill, the law relating to the payment of sales tax on imported goods, that is contained in the Sales Tax Assessment Act (No. 5) 1930, is, as I have explained, to be brought into line with the customs law. Under the structure of the sales tax legislation each Assessment Act has a Complementary Taxing Act, in this instance the Sales Tax Act (No. 5) 1930. This Bill will amend that Act to formally impose sales tax on imported goods at the rates of tax in force when the goods are entered for home consumption. There will be no alteration by this Bill to the rates of sales tax payable. The rates of tax to be imposed by this Bill are the same as those currently in force. Details of the Bill are set out in the explanatory memorandum that is being circulated to honourable senators. I commend the Bill to the Senate. SALES TAX ASSESSMENT BILL (No. 10) 1985 This Bill contains a further measure to counter sales tax avoidance. Together with the 3 remaining Bills in this package, it will ensure that royalties paid in connection with the manufacture, sale or lease of goods, but under arrangements that have the effect of excluding them from the taxable sale value of the goods, will not escape the payment of sales tax. Since its enactment in 1930, the sales tax law has contained a general provision designed to include in the taxable sale value of goods, royalties paid in respect of the goods. Avoidance arrangements have developed under which the intention of the present law can be readily circumvented. The result is that royalties that ought to form part of the taxable value of goods are freed from sales tax. The arrangements in question, which are particularly prevalent in the recording industry, were described in some detail in statements by the Deputy Leader of the Opposition on 20 August 1981 and 6 January 1982, when, as Treasurer, he announced the then Government's intention to amend the sales tax law to counter these particular avoidance arrangements. Under one arrangement a retailer engages a manufacturer to manufacture goods to order and the retailer sells the goods either by mail order or direct to the public, often via an agency or floor plan arrangement. I have spoken earlier about these practices. Under the arrangement the retailer has the responsibility for payment of, and pays, the royalty on the goods. The amount of the royalty is therefore not included in the taxable price for which the goods are sold to the retailer by the manufacturer. Under measures contained in the Sales Tax Laws Amendment Bill 1985, royalties paid by retailers who sell goods under indirect marketing arrangements will be subject to tax under the present scheme of the sales tax law. This Bill will cater for the additional situation where a royalty is paid in respect of goods, but the person who pays the royalty is someone other than a person who has dealt with the goods. Without such a measure, the royalty amendments in the Sales Tax Laws Amendment Bill could be easily circumvented. Because of the definition of 'royalty' in that Bill which is to be applied for the purposes of this Bill, royalties paid for the performance or exhibition of matter subject to copyright, such as a musical work or a motion picture, will not be subject to tax under the measures in either Bill. The cost to date to the revenue in relation to goods sold under royalty arrangements (other than indirect marketing arrangements) has been around $25m. This Bill, because it is not retrospective in its effect, will not recoup that lost revenue, but it will prevent further revenue losses. For constitutional reasons, and to conform with the existing structure of the sales tax law which is contained in 9 separate Assessment Acts each with its complementary Taxing Act, this Bill proposes the enactment of a further Assessment Act that will be entitled the Sales Tax Assessment (No. 10) Act. It contains the necessary machinery provisions for the assessment, collection and administration of the new tax on royalties. The measures contained in the Bill will apply to royalty payments made on or after 10 May 1985 in respect of goods, notwithstanding that the goods may have gone into use or consumption in Australia, provided that the goods on which the royalty is paid were the subject of a taxable transaction or act for sales tax purposes under one of the other Sales Tax Assessment Acts. Explanations of technical aspects of the Bill are contained in the explanatory memorandum that is being circulated to honourable senators. I commend the Bill to the Senate. SALES TAX BILL (NO. 10A) 1985 This is the first of 3 Taxing Bills that I mentioned in introducing the Sales Tax Assessment Bill (No. 10) 1985. It is a requirement of the Constitution that a law imposing taxation shall deal only with one subject of taxation and that laws imposing customs duties and laws imposing excise duties deal only with those duties. This Bill will, respecting that requirement of the Constitution, formally impose sales tax payable under the (No. 10) Assessment Bill on Royalties in cases where that sales tax is technically a duty of excise. As I explained in introducing that Bill, the sales tax will be payable by the person who pays the royalty. The rate of tax on such royalties is declared by the Bill to be the rates of tax applicable to the goods in respect of which the royalty is paid. I commend the Bill to the Senate. SALES TAX BILL (NO. 10B) 1985 This is the second of the Taxing Bills associated with the new tax on royalties. By this Bill, sales tax will be formally imposed on royalties paid on goods where the tax is in the nature of a customs duty. This could occur, for example, where the payment of the royalty is connected with the importation of the goods. In other respects, the Bill is identical in effect with the Sales Tax Bill (No. 10A) 1985. I also commend this Bill to the Senate. SALES TAX BILL (NO. 10C) 1985 Finally, Mr President, I come to the sixth Bill in this package of Sales Tax Bills and the third Taxing Bill associated with the new tax on royalties. In cases where the sales tax on royalties is neither a duty of excise nor a duty of customs it will be imposed by this Bill. With the exception of the nature of the tax, the Bill has the same effect as the last two Bills. I commend the Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. Bills received from the House of Representatives. Motion (by Senator Grimes) agreed to: That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of all or several of the Bills being put in one motion at each stage and the consideration of all or several of such Bills together in the Committee of the Whole. Ordered that the Bills may be taken through all their stages without delay. Bills (on motion by Senator Grimes) read a first time. Second Readings Senator GRIMES(Tasmania-Minister for Community Services)(4.07) —I move: That the Bills be now read a second time. I seek leave to have the seconding reading speeches incorporated in Hansard. Leave granted. The speeches read as follows- STATES GRANTS (SCHOOLS ASSISTANCE) LEGISLATION AMENDMENT BILL 1985 The main purpose of this Bill is to adjust 1985 grants to government and non-government schools in the States and Northern Territory, in line with the Government's policy of providing retrospective cost supplementation for the Commonwealth's schools programs. These arrangements provide school systems and authorities with the confidence to plan ahead in the knowledge that grants will be maintained in real terms. This will involve a further appropriation of $15m. I commend the Bill to the Senate. STATES GRANTS (TERTIARY EDUCATION ASSISTANCE) AMENDMENT BILL 1985 The primary purpose of this Bill is to adjust grants to the States and Northern Territory for universities, colleges of advanced education and technical and further education institutions in line with the Government's agreed procedures to supplement the programs of the Commonwealth Tertiary Education Commission for cost increases. Under these procedures, wage and salary increases occurring during the program year are met while increases in non-salary and capital costs are adjusted to the levels applying at the beginning of the program year. The total amount of supplementation to be provided by this Bill is $219.58 million, comprising $60.43 million for 1985 programs, $79.226 million for 1986 programs and $79.924 million for 1987 programs. I commend the Bill to the Senate. STATES GRANTS (EDUCATION ASSISTANCE-PARTICIPATION AND EQUITY) AMENDMENT BILL 1985 The primary purpose of this Bill is to supplement for cost increases the grants available to government and non-government education authorities in the States and the Northern Territory in 1985 to conduct projects and programs under the Participation and Equity Program which the Government introduced in 1984. This adjustment is in accord with the Government's undertaking to provide retrospective cost supplementation for this program. The adjustments are consistent with those being made by the States Grants (Schools Assistance) and States Grants (Tertiary Education Assistance) Amendment Bills which are also before the House today. This supplementation will involve a further appropriation of $1.518 million in 1985. This Bill will also extend the delegation arrangements set out in the Principal Act to allow the Minister to delegate powers in respect of Technical and Further Education to the Chairman of the Commonwealth Tertiary Education Commission. I commend the Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. Bills received from the House of Representatives. Motion (by Senator Grimes) agreed to: That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of all or several of the Bills being put in one motion at each stage and the consideration of all or several of such Bills together in the Committee of the Whole, and as would prevent the reading of the short titles only on every order for the reading of the Bills. Ordered that the Bills may be taken through all their stages without delay. Bills (on motion by Senator Grimes) read a first time. Second Readings Senator GRIMES(Tasmania-Minister for Community Services)(4.08) —I move: That the Bills be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- These Bills propose a number of amendments to the Petroleum (Submerged Lands) Act and incorporated Acts. They provide for: the granting of retention leases over currently non-commercial discoveries and the setting of fees for such leases; the revision of the registration provisions of the Act which deal with registration of legal documents concerning interests in titles and consequential amendments to the fees payable on registration; the improvement of the administrative processes for the making of regulations and the service of directions which control offshore petroleum exploration and development operations; the extension of the scope of access and special prospecting authorities to facilitate seismic survey work; the early release of basic data and interpretive information supplied by titleholders to Government; and the review by the administrative appeals tribunal of discretionary decisions made by the Commonwealth Minister (or the Minister's delegate) as designated authority in areas adjacent to Commonwealth Territories, or in exercise of other specified powers. The above provisions have been the subject of extensive consultation with the State and Northern Territory governments and the petroleum exploration industry, and have general support. In addition, the amendments provide that petroleum production in the territory of Ashmore and Cartier Islands adjacent area will not incur liability for royalties. The amendments also give effect to the agreement between the Commonwealth and Western Australian Governments which waives a proportion of the Commonwealth's share of royalties from the north west shelf natural gas project in favour of Western Australia. The amendments proposed in these four Bills are essential to the efficient administration of offshore petroleum activity. Many of them will also provide further encouragement of offshore exploration and development. With the introduction of a new division into the Act, the Petroleum (Submerged Lands) Amendment Bill 1985 enables permittees discovering petroleum which is currently non-commercial, but which is expected to become commercial within fifteen years, to apply to the joint authority for the award of a retention lease. Applicants are required to provide details of proposed work and expenditure in a lease area, as well as details of the commercial viability, or possible future commercial viability, of the recovery of petroleum from the area. A fee of $600 is payable on lodging an application for a retention lease. If the Joint Authority is satisfied that recovery of petroleum is not presently commercially viable, but is likely to become viable within fifteen years, it shall grant a lease for a period of five years over all of the blocks applied for by the permittee. Given the uncertainties concerning petroleum prices, marketing opportunities and technological change, a fifteen year assessment period should ensure that discoveries with genuine development potential are awarded a lease. The Government does not intend that small, insignificant discoveries will be eligible for a lease as this would 'sterilise' exploration areas with no reasonable prospect for development of the resource. The Joint Authority may refuse to grant a lease and, if it does so because it is satisfied that recovery is already commercially viable, the permittee may then apply for a production licence. If refusal to grant the lease is on the grounds that petroleum production is unlikely to become commercially viable within fifteen years, the blocks applied for will remain part of the exploration permit. During the term of a lease the Joint Authority may require the lessee to re-evaluate the commercial viability of petroleum production from the lease area. Having examined such a re-evaluation and formed the opinion that production is viable, the Joint Authority may inform the lessee that the lease is to be cancelled. However, before the Joint Authority issues a cancellation notice, it must give the lessee not less than one month to object to the cancellation. If the Joint Authority proceeds with a cancellation notice after consideration of the lessee's objections, termination of the lease will take place twelve months after the notice has been served. During this period the lessee may apply for a production licence, in which case termination of the lease will not take place until the application for the licence has been dealt with. It is expected that lessees will keep development options under detailed attention throughout the term of the lease particularly where the commercial viability is marginal in the short term. Accordingly, where cancellation action is proposed by the Joint Authority, twelve months will provide adequate opportunity for lodgment of an application for a production licence. A lessee may apply for renewal of the lease six to twelve months before its expiration. Details similar to the original lease application and a fee of $600 are required to accompany the renewal application. If the Joint Authority is satisfied that the lease is still not commercial, but is likely to become commercial during the next fifteen years, and the lessee has fulfilled the conditions of the original lease, a renewal will be granted. The Joint Authority may, however, refuse to grant the renewal of a lease, in which case the lessee must be provided with the reasons and will have the opportunity to provide further information in support of the renewal application. Where refusal to renew a lease is because the joint authority is satisfied that petroleum production has become commercially viable, the lessee will have twelve months within which to apply for a production licence. Where additional petroleum is discovered in a lease area, after the grant of a lease, the lessee is required to notify the designated authority immediately. The designated authority has the power to direct the lessee to furnish particulars in connection with the discovery. The designated authority may then direct the lessee to evaluate the discovery. Non-compliance with either of these directions could attract a penalty of $10,000. These provisions are similar to those applying to the discovery of petroleum by a permittee. The Petroleum (Submerged Lands) Act (Retention Lease Fees) Bill sets annual fees of $4,500 for each block in a lease. This compares with $9,000 per block for a production licence and $15 per block for an exploration permit. Fees collected from retention leases will be paid to the relevant State or the Northern Territory as appropriate. The introduction of the retention lease as a form of title is supported by the State and Northern Territory Governments and by industry. The provisions in the Bill include numerous constructive suggestions from those sources which will enhance the effectiveness of the legislation. The Petroleum (Submerged Lands) Amendment Bill also revises the registration provisions of the Act. The new provisions take into account recommendations of the Royal Commission into the activities of the Ship Painters and Dockers Union, and suggestions by industry and the States and the Northern Territory, to clarify the process of registration of transfers and dealings affecting petroleum titles. The status of transfers and dealings which have not been lodged for registration is also clarified. Provision is also made to ensure that the register is kept as up-to-date as possible, to protect the interests of investors and potential investors. The amendments ensure that a transfer of title is of no force in law until it has been approved by the joint authority and registered. Each registered holder and each transferee of a title will be required to execute the instrument of transfer before it can be lodged for approval. Applications for approval of a transfer of title must be lodged with the designated authority within three months of the execution of the instrument. Applications received after this period are not to be approved by the joint authority unless special circumstances exist. The prescribed instrument of transfer will make it clear that a transfer must involve the transfer of the whole title from all of the transferors to all of the transferees. The transferees will comprise all of the parties who will be the registered holder of the title on registration of the transfer. Partial transfers will not be acceptable. Where a transfer is approved by the joint authority the new provisions set out the manner in which the designated authority shall amend the register. The transfer comes into force at the time the register is amended. All applications for transfer of titles lodged after the commencement of this section will be dealt with under the new provisions. Applications lodged before the commencement of this section, but for any reason not dealt with before the commencement, will be dealt with under the old provisions. The Bill also introduces an amended scheme of arrangements for registration of specified dealings affecting titles. The new arrangements will remove deficiencies in the existing legislative scheme, particularly the uncertainty as to which dealings are able to be registered, and the effect in law of instruments evidencing dealings which have not been approved and registered. Dealings which are covered by the amendments are those establishing the initial interests of registered titleholders in a title and any subsequent assignment of those interests, including arrangements which create a charge over an interest; dealings giving rise to assigning a right, whether conditional or not, to the assignment of an interest in a title; dealings between registered titleholders and other parties with an interest in a title regarding the manner in which operations will be carried out under the title and the rights and obligations of each of the parties; dealings creating or assigning an entitlement of a person to a share of the production of petroleum, or the revenue derived from a current or future discovery; and dealings creating or assigning a right or an option to enter into any of the dealings previously described. Any dealings altering or terminating any of the dealings described above are also registrable. Examples of these dealings are given in the explanatory memorandum to this Bill. Such dealings are of no force until they have been approved by the joint authority. Applications for approval of a dealing must be lodged within 3 months of the date of execution of the instrument evidencing the dealing or they will not be approved, unless special circumstances exist. A separate application must be made for each title affected by a dealing. Any dealings entered into prior to a title coming into existence are, if a provisional application had not already been made, to be lodged within 3 months of the title coming into existence. Any dealing forming a part of a set of dealings comprising the issue of a series of debentures in relation to a particular title is to be treated as one dealing. The amendments set out the manner in which the designated authority is to amend the register where an application has been made seeking approval for the registration of a dealing affecting an interest in a title. Amendments are also made to the act covering dealings relating to titles which might come into existence in the future and which would then be subject to the provisions relating to registration of such dealings, as described above. This will enable a party to such a dealing to lodge a provisional application for approval of the dealing immediately before a title comes into existence. On the day the title comes into existence, the dealing will be treated as described above. Any party to an unregistered dealing which has been entered into before these amendments come into force, and to which this Bill applies, may make application within twelve months for approval of the dealing. As the legislation is not retrospective this is not compulsory, but it will allow parties to clarify the legal status of their dealings. It is an offence to lodge an instrument relating to transfers or dealings described in this Bill which is false or misleading in relation to the information necessary to calculate the fee payable under the registration fees Act. The penalty is $10,000. In addition, a party to an approved transfer or dealing may be required to supply information as to any alterations in the interests or rights in the title as a result of the operation of the transfer or dealing since it was approved, or to supply further information in respect of applications. Failure to comply with such requests could involve a penalty of $5,000. The Bill also provides for corrections to be made to the register by the designated authority where there are obvious errors, for example, misspellings of company names. Entries in the register may also be made by the designated authority, either on application by interested persons or on the designated authority's initiative, to ensure the register is accurate. Before an entry is made, however, a notice must be published in the Gazette and the designated authority must take account of any submissions received on the matter before the register is amended. Appropriate amendments have been made to the incorporated registration fees Act. These amendments clarify the calculation of fees payable for applications to register transfers or dealings affecting titles. They ensure that excessive fees cannot be charged in relation to the series of agreements which give effect to what amounts to a single transaction. The amendments to the registration provisions of the Act are complex and could not have been completed without the considerable industry support which has been received. At the suggestion of the Victorian Government, amendments to improve the administrative processes for the making of regulations and the service of directions are included in this Bill. The new provisions will facilitate the service of documents, enable codes of practice and standards to be adopted as they exist from time to time, and enable the directions and regulations to control certain activities by making them subject to the consent or approval of specified persons. A direction may apply to a titleholder and also to other persons specified in the direction. These persons include those having a contractual relationship with the titleholder. The responsibility for ensuring that all relevant persons are aware of the directions falls on the titleholder. Where the titleholder fails to take appropriate action to make relevant persons aware of a direction, a penalty of $5,000 may be imposed. To safeguard the rights of persons to whom a direction applies, it is provided that they may not be convicted of an offence for failing to comply with a direction unless the prosecution can prove that they knew, or could reasonably be expected to have known, of the existence of the direction. These parties are also protected from liability for costs incurred by the designated authority. In view of the international nature of the petroleum industry this Bill will enable regulations to apply Australian or international codes of practice or technical standards, as in operation from time to time, to offshore petroleum activities. Of course, overseas standards will only be adopted where appropriate Australian standards do not exist. The amendments will allow regulations to be made to enable specified operational and technical actions to be taken subject to the consent or approval of titleholders. The amendments will also enable the advice of internationally recognised certifying and classifying bodies to be accepted as the basis for consideration of certain specified proposals such as the assessment of the sea worthiness of vessels. These provisions are fully supported by industry and the States and the Northern Territory. The Bill also extends the scope of access and special prospecting authorities and facilitates their grant to exploration companies. At the present time an access authority only applies to titleholders and exploration areas under the jurisdiction of the Commonwealth offshore legislation. The scope has been broadened to allow a person who holds a State or Northern Territory petroleum title to apply for an access authority to enter the Commonwealth area adjacent to that title. The scope of special prospecting authorities has been extended to allow them to be granted over any vacant area, and more than one person may be granted a special prospecting authority over an area. However, the designated authority must inform each holder of a special prospecting authority of the proposed activities by other holders in the same area. The Petroleum (Submerged Lands) Amendment Bill also provides for the early release of basic data and interpretive information supplied by titleholders to government, subject to consultations with titleholders on the release of interpretive information. The new provisions will increase public availability of data and information and will encourage exploration activity. Information contained in or accompanying an application for the grant or renewal of a title may be released after the grant of the title, unless it is confidential or of a financial nature or covers details of the technical capability of the applicants. Further, factual data and information, that is data and information which are not conclusions or opinions, obtained about a permit or lease area may be released after two years. The current provisions applying to data and information about permits provide for five years confidentiality. When a permit, lease or licence is surrendered, cancelled, determined or expires, factual information will be available for release immediately. Factual data collected on vacant acreage, for example under a special prospecting authority, will be available for release after two years, or earlier if it is deemed appropriate by the designated authority. Interpretive information, that is a conclusion or an opinion of a confidential nature, may be released after five years subject to a number of conditions. Such information was previously not available for release at any time. Before interpretive information is released, a Gazette notice will be published giving interested persons forty-five days in which to lodge an objection to the release of the information. The grounds for objection are that the information is a trade secret, or that disclosure of the information would adversely affect the business, commercial or financial affairs of the objector. The designated authority or the Commonwealth Minister may allow, partly allow or disallow, the objection. A person who is dissatisfied with the decision of the designated authority may request a review by the Commonwealth Minister. The latter provision reflects the fact that the Commonwealth Minister is responsible for the administration of the legislation. The Bill provides a more efficient arrangement in relation to the service of documents on titleholders. Where there is more than one titleholder it will allow one titleholder to be nominated as the person on who documents may be served. This nomination may be revoked by the other titleholders at any time. In the event of such revocation, documents would be served on all titleholders. This will improve the efficiency of administering titles and should be of considerable assistance to titleholders. The Bill includes amendments which will enable review by the Administrative Appeals Tribunal (AAT) of designated authority decisions made by the Commonwealth Minister, or his delegate, in relation to areas adjacent to the Commonwealth Territories or in relation to the release of data and information supplied by titleholders. The amendments set out the manner in which the Minister may review decisions taken by a delegate before the matter may be referred to the AAT. The Government has decided that decisions of a policy nature, that is joint authority decisions, and decisions of designated authorities in the State or Northern Territory adjacent areas should not be subject to AAT review. Policy decisions are clearly not a matter for AAT and it would be inappropriate to subject State or Northern Territory Ministers to the AAT legislation in relation to those areas in which they exercise powers in their own right as designated authorities. In order to ensure that prospective petroleum development projects in the territory of Ashmore and Cartier Islands adjacent area are encouraged to proceed at the earliest possible time, the Government has decided to bring forward amendments to the petroleum (submerged lands) Act and the Incorporated Loyalty Act which will exempt production in this area from royalties. Currently known discoveries affected by this decision include Jabiru, Challis and Puffin. I make it clear that this exemption from royalties cannot be viewed in isolation. It represents the first legislative step in introducing the RRT arrangements previously announced by the Government. It is being done now, ahead of the overall RRT legislation, to assist the developers of the Jabiru Project and to demonstrate the Government's commitment to major and positive changes in the financial regime applying to 'Greenfield' offshore projects. A prime example is the Jabiru Development in the Timor Sea which will clearly proceed under under the resource rent tax regime and may not have been developed under the previously applicable royalty and levy arrangements. Amendments to extend the royalty exemptions to the remaining 'Greenfield' areas will be introduced when the resource rent tax legislation is introduced into parliament. Finally, the Petroleum (Submerged Lands) Amendment Bill makes provision for the Commonwealth to waive part of its royalties from the north west shelf project in favour of the Western Australian Government. Details of this arrangement were announced on 11 March this year. This will help Western Australia to meet its contractual obligations to the north west shelf operators, and so ensure the continued viability of the project. The north west shelf project is of national significance and will bring substantial economic benefits to the State of Western Australia as well as the nation as a whole. It will play a key role in the future development of Australia's energy resources and in the development of energy trade between Australia and Japan. The Commonwealth's future financial contribution to the project, will be the waiver of the proportion of the royalties on the domestic phase of the project amounting to $117.1m (in 1984-85 dollars) over the next 20 years. This contribution is additional to substantial taxation other concessions provided by the Commonwealth for this project. The amendments proposed in these four Bills are essential to the efficient administration of offshore petroleum activity. Many of them will also provide further encouragement of offshore exploration and development. I commend the Bills to the House. Debate (on motion by Senator Kilgariff) adjourned. Senator GRIMES(Tasmania-Manager of Government Business) —by leave-I move: That Senator Coleman be granted leave of absence for four months, on account of ill-health. It is my understanding that she is improving, but she cannot fly yet. We wish her well and will welcome her back, I am sure, after four months. Senator PETER RAE(Tasmania)(4.09) — The Opposition warmly supports the motion and takes the opportunity to wish Senator Coleman well in her recovery. I was delighted when I heard that what was regarded at one time as a relatively balanced prospect has become a prospect for an excellent recovery. We are delighted that that has been the eventuality. We look forward to her returning. We trust that it will not be long. Senator CHIPP(Victoria-Leader of the Australian Democrats)(4.10) —On behalf of the Australian Democrats, I join with those honourable senators who have spoken in this expression of goodwill to Ruth Coleman. Only last week I rang her office to find out her progress and was told the same as Senator Grimes has just told the Senate-that she was making excellent progress. In fact, she is making such good progress that she is silly enough to contemplate returning here at an early time, which indicates that she is regaining that robust state of health which we all remember her for. We all wish her well. Senator HARRADINE(Tasmania)(4.11) —I too would like to support this motion and take this opportunity of wishing Senator Coleman well. I hope to speed her recovery even further by saying that we all miss her sallies in this chamber and her discussions outside. Question resolved in the affirmative. Consideration resumed from 9 May, on motion by Senator Grimes: That the Bill be now read a first time. Question resolved in the affirmative. Bill read a first time. Senator GRIMES(Tasmania-Minister for Community Services)(4.12) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Senator Peter Rae —I wish to speak very briefly about the application for leave so that I may explain something to the public. As we are being broadcast at the moment, a lot of people will wonder what is happening when they hear repeatedly that leave is being sought to incorporate a second reading speech in Hansard. It is the practice in this place to give such leave when the Bill has been introduced into the House of Representatives and the speech has already been given in that place. This saves repeating what is an identical speech. Leave is automatically given, as it will be given again on this occasion. I can recall listening to broadcasts before I came into this place and I wondered what on earth was going on and why so many speeches were incorporated and not given. Leave granted. Senator GRIMES —I thank the Senate. The speech read as follows- I present Appropriation Bill (No. 3) 1984-85 which, together with Appropriation Bill (No. 4) 1984-85 which I shall introduce shortly, comprises the additional estimates for 1984-85. In these Bills, Parliament is asked to appropriate moneys to meet essential and unavoidable expenditures additional to the appropriations made under Appropriation Acts (Nos. 1 and 2) 1984-85. No additional provisions have been sought by the presiding officers by way of supplementation to the Appropriation (Parliamentary Departments) Act 1984. These additional appropriations are required to meet commitments that have been approved by the Government since the Budget, additional requirements of an ongoing nature and the reappropriation of certain amounts, unable to be effected under existing legal authorities, necessitated by the changes to administrative arrangements on 13 December 1984, and other transfers of departmental functions. Reappropriated amounts have been fully offset. The principal factors underlying the requirements are cost and price increases and exchange rate fluctuations since the Budget was prepared. Although the Budget figuring contained allowances for prospective wage and salary increases, those amounts were not then appropriated, and funds are now required to meet the costs of minor awards and determinations made since that time and to meet the cost of other factors affecting wages and salaries, such as staffing increases. This Bill was introduced into the House of Representatives prior to the full bench of the Conciliation and Arbitration Commission handing down a decision on 3 April which granted a 2.6 per cent wage and salary increase. No provision has been made in the Bill for the increase which will be met under the separate appropriation provision in section 5 of the Appropriation Act (No. 1) 1984-85. The additional appropriations in the two additional Estimates Bills total $564.5m. Of this, $426.0m is sought in Appropriation Bill (No. 3), and $138.5m in Appropriation Bill (No. 4). These amounts are offset in part by savings in the appropriations made by Appropriation Acts (Nos. 1 and 2) 1984-85 reflecting the Government's determined efforts to achieve savings in expenditure for ongoing programs wherever possible. These savings, amounting to $198.0m, are detailed under the relevant appropriation headings in the document, ''statement of savings expected in annual appropriations'', which has been distributed to members. After allowing for prospective savings, the appropriations now sought represent a net increase of $366.5 million in expenditures financed from annual appropriations. As a proportion of total estimated outlays-encompassing both annual and standing appropriations-this increase amounts to 0.57 per cent. I note here that this proportion has fallen from 0.59 per cent in 1983-84 reflecting the Government's continued commitment to restraining growth in Commonwealth outlays. The Government's introduction of a more efficient method of budgeting for departmental administrative expenses has contributed significantly to a reduction in the amount of supplementation needed in this area. I refer in particular to the consolidation of administrative items and the associated cash limits introduced in the 1984-85 Budget. On the total outlays picture, I recently announced that the mid-year review of estimates indicated that the 1984-85 Budget outlays were broadly 'on track'; this has been supported by actual progress to date as reported in the monthly statement of Commonwealth Government financial transactions. I now outline some of the main areas in respect of which the Government has found it necessary to seek additional provisions in Appropriation Bill (No. 3) 1984-85 to meet expenditure for the ordinary annual services of the Government. An estimated $42.3m is for wages and salaries, $33.7m being for non-defence and $8.6m for defence purposes, to meet increases in award rates, other wage and salary costs and a small increase of 0.4 per cent in Budget-approved average staffing levels. These provisions do not include the wage and salary components of additional funds being provided to certain statutory authorities funded under one line appropriations. $10.9m is included under the Department of Communications for payment to the Australian Broadcasting Corporation for higher staff costs. The ABC is in the midst of a reorganisation to establish smaller, more manageable units. In the course of this reorganisation, there has been an increase in retirements and resignations leading to a significant increase in lump sum payments. There are also cost increases associated with the reorganisation of production and broadcast officers and in operational expenses. These increased requirements have been partially offset by savings on capital equipment. $236.5m is sought for the Department of Defence to meet the effect on the purchase of new equipment and stores of exchange rate fluctuations and variations in the pattern of payments provided for in the Budget. Part of this requirement relates to earlier than expected deliveries and increases in costs of replacement equipment. An amount of $14.6m is sought under the Department of Foreign Affairs for emergency humanitarian assistance and disaster relief. This is part of Australia's response to the tragic food crisis in Africa. Australian aid to Africa has totalled nearly $33m since mid last year. On a GNP basis Australia is now the second highest contributor of emergency relief to Ethiopia and to Africa as a whole. $9.0m is included under the Department of Local Government and Administrative Services as a result of tender price rises for furniture removals and storage. This results from increases in the total cost of furniture removals, which were unforeseen at the time of preparation of the 1984-85 Budget. An increase of some $4.5m was required in 1983-84 for similar reasons. The bulk of furniture removals are undertaken by private contractors who tender competitively for the work in the usual way. I will be taking up with the Minister for Local Government and Administrative Services possible measures for containing cost increases in future years. $6.2m has been included under the Department of the Special Minister of State to cover the higher than expected costs associated with the conduct of the federal election in December 1984. $8.4m is sought under the Department of Sport, Recreation and Tourism to enable Australia to participate in Expo '85 which is being held in Tsukuba, Japan. Participation is at the invitation of the Japanese Government. An additional $20.4m has been provided to the Department of Veterans' Affairs to enable the payment of funds to the Health Insurance Commission to meet treatment accounts for veterans. As there is intended to be a progressive transfer of this function to the Commission, the amount will be fully offset by savings under existing departmental appropriation items. I commend the Bill to the Senate. Senator Grimes —I seek leave to debate Appropriation Bill (No. 3) and Appropriation Bill (No. 4) cognately. Leave granted. Senator PETER RAE(Tasmania)(4.14) — The Opposition wishes to debate Appropriation Bill (No. 3) and Appropriation Bill (No. 4), but it will not oppose them, for reasons which I will explain. The Appropriation Bills are the Bills by which money is appropriated from the Consolidated Revenue to the application of specific purposes of expenditure. The Appropriation Bill (No. 3) appropriates an amount of $426m and the Appropriation Bill (No. 4) appropriates an amount of $138m, each with some added thousands of dollars. Those amounts are divided according to an agreement made in 1965, called the Compact of '65, which divides those matters which, by agreement, the Senate cannot amend from those matters which, by agreement, the Senate can amend if it so desires. In relation to Appropriation Bill (No. 3), which is basically for the ordinary annual services of government, the Senate can either reject it or make a request. In this case I am not aware of any requests that are likely to be made and certainly there will not be any attempt to reject the Bill. With regard to Appropriation Bill (No. 4), which is for capital works and so forth, again the Senate can make amendments if it wishes but once again we regard both Bills as matters for the Government of the day and we will treat them as such. These Bills present an opportunity-indeed, an obligation-for the Opposition to make some comment, both general and specific, on the Government's management of the economy, of government business and of its various departments and its statutory authorities created by the Parliament. In the Committee stage of the discussion certain specific matters relating the these proposed expenditures can be debated in more detail and there will be a number of matters that we will raise at that stage. I wish to speak generally, taking this opportunity for a brief but broad reflection on the general economic management of the Government. The first matter about which I must comment, looking at the need for the appropriation of extra funds, is the concern about what is happening in the economy in relation to interest rates and whether these Appropriation Bills will have any impact on interest rates or whether other measures are having more impact. At the moment in Australia we have the highest interest rates in real terms since the Depression-that is, the difference between the average interest rate being charged on loans and the rate of inflation. That difference constitutes the real interest rates and now it is averaging about 12 1/2 per cent. Comparing that with other comparable countries, one sees that the real interest rate in the United States, for example, is about 5 per cent. In other words, our real interest rate is about two and a half times as high as that of one of our trading partners and competitors. The same applies if one looks at a large cross-section of comparable Organisation for Economic Co-operation and Development countries. This is all the more alarming when one has regard to the fact that it was not so long ago that the Prime Minister (Mr Hawke) was quoted as saying: We nevertheless believe that given the fundamental strengths of the Australian economy that we can expect through the period of this year that there will be I would expect, a lowering of the level of interest rates- That was reported on 12 April. When he made that statement on 11 April, the Prime Minister was predicting a general fall in interest rates steadily throughout the year. Instead of that, we have had one of the most dramatic and fundamental rises in real interest rates that this country has ever experienced. It is a reflection of the general economic management that this situation has arisen. In a recent interview the Prime Minister accepted government responsibility for the increase in the rate of rise of interest rates in Australia, acknowledging that it was government intervention in the market-place which was forcing up the interest rates. In the light of that situation, one must look at the appropriations which are sought from us now. We must also look at them in the context of the expenditure cuts which have just been announced for next year. When we look at what is necessary for this year, it is reasonable to look at what one can draw from that as being likely to be needed for next year. The expenditure cuts, which were announced in the much-vaunted mini-Budget statement last week, have already received the early judgment of the international market-place, which has given that piece of economic management of the Hawke Government the thumbs down. We have found that the market-place has marked down the value of the Australian dollar from about 70c, to which it had risen just before the announcement in anticipation that there would be a rigorous real cutting of expenditure, a real exercise in economic management of the type needed to reduce the deficit, reduce pressure on borrowings, reduce interest rates and create the opportunity for growth in the private sector and through that a growth in employment. What do we find? We find that the judgment is such as to have taken the value of the Australian dollar down steadily from US 70c, to which it had risen, to something under US 67c, which is a serious, nevertheless firm, judgment made by the international market-place. Let us look a little further at what is happening in relation to Government cuts and expenditure. Provision will be made by the Government for expenditure of $43m of compensation in respect of uranium not sold as a result of the Government's bans on contracts for the sale of uranium. The sum of $43m of taxpayers' money will be spent as a result. That amounts to about twice the total cuts made in the much-vaunted mini-Budget in the areas of culture and recreation. If we look at another area of potential interest, we find that the sum is the same as the total cut made in the area of labour and employment. This money could have been saved by one simple measure-by letting people honour contracts which had been entered into quite lawfully for the sale of uranium mined in Australia, which contracts the Government has decided it will not permit to be honoured and for which it will pay compensation of $43m. That sum is equal to about twice the cut which has been made in the areas of overseas aid and foreign affairs. In other words, if the Government had let these contracts be honoured it would not have needed to make cuts in respect of overseas aid or foreign affairs, involving mainly overseas aid. It would still have had some $20m left to spread around elsewhere. It would have very neatly saved the need for the $1 increase in charges for chemist prescriptions. In other words, if the Government permitted people to honour contracts for the sale of uranium for which it is now to pay compensation, it would not need to propose an increase of $1 in the cost of chemist prescriptions-a 25 per cent increase. The sum would have more than covered the cost of the cuts to the disability and war widows' pensions. In other words, we would not have needed to have disability sufferers and war widows suffering cuts in pensions if the Government had permitted the sale of uranium to take place. The sum would have almost covered the total cuts that have been made to local government. Local government has suffered a very severe cut as a result of the mini-Budget. I am not talking about the merits of any of those cuts. However, it shows something about the relative priorities of this Government that it is prepared to cut the pensions of war widows, overseas aid and employment funds and to do those sorts of things as opposed to permitting contracts lawfully made for the export of uranium to be fulfilled. Knowing how desperate the deficit situation of Australia is and how serious the situation of overseas borrowings and public debt is, one would have expected to see some very good examples of neat housekeeping by the Government. We should have seen good examples of the Government ensuring that its own administrative expenses were curtailed, not expanded. What do we see when we look through the explanatory notes which have been provided by way of support for Appropriation Bill (No. 3) and Appropriation Bill (No. 4)? Appropriation Bill (No. 1) and Appropriation Bill (No. 2) were the Bills discussed in the early part of this financial year after the Budget in August last year. Appropriation Bill (No. 3) and Appropriation Bill (No. 4) cover the supplementary amounts of expenditure which have already been committed for the remainder of this year. When we look at the explanatory notes we find that in the Department of Aboriginal Affairs there has been an increase in salaries and allowances payments of 14.78 per cent, which is nearly three times the rate of inflation. Administrative expenses have gone up by 28.06 per cent, which is nearly six times the rate of inflation. In the Department of Sport, Recreation and Tourism, administrative expenses have gone up by 30 per cent. In the Department of Communications, administrative expenses have gone up by 26 per cent. In the Department of Employment and Industrial Relations, administrative expenses have gone up by 27 per cent. In the Department of Aviation, administrative expenses have gone up by 33.9 per cent. These figures all raise the question of whether this Government has been engaged in good housekeeping or whether it has been engaged in a profligate management of the economy which has caused the need for more severe real cuts which hurt people than would otherwise have been necessary. Senator Kilgariff —Frivolous. Senator PETER RAE —Unfortunately, while some of the Government's expenditures are frivolous the effect of the cuts on various people, including local government, will be far from frivolous. In the Department of Education, the cost of salaries and payments in the nature of salaries has increased by 16.3 per cent. If we look at the Department of Immigration and Ethnic Affairs, we find again that administrative expenses have gone up by 31.5 per cent, more than six times the rate of inflation. In the Department of Transport, administrative expenses have gone up by 19.3 per cent. In the Department of the Special Minister of State, administrative expenses have gone up by 49 per cent. There can be some explanation in regard to some of these increases. There may be some extra expenses in one department because there has been a reallocation of duties between one department and another. However, one cannot say that all of these increases are due to a reallocation of duties. In the Department of Trade, salaries and payments in the nature of salaries have gone up by 10 per cent, double the rate of inflation. In the Department of Territories, administrative, travelling and subsistence expenses have gone up by 33.3 per cent. Incidental administrative expenses have gone up by 45 per cent. In the Department of Treasury-this really surprises me as it is the department of the fine-honed cutters of the expenditure of the country-administrative, travelling and subsistence has cost us only an extra 34.4 per cent! That sort of lead will hardly cause this Government to want to acknowledge that there is a real need for expenditure restraint in its other departments. Certainly, an example will not be given by the Government to the country as a whole that there is a need for restraint in government expenditure when those sorts of increases are taking place in administrative expenses. In the Department of Foreign Affairs, salaries and payments in the nature of salaries have risen by 17.28 per cent. I have been through about two-thirds of Government departments. One can hardly regard their examples as good housekeeping. One could hardly regard it as indicative of a government which has shown a proper caution in the expenditure of taxpayers' funds. Why have these cuts had to be made? Because of profligate expenditure in general administration. That is one of the reasons. Let us look at the other reason that is often bandied about in this place; that is, the tax avoidance schemes that are said to have flourished under and been encouraged by the former Government. In the sixty-third report of the Commissioner of Taxation for 1983-84, under the heading, 'Review of Activities and Developments, Commissioner's Overview', the Commissioner says: That elimination of 'paper' schemes is one of the success stories of the last decade. They have been beaten by a combination of legislation, administration, changes in attitude and sheer hard work. That was the work of the former Government and of the former Treasurer, Mr Howard, in particular. During the seven years of the last decade those schemes were knocked out and that success story, as the Commissioner of Taxation calls it, was able to be achieved. So it is not because of the continuing existence of huge tax evasion schemes, unless we are talking about the black economy, which is another story, that the Government has had the problem of the extra expenditure. We have to look elsewhere for the reason for the problem. It is time for us to consider what was said by Bryan Frith, a highly experienced, long time financial journalist of the Australian newspaper on 16 May. He said: If Mr Keating is wondering in what direction his talents could be best employed, his performance on Tuesday night in delivering the mini-Budget suggests that he could have a big future as a conjurer! With suitable showmanship, he pulled expenditure cuts out of the hat to the tune of $1,259 million, which gave the desired illusion-- I emphasise the word 'illusion'- that the Federal Government means what it says about its determination to reduce government spending. I have referred to the increases in the administrative expenses of this Government. Many of those expenses have increased in the year by 30 per cent or six times the rate of inflation. Senator Button —What is the overall figure? Senator PETER RAE —The overall figures are not too bad. That is because the benefits to people in the community have come down while the Government has been looking after itself. Its administrative expenses have gone up by an average of three, four, five or six times the rate of inflation. In so many of the examples I gave-- Senator Button —What is the overall figure? You have selected isolated figures for various departments. Senator PETER RAE —I selected a number of examples by department. I will read them again if Senator Button likes. Senator Button —They were very selective. Senator PETER RAE —They were not very selective. Senator Button was not here when I read the first half of them. He came into the chamber when I was on the last two or three. I will read them again if Senator Button wishes me to. The administrative expenses of the Department of Aboriginal Affairs increased by 28.06 per cent, the Department of Sport, Recreation and Tourism by 30 per cent, the Department of Communications by 26.1 per cent and the Department of Employment and Industrial Relations by 27.7 per cent. I could go through many more if the Minister wanted me to but I am sure that he does not. I will not hold the Senate any longer by citing those figures in detail. Let me return to what Mr Frith said: Mr Keating continues to generate uncertainty about monetary policy, arguing that the Government was correct to abandon money supply targets, correctly saying that the process of deregulation had resulted in the M3 aggregate becoming 'badly flawed' as a monetary indicator. It is true that the Government has subsequently tightened monetary policy. But this does not absolve the Government from the need to restore greater certainty to the financial markets, either by adopting other measures of monetary aggregates or through greater open market disclosure, such as publishing precise details of purchases and sales of government securities. This is necessary, if for no other reason, because overseas investors are used to such detail, and they inevitably will continue to react with suspicion and confusion in the absence of such information. Mr Keating has, however, held out the possibility of resiling from his present position, and said the 'future of the practice of conditional projections-and the more general issue of the prominence to be attached to such aggregates in conditions of change and uncertainty-will be determined prior to the forthcoming Budget'. We look forward to that but, in the meantime, will interest rates hit 20 per cent? While we are waiting for the Government to make up its mind what it will do about this and many other things it keeps having all night meetings about- Senator Puplick —It has to make up all its factional minds. Senator PETER RAE —It has to make up its factional minds and try to bring together its various split causes. While this is occurring one wonders what is happening to the economy of the country. It is no wonder that people are now realising that at the last election they chose a Government that did not have a taxation policy or an economic management policy. It was long on the illusion and short on the substance. It has been proved since that the Opposition has a very clear idea of where it is going. It has a very clear taxation policy and expenditure restraint policy. It has a very clear policy in relation to watching waste, cutting the quangos and reducing the expenditure and waste that takes place in various areas of government with the continuing need for the taxpayer to pick up the tab for the losses created by the extravagant way in which many quangos have been conducted. The Opposition's policy is not a sleight-of-hand as Mr Bryan Frith suggests was Mr Keating's main capacity, as demonstrated last week. We do not oppose the Bills but we do not approve of the expenditure. We do not approve of the way in which this Government is conducting this country's economic management. We do not approve of the way in which the Government is handling this country's excellent economic prospects, its prospects of restoration of economic growth, real growth in employment, a growth in real wealth, a growth in shared wealth, a reduction of the plight of those who are less fortunate in the community and a restoration of opportunity for those who have the initiative to get up and go. These are the things which the Opposition promises to the community which are not reflected in anything the Government has done in the management reflected by the Appropriation Bills before us, in the mini-Budget presented last week or in the pathetic answers which were given at Question Time today by the Minister for Finance, Senator Walsh. He would not give any indication whatsoever as to what plans the Government might have. He did not have any idea of where inflation might be by the end of the year or what would be regarded as a reasonable target for interest rates, unemployment, public debt or the other major aspects of economic management. He simply threw in the towel and said, in effect, that the Government did not have any idea. The Minister for Finance is in such a deplorable state of disillusionment after the caning he got over the cuts and in the taxation meeting last night that one can imagine that he feels like throwing in the towel. I do not understand, after the sad story I have just related, why the whole Government does not throw in the towel and move over for somebody who has a policy of getting on with the development of this country. That is one constructive thing that the Government could do. It could move aside for somebody who has a policy to get this country back on the road to real growth. That is what the Opposition will do the moment it is given the chance. Senator MAGUIRE(South Australia)(4.38) —I rise to speak on Appropriation Bill (No. 3) and Appropriation Bill (No. 4) which are before the Parliament. Appropriation Bill (No. 3) provides for the allocation of $426m from the Consolidated Revenue Fund for additional expenditure by the Government. Appropriation Bill (No. 4) allocates another $138m for the additional needs of the Government. The total amount of money involved in the two Bills is $564m. That money is in addition to that voted by Parliament last year after the August Budget for the current financial year, 1984-85. In the sum of $564m which is allocated in these two Bills extra amounts of money are provided for price increases, and staffing changes in the Public Service. There is an extra $42m for wages and salaries and $249m for extra needs by the Defence Department. Appropriation Bill (No. 4) provides for expenditure on capital works by the Commonwealth Government and on services. It also provides for payment to or for the State governments. One of the allocations within the Bills we are examining today is an extra $62m for Medicare grant payments to the States for their public hospitals. Some of the items in the legislation have already been offset by savings in respect of items in the August Budget. I understand that savings have been made totalling $198m, compared with the original Estimates, so today we are really looking at a net increase in appropriations of $366m. That has to be kept in perspective in relation to overall Commonwealth Government activity, where outlays now total some $60,000m to $65,000m annually. I turn to look briefly at the tremendous improvement in the economy under the present Government. Under the Hawke Labor Government, Australia has witnessed one of the strongest non-inflationary economic recoveries ever. It is worth examining the extent of this economic recovery across a range of economic indicators. In the 24 months from April 1983, when the economic summit was held, to April this year, some 308,000 more Australians have found work in the public and private sectors of the economy. I emphasise that the great majority of that employment increase was in the private sector of the economy, not in the public sector of the economy. Tens of thousands more Australians are at work in the private sector of this economy as a result of the policies of the present Government. The Government's commitment to increase employment by half a million in its first three years of office remains on track. I find it almost unbelievable to listen to speeches similar to that made by Senator Peter Rae this afternoon. Opposition senators, with their appalling record of stewardship of this country's economy, have continued to criticise the economic performance of the Labor Government. The interesting thing is that after just 24 months of Labor Government, according to labour force figures issued by the Australian Bureau of Statistics, the increase in the number of Australians working is almost as large as the total number of new jobs created in this country in the entire 88 months of the Fraser-Howard Administration. We have a tremendous difference in the record of the two governments. Over the last 24 months the increase in the number of Australians at work achieved under this Government almost rivals the entire number of jobs created in the 88 months of the Fraser-Howard Government. As a result of the growth in employment, there has been a substantial reduction in the level of unemployment in this country, and a welcome reduction indeed in the tragic level of unemployment which was left by the Fraser-Howard Administration for this Government to deal with. I refer again to the figures for April 1983, when the economic summit was held, and April 1985. In the period between those two years the number of unemployed persons in Australia declined by almost 100,000-a tremendous reduction and one that gives new hope to the many unemployed people in Australia. Unemployment remains at an unacceptable level, but under the Hawke Government there has been a reduction of between 99,000 and 100,000 in the nation's jobless total. That is in stark contrast to the situation under the Fraser-Howard Administration, when we saw such a huge rise in unemployment. In the period of office of the Hawke Government the inflation rate has been reduced markedly. We heard much rhetoric in the 1970s about fighting inflation first and the evils of double digit inflation. Many sacrifices were called for from the community by the Fraser-Howard Administration, to fight inflation first, as they put it, but when we came to office we found that inflation was running at an annual rate of 11 1/2 per cent. That was clearly a double digit rate and one which was unacceptably high. That was clearly a poor legacy to the community by those who would have us believe that they were fighting inflation first. Under the present Government inflation has been reduced from 11 1/2 per cent to between 5 1/2 and 6 per cent-more than halved in the period of office of the Hawke Government. The real improvement is to be seen in real economic growth. When we look at growth in the non-farm sector of the economy, which can be influenced by economic policy-it is very hard to influence the seasons and, therefore, the output of the rural sector-we see that in the last full calendar year of the Fraser-Howard Administration Australia managed only 0.9 of one per cent real economic growth. That is a disastrous record, when one looks back and considers the tremendous advantages this country has had-the natural resources endowment, the skill levels of the community and the highly trained labour force. By world standards, 0.9 of one per cent real economic growth in this country is a tremendously poor result, and that is what that Administration achieved. In 1983 non-farm economic growth increased by 2.6 per cent. In 1984 real economic growth was at a level in excess of 5 per cent, which is a quite respectable level of economic growth by world standards and certainly a major improvement on the slumped and faltering economy of the Liberals as a result of their stop-go economic policies. Senator Peter Rae —Try comparing it with 1978-79, if you want a real comparison. Senator MAGUIRE —We are now experiencing 5.1 per cent real economic growth in the non-farm sector of Australia. Of course, Senator Peter Rae and his colleagues would have the community forget that through the financial year 1983-84 Australia experienced the highest real growth in gross domestic product of all the developed countries. From June 1983 to June 1984 this country experienced double digit economic growth, growth in excess of 10 per cent; something the Fraser Government could not achieve in economic growth. Regrettably, it did achieve double digit inflation, and that is one contrast that can be made between the performance of the two governments. Recent indicators of consumer spending and private investment reveal that the growth in those sectors is continuing strongly and is spreading throughout the private sector. This is reflected in the recent pick-up in the motor vehicle registrations, retail sales and the demand for housing. It is clearly a very broad-based economic recovery spreading over major sectors of the economy. I was pleased to hear the information made available today by the Minister for Finance, Senator Walsh, that retail sales in this country are now growing strongly. The Minister instanced a growth of 3 per cent in real terms. Under the Fraser Government I would be very surprised if retail sales ever achieved 3 per cent real growth, but it is very pleasing indeed to see the economic recovery in this country broadening out and encompassing major sectors of employment. One of the great achievements under this Government is the huge reduction in the level of industrial disputation in the community. The number of days lost as a result of industrial disputes in the calendar year 1984 was the lowest in one and a half decades. That is certainly a tremendous improvement over the situation which prevailed under the previous Government. The number of days lost due to industrial disputes in the 12 months to the end of January this year was some 15 per cent below that in the corresponding period to January 1984. That is a very big reduction. The level of industrial disputation has fallen dramatically under the Labor Government; days lost as a result of industrial disputes have fallen dramatically under the Labor Government; and disruption to economic activity as a result of industrial disputes has fallen dramatically under the Labor Government. Under the Liberals, they escalated. The contrast between the two administrations simply highlights the damaging effects of policies of industrial confrontation which some Liberals wish to practise even today in this country. Clearly, policies of industrial conciliation have a much greater effect than policies of confrontation. Recent economic indicators lead to the conclusion that the Budget forecasts for domestic economic activity and employment in 1984-85 remain broadly on track, whilst consumption and investment spending could be even higher than expected. It is a tremendous plus to have the two major elements of economic expenditure referred to in the Budget actually appearing to be growing faster than was forecast in the Budget Speech. That is a tremendous source of confidence for continued growth throughout the current financial year and at least early into the next financial year. I believe that the income tax cuts introduced last November are now beginning to feed through, resulting in stronger consumer demand in the community. Income tax was cut by $7.60 a week, resulting in a rise in disposable income. That is one of the key reasons why retail sales are now starting to grow significantly in the economy. It is undeniably clear that the economic recovery in Australia has been more rapid than it has been in most other countries. I believe that this growth cannot be explained away conveniently, as the Opposition would have the community believe, by such factors as the breaking of the drought or international economic expansion. On so many occasions we have heard members of the Opposition claim that somehow the 10 per cent increase in real economic growth that we have achieved in Australia, 1983-84, was related to the breaking of the drought or international economic expansion. It is important to recognise that Australia's economic growth and employment expansion have been achieved despite relatively low prices for rural and mineral products. That is a fact of life at the moment. The rural and mineral sectors are experiencing relatively low prices. Australia still has achieved very rapid economic growth as a result of factors other than the convenient reasons the Opposition puts forward such as the breaking of the drought or international economic effects. One of the most important challenges facing the Commonwealth Government in the immediate future is the need to reduce the Budget deficit. I shall talk about this challenge in more detail. A Budget deficit must necessarily be funded by government borrowing, which in some circumstances can place upward pressure on interest rates. The major alternative to increased borrowing is higher taxation. As a result of the high level of borrowing by the Fraser-Howard Administration, the Australian public debt rose significantly between 1976 and 1983. I have figures which suggest that from the end of June 1976 to the end of June 1983 the public debt in this country escalated from $20,000m to $39,000m-almost doubling in the period of office of the Fraser-Howard Government. I should point out that some of that debt was in respect of borrowing by the State governments. But the significant increase occurred in the Commonwealth sector, and the total public debt during the period of office of the Fraser-Howard Administration grew from $20 billion to $39 billion-a tremendous increase. As a result of that increase the annual interest cost to the budget of the Commonwealth of Australia has risen by $2,000m. So every year we are paying $2,000m extra in interest just to service the increased debt-not the total stock of debt-incurred under the Fraser-Howard Government. Put another way, during the Liberal Government's term the public debt doubled in dollar terms and the interest liability increased in real term by about 25 per cent. That is a very big increase. This suggests to me that the way to sum up the eight years of the Fraser-Howard Administration is to say that it ran the Commonwealth Government of this country on a buy now, pay later plan. During the 1970s and the early 1980s it financed its Budgets by running up a huge stock of debt. Senator Button —The same as their heroine, Margaret Thatcher, is doing in England. Senator MAGUIRE —Yes. I say to Senator Button that the previous Government's policy was very much an example of buy now, pay later. The unfortunate consequence of that policy is that the community is now being forced to pay the bill for the expenditure incurred in the late 1970s and early 1980s under the Fraser-Howard Administration. The Hawke Government, in order to achieve its stated aim of reducing the deficit, has made a commitment to the so-called economic trilogy. The trilogy involves a commitment to reduce in money terms the deficit in the Commonwealth Budget in the next financial year, 1985-86, and to reduce the deficit as a proportion of gross domestic product over the three-year term of the current Parliament. The trilogy also involves a commitment not to increase Commonwealth tax revenue as a proportion of gross domestic product in 1985-86 and over the life of the Parliament. It involves another commitment to reduce government expenditure as a proportion of gross domestic product in 1985-86 and over the life of the Parliament. In line with the trilogy commitments, the Government aims to reduce the deficit as a percentage of Australia's gross domestic product from its current level of 3.3 per cent to a figure closer to 2.5 per cent. For this reason, the Government announced last week expenditure cuts totalling over $1,000m for the coming financial year, beginning on 1 July. In the face of this reduction in government expenditure, it is important to correct the widespread misconception that cutting the level of public spending is for some reason incompatible with Labor's objectives for achieving greater social justice. The absolute level of government outlays is not important in order to achieve Labor's social justice objectives but rather their precise nature. In fact, the absolute level of government outlays can at times be a hindrance to the implementation of progressive social policy. The financial obligations associated with large public borrowing can erode a government's future capacity to implement social and economic change. The legacy of a massive public debt accumulated under the Fraser-Howard regime is still influencing the Labor Government's spending priorities. Total public debt interest is at present the fourth largest Budget outlay item in the Commonwealth Budget. That is a very staggering finding. One-third of that interest item covers interest paid on State debt, which has to be paid through the Commonwealth Budget. Because public debt grew so rapidly under the Fraser-Howard Government, more money is now spent by the Commonwealth Government on interest to service public debt than it spends on education and defence. It is quite a staggering finding that the accounts of the Commonwealth Government show that more money is being spent on the annual interest bill of the Commonwealth than the nation allocates in the Commonwealth Budget to be spent on education and defence. It is also very clear that the interest bill is now nearly as high as Commonwealth health payments allocated in the Budget. Interest payments are the fourth largest item in Budget outlays and expenditures and they are not a great distance behind the third largest outlay item. I think that all Australians would agree that this trend must be reversed. We cannot afford such a large interest bill. It is the product of years of government by the Liberals on the time payment plan when they spent money and decided to worry about financing outlays later. It is the price we are now paying for the policies of the Fraser-Howard Government. Senator CHIPP(Victoria-Leader of the Australian Democrats)(5.00) —In speaking on Appropriation Bill (No. 3) and Appropriation Bill (No. 4) I wish to discuss and criticise the Government's recent attitude towards expenditure. I deal first with the fear of the reintroduction of tertiary fees. We did believe that this battle had been fought in Cabinet and lost by the Minister for Finance, Senator Walsh, and those others in the Australian Labor Party who wanted to reimpose fees for tertiary education. It is now crystal clear that the matter has been reintroduced into Cabinet and that the Minister for Education, Senator Ryan, and the Department of Education seem to be fighting a losing battle. Senator Button —It has never been to Cabinet, on the first occasion or the recent one. I am just telling you that. Senator CHIPP —I accept Senator Button's interjection and thank him for his contribution and assistance. If that is so, why did the Minister for Education clearly, wilfully and overtly evade answering my question last week when I asked whether she would give an unequivocal commitment that tertiary fees would not be introduced in the August Budget. Quite cleverly she evaded that very simple question. I have no doubt, whether or not it has been formally discussed in Cabinet, in a Cabinet sub-committee or whatever, that this reintroduction of fees is on. I take this opportunity of asking all student and teacher organisations to get in touch with their Labor and Liberal members of Parliament to see whether they will stand firm and reject this broken promise. The Australian Democrats are totally committed to free education at all levels, including the tertiary level. This is an unequivocal commitment, unlike that of this Government, which tomorrow, as I understand it, for the second time in as many months is giving serious consideration to imposing fees on tertiary students. I remind the Government that the Australian Labor Party's election platform of 1983 states: . . . a Labor Government will . . . Maintain the provision of free tertiary education. It would be difficult to get a more unequivocal statement of policy than that, and yet the contemplation of this promise is about to take place in Cabinet with a view to breaking it. I would like to dispel some myths regarding the abolition of tertiary fees. Since tertiary fees were abolished in 1974 there have been marked changes in the participation rates for tertiary education. A catchcry around now, sponsored by people such as Senator Walsh, asks why the taxpayer should subsidise the university education of rich people. I put an equally pressing, if not more pressing, question to Senator Walsh and his ilk: Why should tertiary education be the prerogative only of the wealthy? Why should not tertiary education, at both university and college of advanced education levels, be available to everybody in the community, including the children of blue collar workers? The percentage of students from blue collar families attending universities increased by almost 30 per cent between 1974 and 1979. The figures for those years are the latest available to me. In other words, the attendance at university of people from the western suburbs of Sydney and Melbourne-I am sorry, Mr Acting Deputy President, I do not know whether Brisbane has a direct socio-economic equivalent of those areas-the children of blue collar families, increased by 30 per cent between 1974 and 1979. The children of blue collar families attending colleges of advanced education increased by over 36 per cent. I take those figures from the survey undertaken by Anderson and Vervoorn at page 146 of Access to Privilege, and page 19 of the Commonwealth Department of Education's 1979 survey of full time tertiary student finances. There was an equally dramatic increase in the number of women pursuing tertiary studies. In 1970 18 per cent of students were women; in 1983 women constituted 44 per cent of the university student population and 48 per cent of those students attending colleges of advanced education. Let us look at the stark impact the reintroduction of tertiary fees will have. The reintroduction of fees will have manifestly cruel effects on the ambitions, dreams, aspirations and careers of 68,000 part time tertiary students, mature age students-especially women-and post-graduate and country students. Sixty-eight thousand people undertaking tertiary education could be directly affected. The number of mature age students also increased by 10 per cent between 1970 and 1980. Participation at the tertiary level of women students, children from blue collar families and mature students would be put back a decade by the reintroduction of tertiary fees. At a time when the Government should be trying to increase the pathetic participation rate in tertiary education in Australia-which is less than half of that in the United States of America-the Government has cut funding for the participation and equity scheme by 50 per cent and now entertains the suicidal idea of reintroducing tertiary fees. This time the Minister for Finance is apparently-if one can believe Press reports-concerned only about fees for second and higher degrees. It would be hard to think of a crazier thing for the Government to do in the present circumstances than introduce fees for higher degrees. This country desperately needs more research. I cite the shocking figures that come from a 1980 report of the Organisation for Economic Co-operation and Development. It indicates that Australia has the lowest proportion of all major OECD countries of young people in full time education. The report indicates that only 5.5 per cent of Australians aged between 20 and 24 were undergoing full time education in 1980. I apologise for using figures in a speech, in particular when the Senate is on air, because they are hard to absorb. However, I emphasise that in 1980 only 5.5 per cent of Australians aged between 20 and 24 were undertaking full time education. In the United Kingdom the equivalent figure was 7.5 per cent; in West Germany 11.5 per cent-double our rate; in Japan 14.5 per cent of young people were involved in tertiary education; and in the United States the figure was a staggering 21.65 per cent. Yet, Australia had just over 5 per cent of its 20- to 24-year-olds in tertiary education. It is hardly a time to reintroduce tertiary fees. Senator Sheil —Are there fees in Japan, the United States of America and the other countries you mentioned? Senator CHIPP —I understand not. With great respect, the question is irrelevant. If we are suffering such a pathetic comparison as that, with the United States having four times more young people in tertiary education, whether or not students are paying fees surely is irrelevant. It is not the best time for Australia to be contemplating the reintroduction of tertiary fees, thereby lessening the desire and the capacity of young people to undertake tertiary education. The Government has acknowledged this. Yet what does the Government do? It cuts the funding to the Commonwealth Scientific and Industrial Research Organisation and now it is thinking of charging fees for higher degrees. Many post-graduate students are already forced to live in conditions of near poverty. Despite the appalling support presently provided to post-graduate students they will still manage to produce about 50 per cent of all published research in this country. If we reintroduce fees we can kiss the major part of this research goodbye. Many students doing second degrees are retraining or are upgrading their qualifications. To me this is the key to unlocking the enormous puzzle that will unfold before us as a result of the effects of the technological revolution on Australia and other Western countries in the decade ahead. As jobs disappear-that is what is happening to them; they are just disappearing overnight-the people who had those jobs have to be retrained in order to find other avenues of employment. I would have thought that it would be a reasonably logical exercise to conclude that. One must ask: Does the Government want to discourage this? In a study carried out by the University of New South Wales in 1977, 28 per cent of students from the lowest income group said that they would not enrol, or would defer, if fees were charged. Sixteen per cent of students from middle income families would defer or not enrol. For country colleges the figures are even worse. We are talking about significant proportions of the population at tertiary institutions in Australia who cannot afford, or say they cannot afford, to continue attending universities or colleges of advanced education if tertiary fees are reintroduced. I turn now to that item of last Tuesday's statement which refers to what appears to be a cut in the grants to local government. I regard this as being extremely serious, as do the representatives of local government who have been calling on members of parliament of all political parties in recent weeks. Having been a member of local government, it has my total sympathy. My vote and the votes of my Democrat colleagues will show where our sympathies are. We are against these cuts, which look like amounting to $62.4m, to the anticipated local government tax sharing arrangements for the year. The effect on local governments, particularly in Victoria, will be nothing short of a disaster. Local governments legitimately anticipated that 2 per cent of personal income tax, known as PIT, would remain in place until the Professor Self inquiry into local government finance brings down its report in September this year. Having accepted the PIT formula during the past two lean years, local governments were entitled to expect that they would get their share of the income tax revenue increases for this year, ending 30 June 1985, which were the result of economic recovery. Senator Peter Rae —It was a Labor Government election promise. Senator CHIPP —It was an unequivocal Labor Party promise. It said: The Labor Party believes that local councils should enjoy the security of a guaranteed fixed percentage of government revenue . . . A Labor Federal Government will allocate annually at least 2 per cent of Federal personal income tax as a revenue grant for local government. There can be no doubt about the meaning of those words. Yet we now seem to have a breach of that promise. The choice for local governments will be almost impossible. They can increase rates, which will mean that government expenditure cuts will result in an increased tax on ratepayers; so that what the Government saves in Canberra ratepayers in the suburbs will have to make up. In those suburbs where councils cannot increase rates, services will suffer. By the actions of the Federal Government and particularly those useless appendages to the body politic-State governments-local governments have had increased responsibilities placed on them year after year, particularly in the welfare field, without having the accompanying finance to cope with those increased responsibilities. Local governments can cut services, but these services are, in many municipalities, crucial to the unemployed, the aged, the frail, the sick and the increasing mix of ethnic people in many communities for the care of whom local government is being given more responsibility. Furthermore, these are services that the Commonwealth and State governments are failing to provide-for example, helping aged people to find housing, providing meals on wheels, and buying rooming houses to provide accommodation for the poor and the unemployed. In general, the councils which have become most dependent on this income are those where the need for human and community services is greatest. These councils will also be hit by the Government's decision to reduce funding for the community employment scheme which has helped local government to meet some of the demands being made on it. This dilemma will be faced by many of the councils which try to deal with the social problems in their communities. The difficult choice will be forced on local government by a Labor government which made an unequivocal policy commitment to providing 2 per cent of PIT to local government. I give an undertaking on behalf of the Australian Democrats that we will block, amend, reject or whatever legislation to ensure that local governments in Australia do not receive less this year than they were promised and that the previous funding situation will not change until the report of Professor Self is tabled in this Parliament. Having been a member of the Liberal Party for some years, I do not believe that one Liberal in this chamber would disagree with that. I have no doubt that when the legislation comes before this chamber Liberal senators will make speeches denouncing the cuts and the broken promises but, for some obscure reason, they will vote with the Government because the legislation is a money Bill or they believe that it is not the prerogative of the Senate to knock out such budgetary measures. The Democrats have no such hesitation. We will call a division to vote against it. If we get flak from the economic purists in the Press, or whatever, descending upon us for interfering in budgetary measures, so be it. The Senate is here to keep the Government honest, and the Government made an unequivocal promise to local government that it would not cut these expenditure grants. On that basis, those in local government, the councillors, the aldermen and the bureaucrats of local government went ahead and made capital and revenue commitments for caring for people less fortunate. The Democrats will stand up and be counted on this. I hope that in the interim the Liberal Party and the National Party will see fit this time to vote against what could be a money Bill. We will put them to the test. Another matter of deep concern, which I raised in the Senate last week, is the problem confronting Australia on organised crime, its magnitude, and, essentially, the protection of witnesses. One cannot accept everything in the report of the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union as gospel, of course, but that Royal Commission looked exhaustively into organised crime in Australia over a period of years and estimated that the profits-not the turnover-of organised crime per year are now in the vicinity of $5,000m. That is a mind-boggling figure. We must ask who is safe-even ourselves-at times when organised crime is earning profits of that magnitude. Is every judge, magistrate, politician and policeman safe from potential bribes of $100,000 or $200,000, which is petty cash to organisations earning this amount of money? I am deeply concerned about one aspect of organised crime. It is my personal view-not necessarily that of the Australian Democrats-that legislators throughout the country need to have some guts to look at the kinds of acts which we now say are illegal, and which are impossible to police, and at laws which are impossible to enforce and which give our police forces and law enforcement agencies impossible tasks and provide a breeding ground for corruption and graft of immense proportions. If any honourable senator in this chamber believes that prostitution can be eliminated, let him stand up and say so. I will be the first to vote for increased strength and powers for the law enforcement agencies. If any honourable senator in this chamber believes that he can eradicate totally from Australia the use of cannabis sativa, let him stand up and say so. I will be the first to support him, with the Australian Federal Police, in gaining extra powers, resources or whatever is needed. I have asked those questions of the six police commissioners in this country. At least they were honest enough at the crime summit here two years ago to acknowledge that those two problems are almost impossible to stamp out in Australia. Why are they still on the statute books? It is because of a group of gutless politicians who are frightened of the loud voices of a small minority of people in organisations such as Right to Life Australia, the Festival of Light (Australia), et cetera, who receive a deal of newspaper space as soon as somebody says: 'Let's look honestly at this problem'. Until we do something, we are fooling ourselves; we are being hypocrites and we are endangering our young people. I refer to recent newspaper reports which have pointed to an urgent need for adequate protection to be provided for potential witnesses in the fight against crime. The first example relates to the possible early release from prison of two men, two creatures known as Tizzoni and Joseph, who pleaded guilty to a charge of having conspired to murder that magnificent human being, anti-drugs campaigner Donald Mackay. They pleaded guilty to the charge and now they are being considered for early release from prison. Tizzoni was sentenced to eight years gaol, with a minimum period of four years. Joseph was sentenced to seven years gaol, with a minimum period of three and a half years. They have served less than one year in gaol and are to be released in the immediate future. Senator Puplick —It is as disgraceful as the Fulcher case. Senator CHIPP —Exactly; I acknowledge that and thank Senator Puplick for his interjection. I am not blaming the authorities. It is clear that these two creatures-I will not call them men or human beings-have bargained with the authorities and are about to turn Queen's evidence, if that is still the correct expression. To use a more popular expression, they are about to blow the whistle on others in this nefarious trade of murder, drugs, extortion, prostitution or whatever. I do not blame one bit the authorities who have made that decision. The reason for this extraordinary decision is not that some weak-minded politician has said: 'Let them off easy'. It is not the fault of some judge who has said. 'Let's feel sorry for them'. It is because, I am informed, there is no gaol in this country which can guarantee the safe custody of men who have turned evidence on other criminals, even if they are kept constantly in solitary confinement. They are no longer safe in solitary confinement and therefore they are being released. Once they are released they will be under close protection by the police in whichever State they happen to be; in this case, as I understand it, it will be Victoria. Senator Peter Rae —Like Ireland or somewhere. Senator CHIPP —I do not generally knock police, and I am sure that Senator Rae does not either. Senator Peter Rae —I just meant Trimbole. Senator CHIPP —I know. I thank Senator Rae for his help. I am extremely proud of our police force in Victoria. It is a remarkably fine body of men and women. But this police force, which already has an inadequate budget with which to fight crime, is to be asked to keep these two creatures alive in order that they can give evidence against other criminals. The cost of doing just that is monumental. Why is it necessary? It is necessary because our prison system is incapable of keeping them alive. I have made the point to the Minister for Resources and Energy (Senator Gareth Evans), as Minister representing the Attorney-General, that it is grossly unfair to expect police forces, already inadequately funded, to bear this kind of additional expense. It should be the responsibility of governments and should come out of Consolidated Revenue. I put to the Government that it should consider this in conjunction with State Attorneys-General. I will conclude with comments on Australia's forests. We have a tragic story to tell. Australia's native forests are one of our most valuable and beautiful resources. We are all familiar with the Queensland Government's vandalism of the Daintree Rainforest, an area recommended by the Australian Heritage Commission for inclusion on the World Heritage List. We may not be as familiar with the danger posed to Australia's forests by woodchipping. Nearly 80 per cent of New South Wales forested lands are designated as wood chip holdings. Much of the Western Australian karri forest is to be cut for wood chips. In Tasmania 400 hectares of forest are cleared each week, mostly for wood chips. Each week a space equal to 200 Melbourne Cricket Grounds is devastated for wood chips. Up to 40 per cent of the timber gathered in this nefarious industry is wasted and never used. Trees are usually resown, but no amount of replanting can recreate a natural forest. On a recent trip to Tasmania I saw scenes of incredible devastation as the wood chippers pursued their dreadful course. Over 60 per cent of the wood removed from Tasmania's forests is exported unprocessed as wood chips, mostly to Japan. To do this the wood chip companies need export licences which are granted by the Federal Government. The current licences expire in 1988, three years away. Yet the wood chip companies have now been asked to submit an environmental impact statement to support their application for an extension of their licences after 1988. Why do they need a decision now when the time for the expiry of the export licences is 1988? We know that a draft statement has already been submitted. It could be described as nothing less than a public relations exercise for the wood chip industry. The Australian Democrats believe that the Federal Government should totally ignore the Gray Government in Tasmania, whose record in matters environmental is nothing short of disastrous, and should hold a public inquiry into the future of wood chipping in Tasmania. It should declare that no more wood chipping will be allowed in any area declared as part of the National Estate. It should establish a national inquiry into the future of Australia's forests so that a forest based industry plan can be worked out between the Government, conservation groups and industry and trade union groups which will guarantee both the future of Australia's native forests and a stable forest industry. It is not often that I praise the former Prime Minister, Malcolm Fraser, but I remind the Senate that he was not afraid to use the Federal Government's external powers over the granting of licences when he quite correctly stopped sand mining on Fraser Island. I hope that this Labor Government will have the same courage and will not hesitate to refuse export licences to an industry that is clearly and overtly destroying some of Australia's most beautiful rain forests. Senator MESSNER(South Australia)(5.29) —I wish particularly to speak on one or two welfare matters and will conclude my remarks with reference to matters affecting the economy. I commence by referring to the current situation with the assets test and the hardship it is causing very many people in the community, particularly in rural areas. I do not wish to cover all the arguments about this matter, which have had plenty of airing both in the Senate and in the newspapers, chiefly by Government spokesmen. The fact is that a great deal of hardship is being generated in the rural communities at present. The essential element of this problem is that far too little income is available to support two families in many cases. People who were relying upon the supplement of the pension for their retirement find that they are unable to earn enough farm income to build that into two incomes. For that reason we on this side of the House believe-we moved the other day for the repeal of this legislation-that the Government should move as quickly as possible to ensure that the assets test is corrected to get rid of some of the gross anomalies. I do not wish to canvass all of those anomalies; I am sure that we know what they are. Many of them are on the record. We need action from this Government to make sure that hard working people who have built up modest assets and savings over a long period through their own efforts are not unduly penalised by this iniquitous assets test. Of very real concern in the welfare area are the advanced aged and, in particular, those who use the services of nursing homes, various private organisations and community homes which provide hostel accommodation and related services in that area. During the Budget session last year the Government saw fit to announce a new home and community care program. As has now been exposed, that program was little more than a political confidence trick announced in advance of the election last year. Whereas people generally were thinking that there would be an increase in expenditure in this area of some $300m, we have found that it is as little as $10m in this financial year. The reason for that is that many of the programs that applied previously, such as the delivered meals subsidy, the so-called Meals on Wheels plan and the various domiciliary care programs that were available and operated by the States have in fact been merged into the new HACC program and, consequently, a very little money has become available. This theory certainly had the support of the Opposition when it was announced in the Budget last year. The idea was that we should encourage as many people as possible in their advanced old age to stay in their own homes, near their friends, their well-known surroundings and the shops so that in their declining years they were living in an area in which they had lived for most of their lives. On the other hand, this would save very considerable amounts not only for families but also for the Government in that many of these people would not enter institutionalised care in the way that many have over a long period. We support that theory in very general terms and in fact said that at the time. But the fact is that the Government has not followed through on its promise. It misled the people very substantially during the pre-election campaign last year because it knew it was in awful trouble with the electorate over the assets test, broken promises on superannuation and broken promises on the incomes test for the over-70s pensioner. As a result, the Government saw fit to mislead people at election time and certainly demands the condemnation of the Senate on that matter now. One particular case in South Australia was brought to my attention. It seems absolutely inexplicable in terms of its handling by this Government. A well-known organisation in Adelaide, Wanslea Child Care Services, has provided services for children over a very long period. It has a very substantial reputation going back over 40 years. Only in the last few months, upon application for funds under this very new program-the home and community care program that is designed to assist people in this area and to take the load off families generally-there has been a failure to acknowledge the equity of the argument put forward by Wanslea for extra funding. In fact, no arrangements have been made by this Government to provide funding for that organisation. In fact the programs have now been, as I understand it, curtailed or totally abolished. I think the Government has to be prepared, if it puts its name on the line in this area, to commit itself to more expenditure and to the further development of this program, to meet the circumstances as they arise and indeed to consider cases on their merits. In this case I cannot understand why the Government has seen fit to curtail the out-of-home care program run by the Wanslea institution in Adelaide. The third area of concern to me and possibly to you, Mr Acting Deputy President, as well is the proposed submarine building project. Mr Acting Deputy President, you would know that there was a very considerable interest in the State of South Australia in this project. The State Government and the Chamber of Commerce in Adelaide have been making substantial representations to the Federal Government seeking to have the next generation of submarines for the Royal Australian Navy built in South Australia. We know that a decision has not yet been made. I hope that many South Australian senators from both sides of this chamber will be making appropriate representations, hopefully successful, to the Federal Government to ensure that that new project is undertaken in order to provide work for South Australians. The State Government is particularly concerned about this matter and has been putting forward very strong views about it. I hope that the Federal Government will see fit to support those representations and do what it can to ensure that the project goes ahead in the State of South Australia. I am not sure what my colleagues from the other States will have to say about this matter. Mr Acting Deputy President, I know that at least my thoughts on this matter will have your support. Indeed I look forward to the support of the Federal Government. Mr Bannon, the Premier of South Australia, has really nailed his colours to the conning tower of the submarine project and has all but promised that the Federal Government-over which he has some special influence-would be able to deliver this to South Australia. I hope that he will be able to prove to us that he is a marathon man and can come up with the goods and deliver that project to South Australia. If not, I do not know what the people of South Australia will think about Mr Bannon. But they will be able to form their own conclusions. I am sure they will not be blaming the Federal Government as much as they will be blaming Mr Bannon. Senator Archer —Another broken promise. Senator MESSNER —Indeed, he may well have broken another set of promises in much the same way as this Federal Government has been consistently breaking promises since April 1983. Mr Acting Deputy President, I hope that we do have your support at least in this matter, if not Senator Robert Ray's support. He will never see the logic of any argument; so we are not going to be getting his support for this project, but certainly good South Australians like you, I am sure, would see the force of that argument. Turning briefly to the questions affecting the economy, we must face the fact that since this Government came to office in March 1983, we have seen poverty in this country continue to grow. That is notwithstanding all the grandstanding claims of this Government that it is improving the position of the unemployed, making the economy grow rapidly and so on. In fact, the figures show that the average person who is in receipt of the base rate of pension today is 10 per cent worse off now in relation to the poverty line than he was when the Hawke Labor Government came to power. Not only are more people poorer, but the number is growing under this Government. We must look at the reasons why this is happening. We find those reasons largely in the lack of commitment in this Government to the question of how to put people back to work. Sure, the Government says it is creating numbers of jobs, but a great number of those have been in the public sector. Notwithstanding the rhetoric of the Treasurer (Mr Keating) last Tuesday night, followed up with great gusto the next day by the Prime Minister (Mr Hawke), the object of this Government's economic policy is to get the public sector out and thereby create more room for the private sector to expand. I hope that this Government is serious about that objective, but frankly it is hard to believe that it is sincere. This Government is presiding over the greatest disincentive to private sector investment that has existed for 50 years. We have in this country the highest interest rates in real terms that have existed since the Great Depression in 1930. That is the situation-the highest interest rates for 50 years apply in Australia at the moment and these have grown consistently since this Government came to power in March 1983. Even the most basic businessman knows that when he has to pay a great deal of interest for money he needs to borrow to build up his business, to employ more people, to create more jobs, to buy more machines he will be forced to consider very carefully his decision to buy that equipment or whatever because it is costing him so much. The truth is that that is a major disincentive at the moment and it is the reason why the worst performing statistics that have been appearing consistently over the past two years have been those for private investment in this country. For that reason the Government is not attacking firmly the problems of unemployment in this country and it is tending not to create as many jobs as it possibly could. A lot of that is to do with the fact that this Government's wages policy is wrong and it is failing to enunciate clearly what policy it has. It is pandering merely to the trade union movement in seeking to maintain some semblance of order with its so-called accord, which is rapidly crumbling. We need some determined action from this Government; we need some firm leadership on the question of wages which will have the effect of lowering costs and keeping them down so that more goods can be produced by more people in work to produce them. It is essential that that policy be applied, particularly at the moment in the light of the fact that we have such a serious devaluation of the Australian dollar. Obviously that will cause more inflation in the economy. Inflation can only be driven up harder and harder by higher wages over which this Government fails to exercise appropriate control. We understand all the political reasons why the Labor Party cannot make a decision about this. It is rent asunder by its three various factions that go together under the name of the Australian Labor Party. We know that the Government is in the grip of the trade unions in this matter but, in the interests of all Australians, it must stand up and show that it can lead this country, rather than letting it drift in the manner that it is today. These statements come not just from me and members of my Party; they come also from a growing number of writers in the newspapers who recognise that these facts are so vital to our future prosperity. One only had to read Des Keegan's article in the Australian last weekend to understand the clouds which lie on the horizon in this country and which must be faced by this Government. We do not get any clear impression at all at the moment from this Government that it intends to pursue in a vigorous fashion a firm control over wage policy. Such control would mean job opportunities for those unemployed Australians who find it so difficult to get work today. I return to my point about poverty-the fact is there are more people today who are poorer under this Government than there have been at any other time since it came to power. These people are mainly the unemployed so for that reason they demand particular attention from this Government to ensure that labour costs are kept further under control so that there are more job opportunities, not just through the public sector but through the private sector as well. The Prime Minister and the Treasurer say that that is their objective, that the reason for the mini-Budget the other night was to roll back the public sector so as to make more room for the private sector. I see that even Senator Childs is laughing at that one. The fact is that it is through the private sector that there will be a stimulus to further activity in the community. It is by encouraging the private sector that that will occur, and it is up to this Government to show the lead. We look for that lead. We are very concerned that we will not get it and we in the Opposition will continue to draw attention to the doubts we have about the state of the economy and the way in which this Government is tackling its job as we pursue the matter leading up to the Budget and of course to the fateful tax summit which is yet to come. Senator BOSWELL(Queensland)(5.48) —I am glad of the opportunity to enter this debate on the Appropriation Bill (No. 3) and the Appropriation Bill (No. 4) because it allows me to put the case of the Queensland Government's record- Senator Childs —It will not take very long, then. Senator BOSWELL —It will; it will take quite a long time-20 minutes or so. I put the Queensland Government's record on the economy to the Senate. Far too much of the Senate's and the Government's time has been wasted on attacking the Queensland Government. Every day in this place we see dorothy dixers being set up to Senator Walsh so that he can bucket the Queensland Government. It happens time and time again, so I wish to put quite clearly on the record the exact position of the Queensland economy. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! I point out to Senator Boswell that we are debating a Federal Bill and I ask him to speak to it. It is not a State Bill. Senator BOSWELL —I understand that. Obviously the Australian Labor Party in Queensland has given up any hope of the Queensland Labor Opposition making any dent on the Queensland Government; so the Federal Government has set itself up as a de facto Opposition to the Queensland Government. The Federal Government should be concentrating on its own economic problems-and I assure honourable senators that it has plenty. The Australian people elect a Federal government to govern them and to run the affairs of the Commonwealth Parliament, not to attack the two non-Labor States as we see continually happening here. The vitriolic bias against these two States has earned this Federal Government the complete distaste of the entire community. It is about time that those who attack Queensland considered Queensland's contribution to the Australian economy. In recent years Queensland has played an increasingly important role in the national economy, particularly in the area of mining and mineral processing, which have provided the basis for much of Australia's recent economic growth and which have significant potential for growth in the future. Queensland contributes more to Australia's principal export earnings sector-mining and agriculture-than its share of total population, which is 16.1 per cent. In the year ended 30 June 1983, Queensland's contribution to these key sectors was 21.8 per cent of the total mining output and 23 per cent-- Senator Gareth Evans —Mr Deputy President, I take a point of order. We are debating the second reading of these Appropriation Bills. It is not a first reading debate, in which it is proper for honourable senators to range at large over things according to their whims and fancies. The remarks of the honourable senator have to be related to some aspect of the appropriations of the Commonwealth and public expenditure by the Commonwealth Government. I suggest to you, Mr Acting Deputy President, that Senator Boswell's speech is now obviously wholly out of order and that you should rule accordingly. Senator Messner —Mr Acting Deputy President, I also take a point of order. I thought that Senator Boswell was being entirely relevant because he was drawing attention to the state of employment in Queensland, which has a vital bearing on the Commonwealth appropriations, as far as the unemployment benefit and other kinds of benefits are concerned, and indeed on the state of the economy of Australia. Surely Senator Boswell is drawing attention to the very area of the Minister for Resources and Energy (Senator Gareth Evans) by referring to the trade prospects of Queensland, Queensland's place in the Australian community and to the fact that Queensland has generated considerable tax income for the Commonwealth Government. THE ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! Senator Evans's point of order is technically correct. We have ranged far and wide in this debate. However, I ask Senator Boswell to confine his remarks as the debate, as I pointed out earlier, is a second reading debate on Federal Bills-the Appropriation Bills. Senator BOSWELL —If Senator Evans allows me to do so, I will come to the employment that the Queensland Government is providing. I will also touch on housing and Aboriginal grants. However, I ask for the Minister's consideration to allow me to get to that part of my speech. In the year ended 30 June 1983, Queensland's contribution to these key sectors was 21.8 per cent of the total mining output. In addition, Queensland contributed 27.4 per cent of Australian exports of agricultural products and 29.3 per cent of Australian mining exports. Over the five years to 30 June 1984, Queensland was, in economic terms, the fastest growing State in Australia. Whilst several factors contributed to this growth, its main impetus was gained through the major, once-off boost to the economy through the development of new export coal mines, related rail and port facilities and an aluminium smelter. The development lifted the Queensland economy to the point where all key indicators were performing better than the national average. This is shown in a table which I seek to have incorporated in Hansard. I mention to the Minister for Resources and Energy that I have shown the five tables I wish to incorporate to the Leader of the Government in the Senate (Senator Button) and that he has given me permission to do so. I seek leave to incorporate the table in Hansard. Leave granted. The table read as follows- AVERAGE ANNUAL GROWTH RATES(%) 1979-80 to 1983-841983-84 Qld Aust. Qld Aust. Population 2.3 1.4 1.4 1.1 GSP/GDP (1) 13.2 (2) 12.2 (2) n.a. 13.1 Labour Force 3.4 2.0 3.8 2.5 Employment 2.8 1.4 4.6 3.7 New Fixed Capital Expenditure (1) 16.0 (3) 11.6 (3) -19.8 -8.7 Value of New Buildings (1) 16.9 12.5 30.7 34.9 Motor Vehicle Registrations 5.3 3.7 6.4 13.0 Retail Sales (1) 12.0 10.8 6.0 6.5 (1) Values are in current price terms (2) Covers the four year period to 30 June, 1983 (3) Covers the four year period to 30 June, 1984 Senator BOSWELL —This table shows the average annual growth rates for key economic indicators for the five-year period from 30 June 1979 to 30 June 1984. It also shows the growth rates for 1983-84 separately. By 1983-84, there were signs of a falling off in Queensland's edge over the rest of Australia. In population, labour force and employment growth over 1983-84, Queensland's advantage was smaller than for the four-year period from 1979 to 1983, while in the other four indicators-private capital expenditure, building approvals, vehicle registrations and retail sales-Queensland fell below the Australian growth rates. Over the four years to 1983-84, new fixed capital expenditure by private enterprise, excluding agriculture, forestry, construction and community services, increased by 81 per cent in Queensland compared with an increase of only 55 per cent for Australia. The following table sets out the changes in new fixed capital expenditure for Queensland and Australia during the last four years. I seek leave to incorporate the table in Hansard. Leave granted. The table read as follows- INCREASE IN PRIVATE CAPITAL INVESTMENT(%) Queensland Australia 1980-81 39.2 36.9 1981-82 45.7 25.9 1982-83 11.5 -1.5 1983-84 -19.8 -8.7 Senator BOSWELL —The table shows that in 1980-81 the increase in private capital investment in Queensland was 39.2 per cent, as against Australia's average of 36.9 per cent. In 1981-82, the increase in private capital investment in Queensland was 45.7 per cent, as against the Australian average of 25.9 per cent. In 1982-83, private capital investment in Queensland increased by 11.5 per cent, as against a decrease of 1.5 per cent for Australia. In 1983-84, private capital investment in Queensland decreased by 19.8 per cent, as against a decrease of 8.7 per cent for Australia. As the table indicates, the expansion of capital expenditure was sustained for a longer period in Queensland than for the rest of Australia. In 1982-83, capital expenditure continued to increase in Queensland but declined throughout Australia as the effects of the world recession had an impact earlier in the southern States. The main reason for the growth of capital expenditure in Queensland in 1982-83 was the continued growth in the mining sector. In contrast, investment in the manufacturing sector in Queensland declined by 30 per cent. In 1983-84, the rapid growth of investment in the mining sector in Queensland was reversed. It declined by 47 per cent. Investment in manufacturing declined by 24 per cent. However, investment continued to grow in the finance sector by 2 per cent. In other industries, including the wholesale-retail trade, transport, communications, electricity, gas and water, entertainment and personal services, it increased by 15 per cent. Even allowing for the greater decline in 1983-84, Queensland accounted for 18.5 per cent of the Australian total actual new fixed capital expenditure by private enterprise in 1983-84, compared with 15.8 per cent in 1979-80. Whilst for many indicators Queensland's current figures are below their previous boom levels-I emphasise boom levels-they indicate that Queensland is still making an above-average contribution to Australia's economic performance in these areas, as shown in the table I wish to have incorporated in Hansard. The table covers the key indicators of economic performance. All figures relate to the latest period for which statistics are available. I seek leave to incorporate the table in Hansard. Leave granted. The table read as follows- Queensland as a proportion of Indicator Period to which figures relate Australia (%) Population 30 June 1984 16.1 Above average performance Private capital investment 12 months to September 1984 17.4 Housing - approvals 8 months to February 1985 19.0 - commencements 3 months to September 1984 18.5 - completions 3 months to September 1984 24.5 - work done 3 months to September 1984 20.5 Total building - approvals 8 months to February 1985 18.7 - commencements 3 months to September 1984 16.6 - completions 3 months to September 1984 22.9 - work done 3 months to September 1984 19.3 Exports 8 months to February 1985 22.5 Average performance Vehicle registrations 8 months to February 1985 16.0 Retail sales 7 months to January 1985 16.2 Below average performance Unemployment March 1985 18.5 Senator BOSWELL —The bottom line of all this is that Queensland is pulling its own weight and is leading the way in many areas. The Federal Government's attack on the Queensland economy is in stark contrast to its silence on the Australian economy, including the huge trade deficit, high public spending, budgetary deficits, increasing public and private debts and the fluctuating value of the dollar-- Senator Childs —What about the Queensland deficit? Why don't you talk about that? Senator BOSWELL —I say to Senator Childs, as he is so interested in it, that, if he will wait in about one minute's time I will come to the Queensland deficit. The Australian economy as a whole reflects the same structural characteristics compared with the rest of the world as Queensland does with respect to the rest of Australia. The national recovery also requires an improvement in agriculture and mining to stabilise the position. Without that improvement in the balance of payments, the national deficit will continue. I now come to the Queensland deficit, in which Senator Childs is so interested. It may be to the benefit of honourable senators opposite if they read the Australian Bureau of Statistics figures accurately before jumping into areas they do not understand. I refer to Senator Maguire in particular. Let me make it quite clear: The Government's financial estimates for 1984-85 have not been released. A summary has been sent to the various State Treasurers and statistical personnel. It is interesting to note that honourable senators opposite should have had access to the document before the Queensland Treasurer, and more interesting to note that any senator could interpret it without the accompanying explanatory notes. In the 1983-84 ABS publication of the Government's financial estimates, the Bureau warned that its figures underestimated the true deficit position of some States, particularly New South Wales and Victoria, and overstated the deficit in Queensland. This was because New South Wales and Victoria had made widespread use of sale and lease back arrangements in recent years for the financing of capital items and these arrangements were not included in the deficit figures. Not having access to the latest explanatory notes, it is not known whether that position has been rectified. Obviously, honourable senators opposite who believe they are authorities on the Queensland deficit do not know of such matters. The figures from last year's Commonwealth Budget Papers showed that Queensland's level of debt for all categories, including statutory and local authority borrowing, was still lower than the average of all other States. The papers showed also that Queensland has the lowest per capita public debt and the lowest debt to the Commonwealth of any State. Attacks on the Queensland economy by people like Senator Maguire, Senator Colston and Senator Reynolds are based on ignorance and the desire to score political points and see their names in print. For back bench senators to come into this chamber with simple statistics on Queensland shows not only their ignorance but also their fear in coming to grips with the national economy. I say to Senator Maguire that the people of South Australia elect him to look after the national economy. He has some expertise in that field and I suggest that he concentrate that expertise on the national economy. Queensland has an intensity of farmers and graziers who pay heavily through tariff protection to keep the secondary industries of Melbourne and Sydney functioning. Every Queensland farmer pays on average $16,000 a year in tariff protection. There is another extremely important issue which I must address, that is, this Government's hypocrisy in its proposed funding of the two non-Labor States and the Commonwealth's role in tax sharing payments. For a government that espouses the principle of one vote one value it certainly does not believe in one person one dollar when it comes to distributing the taxation collection throughout Australia. I refer, for instance, to housing assistance. The allocation for welfare housing to the Queensland Government on a per capita basis is only $30 as against the national per capita average of $38. If Queensland were to receive the same per capita amount 1,600 low income families would be enjoying the benefits of a Housing Commission home. This Government is denying 1,600 Queensland families the benefit of welfare homes by denying Queensland its rightful per capita allocation under the tax sharing arrangements. Aboriginal housing is another area of concern. The Aboriginal housing grant disadvantages Queensland. Queensland is under-funded by $6.5m. On the 1981 census data Queensland had 34 per cent of the total Aboriginal and Island population and yet it will receive only 24 per cent of total Commonwealth grants for that purpose. One would assume from the Australian Labor Party's policy that it would be prepared to allocate housing grants evenly amongst the Aboriginal people of Australia, yet Queensland Aboriginals are being discriminated against. They are the butt of the ALP's anti-Queensland bias. The Australian bicentennial road development program is another area in which Queensland is discriminated against. Given the total length of declared roads in Queensland the Commonwealth allocation of $91m is $27m under on a kilometre per dollar basis. I could go on and on. Queensland will receive only 13.3 per cent of general purpose capital grants in 1984-85 although its population share of the six States is 16.6 per cent. This means that this year Queensland is being deprived of at least $21m that will be directed to other States. I would like to hear from Senator Reynolds, Senator Jones and Senator Colston-they are being very shy in coming forward-and also from Senator Maguire whose own Premier was reported in the Australian as saying that the Commonwealth Government has ripped off that State by $50m. Where is Senator Maguire? I remind him, amongst other ALP senators, that his job in the Senate is to protect the rights of his State. We do not hear very much from Government senators. They continue to bucket and attack the Queensland Government. Under the Constitution, they should be prepared to defend their State when it is being discriminated against. Under the five programs to which I have referred Queensland will be under-funded by $127m relative to the other States. It is interesting to note that the Commonwealth Government has committed itself to supporting the America's Cup to the tune of $30m but has been very reluctant to assist the Queensland Government in staging the bicentennial Expo 88. All it could get was $3m. The list goes on and on. The Kirby report states: We were surprised to learn that the distribution of CYSS projects is unequal. Mr Kirby might have been surprised but I am sure that no one in Queensland was surprised to learn that Queensland has 15 per cent of the young unemployed and gets 11 per cent of the funding. To bring Queensland up to a funding level per capita similar to any other State-I wish Senator Ryan were here to listen to this-an extra $53m would be necessary for tertiary education. If Queensland received its per capita allocation almost 5,000 new tertiary education places would be made available. As honourable senators can see, the Labor Government has taken the stockwhip to Queensland because the people of Queensland had the audacity to vote for a free enterprise government. The Labor Government of this nation will make them pay for it. I say to Senator Gareth Evans, who is in the chamber, that the Queensland people are not prepared to sell their votes for a lousy few bucks. If the Commonwealth Grants Commission recommendations were implemented in full the ensuing shortfall of $150m, coupled with the funding deficiency of $130m in the other programs, would mean a total loss to Queensland in these areas in 1984-85 of $280m-more than $110 per person in Queensland. I ask Senator Maguire how many people that $280m could put into jobs. He attacks the Queensland Government and he is vitriolic in his attack. But when it comes to something positive-- Senator Childs —He can count accurately. Senator BOSWELL —I do not know that he can. I would like to know how many jobs Queenslanders are missing out on because they are being under-funded by $280m by this Government. They are paying the price of voting for a free enterprise government and returning a majority of non-Labor senators. This has not happened only to Queensland; it has happened also to Tasmania and the Northern Territory. The big stick is out. The Government says: 'If you do not vote for us you will get nothing'. I ask Senator Reynolds, Senator Maguire and Senator Colston to work out how many jobs Queensland is being deprived of by that under-funding of $280m. I do not expect that any of them will be prepared to answer. It is probably too difficult and it certainly would be far too embarrassing. Senator MacGIBBON(Queensland)(6.10) —I take this opportunity on the second reading of Appropriation Bill (No. 3) 1984-85 and Appropriation Bill (No. 4) 1984-85 to speak briefly on a few topical points in relation to defence. I will deal with the three Services first and then the Department of Defence in the few minutes I have to speak before dinner. The first Service I want to deal with is the Royal Australian Navy. I wish to make some comments about the new submarine for which there is supposed to be a project definition study announced this week, after many months of delay under the Labor Government. I regret that I have to make these comments without having the benefit and the privilege of a brief from the Royal Australian Navy. The Liberal Party and National Party defence committee had scheduled for last Wednesday a brief from Captain White and some of the officers of the RAN. At the last minute this brief was withdrawn by the Minister for Defence (Mr Beazley) without any reason being given. We find that rather strange because not only has the Labor Party been briefed, but also briefs have been given all around the country to industry groups and interested groups by the same team. We find it a little strange that this courtesy was not extended to the Opposition parties. The Caucus had a massive brief from the same team and it also went to the extraordinary length of having the contractors for the hulls and propulsion systems and the contractors for the weapons systems presented before them. I think the problem was that the Minister for Defence is due to make an announcement this week and he was so insecure that he did not wish the possibility to arise that anything that might be said by members of the team could be used against him by the Opposition. Be that as it may, I now move to a brief comment on the replacement submarine. A deal of debate has been provided by the Labor Party in recent days in relation to this contract. It is for the basest of motives; it is purely for pork barrelling-Labor Party members are looking for the work to go to their own States. There is no concern at all for what might be best for Australia's defence. We have had proposed by the Labor Deputy Premier of Western Australia an absurd scheme that the submarine be built in modules. It shows the extent of his ignorance that he could possibly float the idea that submarines could be built in 500-tonne modules and freighted thousands of miles around Australia to be put together. Aircraft can be built in sections, if the volume production run is large enough, and transported and put together at one site, but submarines are not designed for modular construction. The hull is a unit and it cannot be broken up into sub-units. The whole idea is a nonsense. The submarine contract clearly falls into two parts; the hull and the propulsion system are one and the weapons system is another. The weapons system is an electronic system of great complexity, and all the electronic industries in Australia are situated in South Australia, Victoria and New South Wales. They will get the offset work and the production work for the weapons fit of the submarines, whatever happens, because the outlying States of Tasmania, Queensland and Western Australia do not have that capability. As I said on a previous occasion, provided all other things are equal, on the grounds of sharing the work around Australia, the case for the hull and propulsion unit should go to wherever the boat can be best built. That is quite clearly Queensland, because the most efficient shipyard in the country is that of North Queensland Engineers and Agents Pty Ltd. The importance of the submarine contract cannot be overestimated. Since the Labor Party embarked on its very intemperate decision to get rid of the carrier and the fleet air arm, which was not in any way at all a consequence of getting rid of the carrier, the offensive capability of the Royal Australian Navy has rested very heavily on the submarine force. I am not preaching that the submarine force is a substitute for a surface navy in any sense at all. There are great limitations for submarines particularly in regional operations. Surface ships are very important for any conflict we have in the archipelagos to the north or west of Australia. The sort of surface ship we need there, as Senator Hamer said many years ago in this place, is not a ship of the size of a DDG or something like that, but something of the size of 2,500 tonnes to 3,000 tonnes which has a high turn of speed and considerable endurance to perform the role of a policeman on the beat. But in the absence of a carrier, the primary offensive capability rests with the submarine force, so it is important that, if we are to buy some submarines, we get the best we can. There is no question at all that if we were buying new submarines with an open mind we would be buying a nuclear-powered submarine. We would not be buying them tomorrow; we would look at the design for another four or five years before anyone starts cutting metal, and it would probably take eight years before we got possession of the first one. Those submarines then would be in service for a period of 30 to 40 years beyond that; to the year 2020, when none of the present members will be in Parliament. We have to look at the technology that is likely to exist then. Speed is of great benefit in the transit role of getting from Australia to the theatre of operations, wherever they may be-passage distances of 3,000 and 4,000 miles perhaps. The ability to cover that distance quickly is very important and the ability to stay on station without the need for refuelling is also critical. On these grounds the argument is overwhelmingly for a nuclear-powered submarine. I recognise that to buy nuclear-powered submarines at the present time would be an horrendously expensive program, because this country does not have the industrial infrastructure in nuclear engineering to support them. That is a sad commentary on the short-sighted decision of many years ago to abandon the building of a nuclear power house at Jervis Bay. That was proposed under the Gorton Government. Had Australia gone ahead with that correct decision to build a nuclear-powered electricity generating station at Jervis Bay, we would now have the nuclear engineering infrastructure to enable us to support nuclear submarines. If we were to go ahead now, when we have none of that support, it would have to be introduced at great cost for a special and restricted purpose, and it would be unfair to load that cost on to the Royal Australian Navy or the Department of Defence. I come to the design of the new boat. The Navy has its mind set on buying a new boat. There is a very real case to be made out for upgrading the present O class boats that we have. The advantage of the O class boats is that they have a far greater range than the contemplated new submarines would have. Their sensors would probably be better than the sensors proposed to be fitted in the new submarines-there are technical reasons for that which I am not prepared to go into in public. They certainly have more torpedo tubes than the new boats, and given the new weapons systems we have, particularly the Harpoon missile, it is highly desirable to maximise the number of weapons which can be fired in a salvo. There may be good tactical reasons in an underwater attack to fire the maximum number of missiles which can be launched in one salvo. There are other reasons, such as the great flash and smoke signature from firing a Harpoon, when one does not want to advertise the submarine's position at repeated intervals by firing missiles sequentially. There is a very good case to be made out for the O boats. The problem with the O boats is that their hull equipment goes back to the 1950s. The spare parts position is difficult. I would have thought there was a very good case to be made out for re-equipping those boats. They have all gone through survey. On inspection the hulls, apparently, have been found to be in excellent condition. They could have a life of 40 years, so there is quite a bit of life left in them. With new equipment one could have increased performance, more space and improved habitability for very much less cost than would be the case with the new boats. Whilst the first Oberons were bought for $10m, we are looking at a project cost of $150m for each new boat, and for a fleet of six we are looking at about $1.5 billion. This is not petty cash; it is a big expenditure. My argument would have been that there was a case to upgrade the systems that we already had, pending the time that nuclear support came to the country and we could head in the direction in which we should be heading. I turn to the Navy's position. It is very keen to buy a new boat, irrespective of the advantages or disadvantages. If popular rumour is to be believed, the chosen boat will be the German HDW-IKL design, with the Swedish design by Kockums put up as a weak contender so that the HDW would come out ahead. Neither of those designs has been built, and one of the requirements of the contract was that the tenderer had to come up with a design that was already in production. All the designs that have been considered by the Navy are extensive modifications of boats that have been built only in small numbers or not built at all. The best of all designs seems to be the Vickers Shipbuilding and Engineering Ltd 2400 series, which is being built for the Royal Navy. The Royal Navy has said that it is prepared to modify its boats as they come down the line if Australia is prepared to buy them. So we would get commonality of equipment. We would get a spread of the research and development costs across the two fleets, and most importantly, a fleet would be operated by the RN as well as by the RAN so there would be spares support in the future. Added to those advantages has to be the fact that the Royal Navy is operating nuclear submarines and Britain has far greater experience in submarine construction than any other European power. The benefits of advanced nuclear engineering will be manifested in the conventionally-powered boats that Australia will have built. Unfortunately, there is an intense anti-British bias in the RAN at present. Once upon a time it used to be the other way round-the RAN was blindly pro-British-but for reasons that I do not understand we now have intensely anti-British bias in the RAN and nothing emanating from Britain can be considered in any way at all. I have great reservations about what looks like being the successful design to be announced this week by the Minister for Defence. It is a paper boat; it will be an orphan boat and indications are that it will have severe technical limitations. It will be considerably shorter on range. It will have fewer torpedo tubes, and there are very real reasons to doubt whether the weapons system-the sensors-we presently have in the Oberon boats can be fitted successfully to this new hull. Even if this can be done, the integration of electronic systems is something that involves an enormous amount of work. One cannot take a system that works well and throw it into a hull, whether it be an aircraft's hull or a ship's hull, and expect it to work perfectly in the way it works in another setting. We are looking at development costs that run into tens or hundreds of millions of dollars and years of work to get over that. Another topical point in relation to the Navy that I wish to comment on is the proposed removal of the amphibious squadron-the LCHs and HMAS Tobruk-from HMAS Moreton in Brisbane and its transfer to Sydney. This is absolutely nonsensical. It is a cost saving move by the Labor Government and it will deny a training capacity that is important in the national interest. Under the present scheme the 6th and 7th Brigades in Queensland are tasked with development and training in amphibious warfare. In New South Wales, at Holsworthy, there is the 1st Brigade and it is tasked with parachute operations and mechanised infantry. To close HMAS Moreton, purely on the basis of costs, not on logic or operational efficiency, and to transfer those ships from Brisbane is absolute nonsense and is very short-sighted. The second Service I wish to deal with is the Australian Army. The Army is suffering enormously from poor funding. As I said here many years ago, there is a basic belief in the Parliament that all that each member of the Army needs is a rifle and a pair of boots. But the need for high technology weapon systems in the Army is as great as it is in the Royal Australian Air Force or in the Navy. The difference is that the unit cost of the equipment required is smaller. It may be $500 or $5,000 as against $50m or $500m for a ship. The need is there and is not being met. It is undramatic, but one simple example I can give honourable senators relates to the need for night fighting capabilities. Any army today will fight at night. To do that it must have night vision goggles. I do not think we have any in this country. If we do, we would have half a dozen purely for experimental purposes. The Army needs high technology equipment and that need is not being met. My second point in speaking on the Army relates to the Army Reserve. The Army Reserve is now in a disastrous state. Only last week we heard the Minister talk about the integration of the Army Reserve into the permanent Army. That is Liberal Party policy. I am glad the Minister is implementing it because it is important, with the small numbers we have in the Army, that we have one army. There is no case for a permanent army and a reserve army. I applaud that move but the Reserve is now almost completely destroyed. It has a nominal strength figure of 30,000 members. In an Estimates committee hearing held in this chamber a couple of weeks ago, departmental officers admitted to the strength of the Reserve being around 24,000 to 25,000. That is an incorrect figure. It is a meaningless figure. I do not doubt that if we were to audit the books of all the units in the Reserve in Australia, we would find names and numbers equalling 24,000 or 25,000 reservists. The important factor is the number of efficient soldiers in terms of the Army definition. To comply with the Army definition of 'efficient' a soldier must do 28 days training a year, of which 16 are spent in a camp, and must qualify on a weapons course. Very few people miss qualifying on a weapons course. I have talked to members of units, to adjutants and to commanding officers around the country. They told me that if, for example, a unit has 430 members of the Reserve on strength, only about 280 turn out to camp. I suspect that is the true figure around the country. My estimate is that of the efficient members-'efficient' means active, willing participants in the Army Reserve-we are probably looking at a figure of around 12,000 to 14,000 in Australia today. Out of a nominal figure of 30,000 that is terrible. What is going on? The first thing that happened was the decision to tax Reserve payments. That was disastrous. People do not join the Reserve to get money tax-free, but the tax-free payments were very important because many people with specialist skills-whether they came from the transport industry, from professional services, such as accountancy, or the health services-joined the Reserve out of a love of doing something worth while for the country. While they were in camp for the required 16 days a year, they used the tax-free money to put people into their jobs. Most of them were self-employed; they were individual operators. Because they cannot get that money tax-free, they are now losing very heavily by being members of the Reserve. The other day I talked to a senior captain, who is on the highest rates of pay. He told me that he was in camp this year for 30 days and he received under $600 in his hand at the end of the month. On the basis that he is probably paying $600 a week for someone to replace him in his own job, he is losing and is losing very heavily. The decision to tax the Reserve was one of the stupidest decisions that this Government made. It does not save money. It has driven out the capable people in the Reserve forces and it means that many of the people who now join the Reserve are public servants. I have nothing against public servants, but it has to be recognised that a large number of public servants are in protected or reserved occupations. So if we have a war or an emergency, the people who have been trained in the Reserve will be unavailable. The second thing that has upset the Reserve is the freeze on pay for 3 1/2 years, which is absolutely inexcusable. The third factor is the way allowances have been dropped. Once upon a time if members of the Reserve were camped out in the bush they got paid something extra-it was not terribly much; it may have been only $70 or $80 a camp-but that is now unavailable. On top of that, they experience the nitpicking, sticking to rules, and general frustrations of operating in an organisation that is held in contempt by the government of the day and seems to have no purpose in life. So we have had an exodus of many people from the Army Reserve. Sitting suspended from 6.30 to 8.p.m. Senator MacGIBBON —I now wish to turn to the Royal Australian Air Force, and I comment first of all on the historic delivery flight on Friday last week of two FA18 aircraft that were built in America for the Air Force. They flew non-stop from Naval Air Station Lemore in California to Williamtown in New South Wales. It is a great tribute to the airmanship and the organisational ability of the Royal Australian Air Force that that trip was completed without a hitch. It is also a great tribute to the capabilities of these aircraft that they flew non-stop from America to Australia and that it would have been possible, just by refuelling and arming them, to put them immediately after that long flight into service with all their systems operating. The delivery of these aircraft marks the start of a new era in Australian Air Force capabilities because in the FA18 we have a very worthy partner for the F111, which is the finest heavy long range strike aircraft in the world. The FA18 has enormous versatility. It is the best air superiority fighter and close support aircraft in the world. It is a generation ahead of anything else and, most importantly from our point of view, as well as this great flexibility in roles that it can perform it is very easy to maintain. The maintainability of this aircraft is in a different dimension from anything else we have in our inventory. The interesting thing about the flight was that the aircraft were refuelled 13 times in the air. The fact that they were refuelled 13 times is not significant because it is part of the peacetime doctrine that such aircraft never operate with less than two-thirds of their normal fuel load. They probably could have got by with well under half the number of refuellings that took place. The important point is that they must have an airborne refuelling capability because that capability is a design characteristic of both the F111 and the FA18. The RAAF does not have that capability. It does have four Boeing 707s which were purchased primarily to be airborne tankers but the Government has not proceeded to buy the kits for them. If they are converted to tanker aircraft they do not lose any of their capability as freighters or passenger aircraft because no tanks go in the fuselage. The kits are added to the aircraft. There are two different kits-the probe and drogue kit for the FA18, which costs about $1m or $1.5m per aircraft to fit up, and the boom refuelling gear for the F111s, which would cost between $10m and $12m. So for something like $50m to $60m the RAAF could have air refuelling capability. It is most important that we have that capability. The project costs for the FA18s will be $3 billion to $4 billion and not to spend $50m or $60m to give us an air refuelling capability is being penny wise and pound foolish. It is important that we have that facility, and it is important that we have it as the F-18's come into service because we should develop the doctrine and the training for those refuelling operations rather than leave it till we get to an emergency. The provision of an airborne refuelling capability for the Air Force will allow us to use the maximum design potential of both the FA18 and the F111. The aircraft also need an airborne early warning capability. The ANAPG65 radar in the FA18 is the standard by which all fighter aircraft radars are judged. It is the most advanced, most sophisticated in the world but it is still essentially a short range radar set. One cannot vector over long distances with this unit; it would have a range of roughly 50 miles but with our coastline and great area we have to cover thousands of miles. It is impossible to dispatch an FA18 and let it search by itself; it has to be guided to its intercept, to its target. For that we need either ground based radar or airborne radar. Because of the huge capital cost for ground based radars covering all of Australia, we come down to an airborne early warning capability and airborne surveillance. There are only two suitable aircraft available-the Grumman E2C, which is an old short range Navy aircraft which would probably cost about $60m to buy, and a Boeing E3A, which was based on the Boeing 707. The latter is a very expensive aircraft which would probably cost between $150m and $200m. The Lockheed company has come up with a proposition whereby the P3C, an aircraft already in service with No. 10 and No. 11 RAAF squadrons as a long range maritime patrol aircraft, could be built as an AEW aircraft. It has already flight tested the aircraft with the radome on it and there are no aerodynamic problems. I estimate it would be possible to acquire this aircraft for between $40m and $60m. Lockheed would be prepared to provide the bare airframe to us and the Australian industry could provide the electronic fit precisely as the Air Force required. That is something on which this Government should move, and it should move very smartly because until we get that AEW facility the great capabilities of both the F111 and particularly the FA18 cannot be used. The third point concerning the Air Force that I wish to raise is the trainer program that is presently running, and running disastrously. There is no doubt that the trainer program should be abandoned. It seemed like a good idea at the time some years ago when it started. It was a simple design exercise but it has gone out of control. We have an aeroplane that is being built to do everything. It is getting very big and heavy, it is over a year late and it is costing the earth. The Auditor-General's report of October 1984, released a couple of months ago, said that the price of this program now had gone past $281m in October 1984 figures. That is the cost for 69 aircraft, which gives us a figure of over $4m a unit. Bluntly, we cannot afford that sort of money for an aeroplane that is a year late, has not flown and probably will not ever fly. One thing about business is that when a deal goes bad one has to have the courage to cut one's losses and get out. Even though we have spent $34m and have nothing to show for it in the form of a flying aeroplane, let us be men enough to take our medicine and cut the program. We must recognise that we are on a losing deal; we are on another Nomad project. We must get out of it. Other aircraft are available, such as the Brazilian Turcan or the Pilatus PC9. They will carry out the role required better than the Australian trainer. The Royal Air Force has bought the Turcano. Its choice was the PC9 but the British Government, under Margaret Thatcher, is selling Shorts as part of its privatisation program. The Shorts firm has a co-production agreement with Embraer in Brazil, so Britain bought the Turcano against the advice of the Royal Air Force, which preferred the PC9. The PC9 would be available, I estimate, for between $1m and $1.75m in this country, so we could probably pick up on this deal around $150m. That could give us the AEW aircraft. I had intended to say something about the Department of Defence but there simply is not time tonight. I will confine my remarks to saying that the Department of Defence continues to blunder along with the great incompetence that it has manifested ever since the Tange report was implemented. It employs between 32,000 and 36,000 people. It is just an enormous debating club which has as its doctrine: 'Let's do nothing, let's obfuscate the interests of the Services, let's do nothing to enhance the operational capability of the defence forces of Australia, let's have a reduction in capability, let's paralyse the whole system'. I hope the report that has been commissioned by the Government will provide us with a way of reducing very much the influence of the civilian component of the Department of Defence in the Department's operations. It is an absolutely fundamental flaw to have the Chief of the Defence Force equivalent with the Secretary to the Department. I do not say that in a personal way; personalities do not enter into it. In the Chief of the Defence Force we have a man who is vested with the responsibility of defending the country, but the administration of the Department is shared equally between him and the Secretary. We cannot divorce administration from the responsibility of Executive control. That is the Department's fundamental flaw; it is one that must be corrected at a future date. Senator SHORT(Victoria)(8.10) —I join this debate to look at just where this Government is attempting to go with its overall economic policies and to compare its windy rhetoric with its actual performance. The more one looks at what the Government is actually doing, the more difficult it is to find any identification between this performance and what it says are its policies. However, the task is complicated still further by the fact that different Government spokesmen say different things, and even the same spokesman says different things from one day to the next. One has only to examine the statements of the Prime Minister (Mr Hawke) on tax reform. One day the Prime Minister says that tax reform is essential. The next day he says that tax reform is not worth the effort if the political difficulties are too great. The following day he is back on the original tack, and so on. The Treasurer (Mr Keating) said in his so-called expenditure cutting exercise last week that: . . . it is the Government's view that the wage indexation case should proceed as normal in September under the principles. The very next day both he and the Prime Minister backed away from that statement, but they backed away in somewhat different directions. The day after that, the Treasurer went down yet another path. Then he was contradicted in the Senate by the Minister for Finance (Senator Walsh). Then today, in Question Time, the Leader of the Government in the Senate, Senator Button, threw more confusion into the ring when he said that the Government was 'cool' at this stage about whether it would seek discounting for devaluation at the September wage case hearing. In other words, Senator Button was saying: 'Maybe we will; maybe we won't. Let us toss a coin.' What a way to run a ship. With all the tacking that this Government is doing-to borrow a nautical term-it is no wonder that the captains of the ship of state are looking decidedly green. What worries me is that the ship itself may founder if this absurd, dangerous and confusing state of affairs continues. I turn now to a brief look at just what the Government is doing in the four major areas of economic policy for which it has direct responsibility. These areas are, of course, fiscal policy, monetary policy, wages policy and balance of payments policy. Unless appropriate policies in each of these areas are pursued and unless these policies are consistent one with another, we cannot hope or expect to have the economy growing in the way which is necessary if living standards are to rise and if new jobs are to be created. First, let us consider the Government's fiscal policy; that is, its approach to government spending, taxation and deficit budgeting. Last week the Treasurer produced his long awaited expenditure cuts. It is just as well that we had not been holding our breath, for despite all the huffing and puffing and all the build-up, the result was nothing short of pathetic and grossly misleading. The Government claims that it has cut its 1985-86 expenditure estimates by $1 1/4 billion. But this is a gross overstatement. It is based on the unrealistically low inflation figure of 4.5 per cent. It includes several hundreds of millions of dollars of spending which has merely been deferred, not cancelled, and it includes numerous increases in government charges which, of course, are totally different from reductions in expenditure. Even if we were to take the exercise at its face value of $1 1/4 billion, that would simply mean a reduction in the Forward Estimates of 1.8 per cent-hardly a significant reduction. For example, let us compare it with that of the previous Liberal Government. In 1977-78, that Government reduced the Forward Estimates by 6.6 per cent. In 1978-79 it reduced them by 3.6 per cent, and in 1979-80 by 2.1 per cent. Each of those reductions took place in an environment in which courage in decision making was much more difficult than in the environment of today. The present Treasurer has not shown courage; on the contrary, he has failed to face up to his responsibilities. He has failed to give economic management the lead that it needs. No wonder the business community, now that it has had a chance to look at the statement, has given the Treasurer's announcements a cold shoulder generally. No wonder the foreign exchange markets have treated the whole affair as a damp squib. However, the real test of the Treasurer's mettle will come with the August Budget, because only then will we know what the Government's total level of proposed spending for 1985-86 will be. If experience is any indicator, the Treasurer will again fail the test of financial responsibility. In his first Budget, in 1983, the Government added $2.5 billion in new spending programs. In 1984, the Treasurer added a further $1.2 billion. It is for these reasons-nothing whatsoever to do with any situation that Labor inherited from the previous Liberal Government-that government spending under the Hawke Labor Government has risen in the past two years to the highest level in our history. The present Government, on its own figures, is the most profligate government in Australia's history. It is for this reason that the present Labor Government is also the highest taxing government in Australia's history. The level of tax receipts has grown under this Government more than at any other time in our history, with the notable exception of 1974-75, under the previous Labor Government-and it is giving even that increase a nudge. Senator Peter Rae —I wonder whether you could send a copy of your speech to Senator Maguire, who does not know these facts. He is not in the chamber tonight to hear this. Senator SHORT —I would be delighted to do so. I wonder whether he would understand it. The Government is talking about tax reform at the July summit, but one cannot look at tax reform in any meaningful way unless one is looking to lowering the overall tax burden. One cannot lower the tax burden unless one reduces the level of government spending. It is now patently clear that the Government will not lower its spending. It is quite certain that spending under this Government will increase. To make matters worse, it now appears that the tax summit will not even look at the appropriate size of government spending or the appropriate size of government revenue. In my maiden speech in February, I urged the Government that if it proposed to hold any sort of summit-which in the event is nothing more than a gimmick-it ought to hold an expenditure summit. That call fell on deaf ears. So far as the tax summit is concerned, I am appalled that it now appears that the issue of business taxation will not be addressed at all. Business taxation is in a mess. Senator Walsh —Who told you that? Senator SHORT —Senator Walsh should just ask the business community. He should also ask a much wider range than that. Senator Walsh —Who? Come on; name them. Senator SHORT —Most of the leading business organisations would agree with that statement. Senator Walsh's interjection is fairly indicative that this Government is not talking sufficiently to the business community. Business taxation has developed in fits and starts over the years, and with no cohesion. For that, I do not blame just the present Government, I blame successive governments. The whole area of business taxation needs urgent overhaul if we are to encourage productive investment and to create new jobs and new income. Yet the Government will apparently choose to ignore it altogether. Despite the massive increases in taxation under this Labor Government in the past two years, borrowings by the Government to fund its profligate spending programs have mushroomed. In Labor's first two Budgets alone, Federal Government borrowings have increased by almost $15,000m. That is $1000 for every man, woman and child in this country. This year that figure will certainly increase to more than $20,000m. These borrowings have to be repaid, and they have to be repaid with interest. In 1984-85, this year, the interest bill alone will be $5,600m. In 1985-86, it is projected to rise to about $6,500m. That is almost certainly an underestimate now that we have the highest real interest rates in 50 years as a result of this Government's mismanagement. In 1985-86 the interest on Federal Government debt alone-I exclude entirely from these figures the enormous debt incurred by State and local governments-will be 9.5 per cent of total Government spending. That means that for every $10 that the Government has taken from us in tax, almost $1 will go simply in meeting interest payments. The interest bill in 1985-86 will be more than we spend on the defence and security of this nation and much more than this Federal Government spends on items such as education. That is a dangerous and highly destabilising situation. It lowers our standard of living; it reduces our credit rating with the rest of the world; and it has all the seeds of feeding on itself and becoming an increasingly serious problem. Yet the Government seems oblivious to the dangerous waters into which it is leading Australia. A similar comment to that which I have just mentioned on the interest bill could be made in relation to the interest on our foreign debt. So great is our foreign debt now that for every $8 of exports we need $1 to repay the interest on our foreign borrowings, our foreign debt. That does not include covering 1c of repayment of those borrowings. I wish now to look briefly at the Government's monetary policy over the past year. In the second half of 1984 the Government let money supply grow at a rapidly increasing rate. The growth far outstripped the Government's own monetary targets, regardless of which definition of money supply is adopted. What did the Government do? Instead of reining in the growth, instead even of revising its targets, in January this year the Government chose simply to abandon monetary targeting altogether. The failure of the Treasurer last week to restate and reinstate monetary targeting is of major concern. It has unsettled the financial markets. It has produced uncertainty as to the Government's monetary policy intentions; it has caused a rise, certainly in short term interest rates; and it has further eroded the already eroded business sector confidence. Tonight I urge the Treasurer to announce firm monetary targets as soon as possible. The Government's decision in 1983 to float the Australian dollar was welcomed by my Party and certainly by me. It was a sensible and a courageous decision, and it is still the correct policy. There can be no suggestion that we should abandon this policy. But a floating exchange rate has certain very important implications for the other three arms of policy, particularly for wages policy and monetary policy. This fact was pointed out very clearly by the Secretary to the Treasury, Mr Bernie Fraser, in a speech in Sydney last week. Mr Fraser very rightly raised the question of whether monetary policy would be able to shoulder the burden of coping with the inflationary impact of the recent depreciation of the floating dollar if the Government failed on the wages and fiscal policy fronts. He also pointed out that the floating dollar had presented a sizable challenge to the rationale behind the prices and incomes accord between the Australian Council of Trade Unions and the Australian Labor Party. He went on to say: Indeed, deregulation associated with the floating of the exchange rate poses some questions about the longer-term compatibility of those arrangements with regulated labour markets-questions which will come under increasing notice if the depreciation heightens the extent to which rigidities in the labour market pull against economic forces. In other words what the Secretary to the Treasury was saying was that, unless both the Government and the trade union movement recognise the need for greater flexibility in wages, the potential benefits of the recent devaluation of the Australian dollar will quickly be squandered and we will be worse off than we were before the devaluation. We will also be faced with a continuing loss of the international competitiveness which is so essential if we are to avoid slipping further down the ladder in terms of relative living standards. It is only 30 years ago that Australia was the third or fourth richest country in the world on a per capita basis. Today we are about twentieth. On present rates of growth several of the nations of South East Asia will have higher living standards than ours before the turn of the century, which is less than 15 years away. Wages and labour productivity are the essential elements in our overall cost structure and our competitiveness and therefore determine the sort of economy and the sort of standard of living that this country will have. Yet we are living in a time when our international competitiveness is slipping and when we have had the largest devaluation of our currency in more than 30 years. We are living in a situation, in a lotus land, where wages, despite the so-called rigidities of the accord, have over the last 12 months or so increased significantly more than the consumer price index. The Government and the trade union movement appear incapable of grasping this simple fact-that wages and labour productivity are the key to our success or failure as a nation and the key to our success or failure in terms of government responsibility for Australians. How else can we explain the Government's and the ACTU's refusal to embrace discounting at the forthcoming national wage case? The Government's fiscal and monetary policies, wages policy and exchange rate policy are not in line with each other. As a result this Government is mismanaging the economy in a way which will prove extremely costly to all Australians over the next year. Senator HILL(South Australia)(8.27) —Appropriation Bill (No. 3) 1984-85 and Appropriation Bill (No. 4) 1984-85 deal with additional appropriations of approximately $550m to meet new commitments of the Government since its last Budget, to cover costs and price increases and also exchange rate fluctuations. The debate therefore raises for further consideration this Government's attitude to critical economic issues currently facing Australia, particularly in relation to its expansionary economic policies about which we have just heard a great deal from Senator Short, matters concerning its wage fixing regime and matters concerning the massive devaluation in the dollar that has occurred this year. I suggest that this debate about additional expenditure is opportune in view of the statement by the Treasurer (Mr Keating) of 14 May claiming to reflect an intention to reduce expenditures. The Hawke Government, since its election over two years ago, has indicated a willingness to have as its standard responsible economic management. It will be judged on whether it achieves that goal. Its rhetoric will have to be matched by action. This Government's leadership performance to date indicates an uncertainty of purpose at a time when the economy requires clear and decisive action. The economic policy challenges facing this Government in 1985 are quite different from the challenges it faced in 1983. Over the past two years the economy has recovered from recession to a certain extent and has returned at least to improved rates of growth. I remind the Senate that the Opposition has not hesitated to welcome the recovery and to acknowledge government initiatives which it believes have contributed to that recovery. The fall in the rate of unemployment to below 9 per cent, together with some improved rates of employment growth, have been welcomed as a sign that the economy has moved to an upturn. Lower rates of inflation have improved our chances of becoming more internationally competitive, while the operation of the prices and incomes accord has no doubt played a role in minimising excessive wage increases during the recovery phase. On the other hand, the Opposition also recognises that the Government has had a relatively easy road in overseeing this recovery. Throughout the two years it has been in office it has experienced the world economic upturn, driven by a continually expanding American economy which provided the Government with opportunities to exploit a healthier trading environment. Growth rates have returned to more normal levels following the ending of the drought, and the private sector took advantage of the previous Government's wage pause initiative. The task to hand in 1985 is to make sure the recovery is sustained. It is now time for the economically more difficult decisions to be made so that recovery becomes sustained economic growth. The challenge at hand is the achievement of sustained economic growth which will provide higher standards of living for all Australians. The coalition parties believe this challenge must be met with policies which create the right conditions which will produce high rates of employment, low rates of inflation, a competitive and export oriented economy and a labour market fully responsive to the increasingly rapid changes in world markets. To this end it is our belief that an important task of government is to ensure the efficient operation of market forces, thereby minimising the barriers and restrictions on economic growth. For such policies to be successful they must not only be clear in intent but also consistent in application. Sadly this Government appears to have lost its way. While Government spokesmen, in particular the Prime Minister (Mr Hawke) and the Treasurer, have been more than willing to embrace some of the rhetoric of freer markets, the primacy of the private sector and the need for restraint in government outlays, it is increasingly obvious that they are unwilling or unable to take the necessarily difficult decisions to bring those objectives to reality. We readily acknowledge that attempts have been made by this Government to cut itself adrift from the moribund socialist ideology of the last century. Initiatives which have led to a freeing up of the financial markets are a case in point. Despite predictible opposition which came from the left wing of the Party, and is still coming from that faction, the Treasurer has succeeded in instituting that long overdue reform and, as the previous speaker, Senator Short, has said, we applaud it. But one must ask how serious this Government really is when its laudable efforts in financial deregulation cannot be matched by any serious effort at deregulating the wage-fixing system. It is this inconsistency which threatens to dissipate the gains made during the economic recovery and to condemn Australia to further years of low growth, international non-competitiveness and continued high rates of unemployment. For example, one may ask: What does the Government intend doing to ensure the positive effects of the devalued dollar are not lost through a further round of fully indexed wage rises? What does this Government intend doing to lower the structural component of the deficit, a deficit mainly of its own making? What policies is the Government intending to pursue in order to overcome the unacceptably high national debt? What policies is the Government putting in place which will address our chronically poor trading performance? Where, in fact, in the statement delivered by the Treasurer last week is there any evidence of the Government's intention to provide clear and decisive leadership to an economy under threat of only temporary recovery? In that regard it is important to understand clearly what was involved in the Treasurer's statement last week. It was, in effect, an announcement that something in the order of $1.25 billion is to be shaved off the Forward Estimates of outlays for the 1985-86 financial year. However, there is nothing unique in the process whereby Forward Estimates for the coming financial year are reduced during pre-Budget discussions. The only thing which is unique is that, for the first time, a government has made public the specific cutbacks in the annual departmental and ministerial claims for future spending programs. In essence, what the Government has done is turn what is a commonplace pre-Budget procedure into a glittering showcase of apparent government fiscal responsibility. It is an apparent, rather than real, exercise in fiscal responsibility for two reasons: First, these shavings are to be achieved by cutbacks in anticipated growth in outlays. In other words, government outlays will continue to grow; only now the growth will be at a lower rate. It needs to be noted that of the $1.25 billion taken off the Forward Estimates, only $237.2m represents actual cuts in expenditure on the 1984-85 Budget. Despite the Prime Minister's gloating references to the many satisfied responses of business organisations to this statement, I remind the Senate that the Australian Financial Review placed matters in their proper perspective the day following the statement when it reported: On the contrary, the cuts instead of being basic and lasting reductions are for the most part simply temporary reductions in growth rates in various classifications of expenditure or deferments of expenditures to future Budgets. Many of the so-called savings do not even represent ongoing budgetary reductions. I remind Senator Walsh that the Government can sell Belconnen Mall only once, assuming, that is, that a buyer can be found. Furthermore, there are examples, such as the rephasing of the participation and equity program for schools, which do not represent cuts in spending in any real sense; the money is still going to be spent, only over a longer period. The second reason these so-called savings on Forward Estimates are a more apparent than real attempt to come to grips with expenditure reduction is the poor track record of this Government in applying any consistent attitude to expenditure reductions. While the following figures have been mentioned before, I believe they are worth repeating in view of the Government's desperate desire to be seen to be responsible economic managers. In the first Hawke Budget, in 1983-84, the Government added approximately $2.4 billion to its discretionary spending program. Prior to the Budget it had reduced Forward Estimates by approximately $1.2 billion. In 1984-85, the Forward Estimates were reduced by $500m prior to the Government bringing down a Budget which added $1.138 billion to its spending programs. We will have to wait until the August Budget to see whether the Government is really serious this time in reducing its expenditure. I would suggest that its performance to date gives little hope that, on this occasion, it will get it right. Therefore, the entire exercise that we have witnessed is one of feigned toughness. As for the much heralded pain the statement was meant to bring to sections of the community, the Australian Financial Review correctly observed how temporary that pain could be. It stated: The message to those affected is clear: Don't complain too loudly, because you'll get it back before the next election. If in fact this turns out to be the case, Australia has once again been cruelly misled by this Government. We have, I fear, been subjected to an elaborate publicity exercise under the guise of responsible economic management. The more difficult and important tasks remain. Yet the Government has failed to address itself to vital economic issues. The Government remains negligent on the question of wages policy. The Treasurer's statement last week and the subsequent statements by both him and the Prime Minister clearly indicate this Government's incapacity or unwillingness to exert any influence on what appears will be the inevitable national wage rise without allowance for the effect of the devalued dollar. The Treasurer himself recognises the importance to a sustained rate of growth of wage levels which do not place unacceptable cost burdens on the private sector. On page 46 of his statement, he stated: This Government's accord with the trade union movement provides a mechanism through which a wages outcome, consistent with contrived strong growth in the economy, can be achieved. Such an outcome must involve a lesser real wage level during the adjustment period than would otherwise have applied. Yet despite the Government's recognition of the centrality of a correct wage outcome to maintain the momentum of recovery, the wage indexation case will proceed in September along with its inevitable outcome of a fully indexed national wage rise. In lieu of its abdication of responsible leadership in seeking to discount the next national wage increase for the effects of the devaluation, the Government announces in the same breath that a deferral of the national productivity case will provide an adequate release valve for cost pressures impacting on the private sector. This of course presumes that the national productivity case has a legitimate role to play in the first place. As the Business Council of Australia makes clear in its April 1985 Bulletin: A large part of the productivity gains in Australia have already been distributed to labour through remuneration in the form of superannuation, hours, allowances, redundancy provisions as well as wages drift which has occurred beyond indexation. With the devaluation and the Government's intention to support the full indexation in September, the resulting wage increase will further impact on already increasing cost pressures. Rather we are told that the Government may well address the need for some form of discounting for devaluation in the national wage case in early 1986. However, business confidence is ill-served by a government which shows an unwillingness to address important issues now, preferring instead to postpone the exercise of its responsibilities for another six months. The question that immediately arises is what will happen over the next six months to change the attitude of the Australian Council of Trade Unions to one of support for the necessity to discount wage rises. If the recovery were based on a more solid foundation it may have been argued that continued adherence to full wage indexation without discounting for the effects of devaluation might be capable of being absorbed by the economy. It is clear, however, that the economic recovery which we have experienced, remains fragile and uneven. It is incapable at this stage of withstanding the pressures imposed by a full indexation wage rise. It should be remembered in that context that employment growth has slowed down markedly and unemployment remains at 8 per cent, with little prospect of a further substantial decline. Australia's growth rates are no better than they were two decades ago and are of insufficient magnitude to absorb fully the expected growth in numbers entering the labour market. Our trade deficit remains of the order of $1.7 billion and a deficit in the balance of payments on current account is still expected to be of the order of $11 billion. Real interest rates remain historically high and the high servicing requirement of our net external debt will continue to place an increasing burden on Australia's balance of payments. Because of the continued uncertainties faced within the economy we need from this Government a clear commitment to policies which will properly secure the economic recovery. That objective is not served by statements by the Treasurer which are long on rhetoric but short on substance. Despite the statement last week, the Hawke Government remains Australia's highest spending and highest taxing government in the country's peacetime history. Despite the Treasurer's statement, the fact remains that, while the previous Government was able to maintain expenditure increases in real terms by a mere 2 per cent, the Hawke Government has overseen budgetary expenditure increases of 6.1 per cent and 7.7 per cent in real terms in its first two Budgets. Despite the Treasurer's statement, it is the Hawke Government's spending policies which have pushed Budget outlays as a proportion of gross domestic product to an expected 31.3 per cent this financial year-the highest proportion ever. The important question which remains is whether this Government is really serious when it claims it is concerned with Australia's long term economic health. If this Government is willing to show real leadership it is clear from the record of the Opposition that we will support that leadership. We will support regulatory reform which is consistent. We will support initiatives which will result in permanent reductions in the structural deficit. We will support moves to real rather than cosmetic expenditure restraint. We will support policies initiated by this Government which we consider will contribute to a more internationally competitive and export oriented Australian economy. We cannot support statements like the one delivered by the Treasurer last week which patently fails to tackle the real issues of securing a sustainable economic recovery. Senator PETER BAUME(New South Wales)(8.47) —I wish to support the comments made by my colleague Senator Hill when he referred to the Hawke Government as the highest taxing government in Australia's peacetime history and the government that has put Australia in the greatest debt in its peacetime history. These are sad enough facts. I am using the occasion of the discussion on the Appropriation Bill (No. 3) to discuss some of the activities of the Government and some of the disappointments that many Australians have about the road that the Government has travelled and the direction that the Government is taking. It is bad enough that a Labor government is always under the control of the Caucus, but this Government is a government of factions. We have factions now that are so formalised that they have their own meetings and their own office bearers. The newspapers are not just intent on finding out what the Executive Government itself will do or what Caucus will do, but they are also intent on finding out what the power brokers of one or other of the factions will decide as to whether Government policy will be put into place. That leaves very little place for considerations of the national interest to be put first and it is a great pity that factional considerations are what seem to be guiding the Government. This is a government whose majority was halved in the last election, in spite of the move to a larger parliament. This is a government whose minority position in the Senate has been worsened. The non-government parties have been strengthened, in both talent and numbers. I am reminded of the very considerable talent that we have gained in new senators who have come to join us. We are disgusted by the cynicism, the arrogance and the uncaring remoteness which the Government is now displaying towards the people of Australia. It seems that the Hawke Government and its Ministers have forgotten whom they serve. They serve the people of Australia; yet too many of their decisions are being taken at the expense of the people. They seem not to care, not to be aware and not to be able to respond. We intend to win government from them and we will win government because we have senators like Senator Hill, who has just contributed to the debate. We have a better team, better policies and a more honest and sensitive approach. Judging by the disgraceful programs before us, programs that are embodied both in the Appropriation Bill and in the mini-Budget of last week, I have no doubt that we will succeed. I enter this debate to say a few words about education policy. I shall concentrate on some of the broken promises in the area of tertiary education. We need to remind ourselves constantly and to remind the Australian people of the very large number of educational promises which were made by the Labor Party before it was elected and which have been broken by the Labor Government since its election. We need to remember how Labor has deceived the Australian people, making promises when it wanted votes, promises which it could not and will not keep. It promised more and has delivered less. Whether it is in higher education, in the area of technical and further education, in the area of schools or in special education for small business, to take one example, this Government has broken promise after promise after promise. In the economic statement last week more promises were broken, more promises were set aside. It is the breach of faith with the Australian people, with the electors that the Government sought to impress, that really galls us. It is the breach of faith with the students of today and those of tomorrow which should be revealed clearly. The Government promised the Australian people it would increase the number of places in higher education by 25,000 by the year 1990. It made that promise. It put on the numbers. The current funding squeeze will make that promise impossible to achieve. Already the squeeze has been so severe that the University of Adelaide Law School has attempted to reduce its student intake by one third to maintain its student-staff ratio and what it considered to be proper standards of educational provision. Senator Walsh —There are too many lawyers already, anyway. Senator PETER BAUME —I accept the interjection of Senator Walsh. The Government's own guidelines reveal that in the 1985-87 triennium only 4,000 new student places will be created. That alone will make it impossible for the promised target of 25,000 places to be achieved by the end of the decade, as Labor promised when it wanted the votes of gullible electors. More students are now remaining in schools. More are going through to Year 12, more are achieving matriculation level and more are requiring places. The 4,000 extra places which have been provided do nothing to ease this bottleneck. In fact, the number being turned away from higher education is increasing. The estimate of the Australian Vice-Chancellors' Committee and of the directors of colleges and institutes of advanced education is that by 1985 some 29,500 students may have been turned away. That is, if anyone cares to think about it, the entire populations of two large university campuses-two entire institutions of Australians-have been prevented from getting places. They will not be allowed any other form of entry into the education they want. Their sin was nothing more than to want to better themselves, to have a chance to get an education, to take part in what Australia offers to those who will strive for themselves. There are no places and no chance to compete. The Labor Government promised to provide post-doctoral scholarships for 300 scholars to boost our national research effort. Where is the delivery on that promise? With relation to the tertiary education assistance scheme, the Labor Party promised before the election, first, that it would increase progressively the TEAS family income test until it equated with average weekly earnings. That was a very generous promise, but Labor made it when it was seeking votes. There has been only a very minor easing of the means test. There is no movement towards the achievement or satisfaction of that promise. Labor promised in relation to TEAS, secondly, that it would increase progressively the maximum TEAS benefit until it equated with the unemployment benefit; that is, those who were getting support as students would get as much as those who were unemployed. What has happened with regard to that promise? The gap between the maximum benefit for students and the single unemployment benefit has more than doubled for all students of 18 years of age and more. It has gone from a $5 gap to a $14 gap. That promise not only has not been kept; the situation has worsened. Labor promised, thirdly, that it would liberalise the definition of independence which allows students to have their needs assessed separately from their parents' circumstances. What has happened there? There has been no action whatsoever. That was another specific promise made by Labor when votes were being solicited, another specific promise not delivered on and another specific promise dishonoured. In relation to student benefits, Labor promised, fourthly, that it would remove anomalies in the TEAS regulations. Widespread anomalies still exist. Day after day we hear from students who are caught by anomalies. Any family that listened to the broadcast of last Tuesday's economic statement will know how families have been hit. We know, for example, that the family allowance for all students of 18 years of age and over will now be removed. We know that some families will be able to compete for a student allowance of $6.20 per week. That will hit large families in particular. If a student is a member of a family with five children and if that family receives a family allowance for the fifth child of, say, $11 or $12 per week and the student goes to university, under what Labor has done the family will lose that benefit of $11 or $12 a week and will be allowed to compete under a strict means test for $6.20 per week. Finally, Labor promised that it would not re-introduce tertiary fees. We all know that this very matter, the subject of a solemn election undertaking, is now under active consideration. I indicate that it is a problem for the Labor Party to resolve at present. Labor promised also to strengthen the role of universities, colleges of advanced education and the councils within the Commonwealth Tertiary Education Commission-the Universities Council and the Advanced Education Council-by ensuring that the Tertiary Education Commission communicates accurately the concerns and responses of tertiary institutions to the Government. It is a great promise when one is going to an election. One would have thought that the Government would have delivered on that promise. The academics thought so when they voted for the Government. However, the Government is ignoring what the CTEC advises it to do. It has weakened progressively the role of the Universities Council and the Advanced Education Council. What is more, in its latest proposals in relation to advanced and higher education it has even moved to abolish the Universities Council and the Advanced Education Council, to restructure the Tertiary Education Commission and to replace the Advanced Education Council and the Universities Council with toothless tigers. Is this any way to redeem a promise to strengthen the role of certain advisory bodies? Apparently it is for the Australian Labor Party. Labor promised to discuss with State governments, tertiary institutions and staff associations the expansion of the role of the Academic Salaries Tribunal. That body determines what salaries academics in our universities and colleges of advanced education should be able to claim. Labor said that it would strengthen the role of this Tribunal to empower it to deal with salaries and conditions for academics and any other agreed matters. When Labor was soliciting votes, when it was going to the country, it said that academic staff would have recourse to a more effective mechanism for dealing with their claims. What happened? Was that promise kept? That promise was not kept. On the very first occasion when the Academic Salaries Tribunal sat to determine what salaries should be the Government intervened through the back door and came back with a second submission. It intervened in such a way as to cause a previously agreed salary rise to be phased in and the very academics who had been wooed for their votes to be denied part of their salary rise, in direct rebuttal of a solemn pre-election undertaking. I will not discuss the many broken promises to the schools sector. I note in passing that the bodies which represent public education in this country are bitter in their denunciation of the broken promises of this Government. The teachers federations, the councils of State school organisations and the groups around the country that believe that the promises which were made to support public education, the government system of education, know that those promises have not been kept. In the area of technical and further education this Government made other promises. Labor promised to strengthen the capacity of the Technical and Further Education Council. That is part of the Commonwealth Tertiary Education Commission. It promised to strengthen the capacity of that Council to participate in labour force planning activities. Labor promised to empower it to consult widely with employers, trade unions and agencies involved in planning for the future, such as the Australian Science and Technology Council. What has been the action? The action has been to promise to abolish the TAFE Council-not to strengthen it, but to abolish it-and to replace it with a toothless advisory body. What kind of response is that to a solemn election undertaking? The Government promised that in the first year of a Labor Government there would be an immediate boost-Labor's words-of $15m in Commonwealth funding for TAFE. Where was it? Only a very small increase in recurrent funding and a small amount, $9m, in capital funding have been provided to date. During the 1983 election campaign the then shadow Minister, Mr Hurford, promised an additional $30m for TAFE capital works over the next three years. Of course, these funds have not materialised. They were promised before the election; they were forgotten afterwards. Labor said that it regarded opportunities for second chance and further education as a critical element of its equal employment opportunities. Before the election Labor promised to bring these elements of TAFE provision into negotiation with the States. Where are the results of those negotiations? Where is the provision that was promised to thousands of Australians who need that second chance education? It has not materialised because there was no attempt to redeem these promises once election victory was obtained. Labor promised, as a first step in the elimination of the discrimination which it said was inherent in current levels and patterns of TAFE provision, to seek a report and recommendations from the TAFE Council with a view to implementing an equal opportunities policy for TAFE within Australia and to provide appropriate funding and legislative support for such a program. Where is the delivery of that promise? People who voted for Labor in response to that and other promises have been let down, as they have been let down on other matters. Labor promised to negotiate with employers and unions for increased participation in the training of students of technical and further education and to provide individual experience for TAFE teachers in industries with new technologies. Of course, no negotiations have been initiated. Nothing has happened. It was another promise made in the grubby search for votes and another promise ignored when in government the time came to deliver. Labor has also failed to provide the education and training advice it promised to small business. No action has been taken on the promise to adopt a strategy for the co-ordinated and rational development of a small business education and training program throughout Australia. There has been no action on that. It is a great idea. It was a great pre-election promise. It might not have been a bad matter of honour or of practice to have done something about it following the election. There was a promise to establish small enterprise counselling training programs. Where is the action on that? There was a promise before the election to arrange for private consultants to be available in the small business bureau. There was a promise to provide grants to develop trade associations wishing to develop special management training programs. Where is the action on that? It is easy enough to promise when soliciting votes. Why has this Government not delivered? Why is it so shameless about its failure? Why is it so shameless about the fact that it has dishonoured promise after promise? Labor promised to establish marketing and promotion services attached to the small business bureau. The dishonesty of this approach to education must cast doubt upon the future of any promises in any portfolio area that this Government, its Ministers, its emissaries or its senators and members care to make. Labor promised in opposition and it has failed to deliver, not once but again and again. The litany of broken promises may be bad enough in political terms but in terms of lost opportunity for Australians who want nothing more than a fair go it is a tragedy. When the mini-Budget was brought down last week we discovered that one of the few programs that stood to help people needing a second chance, needing help in regaining their lost place in schooling, needing a chance to participate-the participation and equity program-has been sliced in half for 1986. The Government says euphemistically that the last year of the program will now be spread over two years. That means that half as much will be spent in 1986. I do not question the fact that the Government had to cut expenditure. I am asking who are the losers. Who are the people who will not get the opportunity which they otherwise would have had? Who are the people who would have used the participation and equity program who will not have any access to it because of this decision? I am reminded of Senator Ryan and Mr Hawke who said, not once but again and again, that the participation and equity program was-I use their words-the cornerstone of Labor's policy for youth. They have cut it in half. The losers will not be officers in the Public Service; they will not be Ministers. They will be young Australian men and women for whom that program offered the opportunity to do something about improving their lives and getting a chance back. Of course, we know that the statement last week has also meant that for many Australians programs in other areas, such as pre-school access for Australian children, may well double in price because of the cutting of the subsidy. That, again, may have been good economic sense. The Government had to cut somewhere. But it is interesting that the cuts have fallen upon the powerless, the weak, the disadvantaged and the young. They have fallen on those needing pre-school education, on those seeking access to participation and equity, on those seeking to improve themselves. If ever a government has lost its way it is this Labor Government. It is not enough just to criticise it. It is a tragedy for Australia, for Australian children and for Australian students. It is a tragedy for which this Government will pay whenever the people get their chance to have their say. Senator JESSOP(South Australia)(9.08) —I have heard a number of interesting speeches from my colleagues who have taken advantage of the motion for the second reading of the Appropriation Bill (No. 3) and Appropriation Bill (No. 4) to make a contribution to this debate. I commend them, particularly Senator Baume who drew attention to some of the broken promises of the Hawke Government. I listened to Senator Peter Rae who made a significant contribution on the question of financing local government. I also heard Senator Chipp earlier in the debate raise some good points, particularly with respect to local government financing, and I support what he said. I certainly support what Senator Peter Rae said about the reduction in funds available to local government to a degree where local government authorities will be forced either to raise rates or reduce services and possibly to consider the retrenchment of employees. The decision by the Government to reduce funds is unfair to local government and could result in another tax being levied on the taxpayers of Australia, already overtaxed, with local government being forced to take the blame. I have made representations to the Minister responsible suggesting that this decision on financing of local government should have been left until the Self Committee reported. I understand that that report if due towards the end of September. At that time that Committee will bring forward recommendations concerning the funding of local government authorities. It is quite irresponsible and negligent of the Government to make any decision at this stage. I hope that when the Self Committee reports and presents the Government with an assessment of the problems of financing local government, this decision will be reviewed. I support what Senator Chipp said in that regard. I was concerned when Senator Chipp suggested that he would put the Liberal Party and National Party senators to the test in asking us to support the rejection of a money Bill. Senator Chipp came into this Senate with his Party and said that the Australian Democrats would keep the Government honest. He used slightly more unparliamentary words at that time. Anyone would think that the Democrats were the only honest politicians in Australia. I suggest that he should remember that he also said, when he entered the Senate, that the Democrats would not reject Supply. No matter what he says to justify his Party rejecting a money Bill, this would be, in effect, the rejection of Supply, or part of the Government's Budget, and that is not the prerogative of this Senate, unless reprehensible circumstances arise. However much I deplore some of the things the Government has done and is doing, I do not think we have arrived at that point. I now refer to the Gleneagles Agreement. This seems to be a very popular matter to which the Government has devoted its attention in recent times. The parties to the Gleneagles Agreement suggested that sporting contacts with South Africa should be discouraged. I think that is a fairly reasonable suggestion, as we all have some objection to apartheid, but discouragement does not mean that sporting contacts with that country should be banned by the Australian Government. What has happened with respect to Mr Hughes, a loyal cricketer to Australia, in recent times-- Senator Townley —A very good cricketer. Senator JESSOP —He is an exceptionally good cricketer. What has happened to him and his 13 colleagues seems to me to be quite unfair and quite incredible. Today I read in the Australian that Mr Hughes said: It seems my loyalty to cricket meant nothing. Tonight I defend those cricketers, because they are professional cricketers who want to ply their trade in a free way, which happens to be the spirit of Australian democracy, or so I thought until I heard what the Prime Minister (Mr Hawke) said condemning these people for daring to ply their trade in South Africa. Senator Peter Baume —It was his attack upon them that was reprehensible, wasn't it? Senator JESSOP —I believe that is right. I ask: Where has the free spirit of Australia gone? Where is the right of the individual to exercise his freedom? The Minister for Community Services (Senator Grimes) is frowning at me, wondering why-- Senator Grimes —You paid people not to go to Moscow. You paid sportsmen not to go to Moscow. Senator JESSOP —Do not interrupt me. Listen to what I have to say. Where is the freedom of Australians to go-- The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! Senator Jessop, I call you to order and ask you to come back to the Appropriation Bills. Senator JESSOP —I beg your pardon, Mr Acting Deputy President, but I am provoked by the Minister. I am not saying anything about Russia. I do not mind sending sportsmen to Russia, but I believe we ought to be evenhanded and send them to South Africa as well, and pay them to go there, too, if we need to. What is wrong with that? I am asking the question: What about the freedom of individuals to pursue their particular occupation in the spirit of true Australian democracy? Senator Grimes —What about the freedom of the blacks in South Africa? The ACTING DEPUTY PRESIDENT —Order, Senator Grimes. Senator Jessop, I ask you to address your remarks through the Chair. Senator JESSOP —I am addressing them to you, but I am afraid I am aggravated by the interjections from your right. I do not think that that is quite the right area that they should be coming from in the political spectrum. I ask the question again: What about the freedom of speech and the dissemination of information to the people of the world, including the people of Australia? This fiasco has got to a stage where it is almost laughable. Eighty per cent of the people of Australia surveyed in a recent gallup poll agreed with Australia having sporting contacts with South Africa. The ACTING DEPUTY PRESIDENT —Order! Senator Jessop, I have asked you to address your remarks to the Appropriation Bills. Senator JESSOP —I am talking about the Appropriation Bills, and I think this gives me a fair amount of licence. I am talking about foreign affairs and the question of appropriations to foreign affairs, which I believe is important. Senator Sibraa —That is dead right. You are not talking about sport, you are talking about foreign affairs, and it is a very good point. Senator JESSOP —Foreign affairs has connotations about it-- The ACTING DEPUTY PRESIDENT —I suggest you get back to the expenditure part of the Bill. Senator JESSOP —I suggest we spend more money on foreign affairs to promote contacts with other countries. One way in which we can do this is to appropriate funds to form a bridge of understanding with other countries through the playing of sport and diplomatic exchanges. I sometimes have grave suspicions about the efficacy of our diplomatic conversations with South Africa. Many of the people whom I know who have gone to South Africa have preconceived ideas and are unwilling to accept the evidence of change that is going on in that country. I get back to the point that I believe this is a bridge of understanding that ought to be encouraged by the Department of Foreign Affairs, rather than our denigrating the attempts of South Africa to come to grips with the problem of apartheid, with which we all disagree- Senator Sibraa —What changes have been made? Senator JESSOP —If I may, through you, Mr Acting Deputy President, I will answer my colleague Senator Sibraa, whom I regard as one of the more responsible members of the Government. He will not recognise that substantial changes have been made. He has probably never been there. Senator Sibraa —Cosmetic. Senator JESSOP —That is a typical, bureaucratic, foreign affairs statement: 'Cosmetic'. What a lot of nonsense. Recently the South African Government agreed to abandon the abhorrent interracial marriage law. Now, that is cosmetic! What will that lead to? The South African Government will have to accommodate the black people. It is already allowing black people to buy homes and properties in suburban parts of South Africa. Senator Sibraa —They are burning a few down, too. Senator JESSOP —I am disappointed at Senator Sibraa's reaction to this, because I thought he was one of the more reasonable members of the Government. He does not mind what goes on in Libya or Sri Lanka, where people are killed. Senator Sibraa —That is nonsense. Senator JESSOP —It is the point. The way that people in other parts of the world want to effect change, as far as Australia is concerned, is not to kick us for what we have done to the Aborigines, not to kick us for our land rights policy, but to communicate with us and say that we are not doing the right thing by the Aborigines in Australia and we are not doing the right thing by the rest of the community with respect to the development of the Aboriginal lands of Australia. Come on, let us be fair about this. One does not get the best out of people by kicking them all the time; one gets the best out of people by suggesting that the Department of Foreign Affairs- The ACTING DEPUTY PRESIDENT — Order! Senator JESSOP —I am doing this in the context of the Appropriation Bills, because, after all, I suggest that is the way we ought to go. We ought to be encouraging, not discouraging, through the Appropriation Bills, Australian businesses to establish in South Africa and to trade with that country. Chief Buthelezi, who is the black chief of the majority tribe in that country, has said: No big business today can secure future plans without challenging apartheid. That is right. So Australian companies ought to go over there and challenge apartheid. Chief Buthelezi, the Zulu chief of the black majority tribe, continued: It was the large corporations that broke the apartheid barrier that led to real advancements for black workers. They probably helped to establish black unions in that country. Senator Sibraa looks up to the ceiling and wonders. I suggest that he go to South Africa and find things out for himself. Perhaps he should lead a delegation and come back and report to the Senate. He should find out from the black people themselves what they think of the situation. This Government encouraged the presence of members of the African National Congress and the South West African People's Organisation in this country. Members of these groups are self-professed terrorists who would pursue change with South Africa by bloody revolution. Senator Sibraa and the rest of the Government have encouraged them. I was appalled when a few weeks ago in this Parliament-illegally, I would suggest, or against parliamentary privilege-a SWAPO Press conference was held. It was organised by members of the Australian Labor Party so that they could talk against the South African Government without it having any recourse to reply. What happened last year in this democratic country that we are proud to live in or were proud to live in? Many of us are worrying about that now. I am referring to the Appropriations for the Department of Foreign Affairs. Last year the Prime Minister, Mr Hawke, decided to reject visas that an elected member of the South African Parliament and an elected member of the Indian Members Presidential Council applied for to come to Australia to talk in closed seminars about the problems within their country. The seminars were open to the Press but the discussions were not for publication. Those two people wanted to come here to make an attempt to inform interested people in Australia of the facts and to answer questions with respect to what was going on in their country. What happened? The dictator of Australia, Mr Hawke- Senator Richardson —Come on. Senator JESSOP —I suggest that that is the case. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! The honourable senator must withdraw that remark. Senator JESSOP —I withdraw that. I refer instead to the man who wishes to suppress freedom in Australia. Senator Grimes —How do his views differ from Fraser's on this issue? Senator JESSOP —I suggest, Mr Acting Deputy President, that the Minister is out of order in his interjection because he is out of his seat and he ought to be thrown out of the House. The ACTING DEPUTY PRESIDENT —Order! Senator Jessop, both remarks were unparliamentary and I ask you to withdraw both references to the Prime Minister. Senator JESSOP —I could call him Prime Minister Gillies, but that remark might be even as offensive. That is what he has become known as. Anyway, I withdraw those remarks if they have offended you, Mr Acting Deputy President. The ACTING DEPUTY PRESIDENT —You have offended the Chair. Senator JESSOP —I do not think my remarks were unparliamentary, but I accept your advice. The ACTING DEPUTY PRESIDENT —Senator Jessop, it would be wise not to canvass my rulings. Senator JESSOP —I accept your ruling and I defer to it. Senator Kilgariff —Mr Acting Deputy President, I take a point of order. Obviously, some of the interjections being answered are coming from the Minister for Community Services. I suggest that they are out of order because he is out of his place. The ACTING DEPUTY PRESIDENT —Order! There is no point of order. I acknowledge that the Minister is out of his place. Senator JESSOP —I am talking about the Department of Foreign Affairs in the context of the debate on the Appropriation Bills and I am trying to suggest to the Senate that the way to go as far as understanding other countries is concerned is through inter-parliamentary exchange, cultural exchange, trading and other means whereby we can begin to understand problems of other countries. I suggest that the action taken by the Government last year had even Senator Sibraa and others concerned because they had a special meeting about it. The rejection of visas for an elected member of the South African Parliament and an elected member of the Indian Members Presidential Council who applied to come here was wrong, unfair and undemocratic. I suggest that we ought to change our attitudes if we are truly interested in change. Senator Sibraa shakes his head. For heaven's sake, why do we not realise that we can accelerate change much more readily by communication rather than by isolation, which leads to bloody revolution? That is all I want to say to this Government. I would have said the same thing to the previous Government too because it adopted a similar attitude, with which I disagreed. I believe that if we are a country of fair go-I think Senator Baume said that-what is wrong with changing our attitude in the interests of breaking down the domestic policy of another country with which we disagree? Senator TOWNLEY(Tasmania)(9.27) —I wish to add to the statements that have been made by Senator Jessop in speaking to the Appropriation Bills. I think that this Government is in a very poor position to talk about what is happening in South Africa. It has had a very poor record on sporting contacts with oppressive regimes in the world. I will show that the Government, as in so many other areas of its policy, is confused, inconsistent and clearly out of touch with the way most of the people in this country feel. The comments of the Prime Minister, Mr Hawke, have lost proportion lately. In following up his protests against the oppression of individual liberties in South Africa he has threatened, first of all, Orwellian tax probes into cricketers' incomes. I asked a question about that a few weeks ago. Secondly, he has threatened to block the issuing of passports. I cannot remember that ever happening before. I remember his stopping people from coming into this country. They were not terrorists, but elected members of another government who were stopped from coming into this country. Now he has gone further than that. He is threatening to block the issue of passports to professional cricketers and to members of the Australian rugby union team. Senator Sibraa —Who said that? That is a nonsense. Senator TOWNLEY —He was reported as saying that. If Senator Sibraa does not read the papers I am not going to lecture him in the way some of his friends try to lecture me in this place. I have said before that not many of the people who sit on the right hand side of the President would ever be capable of being called professor. I certainly do not intend to be lectured by them. They do not know what they are talking about. It is time that some of them did some reading, if they can, and read what some of the intelligent members of the Press around this country have to say. Mr Hawke is now threatening to stop the television coverage of the South African cricket tour. The Australian Financial Review of today so clearly described the Prime Minister's actions. It stated: . . . Mr Hawke is now so righteously considering extending into the area of domestic freedom . . . in a manner suspiciously akin to the regime he is seeking to punish . . . by threats of censorship . . . he blurs the distinction between this country's established . . . tradition of freedom and the South African tradition of officially sanctioned terrorism and oppression. That quote came from today's Australian Financial Review. I feel that the whole editorial is worth incorporating and I seek leave to have it incorporated. Senator Grimes —No; you'll have to read it. Leave not granted. Senator TOWNLEY —I will not bother to read it now. I have other things to say. I will make sure that sufficient time is made available to me, by one way or another, to do so in the next day or two. Senator Grimes —I raise a point of order, Mr Acting Deputy President. I seek your ruling on how relevant Senator Townley's present attack on the Prime Minister and others is to the Appropriation Bills. I know we are talking about the earnings of cricketers in South Africa of some $200,000 each but that item does not appear in the Appropriation Bills and I do not see how it is associated with the legislation. The ACTING DEPUTY PRESIDENT(Senator Elstob) —I uphold the point of order. Senator Townley —Mr Acting Deputy President, I wish to speak to the point of order. I referred to the issue of passports and surely as a monetary figure is involved in that it comes within the appropriations. If you go down the track that I think is being suggested by the Minister you will be in real trouble and I will have to take action to stop you. The ACTING DEPUTY PRESIDENT —Order! I uphold the point of order raised by Senator Grimes. Senator Townley, you have not addressed your remarks to the Appropriation Bills up to this point and I ask that in future you do so. Senator TOWNLEY —One may ask what are this Government's credentials for taking this particular attitude to sport. I am sure everybody knows that I take a great deal of interest in sport-more than many other people in this place. In opposition the Australian Labor Party said that it would end all business contact with South Africa when elected. Now in government it appears that its so-called principles are cast aside because it is unable to make the political sacrifices involved in such a decision. Instead it is just attempting to force our unfortunate athletes to make individual sacrifices. So where does that leave us in regard to the ALP? Mr Hawke says that business with South Africa is not banned because other countries would simply replace Australia's trade if we withdrew. I believe that clearly Mr Hawke is attempting to mislead the people of Australia. Senator Crichton-Browne —What about his media ban? Senator TOWNLEY —I have mentioned the media ban already and I will come back to it in a moment. The Adelaide Advertiser of 14 May 1985 said: . . . against the cynical backdrop of all the double standards operating in trade, and against such developments as the selling to South Africa last year of the ABC live television coverage of the Wallabies-All Blacks rugby Tests in Australia . . . I am not sure of the situation in regard to Brisbane Airport but I believe that a contract has been let to a South African company. Mr Hawke and his Government made no attempt to back up our sportsmen by stopping that Australian Broadcasting Corporation sale to South Africa. It cannot say that other countries would have supplied South Africa with that specific item if the ABC had not. So Mr Hawke's words are clearly not backed up by his actions. Not only is this Government's attitude to South Africa inconsistent but also its policies concerning oppressive regimes on the whole are inconsistent. The Minister for Foreign Affairs, Mr Hayden, has said that the cricketers go to South Africa 'with blood on their hands'. Yet, as John Stone pointed out in the Sydney Morning Herald of 1 May 1985, Mr Hayden, when he was Leader of the Opposition, called Mr Fraser a bully for using no more than persuasion to try to stop athletes competing in the Moscow Olympics. Does Mr Hayden hold black African civil liberties in higher regard than those of the dead in Afghanistan or of people in other areas now under the control of Soviet imperialism? How do we explain the ALP's different approaches other than by saying that we have inconsistency followed by inconsistency followed by inconsistency? Mr Hayden says that our athletes will have bloodied hands if they go to South Africa but only recently Mr Hawke embraced the Chinese Communist Party's No. 2, Mr Hu Yaobang. I suggest it is likely that this man has blood on his hands in a quantity far in excess of that which many of us would understand. If the ALP Government is to ban all contact with South Africa, why does it not try to stop Mr Hawke having contact with the Chinese oppressors? Will he stop having contact with these people? Our politicians are not expected to take action that is consistent with their policies, but we are asking our sportsmen to act in accord with those policies. To add to the total absurdity of the South African situation we need only to look to the countries that exhort us to condemn South Africa. For example, the Nigerian Minister for Foreign Affairs was reported in the Canberra Times on 1 May this year as supporting any sports boycott of New Zealand. He said: We don't understand how a group in any country can . . . without being cognisant of the fact that they are going to play in a country whose system represents a denial of the exercise of personal freedom of any kind. That Minister made his statement at the same time as Nigeria was reported as killing a hundred members of a banned Islamic sect. Almost every black nation in South Africa tells the West to stop contacts with South Africa, but most of them are oppressive totalitarian regimes and many deal with South Africa. I think at least 11 of them fly their airlines into Johannesburg. Senator Jessop —They get $4 billion dollars worth of foreign aid from South Africa too. Senator TOWNLEY —I know that a lot of aid is given to certain countries in the area. I wonder where this leaves us. I believe that sport and politics should be connected only where they are inseparable. The evidence is conclusive that sport in South Africa is now fully integrated. Bishop Tutu said on American television on 8 December 1984: We have got a very good example of pressure succeeding. It happened with the sports boycott, where apartheid has been stood on its head. He realises the pressure that has been applied has had an effect. Senator Sibraa —Until the final whistle goes and then you have to catch a different bus home. Senator TOWNLEY —Has the honourable senator been there? Senator Sibraa —Yes; have you? Senator TOWNLEY —Yes, I have been there twice. I can show the Senate my American Express receipts. Senator Sibraa —The people I met have been arrested and charged with treason. Senator TOWNLEY —They may be the kind of people you deal with; the ones I have dealt with have not been of that kind. Furthermore, the International Cricket Conference, the British Sports Council, a French parliamentary group and the International Tennis Federation have all sent delegations to South Africa and have concluded that apartheid in sport has been eliminated. If sport in South Africa is free of apartheid I believe it is free of international politics and should not be cut off from competition. Indeed, those of us who have travelled there know that interaction with foreign people brings understanding in a much faster way than does isolation. No member of the Australian Labor Party would suggest that we cut off the arms talks- Senator Jessop —Of the terrorists. Senator TOWNLEY —No, the arms reduction talks between the United States of America and Russia. Does Senator Sibraa suggest that we abandon those talks? Yet he suggests that we stop interaction with South Africa. Why on earth should that happen? Senator Aulich —I have never heard a more obtuse argument. Senator TOWNLEY —That is not obtuse at all. I am just saying that if we cut off our contact with Russia we are more likely to make the arms situation worse. If we cut off our contact with South Africa we are more likely to worsen the situation. Finally, I believe that the inconsistencies of this Government have been displayed by the overwhelming public support shown for the cricketers who want to go to South Africa. The Sun-Herald reported that a poll of over 15,000 people, a very large poll-the number polled in Western Australia was even higher-showed that 79 per cent of the people were in favour of sporting contact with South Africa. It was even more in Western Australia. This Government is so far out of kilter-I suppose that is the right word-with what the people of this country really want, it believes that the few sports- Senator Aulich —Tell us about Malcolm Fraser. Senator TOWNLEY —Just wait a minute. Do not worry about Malcolm Fraser. I was against his interfering in sports. That does not apply only to him. Senator Crichton-Browne —Look what happened to him. Senator TOWNLEY —That is true. Look what happened to Malcolm Fraser. He tried to cause trouble between a lot of sports people. Now we see Mr Hawke, with all his taxation problems-and that matter is in the Bill-trying to divert people away from the problems that his Government faces. First, the Prime Minister says that he will stop people going to South Africa. He says we might hit them with special tax investigations and we will stop the television broadcasts-when the Australian Broadcasting Corporation has sold a contract to the South African people. What consistency do we have in this matter from this Government? Senator Jessop —None. Senator TOWNLEY —That just about covers the matter. There has been absolutely no consistency whatsoever. I intend to contact the sportsmen concerned in the next few days to give them any assistance that I can- Senator Crichton-Browne —And coaching? Senator TOWNLEY —No, I am not good at cricket, but I am good at other sports. Cricket was one of those at which I was not as good as I would like to be. However, I certainly will encourage these cricketers. It is time that some other people in this country encouraged individuals who, for their own good in the future- Senator Aulich —Greed. Senator TOWNLEY —Let us talk about greed. I thought that honourable senators opposite might bring up that matter. I remember reading that someone said: 'If I had the superannuation of a politician and all the perks that a politician has when he retires, and the income he has while in office, perhaps it would not be needed'. Perhaps people in glass houses should not throw stones about the people going there, because politicians- Senator Sibraa —This does not sound like what Mr Macphee said the other day. Senator TOWNLEY —What Mr Macphee says is his business; what I say is mine. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! Please address your remarks to the Bills, Senator Townley. Senator TOWNLEY —I will leave the matter there. The Labor Party is entirely on the wrong track in attempting to persecute those who go to South Africa. We have had pressure applied to individuals that should never have been applied by a Prime Minister. It does not do him one bit of good in the public's eye, and the public obviously recognise that these individuals have every right to do what they want. Any government which attempts to stop them will do so at its peril. I would like to talk about something that does not relate to sporting matters but was mentioned here today. It relates, I suppose, to those Commonwealth Scientific and Industrial Research Organisation or- Senator Aulich —Or the Army or the Air Force? We are trying to help you. You are not doing too well so far. Senator TOWNLEY —I will ignore the interjection. Senator Mason talked today about uranium hexafluoride leaking at Lucas Heights. He gave the impression, by way of his question, that the material that leaked was dangerous from a nuclear point of view. Anybody who has done a little chemistry would recognise that any fluoride is a dangerous material. Senator Grimes —It makes your hair fall out. Senator TOWNLEY —It may have been that. When I was younger I used to take iodide tablets for my thyroid. I did not get a thyroid problem but iodide is related to fluoride. The point is that about a year ago at Lucas Heights there was a leak of uranium hexafluoride. That is the same material that was dropped off a ship in the English Channel in containers. The anti-uranium people there took very strong action within the Press saying that the material was very dangerous. It is dangerous, but not from a nuclear or radio-active point of view. Any fluoride is a dangerous material. Senator Jessop —It is a chemical. Senator TOWNLEY —Yes, and the fluoride part of it is very active. Anyone in a room where fluoride was spilt-I am sure that Senator Grimes, if he were here, would agree with me-should avoid it at all costs, whether it is uranium hexafluoride or some kind of fluoride. The amount leaked at Lucas Heights was about 2 kilograms, and the danger there was purely from the fluoride. Fluorides are chosen for the uranium enrichment process because fluorine is a very pure isotope-free chemical. When associated with uranium, it is so much easier to separate uranium 235, which is what one is trying to obtain, in enriched form, from the uranium 238. The danger at Lucas Heights was chemical, not nuclear. The people who live in the area have no need to worry about the nuclear problem. Certainly, the amount of fluoride that could leak in any accident there will not adversely affect anyone living in that vicinity. Senator GRIMES(Tasmania-Minister for Community Services)(9.47) —in reply-I do not want to keep the Senate long. People will be amazed to know that we have been debating the Appropriation Bills tonight. We can always guarantee that at any opportunity Senator Townley and Senator Jessop will defend their friends in South Africa. I suppose they feel that this is one way of repaying trips they have had to that country and the hospitality and the air fares that they have had travelling to and from South Africa. It is unfortunate that they abuse the privileges of the Senate tonight. Senator Crichton-Browne —Have you had any free trips to east European bloc countries? Senator GRIMES —No, none at all. Senator Crichton-Browne —What about your colleagues? Senator GRIMES —Neither have my colleagues. I point out to honourable senators and to anyone else who is interested that the issue that Senator Townley and Senator Jessop raised with such passion tonight and over which they attacked the Australian Labor Party with such passion is not a party political issue in the Senate. An article in this morning's Canberra Times contains the following statement: I wouldn't support the rebel cricketers in a million years. I believe it's blood money. They're giving assistance to the South African Government and complicating an already difficult situation. Those words were spoken by Mr Robert Nestdale, well known to all of us as an ex-President of the Young Liberals and a well known ex-staffer of a Liberal senator. In the view of Senator Crichton-Browne he is a galah. The former Prime Minister-it is on very rare occasions that I agree with that former Prime Minister-actually stopped the South African rugby union team from transiting through Australia to play in New Zealand. Also, Senator Townley tonight accused the Prime Minister (Mr Hawke) of threatening to refuse passports to the Australian cricketers going to South Africa-which is a lie, and he can produce no evidence for that at all-and also threatening to refuse passports for the Australian rugby union team. The Australian Rugby Union, unlike the New Zealand Rugby Union, respects the fact that Australian governments, both Labor and Liberal, have signed and agreed to the Gleneagles Agreement. It does not tour South Africa and has no intention of touring South Africa. For Opposition senators tonight, in their usual manner, to try to apologise for what is happening in South Africa and for them to do as Senator Jessop did on the anniversary of the Sharpeville massacre recently when, with absolute insensitivity, he asked questions about violence in South Africa when people had just been killed and shot in the back as a result of riots in South Africa, is outrageous. Senator Giles —Children too. Senator GRIMES —It was children. Mr Robert Nestdale happened to bring that up today also in his statement when he said: I sometimes wonder how they'd feel if they looked over the fence and saw their own kids being shot in the back for wanting to play cricket with other kids. That is what it is about in South Africa. That is why the whole of the Western world and the countries with which we are associated have signed the Gleneagles Agreement. That is why we do not want any association with that regime, no matter how many honourable senators opposite are willing to take free trips and be swanned around that country in the way in which those opposite are. Senator Crichton-Browne —What about the Russians in Afghanistan? Senator GRIMES —The honourable senator mentions the Russians in Afghanistan. His Government did even worse than that. It paid so-called amateur athletes not to go to the Olympic Games. That was even more disgraceful. All we ask is that people respect the fact that this Government and previous governments signed the Gleneagles Agreement and respect the Gleneagles Agreement. We ask that sportsmen respect the views of the government of the day, whether it be Labor or Liberal. The previous Government had the same policy as this Government, the previous Prime Minister had the same policy as this Prime Minister on sporting ties with South Africa. Only people such as Senator Townley and Senator Jessop put on a performance in this place and attack this Government as though this Government is acting any differently from the way in which the previous Government acted. I had plenty of differences with Malcolm Fraser, but one difference I did not have with him was on his views on apartheid. I do not have any differences with Ian Macphee, the shadow Minister for Foreign Affairs, on this issue. The problem in this Parliament is that there are people on that side of the House who have differences with their own Party policy, with their own foreign affairs spokesman and with their own ex-Prime Minister. I just want to point out to everybody that when Senator Jessop, Senator Townley and a few others speak in this place they do not represent their Party, they do not represent the Opposition, they do not represent the Government and they do not represent this Parliament. In fact, they do not represent the views of any decent people in this community. Senator Sibraa —Senator Baume walked out. Senator GRIMES —Senator Baume would not stay here and listen to that nonsense. To return to the Appropriation Bills, many questions were raised by many people during this long and fairly tedious debate on what are in fact the Additional Estimates. Senator Peter Rae, as the first speaker for the Opposition, raised an issue which is worth mentioning. He was concerned about the increases in Government expenditure and the percentage increases in departmental additional estimates requirements compared with the inflation rate. I point out to Senator Rae that the Additional Estimates comprise only approximately 0.8 per cent of the total estimated outlays for 1984-85. The net administrative expenses were $4.3m over budget, which is an increase of about one per cent. The initial May revised figures show that perhaps net administrative expenditure requirements are down $2.5m, down 0.2 of one per cent. We believe this reflects the success of the Government's initiative in introducing a more efficient method of budgeting for departmental administrative expenses. I do not think anyone can argue that my colleague the Minister for Finance, Senator Walsh, who unfortunately cannot be here at the moment, has not a very keen eye on and great interest in administrative expenses. As a Minister in this Government, I can assure honourable senators that I know all about that, every day of the week, every hour of the day. He will continue in that vein and we will continue in that vein because we believe that good economic management and increased economic efficiency are essential if this Government is to continue to improve the economy of this country in the way it has done. All the general issues that have been raised by honourable senators are typical issues that are raised in debate on appropriation Bills. It would be impossible for me to go through them all. It would be impossible even for my colleague Senator Walsh to go through them all, were he here. The best we can do is to settle down to the Committee stage of the legislation, which is always more interesting. I therefore urge honourable senators to support the second reading of these Bills. Question resolved in the affirmative. Bill read a second time. Motion (by Senator Grimes) proposed: (1) That clauses 1 to 7 be postponed till after consideration of the Schedule: (2) That, unless otherwise ordered, the votes in the Schedule be considered in the same groupings and order as the departmental estimates referred to Estimates Committees A, B, C, D, E and F respectively, as follows: Division Nos Department Amount $ Group A 400, 404, 540 Industry, Technology and Commerce 3 665 000 500, 506, 508, 512, 513, 515, 516 Prime Minister and Cabinet 1 052 000 640, 642, 644 Trade 1 851 000 540, 543, 544, 548 Science 1 146 000 Group B 560 Community Services 1 974 000 360, 365 Immigration and Ethnic Affairs 1 050 000 560 Social Security 12 169 000 325, 329 Health 3 438 000 Group C 304 Finance 232 000 287, 288, 290 Employment and Industrial Relations 11 974 000 670-672, 676 Treasury 1 756 000 490, 497 Primary Industry 2 282 000 220, 222, 224 Communications 12 201 000 Group D 270-272, 278, 279, 282-284, 360 Education 6 954 000 352-354 Housing and Construction 3 475 000 130, 333, 590, 592 Sport, Recreation and Tourism 11 820 000 330, 336 Arts, Heritage and Environment 1 187 000 120, 125 Aboriginal Affairs 4 282 000 Group E 520, 521, 523 Resources and Energy 1 171 000 165, 175, 179, 181, 187 Attorney-General's 7 432 000 575, 577, 579, 580, 582 Special Minister of State 11 507 000 315, 316, 318, 319 Foreign Affairs 22 921 000 230, 232-234, 239, 255-257 Defence 248 811 000 Group F 334, 690-692 Veterans' Affairs 24 664 000 664, 666, 667 Transport 2 427 000 193 Aviation 845 000 620, 622, 624, 626, 628 Territories 5 688 000 130, 132 Local Government and Administrative Services 17 185 000 Rent (Defence) 859 000 (3) That leave be given to senators to move motions expressing opinions or making recommendations based on the reports of the Estimates committees; that such motions be moved when the appropriate vote is under consideration; that where more than one motion is proposed in relation to a particular vote, the motions may be debated together, but in all cases a motion or motions shall be disposed of before the question is put on the vote before the Chair, and that any resolutions be reported when the Chairman makes his report to the President at the conclusion of proceedings in the Committee of the Whole. Senator PETER RAE(Tasmania)(9.57) —I wish to clarify what the Minister for Community Services, Senator Grimes, said. We will deal with the Bills as we would in an Estimates committee. In other words, we will deal with Appropriation Bill (No. 3) in groups. When we have dealt with, say, Group A on Appropriation Bill (No. 3) we will then deal with Group A of Appropriation Bill (No. 4) before moving on to Group B of Appropriation Bill (No. 3) and Group B of Appropriation Bill (No. 4). Is that correct? Senator Grimes —That is not normally the way we do it. We go through the groups- Senator PETER RAE —I was hoping that we could do it abnormally. The CHAIRMAN —Order! This is a matter for the Chair, not the Minister, to decide. The only Bill which we are considering in Committee is Appropriation Bill (No. 3). When that is disposed of, we will then conclude the second reading debate on Appropriation Bill (No. 4), if there is further debate on that, and then go into Committee on that Bill. There is only one Bill before the Committee. Senator Grimes —We debated the second reading cognately. The CHAIRMAN —Yes, but I have to put the question on the second reading of Appropriation Bill (No. 4) after Appropriation Bill (No. 3) has been disposed of. Senator PETER RAE —Mr Chairman, may I suggest that, if it is possible, it would be convenient to adapt the procedures so that we may follow the procedure I just outlined. Senator Grimes —We will be here until Christmas. Senator PETER RAE —I think it would be more expeditious. The CHAIRMAN —If, when matters are before the Chair, honourable senators wish, by leave, to relate comments to Appropriation Bill (No. 4), it will be up to the Committee to decide at the time whether it wishes to accept that. Question resolved in the affirmative. GROUP A Department of Industry, Technology and Commerce Proposed expenditure, $3,665,000 Department of the Prime Minister and Cabinet Proposed expenditure, $1,052,000 Department of Trade Proposed expenditure, $1,851,000 Department of Science Proposed expenditure, $1,146,000 Proposed expenditures agreed to. GROUP B Department of Community Services Proposed expenditure, $1,974,000 Department of Immigration and Ethnic Affairs Proposed expenditure, $1,050,000 Department of Social Security Proposed expenditure, $12,169,000 Department of Health Proposed expenditure, $3,438,000 Proposed expenditures agreed to. GROUP C Department of Finance Proposed expenditure, $232,000 Department of Employment and Industrial Relations Proposed expenditure, $11,974,000 Department of the Treasury Proposed expenditure, $1,756,000 Department of Primary Industry Proposed expenditure, $2,282,000. Department of Communications Proposed expenditure, $12,201,000 Senator PETER RAE(Tasmania)(10.00) —I refer to the report of Estimates Committee C and to the proceedings in which we received some rather unsatisfactory answers in relation to matters dealing with not only the Australian Broadcasting Corporation, but also the Special Broadcasting Service. I direct the attention of the Minister for Community Services (Senator Grimes) to some of the questions which could not be answered at the time and which have been published in written replies to questions asked during Estimates Committee C. I start off with what I would have thought was a fairly simple request, that is: Could the Minister please endeavour to reconcile two apparently conflicting statements? On page 19 it is stated: The Chairman has been present at all Board meetings since the inception of the Corporation. He has presided at all meetings. That statement was made in answer to a question as to the percentage attendance by the Chairman at meetings of the Board and whether he has always chaired the meetings if he was present. I refer back to page 16 where, in reply to a question, it is made clear that on 13 February a number of Board members discussed certain matters. At page 136 of the transcript of the proceedings of Estimates Committee C a question was asked as to whether the decision that was taken to settle the particular action, which was referred to, was a decision of the Managing Director or of the Board. It was stated that it was a decision of the Board. There is no reference to the Chairman of the Board being present. There is a reference to the fact that the Deputy Chair was present, presided over the proceedings and was in fact the moving spirit, one gathers, or was in charge of the operations at the time at which a decision was reached which was referred to as a decision of the Board. How can the Minister reconcile the apparently irreconcilable statement, 'The Chairman has been present at all Board meetings since the inception of the Corporation. He has presided over all meetings', with the statement made three pages earlier, that is, that he was not present at all when a Board meeting took place on 13 February and on 14 February at which a decision was taken which was one of some considerable significance and sensitivity? I will not refer to the matter in more detail in asking my question. Senator GRIMES(Tasmania-Minister for Community Services)(10.03) —I am informed that the decision to which Senator Rae has referred was a decision of the Board. I gather it was made at a non-scheduled meeting of the Board. Some members were in contact with other members of the Board by telephone. It was one of those meetings where there is a telephonic hookup. I am not sure where we go from there. The Chairman at the time was not physically present at the meeting. He was contacted at the time of the Board meeting, but he was not physically present at the meeting in Sydney, nor was he in direct contact with everyone continually throughout the meeting of the Board. It may be that those words were not accurate, but there is no question that it was a decision of the Board. I do not think the remarks about the Deputy Chairman of the Board need responding to. As neither Senator Rae nor I was present at that Board meeting we cannot make comments about who was the moving force in that matter. Senator PETER RAE(Tasmania)(10.05) —Perhaps the Minister for Community Services (Senator Grimes) has taken me the wrong way as to who was the moving force. I did not mean that to have any sinister connotations, but rather the explanations given-I do not pause to give great detail-show the Deputy Chair as being the person who contacted other people. It was in that sense that I meant she was the moving spirit, not the person who had necessarily instigated the meeting; nor was I saying the Deputy Chair was the person who had pressed a particular view. But what I am saying is that there is a total, complete and obvious inconsistency. I had hoped the Australian Broadcasting Corporation would have had enough sense to realise that the Senate has been getting more than a little impatient with the inconsistencies and the answers which are given when they are eventually given by the ABC in relation to some of the questions which are asked. Here is an obvious inconsistency: One cannot have the Chairman present at all Board meetings since the inception of the Corporation and have a meeting on 13 April and 14 April in which he was not present and at which a decision of the Board was made. One or other has to be wrong. I ask: Which statement is wrong? Senator GRIMES(Tasmania-Minister for Community Services)(10.07) —It is my understanding the Chairman was present at every scheduled meeting of the Board since its inception. This was a meeting of the Board to make a decision and he was not physically present, although he was contacted. I will admit-I think I would accept that, therefore, there is that discrepancy between the two statements-that the discrepancy is in the mind of the questioner some- times. I understand that the Chairman was asked whether he was at all Board meetings. He was, in fact, at all scheduled Board meetings. Senator PETER RAE(Tasmania)(10.08) —I would like to ask in relation to page 27 of the- Senator Tate —Are you satisfied or not? The CHAIRMAN —Senator Tate, all interjections are out of order, but they are doubly out of order if you are not in your seat. Senator PETER RAE —I want to ask a further question in relation to page 27 of the written replies to questions asked during Estimates Committee C. I would like to come back a little later to certain other matters about the Australian Broadcasting Corporation, if that was what was concerning Senator Tate. At page 27 reference is made to a letter dated 7 February 1985 written by the Auditor-General to the Chief General Manager of the Australian Postal Commission. He said: As you may be aware I have been concerned for some time about the scope and management of the early efficiency audits conducted by this Office and the resultant problems both for the auditee and this Office. In late 1982 I decided that the Efficiency Audit Division should not undertake any new audits and that as existing efficiency audits were completed, staff would be transferred to 'line' divisions. The Efficiency Audit Division has now been disbanded and audits of efficiency aspects have become part of the comprehensive audit program carried out by this Office. I ask: Did the Auditor-General make a specific statement to the Parliament? If so, when was that statement made in relation to the decision that was taken not to undertake any new audit under the efficiency audit provisions by the efficiency audit provisions of the Auditor-General's Office? Senator GRIMES(Tasmania-Minister for Community Services)(10.10) —I cannot answer that question for Senator Peter Rae. Whether the Auditor-General made such a statement to the Parliament is not within the knowledge of my advisers here or of me because the Auditor-General comes under the Department of the Prime Minister and Cabinet. That question would more appropriately be answered when we consider that Department. I do not know how else I can answer that question. Apparently the Auditor-General said he would make such a statement but whether or not he has done so is up to people who read his report to decide and up to the Department of the Prime Minister and Cabinet to advise us. Senator PETER RAE(Tasmania)(10.11) —That letter was published in response to a question asking whether any indication could be given as to why the efficiency audit of Australia Post, which began in June 1980, was not proceeding. The response was that the decision to discontinue the audit was advised to Mr McQuitty, Chief General Manager, Australian Postal Commission, in a letter of 7 February 1985 from the Auditor-General, Mr K. F. Brigden, and a copy of the letter was attached. Is it not a fact that $500,000 worth of work had been done in relation to that efficiency audit before it was abandoned? If $500,000 is not the amount, can I have some indication of the value of the work which had been done in respect of Australia Post counter services efficiency audit? Why, having carried out that amount of work, was it decided that the audit would not be proceeded with after some 3 1/2 or four years? Senator GRIMES(Tasmania-Minister for Community Services)(10.12) —I can understand Senator Peter Rae's concern but the letter is from the Auditor-General. The letter is about an audit done by the Auditor-General in which he is declaring his intentions. The cost of that audit-whether or not he reported the fact that he had stopped it-is a matter for the Auditor-General. It is not within the knowledge of the officers from the Department of Communications. I think that question is more appropriately asked-I am not sure whether Senator Rae will get an answer, of course-of the advisers and the Minister present when we deal with the appropriations of the Department of the Prime Minister and Cabinet. This is an inappropriate time to ask the questions. The letter is certainly there, it is by the Auditor-General and it is to Australia Post. It is not within Australia Post's knowledge what the Auditor-General did or how much he spent on that audit. Senator PETER RAE(Tasmania)(10.13) —I shall try to pursue the matter a little further. I ask the Minister to turn to page 2 of the letter and he will find that it reads: Following my review of the papers associated with the counter services audit-- and I emphasise the next words- and the comments you provided-- 'you' being the Chief General Manager of the Australian Postal Commission- in your letter of 4 July 1984 to Mr C. T. Monaghan, I have decided that the further work necessary to carry out the audit should not be undertaken. I would like to know the comments that were provided by the Australian Postal Commission to the Auditor-General which apparently motivated the Auditor-General to make the decision to which he refers in his letter. Senator GRIMES(Tasmania-Minister for Community Services)(10.14) — I think that is a reasonable question to ask Australia Post, but no one here has that knowledge. I will take the question on notice and get the answer for Senator Rae. I remind him that the letter is from Mr Brigden, the Auditor-General, who is referring to some information that was given to him by Mr McQuitty, but I shall have to seek that information because no one here has it at the moment. Senator MESSNER(South Australia)(10.15) —In dealing with the Department of Communications, I ask the Minister about the state of play in the development of television for Eyre Peninsula in South Australia. What will be the result of putting into place the Aussat satellite and which communities will receive the benefits of the television programs that result from the satellite? Indeed, which communities will not receive the benefit of the satellite programs? Senator GRIMES(Tasmania-Minister for Community Services)(10.15) —I am advised that Telecom Australia and the Department of Communications have been very active in ensuring that television coverage by the terrestrial route will be increased and improved on Eyre Peninsula. It seems to me that I have been hearing that ever since Senator Messner came into this Parliament and even longer than that. I am assured that once the Aussat satellite is up that whole area will be covered by its range. Senator Messner —But how can we determine whether both national and commercial television services will be available? Senator GRIMES —The immediate result will be the availability of Australian Broadcasting Corporation services. If Senator Messner has read the newspapers recently, he will know that there is considerable discussion about what commercial services will be available, how they will be available and who will provide them. A Government decision has been made, but that will be delayed beyond the availability of the ABC service. Senator Messner —I am sorry; did you say that you as a government had made the decision about the commercial television, but you were not yet in a position to announce it? Senator GRIMES —Senator Messner will know that there is an existing policy about the regional networks using the satellite. There have been some discussions about modifications of that but no decisions have been made in that area yet. Senator MESSNER(South Australia)(10.18) —I turn to the Department of Finance. I want to establish the position with regard to invalid pensions. The Minister will know of the discussions we have had in this place and in the Estimates committees about the availability and the granting of invalid pensions. Since this Government came to power there has been a change of practice, particularly in New South Wales, with regard to the degree of impairment which medical officers employed by the Commonwealth would use as the yardstick in order to establish eligibility for invalid pensions. I am interested to know from the Department of Finance its views of the effect of this upon the revenue and whether the Forward Estimates which have just recently been announced and have been the subject of discussion in this place in the last week and, of course, part of the Government's mini-Budget have been severely pruned as a result of other decisions that the Government may have taken or whether they have inflated. It seems from the Forward Estimates report that was made available to members of parliament recently that there is a substantial increase in the cost to the Commonwealth of invalid pensions. As a result I would like to know whether the Department of Finance is taking a very great interest in this matter. It seems to be an area of blow-out on the Budget which tends to offset considerably the so-called savings that the Government has been claiming as part of the mini-Budget announced last Tuesday. Senator GRIMES(Tasmania-Minister for Community Services)(10.19) —We are not dealing with the Forward Estimates tonight; we are dealing with the additional appropriations. When I was Minister for Social Security-I have not spoken to Mr Howe about this matter recently-we had a continuing investigation into whether the 85 per cent invalidity provision was an appropriate yardstick to use for the measurement of invalid pensions. Senator Peter Baume —Does the law provide that? Senator GRIMES —Yes, the law provides that. If we have to change it, we have to change the law and I am not resiling from that for one minute. Although it is nothing to do with what we are discussing tonight, I understand that the Additional Estimates are based on the existing law and the existing regulations-as they have to be. I cannot recall how much the increase is in the Forward Estimates. All I know is that every year I have been a member of this Parliament invalid pensions have increased inexorably. That is one of the things all governments have to look at. I dare say that that sort of estimate has been built into the Forward Estimates. However, that is a guess. We are not talking about the Forward Estimates tonight. I do not have them with me. Senator PETER BAUME(New South Wales)(10.21) —I am attracted to the matter Senator Messner has raised. I ask the Minister for Community Services (Senator Grimes): Is it not a fact that immediately after the election of his Government approvals for invalid pensions in my State of New South Wales quadrupled? From that next month onwards, approvals went up by almost a factor of four-nearly overnight. Is it not a fact that some of the doctors who had been making the assessments believed that some of those approvals did not meet the 85 per cent invalidity criterion laid down by the law? Senator GRIMES(Tasmania-Minister for Community Services)(10.21) —I do not believe that within a month of our becoming elected invalid pension approvals quadrupled. What happened was that soon after we were elected we looked at the mechanism of approving invalid pensions. We found that there was a great disparity between the States as to the number of people who had their invalid pensions approved early in the piece. As we went through the list of invalid pension applicants we found that if we took the number of people who applied and the number of people who eventually received invalid pensions, in every State the percentage was about the same. I forget what it was; let us say that it was 80 per cent. The big difference was that for States such as New South Wales and Queensland to get to that 80 per cent the applicants had to go through all the appeal procedures and everything else. So the end result was the same. The decision-making process in those States was such that people had to go through endless appeal procedures before they received pensions. As a result, we decentralised the decision-making process. We stopped the business that went on in New South Wales whereby doctors from the Department of Health were sitting in offices making decisions to knock people's pensions back without ever seeing them. I found out at a meeting with medical practitioners in New South Wales that a couple of them considered that their role was more as protectors of the public purse than as providing income support for people with invalidity. When we changed the system we found that all States came together pretty well, that the same percentage of people who applied for invalid pensions eventually received them. It is just that the protracted procedure that went on in New South Wales and Queensland at the time was stopped. That assisted not only those applying for invalid pensions but also the public purse in regard to the costs of all the endless procedures through the Administrative Appeals Tribunal, the Social Security Appeals Tribunal and all the other mechanisms. The CHAIRMAN —Before I call Senator Messner I draw the Committee's attention to the fact that we have already approved the estimates for the Department of Social Security. I ask Senator Messner whether he intends to refer to the estimates for the Department of Social Security. Senator MESSNER(South Australia)(10.23) —I am raising this matter under the estimates for the Department of Finance, as the Department has control of expenditure and I regard this matter as an expenditure matter. As a result, I am inquiring of the Minister for Community Services (Senator Grimes) in his capacity as the Minister representing the Minister for Finance. The CHAIRMAN —The matter barely comes under the estimates for the Department of Finance. However, the Minister may answer if he so chooses. Senator MESSNER —Mr Chairman, may I have a moment to explain the reason I am pursuing this matter under this heading? The Minister made out a case a few moments ago that his action, as the Minister for Social Security, in directing a more lenient approach to the approval of invalid pensions, particularly in New South Wales, has led to a boost in expenditure in that State. Senator Grimes —Nonsense! Senator MESSNER —I am sorry. I thought that was what the Minister said. Senator Grimes —No. I said that the end result was the same; it was the time one took to get there. Senator MESSNER —The Minister accelerated the process. He brought forward the expenditure. The point that I am querying now follows the logic of that. I referred earlier to the Forward Estimates. I think, Mr Chairman, that you will see the relevance of my raising this question under the estimates for the Department of Finance when I mention the Forward Estimates, which show-- The CHAIRMAN —Order! The only two matters that come under the heading of estimates for the Department of Finance are sanctions against the Union of Soviet Socialist Republics and Iran and payments pursuant to section 34A of the Audit Act. If the honourable senator's remarks are relevant to those two headings he will be in order. Senator MESSNER —I shall finalise my point because the Minister has indulged me to this stage. The Forward Estimates indicated an increase of expenditure for invalid pensions of something like $190m in the next financial year. If we accept the Minister's assurances that the action that was taken in the last Budget year to increase invalid pensions was a one-off affair that accelerated the process, what is the explanation for the very significant increase in invalid pensions for the next financial year? Senator GRIMES(Tasmania-Minister for Community Services)(10.26) —All I can say is that every year I have been shadow Minister for Social Security, Minister for Social Security or Minister for Community Services the number of people on invalid pensions has gone up by about that amount. However, we are talking about the additional appropriations tonight; we are not talking about the Forward Estimates. If honourable senators want to debate the Forward Estimates they should debate them at the proper time. I do not have the Forward Estimates with me now. The only reason we are debating this matter under the estimates for the Department of Finance is that Senator Messner and his colleagues were too late to come in here to debate it under the Department of Social Security. Progress reported. 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)(10.27) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- This is a Bill to amend the Director of Public Prosecutions Act 1983 so as to arm the Director of Public Prosecutions with fuller and more direct power to pursue civil remedies on behalf of the Commonwealth, particularly in relation to the recovery of taxes and duties. The Bill also confers on the DPP the additional functions of carrying on, where requested to do so, prosecutions on indictment instituted by the Attorney-General. In their final reports both Special Prosecutor Mr R. F. Redlich and Royal Commissioner Mr F. X. Costigan Q.C., recommended enhancement of the Director of Public Prosecutions' role in relation to the taking of civil remedies and the recovery of pecuniary penalties. Special Prosecutor Mr R. V. Gyles, Q.C., also supported this in his 1983/84 report. As recently announced by the Attorney-General, his Department has been in close consultation with the Director of Public Prosecutions, Mr Temby, Q.C., over the past months developing the present measure as a new and effective weapon against crime. The key elements of the Bill are as follows. Clause 3 firstly confers upon the DPP the functions of carrying on a prosecution on indictment instituted by the Attorney-General. This addition to the DPP's function under section 6 of the Principal Act will permit greater flexibility in the enforcement of the criminal law of the Commonwealth by enabling the DPP to be given authority to carry on such prosecutions where that course is appropriate and convenient. Clause 3 goes on to enable the Director of Public Prosecutions to take, or to co-ordinate or supervise the taking of, civil remedies on behalf of the Commonwealth and its authorities for the recovery of any taxes (including duties, charges or levies). This function will be conferred directly by the statute, thus removing in respect of such matters the need under the existing legislation for an instrument from the Attorney-General before the Director of Public Prosecutions can act. In addition, clause 3 also removes the existing requirement that a prosecution be actually commenced before, or at the same time as, the Director of Public Prosecutions may pursue civil remedies. The definition of ''relevant matters'' in the new sub-section 6 (8) to be inserted by clause 3 of the Bill makes it clear that the Director of Public Prosecutions' new function may be exercised in respect of matters connected with or arising out of prosecutions (actual, proposed, or under consideration) by the Director of Public Prosecutions or by a person other than the Director of Public Prosecutions, and provision is also made to extend this new function to cases where the Director of Public Prosecutions could exercise his powers to take over or to carry on prosecutions. Where civil remedies are pursued by the Director of Public Prosecutions provision is made in clause 5 for a Court, before whom such proceedings are instituted, to prohibit or restrict the publication of any evidence or information. Courts will be able to exercise the power to make this suppression order where it appears to the Court to be necessary in order to prevent prejudice to the administration of justice. Neither the English nor the Australian State Directors of Public Prosecutions have been given functions in relation to civil remedies or to pecuniary penalties. While under common law systems Attorneys-General have long been recognised as having special responsibilities and functions in relation to the enforcement of the criminal law to the exclusion of other Ministers, neither he or officers answerable to him have been regarded as having equivalent responsibilities in relation to the exercise of civil remedies available to the Government. The exercise of such remedies has been regarded as a matter for decision by the Minister responsible for the legislation in question, the Department he administers or the relevant statutory officer such as the Commissioner of Taxation. The Minister is, of course, answerable to Parliament for any such decisions. Considered in the light of the traditional position (and leaving aside the particular provisions made in the Special Prosecutors Act 1982), the present measure is therefore a novel one and the Government has therefore acknowledged that it is something of an experiment. Hence the Bill provides in sub-clause 3 (2) for the Director of Public Prosecutions to furnish to the Attorney-General after two years' operation of the Bill's provisions, a report for the purpose of a review by government of the new civil remedy functions conferred. Sub-clause 3 (3) requires the Attorney-General to table this report in both Houses thus giving the Parliament an opportunity, at the end of that ''trial'' period, to weigh the costs and benefits of this measure and to decide whether or not it should continue. The balance of the Bill consists of provisions that are formal or consequential upon the provisions I have outlined. I should add that, in addition to introducing these amendments to the Director of Public Prosecutions Act, the Attorney-General proposes, by an instrument under sub-section 6 (3) of the Director of Public Prosecutions Act 1983, to authorise the Director of Public Prosecutions to institute proceedings for the recovery of pecuniary penalties in respect of ''relevant matters'' connected with or arising out of, prosecutions of the kinds (actual, proposed or under consideration) to which I have already referred. Such a step was also supported by Mr Costigan and Special Prosecutors Redlich and Gyles, and it will further enhance the Director of Public Prosecution's capacity to act swiftly and effectively. There are two matters which I particularly wish to draw to the attention of the Senate. One is the financial impact of the measures proposed in the Bill. Significant increases in staff and resources for the Office of the Director of Public Prosecutions, the Australian Taxation Office, and the office of the Australian Government Solicitor will be needed to enable these extra functions to be carried out. The likely costs have been estimated as follows: approximately $3 million this fiscal year and $13 million next fiscal year. In the light of current financial constraints, these requirements will be addressed in the context of the Budget, but the Government anticipates that the costs should be more than offset by potential gains to the Commonwealth revenue under this measure. The second point is that, in taking these civil remedies, the Director of Public Prosecutions will utilise the services of the Australian Government Solicitor for the conduct of civil litigation unless urgent circumstances require immediate initial action by himself in particular cases. Mr President, this Bill will give the Commonwealth Director of Public Prosecutions wider powers and scope to take civil action to recover unpaid taxes and duties, and will also allow action to be taken to prevent persons suspected of engaging in criminal activity alienating, concealing, or removing from the reach of the courts, their assets in an attempt to prevent payment of their civil liabilities. In addition, the Director will be authorised to take proceedings to recover pecuniary penalties in respect of matters connected with prosecutions or activities considered with a view to prosecution. These measures will strengthen the arm of the Director of Public Prosecutions, particularly in the prosecution of organised crime and drug trafficking. I commend the 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)(10.28) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- I am honoured to introduce this Bill to the Senate. I regard it and related legislation as one of the most significant transport initiatives to come before the Parliament since Federation. It represents the start in establishing a truly national transport strategy for Australia because it deals not only with roads but also with railways, research and road safety. It is the first time a Federal Government has adopted a comprehensive approach to land transport funding. I cannot emphasise too strongly the importance that efficient transport systems have to the economic well-being of all Australians. About one dollar in every seven spent in this country is on transport. Transport impacts on every facet of our economic and social activity. Yet for too long inaction by Federal Governments has allowed our transport systems to flounder without a national sense of direction or priority. Since this Government has assumed office we have devoted considerable effort and resources to addressing the shortcomings of Australia's transport system in a cohesive and coherent way. We have made substantial progress which is due in large part to this Government's policy of working in consultation with other Governments, industry and employees. The Bill now before the Senate will be the foundation upon which our overall approach to transport will be based. It provides a use related basis for determining Federal expenditure on land transport systems. Furthermore the arrangements incorporate an automatic adjustment to match future inflationary movements as measured by the Consumer Price Index. It guarantees the continuity of the greatest road building program in Australia's history, which has been progressively implemented during our two years of Government. Together with the Australian Bicentennial Road Development (ABRD) Program, Federal expenditure on roads will total $1245 million in 1985/86. The Federal road safety promotion and research program undertaken by the Federal Office of Road Safety is incorporated into these arrangements as it is reasonable for road users to fund this area of Federal roads involvement. The Australian Land Transport Program, or ALTP as it will no doubt be known, also maintains our support for research into land transport undertaken through the Australian Road Research Board and the Australian Railway Research and Development Organisation. Assistance is extended under the Bill to the interstate mainline railway network. Together with the establishment of the Railway Industry Council this assistance will contribute to the development of a cohesive program to revive the Australian rail system. The Bill establishes a Trust Fund which will operate on a similar basis to the ABRD Trust Fund. It provides that an indexed share of the existing excise charge on motor spirit and diesel fuel will be paid into the ALTP Trust Fund based on collections from 1 July 1985 until 30 June 1990. The initial rate has been set at 3.66 cents per litre. Recognising the value in providing a transitional arrangement, rather than immediately switching to the new funding method, we have provided an assurance that ALTP funding will be $810 million in the first year. Section 14 provides for an adjustment to the excise rate to that which would have precisely raised $810 million in the first year. Thus the States, Local Government and road interest groups have the type of funding they sought, with the additional protection of a transitional arrangement involving a guaranteed funding level for year one. The future level of expenditure under ALTP will depend upon the following two factors: the rate of consumption of motor spirit and diesel which is the best measure of road use and the rate of movements in the Consumer Price Index to maintain the ALTP excise component in real terms. As I have noted earlier, together with the $440 million to be provided under the ABRD program the Federal Government's road building program in 1985/86 will total $1245 million, an increase of 82 per cent on 1981/82, the last full year of the Fraser Government. The legislation provides that specified maximum proportions of payments into the ALTP Trust Fund shall be allocated to the four roads categories and to road safety and to land transport research. These allocations have been decided after careful consideration. The Federal Government has full financial responsibility for the construction and maintenance of national roads with the State Road Authorities acting as design and construction agents. Accordingly funding for national roads has been determined on the basis of maintaining, in real terms, this year's national roads expenditure under the Roads Grants Act. The Federal Government is committed to achieving an upgraded national highway system by 1988. The distribution among States of moneys allocated for national roads is not specified in the legislation, but will be determined on the basis of meeting that objective. This approach follows the arrangements adopted for national roads under the ABRD program. Our Government also recognises the major responsibilities of local government for the development and upkeep of the local roads system. As a result funding for the local roads category in 1985-86 will also be maintained at the Roads Grants Act 1984-85 level in real terms. Accordingly there has been an adjustment to Federal funding for arterial roads. These roads are primarily a State responsibility and the States have always provided the bulk of the funding for their development. The Federal Government, for its part, has provided a major boost in assistance for these roads in recent years. Total Federal funding for arterial roads in 1985-86 will be 93 per cent more than the amount provided in 1981-82-the last full year of the Fraser Government. This means Federal expenditure on arterial roads has grown at a faster rate than for national or local roads. Funding for road safety and for land transport research will be limited to $5m in 1985-86, a marginal increase on the level of funding provided in the current year. Under the legislation there is also provision to fund the upgrading of the interstate mainline rail network. Funding will be conditional on the development of appropriate measures to improve the capacity of the network and the operational and commercial practices of the rail systems. Funding will be available as an option under the national roads category at the Federal Minister's discretion, or on request of the State Minister as an alternative under that State's rural arterial roads category. Overall, funding for railways will not exceed the contribution that railways make through their diesel excise payments to the ALTP Trust Fund. Sections 17 and 18 of the Bill separate funding arrangements into two periods covering the initial two years and the subsequent three years. This provision has been included in order to allow a review of the State relativities in respect to arterial and local roads categories. Allocations to these categories in the second period are limited to 90 per cent of their initial share. The Federal Minister is required by Section 19 to allocate the balance between these categories by 31 March 1987. Given that this program continues until 1990 and that existing relativities are substantially unchanged from those determined on the basis of a 1975 Bureau of Roads Report it is desirable that such a review be undertaken. The Minister for Transport expects to appoint shortly a panel to carry out an independent review of State shares. The provisions of Sections 18 and 19 allow that review to be undertaken in a manner which minimises disruption to the road construction and maintenance programs of the States and Local Government. In order to provide some flexibility Sections 20 to 22 allow transfers between the various categories. I should emphasize that the transfer of funds from the urban arterial, rural arterial and local roads categories could only be undertaken at the request of, or with the agreement of, the relevant State Minister. Payments to the States or approved organisations or authorities are to be conditional upon the funds being expended for purposes approved by the Minister for Transport. The degree of Federal administrative involvement will vary from category to category. Federal approval will be required for construction projects and maintenance programs under the national, urban arterial and rural arterial roads categories. Federal Administrative controls with respect to the national roads program will follow those currently applying under the ABRD legislation. They include provision for the setting of standards and the requirement for construction works to go to tender. In respect of the arterial roads categories a number of changes have been made. These include a provision to allow maintenance work to be eligible for Federal assistance and requirement for approval of construction projects to enable the Federal Government to have a say in where its funds are used. As with the Roads Grants Act there is no requirement for arterial construction projects to be subject to tender. The States have recently emphasised to the Minister for Transport the serious consequences that such a requirement, had it been included, would have had on their day labour work forces, particularly in provincial areas. Recognising our acceptance of the State argument that arterial roads are primarily their responsibility it would have been unreasonable to include such a requirement in this legislation. The Minister for Transport has assured State Ministers that the controls in respect to the arterial roads categories will operate in a manner that achieves administrative simplicity. Accordingly, he has indicated that project approvals will be based on relatively generalised descriptions to identify the location of project, the type of works to be undertaken and the project cost. State co-operation will be sought to direct Federal funds to a relatively few major projects on the more significant sections of the arterial roads networks. Over time we expect to work together with the States to more clearly identify the network of major arterial roads which are of greater national significance and therefore to be accorded some priority in the allocation of Federal funds. This may at a latter stage involve the identification of a formal primary arterial road network. Assistance for local roads will again be distributed amongst States and local government authorities in each State in accordance with approved principles. No project approval arrangements will be involved and thus the overall arrangements are substantially in line with those applying to local roads under the Roads Grants Act. The arrangements also incorporate a new provision to allow bike paths to be funded under this category. Federal approval of interstate mainline railway projects is required to ensure that the projects will upgrade the network and be related to improvements in operational and commercial practices of the rail systems. Provision is also made for appropriate construction works to go to tender. This arrangement mirrors a similar requirement in respect to urban public transport projects applying under the ABRD program. The administrative provisions of the Bill will be substantially in accordance with those contained in the ABRD legislation. There are, however, a number of significant exceptions which I would bring to honourable senators' attention. Section 32 of the Bill contains a number of provisions relating to obligations imposed upon the States and approved railway authorities. A number of these require appropriate recognition of the Federal road building effort which constitutes over 35% of total road expenditure. Similarly, Federal representatives are entitled to recognition of the efforts they make on behalf of their constituency. As national highways are 100% funded by the Federal Government provision is included to allow the Minister to exercise some control over the display of signs on that network. Simplified administrative arrangements in respect to the standards of national roads construction are provided. Previously there were provisions for extensive Federal involvement to determine whether the construction of national roads had been carried out to approved standards. Under ALTP all that will be required is a certificate from a suitable person, obviously the head of the relevant State Road Authority, that construction has been carried out in accordance with applicable standards. Provision is also made for the proceeds of the sale of any land acquired by the State with Federal road funds provided since 1977 to be either repaid to the Federal Government or applied to road construction and maintenance purposes. This provision formalises an arrangement that was negotiated in 1977 by the then Federal Transport Minister with his State colleagues. It is desirable that it be given legislative basis particularly as the sums involved could be quite significant. This provision ensures that the proceeds of sale of land are applied to the original purpose for which they were provided. The areas where the Federal Minister may delegate his powers have been marginally curtailed. Section 37 requires that Ministerial declarations and directions be published in the Gazette. Over the life of the ALTP we will be able to make major progress along the path which has been the vision of a number of dedicated transport people since Australia's Federation. It is appropriate that I conclude by listing in simple form the objectives that the Government expects to achieve during the life of the legislation. These are: Establish arrangements which identify clearly for motorists and taxpayers the contribution users make to the maintenance and upgrading of our road and other transport systems. In accordance with national priorities, assist the development and maintenance of Australia's land transport systems to facilitate the safe, reliable and efficient carriage of passengers and freight. Develop the national highway system to standards appropriate to meet the growing needs for safe transport between the major centres of population. Assist the development of urban arterial and rural arterial roads, in particular those which are of major national, commercial or industrial significance. Enable State and local governments to develop and maintain local road systems. Improve the capacity, quality, and efficiency of the interstate mainline railway network. Assist activities which will enhance the safety of road users, including motor cyclists, pedestrians and cyclists. Assist national research and development activities related to land transport. In just 26 months we have done more than any other Government to develop a coherent approach to our national transport system. Major investigations have been undertaken in virtually all areas of Federal responsibility to establish the basis on which to implement vital programs like ALTP. Specifically in this Bill we have the fulfillment of this Government's long standing policy commitment to the improvement of our nation's road system-a system which under conservative governments was starved of essential investment funds. Roads are the arteries which carry the life blood of Australia. They represent a major public investment in the infrastructure upon which the health and livelihood of our national economy depends. We are building better roads for Australia and this Bill will ensure that we continue to do so. I commend the Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. Senator GRIMES(Tasmania-Minister for Community Services) —by leave-I give notice that, on the next day of sitting, I shall move: That the Senate, recognising the desirability of a thorough review of the Australian Constitution in the light of experience since its establishment and of modern day requirements, agrees that the Commonwealth Parliament continue its participation in the Australian Constitutional Convention established to review the Commonwealth of Australia Constitution and accordingly resolves: (1) That, for the purposes of the Convention- (a) a Delegation from the Commonwealth Parliament take part in the deliberations of the Convention, and comprise twelve members of the Parliament of whom four shall be members of the Senate and eight shall be members of the House of Representatives; (b) the four members of the Senate comprise two members of the Australian Labor Party, one member of the Opposition and one member of the Australian Democrats. (2) That- (a) two Senators being members of the Australian Labor Party, nominated by the Leader of the Government in the Senate; (b) one Senator being a member of the Opposition, nominated by the Leader of the Opposition in the Senate; and (c) one Senator being a member of the Australian Democrats, nominated by the Leader of that Party in the Senate, be members of the Delegation. (3) That the Prime Minister or his nominee be the Leader of the Delegation, and the Leader of the Opposition or his nominee be the Deputy Leader. (4) That a member of the Delegation cease to be such a member if- (a) he ceases to be a member of the Commonwealth Parliament; (b) the House of Parliament of which he is a member terminates his appointment- I assume or her appointment- or (c) he resigns as a member of the Delegation by writing addressed to the President of the Senate or the Speaker of the House of Representatives, as the case requires. (5) That where, because of illness or any other cause, a member of the Delegation is not available to attend a meeting, or part of a meeting, of the Convention, the Leader or senior available member of that member's Party may nominate an alternative member and the member so nominated shall be a member of the Delegation for that meeting, or that part of that meeting. (6) That, in the event of a member of the Delegation ceasing to be such a member, the Leader of that member's Party in the House from which that member was drawn may nominate another member (being a member of the House of which the first-mentioned member is or was a member) to replace the first-mentioned member. (7) That the Leader of the Delegation from time to time make a report for presentation to each House of the Parliament on matters arising out of the Convention, and that the Deputy Leader of the Delegation may make an accompanying report. Senator PETER RAE(Tasmania) —by leave-I make it quite clear that from the inquiries which I have been able to make the Opposition is taken by surprise as to the contents of the proposal. Notices of motion are usually given by arrangement. The Whip has heard nothing whatsoever of any arrangement whereby such an unequal distribution would be proposed so as to include on the Australian Constitutional Convention delegation only one senator from the Opposition, that is the Liberal and National parties, and one from the Australian Democrats. Notice has not been given of this proposal by prior arrangement. The PRESIDENT —Order! It being after the hour of 10.30 p.m., under sessional order, I put the question: That the Senate do now adjourn. Question resolved in the negative. Debate resumed. Senator GRIMES(Tasmania-Minister for Community Services) —by leave-I do not know how anyone can be taken by surprise by a notice of motion. I have given notice of a motion which will be brought up and debated at a later date. If all notices of motion in this place are to be produced only by arrangement on either side it will suit me fine because it will save a lot of trouble, but to suggest that this notice of motion was a surprise is beyond my comprehension. Senate adjourned at 10.34 p.m. The following papers were tabled: Defence Act-Determinations 1985- No. 28-Overseas Living Out Allowance and others. No. 29-Intermediate Term Duty Living Allowance and others. No. 32-Sea-going Allowance. No. 33-Unpredictable Explosives Allowance. National Health Act-Principles formulated under sub-section 40AA (7), dated 13 May 1985.