Monday, 16 September 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: Australian Capital Territory: Teacher Staffing To the Honourable the President and members of the Senate in Parliament assembled: The petition of the undersigned citizens, teachers, parents and students working in and for the interests of government schools and TAFE colleges showeth that. 1. We oppose the proposed cuts of 75 teaching and 40 ancilliary positions in ACT government schools and 28 teaching positions in ACT TAFE colleges. 2. We deplore the cuts to public education and the harm caused to the opportunities of thousands of Canberra's youth. 3. We call on the Commonwealth Government to honour its primary obligation to public education and its commitments to increase participation and equity in education by not implementing staffing cuts in ACT government schools and TAFE colleges. by Senator Reid (from 147 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That we the undersigned, 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 assembled will reject this recommendation. by Senator Reid (from 95 citizens). To the Honourable the President and members of the Senate in the Parliament assembled: The petition of certain undersigned citizens of Australia shows that the proposed private member's Bill introduced by Senator Harradine-An Act to prohibit experiments involving the use of human embryos created by in vitro fertilisation-disadvantages infertile members of the community seeking treatment through the current medical procedure known as in vitro fertilisation because the inadequate definition of terminology relating to the proposals in the said Bill will prevent any further development and improvement in the relevant medical research anywhere in Australia and, hence, lead to a cessation of the freeze/thaw technique currently associated with the preservation of excess embryos created and intended specifically for the purpose of later implantation into the uterus of an infertile woman seeking treatment. We strongly believe that research should be allowed to continue under the strict guidelines already laid down by the National Health and Medical Research Council and Victoria's `Infertility (Medical Procedures) Act 1984'. Since the proposed Bill infringes on the personal rights and liberties of infertile couples to have children, your petitioners as in duty bound therefore humbly pray that the Senate will view with sympathy our opposition to the aforementioned Bill and not support its passage through the Senate. by Senator Short (from 5,665 citizens). To the Honourable President and members of the Senate in Parliament assembled. Humble petition of the undersigned citizens of Australia respectfully sayeth: That we the undersigned are totally opposed to any taxation change which involves a tax on Health Fund contributions or benefits. That we are already required to pay a 1 per cent levy to partly finance the Medicare scheme and that we would regard any further taxation of our health insurance arrangements as unfair and unreasonable. That therefore we urge the Government to ensure that there is no taxation on illness and no special taxation on those who seek to insure themselves against the cost of private health care. And your petitioners, as in duty bound, will ever pray. by Senator Jones (from 1,004 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of certain citizens of Australia draws to the attention of the Senate the Government's stated intention to hand over to the Multijulu community ownership of Ayers Rock and Uluru National Park, which have until now belonged to all the people of Australia. We believe that Ayers Rock and the Park are the natural heritage of Australia and should be retained by the Crown on behalf of all living and future generations of Australians, your petitioners therefore pray that the Senate oppose any action that would give ownership of these national treasures to any single group in the community. And your petitioners, as in duty bound, will ever pray. by Senator Collard (from 201 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 Collard (from 34 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth objection to the Metric system and request the Government to restore the Imperial system. And your petitioners as in duty bound will ever pray. by Senator Chipp (from 22 citizens). To the Honourable the President and members of the Senate in Parliament assembled. This petition of concerned citizens of Australia respectfully showeth: 1. Uranium mining and processing is dangerous to health and wellbeing, and is dangerous to the ecology of the planet and its citizens. 2. By-products of uranium are toxic for periods of up to 500,000 years and are an intrinsic part of the production of nuclear weapons. Existing safeguards are inadequate and not properly monitored. 3. The policy of the Australian Government permits the entry into Australian territory of vessels and aircraft without the assurance that they are not nuclear powered or armed. Such vessels pose a threat to both the security and wellbeing of Australia and its citizens. 4. The presence of foreign military and communication bases on Australian soil seriously endangers the health and wellbeing of Australia and its citizens. Your petitioners therefore humbly pray that your honourable Senators will take cognizance of the above and take immediate action to remove the above dangers. Your petitioners as in duty bound will ever pray. by Senator Vallentine (from 1,051 citizens). Senator REID(Australian Capital Territory) —by leave-I present the following petition, which is not in conformity with Standing Orders, from 770 petitioners requesting that the Senate oppose the Australian Capital Territory Teachers Federation policy of active non-co-operation with the staff and students of non-government schools: Dear Mr President, and honourable members of the Australian Senate: We, the undersigned, wish to express our grave concern in relation to the A.C.T. Teacher's Federation's newly adopted policy of active non-co-operation with the staff and students of non-government schools. This policy will affect the community at all levels, sporting and non-sporting interschool competition as well as the proposed boycott of the combined curriculum development meeting. We feel that this policy can only be detrimental to all A.C.T. students-those attending government and non-government schools alike, and would appreciate your support and concern. Petitions received. Senator MacGIBBON(Queensland) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) condemns the Government for its moral cowardice in failing to defend the essential national interest over that of the Transport Workers Union in relation to their ban on the export of Australian chilled beef; (b) notes that this ban has nothing to do with the working conditions under which TWU Members are employed but is purely a selfish attempt by the union movement to pay back the Australian rural export industries for applying the rule of law to the irresponsible Australian Meat Industry Employees Union over their lawless actions at Mudginberri; and (c) notes that as the chilled meat export trade is worth at least $1.25m per day to Australia and that as the Labor Government has increased Australia's debt by 43 per cent in the past two years so that every Australian who files a tax return is now paying $20 per week to meet the interest on overseas federal borrowings, any action by a Government in supporting illegal strikers in the export trade is criminally negligent. Senator HAINES(South Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) deplores Australia's poor record of Government funding for child care which, of all the Organisation for Economic Co-operation and Development nations, places this nation ahead only of Spain, Portugal and Turkey; (b) condemns the Government's action in cutting back funding to child care by $30m as announced in the May 1985 Economic Statement; and (c) calls upon the Government to: (i) not only reverse its decision forthwith, but also increase funding to child care by the same amount; and (ii) provide some evidence that it intends to honour its commitment to find 20,000 new places in child care centres. Senator KILGARIFF(Northern Territory) —I give notice that, on the next day of sitting, I shall move: That the Senate, in view of the economic difficulties faced by pastoralists who, in years of drought, are forced to sell off large amounts of stock, thus generating extraordinarily high incomes in those years and incurring similarly high taxation liabilities, calls upon the government to- (a) give consideration to reinstating all the provisions of an income equalisation scheme which would allow pastoralists to have their incomes for those years levelled out over a number of years, to ease the heavy taxation burden which they would otherwise incur; and (b) incorporate into such a scheme provision for a Government investment fund, whereby the excess income generated through destocking in drought years can be invested in a Government fund and exempt from taxation until such time as it is withdrawn, for example, in a year when the pastoralist is expecting a lower financial return and will need considerable funds for restocking. Senator REID(Australian Capital Territory) —I give notice that, on the next day of sitting, I shall move: That the Senate notes with concern the actions of the Australian Capital Territory Branch of the Builders Labourers Federation and the tactics used to coerce building companies and contractors to sign a letter of support for the BLF, namely, the threat to impose black bans on any company which will not give such support. Senator HAINES(South Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) expresses concern at the continuing great disparity in Government funding between privately owned and public housing which- (i) has ensured that there is now a disturbing crisis in the public housing and private rental markets with ever increasing waiting lists for public housing, and escalating rents as housing stocks decrease and competition for existing stocks increase; and (ii) falls most heavily on the young homeless and single parent families, and (b) acknowledges that there is a crisis in public housing and urges the Government to redirect a far greater proportion of its funds for housing to the public and rental housing sectors. Senator MICHAEL BAUME(New South Wales) —I give notice that, on the next day of sitting, I shall move: That the Senate, noting with concern the recent warnings relating to the Government's inappropriate economic policies from- (a) SYNTEC Economic Services Pty Ltd that ``a destructive combination of rising inflation and fundamental imbalances in the external sector of the economy will undermine both financial markets and our economic performance''; (b) the Institute of Economic and Industry Research cutting in half the Budget's economic growth forecasts from 4.5 per cent to 2.3 per cent; (c) mining leader, Sir Arvi Parbo, replacing his welcome to the Budget with criticism that the Government's backdown on wage discounting will harm Australia's international competitiveness and that he was now ``dismal and gloomy''; and (d) Westpac, that the Budget's basic strategy is already in jeopardy because of a slackening of the Government's resolve to restrain wages growth and that, as a result, Australia now faces a prolonged period of very high interest rates; condemns the Government for reneging on its Budget-time undertaking to fully discount wage indexation for the impact of currency devaluation and for its failure to take adequate anti-inflationary measures in the Budget, particularly by failing to reduce government spending and the deficit this year by at least a further $1 billion, so leaving an undue burden on monetary policy, resulting in record interest rates. Senator HAINES(South Australia) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) expresses concern at the lack of uniformity in criminal injuries compensation legislation in Australia; and (b) urges the Government to instruct the next meeting of Commonwealth and State Attorneys-General to examine ways of achieving uniformity under the following minimum principles: (i) the maximum amount payable under the existing legislation is inadequate and should be at least $100,000; (ii) that awards of compensation should be determined on the basis that, on the balance of probabilities, the intended recipient of the award has been the victim of a crime rather than proof of conviction being required; and (iii) that victims of crime should not have to relive their experience through the trauma of a `second trial' in order to have their compensation determined. Senator GRIMES(Tasmania-Manager of Government Business) —I table papers in accordance with the list circulated to honourable senators and I seek leave to incorporate the list in Hansard. Leave granted. The list read as follows- 1. The Training of Skilled Workers in Fiji and New Zealand-Report of the Australian Tripartite Mission. 2. Great Barrier Reef Marine Park far northern section zoning plan-report-pursuant to section 33 (1) of the Great Barrier Reef Marine Park Act 1975 together with the text of a statement by the Minister for Arts, Heritage and Environment relating to the report made in the House of Representatives on the 12 September 1985. 3. The Inter-State Commission-Annual Report 1984-85-pursuant to section 32 (1) of the Inter-State Commission Act 1975. 4. Institute of Family Studies-Annual Report 1984-85-pursuant to section 114N of the Family Law Act 1975. 5. Operation of the Bankruptcy Act 1966-Annual Report 1983-84-pursuant to section 314 of the Bankruptcy Act 1966. 6. Implications of Constitutional Recognition for Australian Local Government-report by the Advisory Council for Inter-Government Relations-pursuant to section 7 of the Advisory Council for Inter-Government Relations Act 1976. 7. Australian Meat and Live-stock Industry Selection Committee-Annual Report 1984-85-pursuant to section 23 of the Australian Meat and Live-stock Industry Selection Committee Act 1984. 8. Agreement between the Commonwealth of Australia and Seanorth Pty Ltd-together with the text of a statement by the Minister for Primary Industry relating to the agreement. 9. Australian Capital Territory Gaming and Liquor Authority-Annual Report 1983-84. 10. Australian Capital Territory Surveyors Board-Annual Report 1984-85. 11. Australian Capital Territory Registrar of Motor Vehicle Dealers-Annual Report 1984-85. 12. Australian delegation to the United Nations Commission on Human Rights, held in Geneva 4 February-15 March-report. 13. Commonwealth Tertiary Education Commission-Annual Report 1984. 14. Quality of Education in Australia-report of the review committee-together with a copy of a news release by the Minister for Education relating to the report dated 18 June 1985. Senator CHANEY —My question is directed to the Leader of the Government in the Senate and concerns the latest chapter in the Government's extraordinary catalogue of confusion and indecision over changes to the tax system. I refer to reports that at a meeting with the Prime Minister on Friday representatives of business and manufacturing in the rural industries repeated the concern expressed three weeks ago by a meeting of 18 organisations about the adverse effects of proposed taxation changes, particularly the impact of a capital gains tax. Is it true that the Prime Minister told Friday's meeting that the remnants of the Government's tax proposals would not be announced until Parliament resumed in October, or is it still the intention to make a statement on Thursday? In view of the growing concern within the community about capital gains taxation and the discriminatory attacks on business proposed in the fringe benefit area, is there still time to reconsider the damage these changes would cause, or has the Cabinet completed its deliberations? If the latter is true, is Caucus now the only hope of a commonsense outcome from the tax debacle? Senator BUTTON —I am not aware of the details of the discussions or of the exact points which Senator Chaney alleges in his question were made by the Prime Minister to representatives of the business community at discussions on Friday. The Government's tax package will be announced this week. The deliberations are complete. Senator COLSTON —I direct my question to the Minister representing the Minister for Social Security. Has the Minister's attention been drawn to a decision by the Queensland Government not to introduce transport concessions for the unemployed? Is the Queensland Cabinet's decision that this matter is a Federal issue a contradiction of its long established procedure of providing some transport and other concessions to pensioners? Can the Minister advise the Senate whether any other State governments provide transport concessions for the unemployed? Senator GRIMES —I have not seen the report referred to by Senator Colston although I am not surprised that the Queensland Government would refuse to provide transport or any other concessions for unemployment beneficiaries. Queensland has the highest unemployment rate and one which is growing faster than that of any other State as a result of that Government's economic policies. That Government can, of course, see that the large number of unemployment beneficiaries in that State will put a burden on it and that the Government will therefore not have sufficient funds to hand out in its usual manner-for instance, for the building of dams to provide water supplies for the relatives of the Premier. Some other States-I am afraid I do not know just which States-do provide transport and other concessions to unemployment beneficiaries. If I remember rightly, the previous conservative government in Western Australia introduced such provisions; South Australia certainly does; Tasmania does to a limited extent; and I think New South Wales does, but I will check the details. I will look up the report referred to by Senator Colston but I hold out little hope that the Queensland Government will do in this area what so many other State governments do. It is always reluctant to provide benefits for pensioners or beneficiaries in that State. It much prefers to provide those benefits to its wealthy friends. Senator COLLARD —My question is directed to the Minister for Finance. I refer the Minister to the forecast by the Westpac Banking Corporation that the monetary policy being pursued by the Reserve Bank of Australia will keep interest rates high well into next year. Does the Minister accept that a critical part of the Government's current economic policy depends on the maintenance of high interest rates? Senator WALSH —Westpac has forecast high interest rates until the end of this financial year. Last week or the week before Syntec Economic Services Pty Ltd forecast that interest rates would fall before the end of this calendar year. That demonstrates that opinion is quite divided between the various private groups which consider themselves to have some expertise in this matter. Of course, one thing we do know is that interest rates are nowhere near the levels which prevailed in the disastrous dying months of the previous Government when Mr Howard was Treasurer and when in April 1982 interest rates on 90-day commercial bills hit 22 1/2 per cent and on two-year and 15-year Commonwealth loans hit 16 1/2 per cent. So far as I know, neither Syntec nor Westpac, nor anybody else, has forecast that interest rates will go to the catastrophic levels they reached when Mr Howard was Treasurer and at the end of the five years of Mr Howard's treasurership. Senator AULICH —I refer the Minister representing the Attorney-General to the intention of the British Government to ask the New South Wales Supreme Court today to suppress a book by former M15 agent, Mr Peter Wright, on the grounds that it breaches sections of the British Official Secrets Act. I seek an assurance from the Minister that the Australian Government will not co-operate in any way with the British Government's attempts to use an outdated British Act to suppress free speech in this country. Senator GARETH EVANS —I am advised by the Attorney-General that the Australian Government does not intend to intervene in the conduct of the case, on the basis that it is essentially a matter for the British Government. Mr Peter Wright is a former member of the British intelligence service and the question of proceedings and the conduct of those proceedings is one for the British Government. Senator CHIPP —I ask a question of the Minister representing the Minister for Foreign Affairs. Does the Government agree that the French Government has shown incredible impertinence and arrogance in, firstly, testing bombs in the Pacific and, secondly, allowing its agents into New Zealand? Is President Mitterrand coming to the Pacific to gloat about those things? Does the Government believe that countries exercising their rights-- Senator Hill —Mitterrand is a socialist-a typical socialist. Senator CHIPP —The Liberals seem to agree-- The PRESIDENT —Order! Will the honourable senator ask his question? Senator CHIPP —I have to answer interjections. The PRESIDENT —I did not hear the interjection. Senator CHIPP —The Liberals seem to be on the French side. The PRESIDENT —Order! I ask the honourable senator to ask his question. Opposition senators interjecting- The PRESIDENT —Order! I went to a great football game yesterday, but we are on other matters today. I call Senator Chipp. Senator CHIPP —Does the Government believe that countries exercising their rights, as have the countries of the South Pacific, can be fairly described, as President Mitterrand has, as adversaries? Does the Government concur with Mr Lange that the French are declaring such countries as enemies? What is the Government's response to the editorial in Le Figaro yesterday which decided that `Australians are primitive' and `not refined'; that their `identification with the Pacific is like a peasant's view of his plot of land'; and that Australia's and New Zealand's objections to French testing are a `primitive rejection reaction', analogous to `French peasants in the 1930s refusing to accept daylight saving'? Senator GARETH EVANS —The Australian Government has already expressed its position in relation to French nuclear testing in the Pacific, to the sinking of the Rainbow Warrior and to President Mitterrand's visit to Mururoa, and I do not need to repeat any of those statements in detail now. I note that President Mitterrand's spokesman is reported as having said in Mururoa that no country can take decisions in France's place, where its interests in the Pacific are concerned, unless it wants to be seen as an adversary. I noticed New Zealand Prime Minister Lange's entirely apt reaction to that. The Government has also noted, and endorsed, what Prime Minister Lange said on 27 August on the question of intelligence officers on New Zealand soil. He said: It is totally unacceptable that a government should authorise, and at the highest levels, such clandestine illegal activities in the territory of a friendly country. The French spokesman's statement, to which I referred a moment ago, appears to go out of its way to be uncompromising and to rule out a flexible or reasoned French response to the approach which the regional signatories to the South Pacific nuclear free zone treaty will be making to France, among other nuclear powers, to sign the protocols associated with that treaty. This is greatly to be regretted. It is not Australia or indeed any other South Pacific country which is picking an argument with France. It is France which is picking an argument with the region, and that is helpful to no one, nor to the Western interests in the Pacific. Finally, on the subject of the quoted editorial opinion of Le Figaro: As to the allegation that Australians are primitive, not refined and have a peasant's view of the Pacific as our plot of land, I would only say that Australia is happy with the company in which it finds itself in this respect. Certainly it has no shame in believing and articulating with a great deal of vigour our continued belief that nuclear testing in the South Pacific should cease. If Le Figaro is interested in the reaction of the peasantry, it might be an instructive exercise for it to run a survey in various parts of rural France as to the reaction of the locals to nuclear tests in their own back yard. Senator McKIERNAN —I direct my question to the Minister representing the Minister for Territories. The Government has become aware through new economic forecasts that there is a great deal of uncertainty relating to the future viability and operation of the Christmas Island phosphate mining enterprise. Will the Minister explain the rationale behind decisions announced by the Prime Minister on 11 September in relation to the future of Christmas Island and its workers? Senator GIETZELT —The future of phosphate mining on Christmas Island has been on the agenda of past and present governments for some years. It had been hoped that the industry would last sufficiently long to provide employment and the maintenance of the industry on the island for some years. However, the Government has been advised by the board of directors of the Phosphate Mining Company of Christmas Island Ltd as recently as a week or so ago that there is very little future for the phosphate industry on Christmas Island. Accordingly, the Government has been required to make some urgent decisions about the future of not only the industry but also the island itself. Having been advised by those who have the responsibility, the Government has therefore accepted that uneconomic operations on Christmas Island will cease before the end of 1986 and that there will be special arrangements entered into by the Government and the phosphate company that will terminate the employment of those involved in the operations, interestingly, at award rates on parity with workers on the mainland. This means there has been substantial acceptance of modern principles of industrial relations. The Government, with the local community, will look at alternative commercial enterprises. The Government has agreed to set up a working party involving the union on Christmas Island and the Australian Council of Trade Unions, together with community representatives, with a view to making recommendations to the Government on whether there is any future for alternative enterprises on Christmas Island. Senator TEAGUE —My question is directed to the Minister for Finance and I refer to the current real interest rates which are the highest since Federation. I refer the Minister to page 7 of the recent annual report of the Reserve Bank which says: By the end of the financial year most interest rates had risen substantially with many rates at historically high levels, absolutely and relative to the rate of inflation. Earlier in Question Time the Minister canvassed various current predictions about interest rates, but what is his own and the Government's assessment? Does the Minister believe that interest rates are likely to remain at their historically high levels in both absolute terms and real terms-that is, relative to the rate of inflation? Senator WALSH —Firstly, let me correct a misstatement of fact at the end of Senator Teague's question. He said that interest rates were at record levels in absolute terms. That is simply not true. The highest interest rates that have ever been recorded were recorded at the end of five years of Mr Howard's stewardship of the Australian economy as Treasurer. In March 1982 interest rates on 90-day commercial bills hit 22 1/2 per cent-I repeat, 22 1/2 per cent. Interest rates of that magnitude could even cause stockbroking firms to become insolvent, as one did in Sydney a few years ago. Senator Ryan —Which one was that? Senator WALSH —Patrick Partners. Indeed, we have a Patrick partner with us-a former Patrick partner has joined us in the Senate. The PRESIDENT —Order! Will the Minister stick to Senator Teague's question? Senator WALSH —Insolvent, leaving many depositors and clients screaming for their money. The PRESIDENT —Order! Will the Minister answer Senator Teague and ignore the interjections? Senator WALSH —Certainly, Mr President. Senator Michael Baume —Mr President, I take a point of order. I ask that that totally false assertion be withdrawn. The PRESIDENT —Order! I cannot order a statement to be withdrawn on the basis that it is false. I can ask that a statement be withdrawn only if it is offensive to an honourable senator. Senator Michael Baume —I ask that the statement be withdrawn because it is both false and offensive. The PRESIDENT —Order! If the honourable senator claims that it is offensive to him, under standing order 418 I ask the Minister to withdraw the statement. Senator WALSH —Mr President, I withdraw the statement on the ground that it is offensive. It is not false. The PRESIDENT —Order! I ask the Minister now to answer Senator Teague's question. Senator WALSH —It is not false. He was a partner in Patrick Partners when it became insolvent. The PRESIDENT —Order! I ask the Minister to answer Senator Teague's question or I will ask him to resume his seat. Senator WALSH —I do not have with me the Reserve Bank report to which Senator Teague referred. I am certainly not going to speculate or forecast what interest rates will be at some time in the future. I have already drawn attention to the fact that private organisations which regard themselves as reputable, such as Syntec and the Westpac Banking Corporation, have come up with contradictory opinions on that matter, which, I suppose, draws attention to the difficulty of forecasting the level of interest rates at any time in the future. While we are on the accuracy kick, I would like to correct one fact. It was asserted earlier today that everybody who files a tax return has to pay $20 a week in order to pay the interest on the Commonwealth's overseas borrowings. That would be something like $6 billion a year. That statement is, of course, quite false. The interest payments on Commonwealth Government overseas borrowings are in fact quite small. Senator TEAGUE —Mr President, I have a supplementary question. I note that the Minister has not refuted that we have the highest real interest rates since Federation. I ask: Is the Minister reneging completely on giving any indication of his own or the Government's assessment of where interest rates are going? Senator WALSH —I do not intend to make any predictions about the direction of interest rates, as I have already said. If other members of the Government want to do that, that is a matter for them. Senator DEVLIN —My question is addressed to the Minister for Education. Has the Minister seen the article in the Hobart Mercury of 13 September, which outlines the career of an employee of the Commonwealth Department of Education? Does the Minister agree that the career of this woman exemplifies the improvements in education for Torres Strait Islanders? Can the Minister inform the Senate of the improvements in education facilities for Aboriginals and Torres Strait Islanders? Senator RYAN —I was pleased to see the article by Tess Livingstone about Lily Jane Shabasaki, a Torres Strait Islander who recently returned to work as the locally engaged officer in the Commonwealth Education Office. I think it is important, at a time when advancement for Aboriginal and Islander people is not always supported as strongly as it should be throughout the community, that success stories such as Lily Jane's become known widely. She is very well known in her own community in Cairns and I think it is very encouraging that stories such as this are appearing in the Tasmanian newspapers. It is a fact that the advances which Lily Jane epitomises are becoming more widespread throughout the Aboriginal and Islander community. It is very much a matter of satisfaction to our Government that there have been increases in expenditure in programs such as the student assistance scheme, both for secondary and tertiary community activities, that the number of places reserved for Aboriginal and Islander people in higher education has increased, and that, indeed, the participation of Aboriginal and Islander people in higher education, which was only about 280 in 1982, increased to an enrolment in 1984 of in excess of 900. Improved statistics like this ought to be drawn more generally to the community's attention. They are a rebuttal to those who would criticise special programs, acts of positive discrimination on the part of our Government to assist Aboriginal and Islander people to overcome disadvantages. Of course, the increased capacity of Aboriginal and Islander people to take leadership and decision-making roles in their own communities will be one of the keys to the achievement of autonomy and independence for those communities. It is a heartening story and I am able to say with some pleasure that it is becoming more typical throughout Aboriginal and Islander communities. The Tasmanian newspaper which published the story, the Hobart Mercury, is to be congratulated on giving exposure to such a heartening story. Senator PARER —I direct my question to the Leader of the Government in the Senate. I refer the Minister to his statement on 8 November 1983 when, claiming credit for a drop in interest rates, he was asked by Senator Chaney whether he would accept responsibility for any rise in interest rates. Does the Minister recall saying: `Of course. We have to.' Will the Minister now concede that this Government, which promised a drop in interest rates this year, is responsible for the historically high levels of real interest rates which now prevail? Senator BUTTON —Any government in office, whether correctly or not, bears responsibility for the level of interest rates. It bears that responsibility in the electorate, otherwise some honourable senators would not be asking all these silly questions today. Senator BLACK —I refer the Minister for Education to a recent media release by the Leader of the National Party, Mr Ian Sinclair, in which the National Party signalled its intention to oppose the Government's funding proposal for non-government schools. Does the Minister agree that the Government's funding system is a disincentive to private effort, as Mr Sinclair states? Is the Minister concerned that the National Party will, as Mr Sinclair says, fight tooth and nail to change the funding system advocated by the Government? Senator RYAN —My attention was drawn to this outburst by Mr Sinclair that bears no relation at all to what our policies are. I concluded from it that agreement about policy within the coalition partners is still a far distant mirage, probably never to be achieved. I understood that Mr Peter Shack was about to make comments on behalf of the Opposition on education matters, and suddenly we had this outburst by Mr Sinclair. I am not sure what Mr Sinclair wants to oppose. I do not know whether he wants to oppose the four-year legislated increases for non-government schools, which give non-government schools the greatest security and stability they have had with regard to recurrent funding of their schools since state aid was first implemented. I do not know whether he wants to oppose the new non-government schools policy which has generally been accepted as a planning document of great sense and equity, which will enable the resources, both of government schools and non-government schools, to be devoted efficiently to the development of new school places throughout our communities, as chosen by communities and parents. I do not know whether he wants to oppose the share of the special purpose programs which goes to non-government schools, enabling them to provide special services for Aboriginal and Islander children, children from migrant backgrounds, children in country areas and from disadvantaged backgrounds, or children who are in danger of becoming school drop-outs in the upper secondary years who are assisted through the participation and equity program. It would be very useful if Mr Sinclair said which aspects of these progressive and equitable policies, which have generally been very well received in the education community, he wishes to oppose. If he is trying to suggest that there is anything in our schools funding proposals which reduces the initiative for non-government school communities to raise funds for expenditure in their own schools, he is quite wrong. This matter has been clarified on several occasions by the Commonwealth Schools Commission and by me. The new needs based formula for assessing the level of funding to non-government schools to be provided by the Commonwealth requires schools to demonstrate the total income they have available to them from private sources for expenditure on students in those schools. That, of course, is an absolutely logical requirement. If we are moving towards a needs-based funding system, which I think has very widespread support, the needs and the total income of schools must be assessed so that the Commonwealth Schools Commission can work out what level of need exists within a school community. Some school communities, such as the very disadvantaged Aboriginal school communities in the more remote parts of Senator Chaney's State, will probably be able to make no contribution at all to their running costs. In their case, an adequate compensatory funding arrangement will be made by the Commonwealth. In other cases, there are communities which traditionally have provided and which will continue to provide a very high level of input from private sources into schools. They have the capacity to do that and they will continue to do that, and there is nothing in our funding policy to discourage them from doing that. To be more precise, the Government's policy has a built in incentive to private effort. Schools which increase their private income by up to 3 per cent per annum in real terms over the legislated funding period-that is, 1984-87-will not have their Commonwealth funding reduced when schools are next reassessed. This is a very significant incentive which has not been included in previous funding schemes. In conclusion, I say in reply to Mr Sinclair and anybody else who wants to distort and misrepresent the very equitable schools funding policy that we have developed that our Government is committed to improving the quality of education available to all students, be they in government or non-government schools, and that improvement will come about in partnership with State governments and with the school communities themselves. We are assured, by the way in which our funding policy has been accepted, that we will see quite remarkable progress towards the goal of achieving a satisfactory school education for all children throughout Australia by 1988. Senator DURACK —Is the Minister for Resources and Energy giving consideration to the establishment of a government hydrocarbons corporation, presumably to go into the oil business? If so, what is his reason for giving consideration to the establishment of such a body, apart, of course, from a doctrinaire adherence to Australian Labor Party policy? Senator GARETH EVANS —The Government is not giving any formal consideration to that concept at this stage. The particular context in which it has arisen-I notice it was the subject of a Press report last week to which Senator Durack is undoubtedly referring-is one possible method of organising investment on the Australian side in a possible joint development zone with Indonesia. There are many different ways in which the Australian interests could be represented and mobilised in the context of that proposed joint development zone. I can assure the honourable senator that the hydrocarbons corporation concept or the notion of some governmental agency being the administering authority, no doubt in conjunction with private enterprise, is but one of a number of possible options and certainly should not generate any anger on his part or, for that matter, on the part of the oil industry. Senator CROWLEY —I direct a question to the Minister for Education. I note that the Minister has announced measures to improve education on the electoral system through projects by-the Department of the Senate, the Department of the House of Representatives, the Attorney-General's Department and the Department of Education. In view of the importance of this matter to all Australians, and as this is International Youth Year, will the Minister say what stage these proposals have reached? Will she elaborate on the role of the Curriculum Development Centre? In particular, will there be any increased requirements for staff and what, if any, arrangements have been proposed or introduced? Senator RYAN —A number of initiatives are underway sponsored by the Government-some by the Curriculum Development Centre and others by the Parliament-to assist in the political education of Australian school children. All honourable senators would be aware that there is a very uneven knowledge in the community of our parliamentary system. This is partly due to the fact that the details of our rather complex electoral system have not been taught systematically or particularly well throughout our schools system. I recently announced a number of initiatives to address these deficiencies. Under one of these initiatives the Department of the Senate and the Department of the House of Representatives have begun a joint project to develop a teaching kit which will increase knowledge and awareness among students and the public of the role and functions of the Australian Parliament. The kit is due to be published in readiness for the 1987 school year and will also be used as a preparation for school groups visiting Parliament House. The Australian Electoral Commission proposes to establish an electoral education centre to cater for the 60,000 school children who will visit Canberra this year. Teachers bringing school groups to Canberra will be able to write to the centre in advance to ask for special programs for their students. For example, they could ask for a session on how the Senate works or how the Senate vote is counted. The Electoral Commission also has plans to develop a number of publications and educational videos on topics relating to the operation of the Parliament. The Curriculum Development Centre, which Senator Crowley mentioned specifically in her question, recently published a resource book entitled The High Court and the Constitution for upper secondary students. The book assembles a range of commentaries, statements and case studies which introduce the High Court of Australia and the Australian court system and discuss their ideas and functions, summarise the Constitution and its effects on Australian society and discuss various contemporary issues related to law and justice in Australia. The Curriculum Development Centre will also be assisting other departments and agencies in their projects, a number of which I have mentioned today. I think all of these efforts will assist in having a better educated and better informed citizenry in our democracy. I should also like to add that as well as these government initiated projects, it is possible for members and senators to engage in the education of young people about our parliamentary system. In conclusion, I compliment my colleague Senator Crowley, who raised this matter today, and her State parliamentary colleague Barbara Wiese, for the efforts they have made in establishing systematic education forums where young people in their State are able to meet with members of the upper Houses of both the Commonwealth and State parliaments and be very thoroughly exposed to the workings of both Houses. Such efforts, taken by individual senators and members, will certainly reinforce the efforts being taken in this important educational area by the Commonwealth. The PRESIDENT —Order! I would like to elaborate on the answer that has been provided by Senator Ryan so far as the Commonwealth Parliament is concerned. The work that has been done by officers of the Senate and the House of Representatives on this matter was instituted initially as a result of a recommendation of a Senate House committee. That work is being done in conjunction with officers of the Curriculum Development Centre, to which Senator Ryan has referred. I should also say that recently the Speaker of the House of Representatives, and the Special Minister of State and I had discussions on the program to be instituted by the Australian Electoral Commission. As a result of those discussions, the Clerk of our Senate and the Chief Electoral Commissioner have been in discussion on the matter. It has been agreed that there should be complementary assistance in regard to the development of the work being done by the Parliament and the Electoral Commission. The Commission proposes to help us and we propose to help it. Senator JESSOP —My question is directed to you, Mr President. I ask: Has your attention been drawn to a leading article in today's Australian headed: `An interference with Parliament's freedom'? It states: The freedom of Parliament to conduct its proceedings without the supervision or interference of any outside authority . . . is one of the foundations of our democracy. Reference was made in that article to the excellent statement made by you last week dealing with decisions made in the Supreme Court of New South Wales. Senator Withers —You should compress it. Your question is too long. Senator JESSOP —I do not need Senator Withers's help on this very important question. In view of the recent judgment of Mr Justice Cantor of the Supreme Court of New South Wales, supported, in principle, by his colleague Mr Justice Maxwell, relating to the cross-examination in courts of witnesses who have appeared before parliamentary committees, do you see any problems arising from the acceptance of Dr Edelsten to the invitation by the Joint Committee of Public Accounts for him to appear before that Committee? Do you regard this as a pertinent example of the difficulties which inevitably will be faced by committees if the judgment of Mr Justice Cantor were to apply to parliamentary proceedings? Clearly, in relation to the Bill of Rights, it is within your responsibility to deal with this matter. The PRESIDENT —I thank the honourable senator for his question because, as everyone would realise from the statement that I made to the Senate last Thursday and the debate that ensued, the matter is one of significance not only so far as my office as President of the Senate is concerned but indeed also so far as the Senate itself and the institution of Parliament are involved. The question asked by Senator Jessop touches on one of the problems referred to in my statement to the Senate last week. I shall give consideration to the points that Senator Jessop has made and if I think that I should add something further to the statement that I made to the Parliament last Thursday I shall do so. So far as the person to whom Senator Jessop has referred is concerned, whose name was also mentioned in this Parliament last week, I noted that the Chairman of the Public Accounts Committee was in attendance when I presented my statement and during the course of the debate on parliamentary privilege. Doubtless he would have taken cognisance of my statement and the ensuing debate. I hope that all chairmen of parliamentary committees will give consideration to the contents of my statement and to the debate. I can add nothing to what I have said although I appreciate the point expressed by Senator Jessop in his question. The point made in the Australian editorial is one of great significance to the Senate and to the Parliament and I will seek further advice from my advisers on the subject. Senator MORRIS —I direct my question to the Minister representing the Minister for Local Government and Administrative Services. In view of the disquiet expressed by some groups in the community as to the alleged reduction in funding of local government by the Commonwealth arising out of the 14 May economic statement, can the Minister outline recent decisions on the funding of local government throughout the States? Senator GIETZELT —Senator Morris is a New South Wales senator but he has asked about funds made available to local government generally. It is fair to say that the Government has met it obligation in respect of providing funds to local government in excess of the inflation rate. To that extent the Government has accepted its responsibility to assist local government to provide the range of services that it does right throughout the country and it continues that policy which has been a feature of recent years. In respect of the funding available to local government, the amount of $177m made available to New South Wales in 1984-85 has been increased to $195m in 1985-86. That 10 per cent overall increase represents a 2 per cent increase in real terms, having regard to inflation. That indicates that the Government's commitment to local government cannot be questioned; nor can my own, having spent 15 years in local government before coming into the Senate. Apart from the obvious need for the Commonwealth to provide funds for the operation of local government, such funds are an important generator of employment and because that funding operates right thoughout Australia of course it has regional influences as well. As to Senator Morris's specific question as to what allocation should be available to each local government body, such allocations for New South Wales arise from recommendations of the New South Wales Grants Commission. Under section 96 of the Constitution and the Local Government (Personal Income Tax Sharing) Act 1976 the Commission has made available to the 176 local government bodies amounts of money which vary in respect of the importance of local government in each of the regions. A list in the brief the Minister for Local Government and Administrative Services has provided me indicates the amount of money made available on a population basis as well as the total grant to each local body. Mr President, I seek leave to have the list incorporated in Hansard. Leave granted. The list read as follows- RECOMMENDATIONS-REVENUE SHARING FUNDS FOR 1985-86 The Local Government Grants Commission recommends that- (1) the amounts shown hereunder totalling $195,252,913 be paid to the respective local governing bodies (176) as financial assistance from the Commonwealth Revenue Sharing moneys to be paid to the State of New South Wales in respect of the financial year 1985/86 under section 96 of the Constitution and the Local Government (Personal Income Tax Sharing) Act, 1976, and (2) there be no conditions attached as to the expenditure by the local governing bodies of the financial grants of assistance recommended for payment. Local governing body Element A (Population component) Total grant $ Albury City... 412,554 1,429,200 Armidale City... 206,540 1,005,000 Ashfield Municipal... 435,210 1,015,200 Auburn Municipal... 493,695 1,217,700 Ballina Shire... 238,154 1,000,200 Balranald Shire... 52,501 679,200 Bankstown City... 1,618,602 3,831,900 Barraba Shire... 48,881 357,800 Bathurst City... 262,391 1,142,300 Baulkham Hills Shire... 1,052,197 1,898,600 Bega Valley Shire... 394,666 1,674,000 Bellingen Shire... 180,134 634,100 Berrigan Shire... 140,306 532,100 Bingara Shire... 40,734 282,500 Blacktown City... 2,024,306 5,279,700 Bland Shire... 146,642 678,300 Blayney Shire... 112,245 528,100 Blue Mountains City... 655,450 2,292,100 Bogan Shire... 68,795 626,400 Bombala Shire... 58,838 428,400 Boorowa Shire... 48,881 310,000 Botany Municipal... 369,876 906,600 Bourke Shire... 77,847 937,300 Brewarrina Shire... 44,355 782,700 Broken Hill City... 286,627 1,926,100 Burwood Municipal... 305,069 631,200 Byron Shire... 190,734 888,400 Cabonne Shire... 210,911 1,025,300 Camden Municipal... 197,056 707,500 Campbelltown City... 1,180,231 2,871,800 Canterbury Municipal... 1,348,835 3,006,400 Carrathool Shire... 63,364 672,700 Casino Municipal... 110,647 618,900 Central Darling Shire... 57,933 772,500 Cessnock City... 760,366 1,885,200 Cobar Shire... 106,813 1,209,200 Coffs Harbour Shire... 430,995 1,270,000 Conargo Shire... 31,682 193,613 Concord Municipal... 250,272 473,700 Coolah Shire... 76,942 475,000 Coolamon Shire... 76,942 453,000 Cooma-Monaro Shire... 169,272 940,800 Coonabarabran Shire... 131,254 695,800 Coonamble Shire... 107,719 608,900 Cootamundra Shire... 153,884 591,400 Copmanhurst Shire... 57,027 319,900 Corowa Shire... 125,822 496,400 Cowra Shire... 211,816 874,300 Crookwell Shire... 85,089 468,700 Culcairn Shire... 79,657 383,400 Deniliquin Municipal... 83,248 647,900 Drummoyne Municipal... 334,047 625,800 Dubbo City ...552,171 1,386,400 Dumaresq Shire... 65,174 292,900 Dungog Shire... 113,150 528,600 Eurobodalla Shire... 349,406 953,500 Evans Shire... 82,373 483,200 Fairfield City... 1,511,117 4,064,300 Forbes Shire... 205,480 1,042,800 Gilgandra Shire... 91,425 555,700 Glen Innes Municipal... 65,334 475,100 Cloucester Shire... 83,278 476,900 Gosford City... 1,127,542 3,326,600 Goulburn City... 236,573 1,076,800 Grafton City... 182,830 980,200 Great Lakes Shire... 353,932 962,900 Greater Lithgow City... 381,088 1,687,400 Greater Taree City... 629,112 1,623,500 Griffith Shire... 391,045 1,015,900 Gundagai Shire... 78,752 432,400 Gunnedah Shire... 236,257 825,300 Gunning Shire... 36,208 235,700 Guyra Shire... 85,994 528,100 Harden Shire... 76,037 439,500 Hastings Municipal... 719,632 1,471,300 Hawkesbury Shire... 745,883 1,853,000 Hay Shire... 72,416 607,900 Holbrook Shire... 47,070 272,900 Holroyd Municipal... 853,560 1,849,800 Hornsby Shire... 1,226,597 2,182,000 Hume Shire... 95,046 383,900 Hunter's Hill Municipal... 126,453 126,500 Hurstville Municipal... 695,493 1,122,300 Inverell Shire... 288,758 1,415,200 Jerilderie Shire... 43,449 386,700 Junee Shire... 104,098 487,600 Kempsey Shire... 394,666 1,287,400 Kiama Municipal... 141,206 644,600 Kogarah Municipal... 499,490 785,700 Ku-ring-gai Municipal... 1,095,929 1,096,000 Kyogle Shire... 169,272 911,200 Lachlan Shire... 155,694 1,112,800 Lake Macquarie City... 1,696,582 4,673,000 Lane Cove Municipal... 304,542 501,600 Leeton Shire... 205,480 756,700 Leichhardt Municipal... 600,653 1,624,300 Lismore City... 390,425 1,732,400 Liverpool City... 997,927 2,735,000 Lockhart Shire... 69,700 412,000 Lord Howe Island Board... 5,431 86,600 Maclean Shire... 195,523 682,400 Maitland City... 467,877 1,608,800 Manilla Shire... 56,122 334,800 Manly Municipal... 390,951 946,700 Marrickville Municipal... 880,431 2,384,600 Merriwa Shire... 44,355 342,200 Moree Plains Shire... 318,630 1,496,800 Mosman Municipal... 281,359 483,600 Mudgee Shire... 266,128 964,000 Mulwaree Shire... 80,563 332,100 Murray Shire... 76,037 395,600 Murrumbidgee Shire... 43,449 388,900 Murrurundi Shire... 41,639 262,700 Muswellbrook Shire... 286,043 1,016,200 Nambucca Shire... 237,162 811,000 Narrabri Shire... 291,474 1,618,700 Narrandera Shire... 136,685 605,300 Narromine Shire... 118,581 638,300 Newcastle City... 1,459,482 4,278,600 North Sydney Municipal... 522,674 904,200 Nundle Shire... 19,914 179,800 Nymboida Shire... 46,165 298,800 Oberon Shire... 72,416 449,600 Orange City... 339,316 1,235,600 Parkes Shire... 266,128 1,248,100 Parramatta City... 1,387,825 3,189,100 Parry Shire... 201,859 787,700 Penrith City... 1,379,922 3,348,800 Port Stephens Shire... 354,069 1,289,600 Queanbeyan City... 220,239 992,600 Quirindi Shire... 98,667 494,600 Randwick Municipal... 1,227,124 2,456,700 Richmond River Shire... 135,780 713,100 Rockdale Municipal... 891,496 1,682,900 Ryde Municipal... 954,722 1,773,400 Rylstone Shire... 74,226 472,400 Scone Shire... 171,988 691,400 Severn Shire... 56,122 359,700 Shellharbour Municipal... 482,630 1,541,900 Shoalhaven City... 1,022,873 2,011,800 Singleton Shire... 323,156 1,104,500 Snowy River Shire... 89,615 619,900 Strathfield Municipal... 279,778 501,600 Sutherland Shire... 1,835,153 3,698,800 Sydney City... 836,699 2,770,400 Tallaganda Shire... 40,734 333,700 Tamworth City... 351,435 1,194,100 Temora Shire... 119,486 625,000 Tenterfield Shire... 121,296 640,400 Tumbarumba Shire... 73,321 560,800 Tumut Shire... 218,153 909,400 Tweed Shire... 459,447 1,386,400 Ulmarra Shire... 79,657 367,200 Uralla Shire... 98,667 463,600 Urana Shire... 33,492 299,700 Wagga Wagga City... 896,146 2,102,000 Wakool Shire... 94,141 575,100 Walcha Shire... 66,985 425,100 Walgett Shire... 134,874 943,700 Warren Shire... 71,511 559,700 Warringah Shire... 1,873,616 3,672,700 Waverley Municipal... 662,826 1,250,000 Weddin Shire... 76,942 408,800 Wellington Shire... 162,030 712,200 Wentworth Shire... 131,254 861,100 Willoughby Municipal... 557,448 805,400 Windouran Shire... 9,957 111,900 Wingecarribee Shire... 506,911 1,294,100 Wollondilly Shire... 407,339 829,800 Wollongong City... 1,860,444 5,060,100 Woollahra Municipal... 560,083 560,100 Wyong Shire... 861,990 2,558,300 Yallaroi Shire... 68,795 473,200 Yarrowlumla Shire... 95,951 321,900 Yass Shire... 137,590 641,200 Young Shire... 200,954 782,600 Totals... 65 084,306 195,252,913 Senator HAINES —Is the Minister for Finance aware of reports that the Commonwealth Bank of Australia has now increased its home loan interest rate to the Government's imposed ceiling of 13.5 per cent? Will the Minister acknowledge that the so-called service fees, ranging from $30 per annum to $90 per annum, charged by the Commonwealth Bank on all its home loans will now effectively sidestep the Government's ceiling on home loan interest rates? Will the Minister say whether the Government sees any irony in the Commonwealth Bank-a government instrumentality established by the Australian Labor Party-being in the vanguard of the higher home loan interest rates push? Will the Minister give an assurance that the Government will maintain the present ceiling on home loan interest rates at 13.5 per cent by moving to prevent the Commonwealth Bank and other banks from effectively raising the rate by such back door measures as service fees? Senator WALSH —In regard to the honourable senator's comments about the Commonwealth Bank specifically, since the banking system was deregulated the Government does not issue directions to banks in general, let alone to the Commonwealth Bank in particular. Service fees are not at all unusual. They have been around for as long as I can remember. Indeed, I was charged a service fee to operate a cheque account when I first opened one in the 1950s. It is reasonable to say that at some point what might be legitimately regarded as a service fee becomes something else. On behalf of the Treasurer last week-I do not remember the exact words, only the substance-I said that the Treasurer has stated that he will keep this matter under review. Even a $90 per annum service fee-it depends on the size of the loan but last week Senator Haines was talking about a $40,000 loan-is something like a 0.2 per cent interest rate equivalent, which is very small. However, whether that should be regarded as a legitimate service fee or as a surreptitious increase in interest rates is, I suppose, if not at that point certainly at some point, a matter of judgment. Other than that, I do not have anything to add to the answer I gave last week on behalf of the Treasurer. Senator VALLENTINE —I refer the Minister representing the Minister for Foreign Affairs to Senator Button's answer in the Senate on 10 September to the Australian Government's inadequate response to the sinking of the Rainbow Warrior. Senator Button replied, in part: The New Zealand Government would like to handle the matter and does not feel that the situation would be helped by other governments at this stage. In light of that answer, I ask: Is the reason for the Australian Government's failure to speak out against this outrage that it has once again decided to succumb to the interests of the United States Administration, which has made no comment at all about this incident because of its nuclear ties with France? Specifically, is it true that the Australian authorities failed to detain French secret service terrorists as they made their escape via Norfolk Island and Sydney, despite being alerted by the New Zealand police? Senator GARETH EVANS —There is no foundation for any suggestion that the Australian Government has been soft in its reaction to the Rainbow Warrior bombing or, to the extent that Senator Vallentine construes us as having been so, that it has been as a product of any deference to the alleged United States attitude in this respect. The truth is that the Australian Government has been as forthright and explicit as we regard our role in the region vis-a-vis New Zealand properly allows us to be. There has been continued consultation with New Zealand throughout as to what New Zealand's view of an appropriate reaction from us might be. As recently as 20 minutes ago, in Question Time, I put on the record yet another statement of our response in this matter and I think it is time that the suggestion that we have been other than appropriately forthright in our condemnation of what has occurred was put to rest. As to the alleged deficiencies in the Australian Federal Police and in the official response to the people who came to Norfolk Island in the aftermath of the Greenpeace affair, the Special Minister of State has given me a brief to the following effect: AFP officers on Norfolk Island serve as sworn members of the Norfolk Island police under the jurisdiction of the Administrator of the island. The Greenpeace investigation was a New Zealand matter. New Zealand police, through the AFP liaison officer in Wellington, requested assistance from the AFP officers on Norfolk Island. AFP officers maintained a watching brief on the suspects until the arrival of the New Zealand police investigation team on Norfolk Island. AFP members co-operated fully with the New Zealand police who were sent to question the suspects. The New Zealand police completed their interviews with the crew members. No charges were preferred by the New Zealand police and, as there was no reason to further detain the suspects, the yacht was allowed to sail from the island bound for Noumea. There are, of course, some well-known vagaries in the administration of immigration rules on Norfolk Island which are outside the jurisdiction of the Australian Government because of the constitutional peculiarities of that territory's position. These vagaries are such that anyone coming to Australia from Norfolk Island has to submit to Customs and immigration formalities at the Australian port of entry, irrespective of the fact that Norfolk Island is technically within Australian jurisdiction. So there may well have been some substance to the suggestions that the recording procedures and so on for people's arrival in Norfolk Island were other than what would have been appropriate and applicable on the Australian mainland. But the crucial issue was the response of the Australian police authorities to the situation as they found it. There has been nothing alleged or suggested to be wanting in terms of the co-operation between the Australian police authorities and the New Zealand police authorities, as I have just indicated. I believe, yet again, that this is another bit of scuttle-butt in this whole affair which deserves to be put to bed once and for all. I hope that what I have said will achieve that result. Senator BOSWELL —I refer the Leader of the Government in the Senate to the current industrial action of the Transport Workers Union which is refusing to load any air shipment of Australian beef and lamb, costing Australian meat producers over $1m a day in lost contracts. Will the Government answer the calls of the National Farmers Federation, the Cattle Council of Australia and the United Graziers Association of Queensland to intervene in the dispute which is seriously jeopardising export markets in Japan and the Middle East? Can the Minister advise the Senate what action his Government is taking to terminate this dispute? Senator BUTTON —This is basically a matter for the Minister for Employment and Industrial Relations and I will refer Senator Boswell's question to him. I think honourable senators will find that the Minister for Employment and Industrial Relations has already taken some steps in this matter. I just remind the Senate again that, on previous occasions such as this, the Minister has taken steps which have usually been successful in the resolution of disputes and which, in terms of the historic perspective, have been far more successful than those of any other government in the last 35 years. Senator FOREMAN —Is the Minister representing the Minister for Foreign Affairs aware that the French President, Mr Mitterrand, declared in a statement to the Press today that representatives of Australia and New Zealand would be welcome to visit French nuclear testing sites at Mururoa Atoll? President Mitterrand also stated that he would be pleased if French representatives could visit the site of numerous British tests at Maralinga. Will the Minister issue an invitation to the French Government to send representatives to visit the sites of British tests at Maralinga and provide these representatives with all the information currently at hand about the problems left to Australia as a result of the testing of atomic weapons? Senator GARETH EVANS —The Government is aware that President Mitterrand has extended an invitation to the heads of state and government of South Pacific Forum countries to visit Mururoa, has renewed the invitation to these countries to inspect Mururoa and has requested permission for French scientists to visit the sites of British atmospheric tests in Australia to study the removal of radioactive material. These various requests and invitations should clearly be seen as a package. In this context I say on behalf of the Government that demonstrating that visiting Mururoa is not dangerous to one's health does rather miss the point. Australia is concerned about the environmental aspects of French nuclear testing on Mururoa. More fundamentally, however, we are opposed to all nuclear testing and in particular to the fact that France exports this activity to the South Pacific. As I said earlier in Question Time today and as I have said previously, it is a bad enough to test at home, but it is quite intolerable to dodge domestic difficulties in metropolitan France by conducting tests across the other side of the world. Regarding the French inspection of sites of British atmospheric tests at Maralinga and elsewhere, the Government will give this request serious consideration. I should perhaps say in relation to that that these tests took place some 25 years ago when a distinctly more casual attitude prevailed as to the effects of nuclear tests on people and the environment. As honourable senators will be well aware, a major inquiry into the British test program is nearing completion and a report on it is expected to be tabled in Parliament before the end of the year. Senator MISSEN —My question is directed to the Minister representing the Minister for Foreign Affairs. Is the Government aware of reports that enormous quantities of grain are rotting in Ethiopian ports because insufficient trucks are available to transport the grain to areas in need? Secondly, is the Government also aware of reports that the reason for the unavailability of trucks is that they are all being used by the Ethiopian army in its war against rebels? Thirdly, what measures has the Government taken or does it intend to take to alleviate this appalling situation? Senator GARETH EVANS —The Government is aware of reports that an enormous quantity of grain is rotting at the Ethiopian port of Assab because insufficient trucks are available to transport the grain to needy areas. Reports reaching the Department of Foreign Affairs indicate that in the month of July 1985 of 50,000 tonnes of grain some 5,000 tonnes of water-affected grain, including 40 tonnes identified as Australian wheat, had to be condemned at that port. This had arisen due to sudden floods and water seepage from adjoining areas. Representations have been made to the Government of Ethiopia by the United Nations Assistant Secretary-General for emergency operations in Ethiopia concerning the inadequate transport available for the distribution of emergency supplies. The Government of Ethiopia has made an effort in this regard, although the full additional complement of 400 Government of Ethiopia trucks for in-country distribution has not been met as yet. The Government of Ethiopia, through its Relief and Rehabilitation Commission, claims that some 70 per cent of the transport resources in the country have been mobilised for the transport of emergency supplies and other material needed for famine and drought victims. The United Nations Assistant Secretary-General estimates that a further 204 long haul trucks will be needed for the distribution of relief supplies in 1986. The Government shares with the international community and other major donors a concern to ensure that international as well as Australian assistance reaches famine victims in all parts of Ethiopia. We have provided $1m for urgent transport needs within Ethiopia and we will continue to monitor, through our embassy in Addis Ababa and through regular meetings of donors and non-governmental organisations, off take and distribution from Ethiopian ports. Senator ROBERTSON —My question is directed to the Minister for Education. Is the Minister aware that during National Aborigines Week last week claims were made that the Northern Territory Department of Education has lost its interest in Aboriginal education, leading to a downgrading of resources in that area? Are these claims valid and, if so, could not the same criticism be levelled at the Federal Government in respect of the Northern Territory? Senator RYAN —I am not aware of reductions in funding by the Northern Territory for the purposes of assisting Aboriginal education but I will have those claims investigated. However, it is certainly not the case that similar claims could be levelled with any credibility at the Commonwealth Government. In all areas of Commonwealth expenditure targeted at Aboriginal education there have been increases in funds. This is true of every Budget that we have brought down. In answer to an earlier question by Senator Devlin today I referred to some of those programs. For example, in the students assistance schemes, the number of secondary students receiving assistance under Abseg increased from 19,964 in 1982 to 24,540 in 1984, with consequent increases in expenditure. Under the Abstudy program, which assists students undertaking post-secondary courses of various kinds, the number of students assisted in 1982 was 9,861. By 1985 it had increased to 13,150, again with consequent increases in expenditure. As part of the special measures the Commonwealth is taking to increase the participation of Aborigines in education at all levels, 200 of the 1,300 places for each year of the triennium-that is, additional places for higher education announced last year-will be reserved for Aboriginal and Islander people. Up to 300 of the further increase of 2,000 places for each of the years 1986 and 1987, just announced in the Budget, will be reserved also for Aboriginal and Islander people. Other special programs the Government has funded include three Aboriginal education projects in higher education in 1985, with expenditure totalling $127,000. The Centre for Aboriginal Studies of the South Australian College of Advanced Education has been nominated as a key centre for teaching and research under the Government's new program and will attract $154,000 in each year of the triennium. Under the Commonwealth Schools Commission, over $7.5m has been spent on capital grants programs for Aboriginal and Islander schools, mainly serving remote communities such as those in the Northern Territory. There also has been extra and specific expenditure on Aboriginal education projects under the participation and equity program and the program of national assistance. As Senator Robertson will know, a number of projects being undertaken by the Curriculum Development Centre are aimed at producing better and more relevant materials for use by Aboriginal children throughout Australia, including the Northern Territory. I will not continue the list of projects we have funded, but I think it would be clear to senators at this stage that there has been quite a dramatic increase in Commonwealth expenditure on all areas of education involving Aboriginal and Islander people. The results, insofar as one can assess results over a relatively short period, would indicate that these programs are successfully promoting increased participation by Aboriginal and Islander children at all levels of education, including post-compulsory education. Senator ROBERTSON —I have a supplementary question. Given the special responsibility the Federal Government has for Aboriginal people, is the Minister in a position to investigate the claims made about the Northern Territory Department? Senator RYAN —I am happy to start a correspondence with the Minister for Education in the Northern Territory to find out the facts in that respect. Senator SHORT —Has the Minister for Industry, Technology and Commerce noted reports of an address by Mr Peter Bennett, the Vice-President of the Customs Officers Association, to a drug summit in Sydney, organised by Relatives Against the Intake of Narcotics, in which Mr Bennett is reported to have said that manpower in the Australian Customs Service is being directed away from narcotics detection in favour of purely revenue raising activities? Is this assertion correct? If it is correct, will he take immediate steps to rectify the situation to ensure that the Customs Service gives narcotics detection the high priority that is demanded by the Australian community? If it is not correct, will he take this opportunity to lay to rest this disturbing assertion? Senator BUTTON —I will draw that question to the attention of the Comptroller-General of Customs. At this stage I say that I believe the suggestion made by Mr Bennett to be inaccurate. Arising from the so-called drug summit earlier this year, additional staff were made available to the Customs Service. Some of those would be arranged in drug detection capacities, and I think it most unlikely that such a situation as described by Mr Bennett has developed. Having said that, I must add that I am not entirely surprised about the suggestion in the context of a meeting about drugs, because if Mr Bennett and those present are saying that the drugs detection services throughout the country are inadequate, I think I would agree with them. I think everybody would. I will check with the Comptroller-General and, if anything comes up that is different from the purport of the answer that I have given, I will see that Senator Short is advised. The PRESIDENT —I have received a letter from the Leader of the Opposition, Senator Chaney, proposing that a matter of public importance be submitted to the Senate for discussion, namely: The devastating impact on small business and employment prospects of the Government's proposed tax on fringe benefits and capital gains. I call upon those members who approve of the proposed discussion to rise in their places. More than the number of senators required by the Standing Orders having risen in their places- Senator CHANEY(Western Australia-Leader of the Opposition)(3.12) —I do not think there would be any doubts in the Australian community as to the area of government activity and policy that is the focus of public interest. The Government's weekend-long Cabinet meeting on the taxation decisions that it must make has reminded us that the Government is coming to grips with an area that is very close to the hearts of all Australians. We bring forward this matter of public importance knowing that it is unlikely that the Government will be promoting debate in either the Senate or the House of Representatives on this very important issue. As the Government has indicated its timetable, the statement on taxation changes will not be brought down until next Thursday and that, of course, is the day on which the Senate will rise to consider Estimates committees and the House of Representatives will rise for a fortnight's recess. Thus, the Government has timed its announcements on taxation in a way which will not permit public debate in this Parliament until some weeks after the public has been subjected to debate in other forums. The first thing that needs to be said about taxation is that the great public interest is generally in seeing a lessening of that tax burden rather than the imposition of new taxes. In respect of the Government's tax proposals, we have reached the unhappy situation where it is basically considering the imposition of new taxes on a public which is already of the view that it is overtaxed. Last Friday when I was talking to a Minister from the previous Government about this Government's proposed Cabinet meeting on Saturday, he made the point that when a Cabinet starts meeting on Saturday it is an early indication that the Government is getting into trouble. He went on to say, in the context of the meeting lasting only through Saturday, that we would know the Government was in real trouble when it started meeting on Sunday. Of course, this Government was unable to complete its meeting on the tax proposals on Saturday and it had to continue sitting on Sunday. From all reports it had to sit again on Monday morning. Since the unexpected extension of the meeting, which ran through until today, occurred I feel I should issue some warning to members of the Labor Party, including those who are taking part in this debate, that they will be called upon to consider decisions which have been made obviously with very great difficulty by their elders and betters. I would suggest that they should watch very carefully the outcome of the weekend deliberations because, if the principles that the Government wants to apply are so unclear, the decisions are likely to reflect that lack of clarity and we are likely to get, in the decisions the Government has put down, a glorious appreciation of the trees and no vision at all of the wood. I commend to Labor senators and members the prospect of a very careful scrutiny of the decisions which have been taken. Senator Teague —What is good about the trees? Senator CHANEY —I am sure the Ministry thinks that these are very good decisions and that on close examination each is worth while. After all, Ministers spent 20 hours of the weekend considering them. It is the clear view of the Opposition that the way in which the Government is moving is not in the interests of the broader community or of Australia. It is certainly not in the interests of the small business community, which is specifically mentioned in this matter of public importance. I hope that some very careful consideration of this will be given by back bench members of the Government Party as well as that being given by Government Ministers. After all, how far have we moved on tax in these recent chaotic weeks? Just a few months ago we had a Treasurer who was setting out to effect fundamental reforms to the Australian taxation system. He picked up the challenge. He spoke about it in a very bold manner. I can remember referring to his chest beating and expressing some doubt that that was quite the tactic to pursue if he wished to get this tax package through the Cabinet and the Caucus. In any event, he undertook to do a substantial remake of the Australian taxation system. We know that the Government held its tax summit-something that was again an on-the-run decision made by the Prime Minister (Mr Hawke) during the election campaign-and that out of that summit came an ignominious collapse on part of the Government. That was universally described as a backdown, as a failure. The term `a hollow victory' was used by one newspaper; `the big daddy of all backdowns' by another. It was described as `Hawke's tax fiasco' in another, and the Leader of the Opposition, John Howard, in his role then as shadow Treasurer, referred to the Treasurer's taxation announcement as a monumental loss of nerve by the Government, a collapse and a failure. We have a situation where the Government took this critical issue of tax to a summit and purported to consult with the representatives of the trade union movement and the business community. It purported to confer with the community through spokesmen who had been appointed by the Government. It purported to confer with the welfare community, which was represented at the summit. What is universally acknowledged is that the Government collapsed in the face of the attitude of the Australian Council of Trade Unions to taxation. We found that the fundamental reforms the Treasurer (Mr Keating) set out to achieve were largely ditched and we were left with those elements of change that had the blessing and endorsement of the ACTU, which are largely those based on cutting people down and on ensuring that the tax burden lies somewhere other than on the great mass of the people of Australia who, in the end, are the only people who can pay these taxes. The remnants of the Government's tax policy pay no regard to the interests of employers and, in particular, they pay no regard to the interests of small business. In my view and in the view of the Opposition, that is a significant difficulty and a great concern, not just for those individuals in the small business sector or who are playing the role of employers in our community, but for the rest of the community, which has a basic and fundamental interest in employment and in the promotion of employment in Australia. Why is it that the Opposition has said today that it is a matter of public importance that the Government is proposing tax changes which will have a devastating impact on small business and employment prospects if it goes ahead with its proposed tax on fringe benefits and capital gains? Are we simply reflecting our constituency in putting the emphasis where we have today? The Opposition is enthusiastic about supporting the constituency which is made up of small business. That is not a narrow or small group of the Australian community. We find that the great bulk of the Australian work force is in fact employed by firms which can be described as a part of small business. If we look at the document put out by the Small Business Research Unit of the Bureau of Industry Economics, under the heading `Small Business Review' we find that there are 660,000 small firms in Australia and that these firms contribute in excess of 50 per cent of private employment and about 40 per cent of industry value added. So we are talking about the employment of half the privately employed people in Australia. We find in that same document that 95 per cent of Australia's manufacturing enterprises employ fewer than 100 people. We also find that they play a very important role in many of our basic industries and that they account for a major part of the value added in manufacturing in Australia. We find that in the services sector-I will be talking a little later about the significance of that sector in contributing to employment growth in Australia-small firms account for 97 per cent of the enterprises in the surveyed service industries and approximately 40 to 50 per cent of turnover and value added, and between 50 and 65 per cent of employment. What we are examining is the business sector, which, in fact, provides about half of the private employment in Australia, and which provides a great deal more than that in terms of the employment growth which has been achieved, and which we expect to go on achieving through that sector given reasonable policies on the part of the Government. We have a very great concern for the small business constituency. We believe that it is a constituency which is not represented by this Government, which has chosen to ally itself with big business and with big trade unions through the Australian Council of Trade Unions. Our concern about this sector has been reflected in our appointment of a shadow Minister for small business to ensure that our own policies have a focus in that area. Beyond the small business constituency, there are important implications for the whole community in actions which have been taken and are to be taken by this Government which will damage that sector. The Budget is, after all, predicated on increased private sector activity. It is quite clear that the Government expects the bulk of the growth in the Australian economy this year, growth which it regards as essential, to take place in the private sector. The Treasurer's Budget Speech makes that quite clear. He refers in a number of places to the fact that, if there is to be a full sharing in the benefits of economic recovery and growth, the most substantial way that they can be assisted is through the creation of lasting jobs in the private sector, and the Speech claims that the whole thrust of economic policy is directed to that end. It claims that, whereas last year over a third of Australia's economic growth came from the public sector, this year the Government expects less than a sixth to come from that source. So we have a Budget brought down by this Government which is predicated upon the promotion of private sector growth. That is why the small business sector is just as important to the community and to this Government as it is important to this Opposition. I said earlier that if one were looking to employment growth-and after all, we had the dramatic reminder the year before last from Mr Wran when he said that the original summit held by this Government should have been about `jobs, jobs and jobs'-one would find, in fact, that it is the small business sector which is contributing and can contribute to employment growth. In Australia, as in our competitor countries, we do not expect to see substantial employment growth in the area of big business and big manufacturing industry in particular. In the United States the traditional smokestack industries have been found to contain a declining share of the work force, notwithstanding a considerable revival in many of those industries. What we find is the creation and growth of employment in the small business sector. When we look at the figures which are available from the Australian Bureau of Statistics about employment growth in Australia, we find that there was a drop in employment in the manufacturing sector between 1966 and 1984 of 7.4 per cent. We find that in the traditional manufacturing sector employment is declining and not growing. If we look at the policies which are being put forward by Senator Button on behalf of the Government, we find that he is advocating higher and higher levels of efficiency, and he concedes that there will be employment reductions in most areas of traditional manufacturing. If we turn, on the other hand, to recreation, personal and other services, including restaurants, we find employment growth of 46 per cent over the same period. In Australia, as in those countries with which we would compare ourselves on an economic basis, it is in these areas of services that we find the employment growth which is so important for our society and economy. There has been a 7 per cent reduction over 18 years in manufacturing industry. We find an increase of 46 per cent in recreational, personal and other services, and nearly 28 per cent in wholesale and retail trade. So it is quite clear where we can have employment growth in Australia. It is quite clear what sectors we should be seeking to encourage, just as it is quite clear that the taxation proposals which have been brought forward by the Government will, in fact, not encourage those sectors, rather the reverse. If the Government is relying on the private sector and small business in particular to get Australia moving, it has to be acknowledged that the Government is proceeding with its taxation arrangements in precisely the opposite direction from that which has been sought by small business and by those who understand what motivates small business. I do not have time to quote extensively from the representations which have been made. We know that three weeks ago 18 major business organisations went to the Government and objected to its taxation proposals and asked that they be changed. We know that last Friday major business organisations met with the Government and made the same request. I shall quote the Australian Small Business Association. In a recent letter written to the shadow Minister for Small Business, Mr Wilson Tuckey, Mr Peter Boyle said: We are completely and utterly opposed to the imposition of selective taxes which will fall unevenly and in a discriminatory manner on the business sector and the small business sector in particular. He went on to say: A capital gains tax as outlined in the White Paper would discourage the formation of new small businesses; it would cause a decline in new investment by existing small business proprietors; it would retard economic growth and further diminish any hope we have of tackling the large scale unemployment problem besetting this country. I respectfully adopt that as a sensible explanation of the attitude of small business and, indeed, of the reality which small business faces. Just today, I read that the New South Wales Chamber of Commerce surveyed 5,000 businesses in New South Wales. The survey showed that 92 per cent were against a capital gains tax and 89 per cent were opposed to a fringe benefits tax. It can easily be said, of course, that any business will be opposed to any additional burden being placed on it, whether by taxation or other methods. That is quite true. The important thing to note is that these are businesses that will prosper and grow only if the people who own and run them can see some reward for their effort. The reality is that most of the rest of the community has organised itself so that rewards can be obtained through long service leave, superannuation or whatever by imposing burdens upon employers or taxpayers. Those people who show the courage and determination to run their own businesses often do so for remarkably little reward during their working lives, but they do so knowing that they are at least building up assets which will give them some security in their old age. One should not underestimate the psychological importance to the whole process of business in Australia of the entitlement to accrue some capital which will sustain people in their retirement. It is all very well for people to come into this Parliament and enter into generous superannuation schemes. It is all very well for people to join the Public Service and have access to taxpayer-funded superannuation schemes. The reality is that many of the self-employed in this country work their hearts out for remarkably little reward. They certainly do not expect four weeks annual leave. They do not expect or get a 17 1/2 per cent leave loading. They work because they are building up a business and an asset which will sustain them and their children. What this Government is doing is taking away one of the great incentives for that sort of business. In that regard, I do not believe that the importance of capital gains can be overestimated. Another major concern which we have about the proposed impositions on business relates to the attack on fringe benefits. There is a genuine problem within the taxation system with respect to the spread of fringe benefits, but that problem is simply a function of very high marginal tax rates. I believe that the Government must tackle that problem not through the sort of unprincipled approach to fringe benefits which was adopted in the preferred option in the White Paper. It must not impose further cost burdens on business and on employment in particular. What has to be done is to attack the problem at its source-the very high marginal tax rates which are imposed upon people who are earning a living. That applies as much to pay as you earn taxpayers as it applies to the self-employed. The spectacle of pay as you earn taxpayers seeking to get a portion of their remuneration in the form of some fringe benefit or non-taxable benefit is simply an indication of the magnitude of the problem. The critical point I wish to make in the time which remains to me is that in the encouragement of greater business activity and in the encouragement of the creation of more employment in this country the Government, through the measures it is proposing, will make what is already difficult more difficult. Senator Button, who has the important portfolio of Industry, Technology and Commerce in this Government, has often conceded that something needs to be done about the burdens on industry and the burdens of on-costs. For example, he talked about payroll tax in his famous Playboy interview and about that being a burden on industry which discourages employment. Why does it discourage employment? It does so because it adds to the cost of employment and, therefore, makes employment more difficult. In March this year Senator Button stated: Insofar as wage levels and on-wage costs are concerned, of course, they are a relevant factor in industry competitiveness. I have said so on numerous occasions in this chamber and elsewhere. Senator Button and his Government are proposing to add further to the on-costs and the cost of labour and, therefore, to reduce Australia's competitiveness and the ability of Australian employers to take on additional labour. For all these reasons-because of the impact these tax changes will have on people in business and the genuine impact they will have on their ability to build up assets and to look after themselves, because of the impact they will have on their attitude to new investment and business activity and because they will add to the cost of labour-we see them as being an utterly destructive course to be followed in Australia today. We ask the Government, even at this late stage, to step back from the remnants of its tax package, not to impose further penalties and burdens on industry and to go on with the job of encouraging employment and economic growth and trying to create the circumstances where we will have not 600,000 unemployed Australians, but will return to the 2, 3 and 4 per cent unemployment rate which I believe would be acceptable to most Australians. We must do something about the unacceptable level of unemployment. The Government is damaging its case by proposing these unacceptable changes. Senator MAGUIRE(South Australia)(3.34) —I wish to speak to the matter of public importance concerning a capital gains tax and the taxation of fringe benefits which has been brought on for debate by Senator Chaney on behalf of the Opposition. This matter of public importance is a travesty. Quite frankly, the Opposition is jumping the gun. The details of the policies on taxation and its effects are not yet known. The package has not been released and will not be released, I understand, until Thursday of this week. So this Parliament will not know what is in that package until Thursday. How can the Leader of the Opposition today claim in this chamber that the package will have a devastating effect? It is just an absolute nonsense argument for him to debate this matter of public importance and claim that a taxation package, which has not yet been decided, will have devastating effects. The fact is that the elements of that package are not known at this stage; the decision has not been made on that package. The Opposition should have waited for a decision to be made before raising this matter of public importance, jumping in off the deep end and claiming that certain taxation packages would have a devastating effect on certain sections of the Australian community. It is very important to get this whole debate into some perspective. As part of his nine principles of taxation, the Prime Minister (Mr Hawke) made it very clear that as a result of the taxation reform process there would be no overall increase in the taxation burden. Senator Chaney, for most of his speech today, has implied that as a result of certain items that have been discussed as part of this taxation package there would be an increase in the overall Australian taxation burden. The Prime Minister has made it abundantly clear for months that as a result of taxation reform in this country there is to be no increase in the overall tax burden. That is something that must be kept in mind in this debate today. It has been repeated on many occasions by senior Government Ministers that the so-called trilogy commitments-that is commitments in regard to government expenditure, taxation and the Budget deficit-will be met. One of those commitments is that the share of taxation in terms of gross domestic product-that is, Australia's gross national income-should not rise. So let us debate this subject this afternoon in that context. The Prime Minister has made it clear that the taxation review process will result in tax redistribution, not tax increases. The overall tax burden will not be increased. That is consistent with the trilogy commitment that the share of taxation revenue to gross domestic product will not be increased under this Government. Senator Chaney has also tried to suggest that some of these taxes are totally new taxes. I certainly got the distinct impression from his address this afternoon that capital gains taxation in Australia was totally new. He is obviously not aware that there are two existing sections in the Income Tax Assessment Act which tax capital gains at present and have taxed capital gains for many years. In fact, under the Liberal Government taxation applied to capital gains in two key areas. Senator Chaney has tried to create the impression today that somehow capital gains taxation in this country is a bolt from the blue when we have had it for at least a decade. Under the Fraser Government, if assets were bought and sold within a 12-month period they were subject to a capital gains tax under the Income Tax Assessment Act. If assets were purchased with the intention of resale they were also taxed as capital gains under the Income Tax Assessment Act. That is what happened under the Liberal Government of this country. Senator Chaney should not suggest that somehow a radical new tax will be introduced. We are simply talking about specific provisions relating to capital gains over and above the current provisions of the Income Tax Assessment Act. Proposals to extend capital gains taxation were very strongly endorsed at the national taxation summit. That should be made very clear to the Australian community this afternoon. There was also very wide support from a range of organisations in support of capital gains taxation. I suggest that those opposite who push special barrows and who make the special pleadings for the big interests should in fact acquaint themselves with the widespread public support at the national taxation summit for capital gains tax. It was quite clearly expressed at that summit that wage and salary earners, through the pay as you earn system, are paying too much tax in this country and the burden has to be re-allocated. The commitment to capital gains taxation was also part of the historic accord with the trade union movement, an accord which has delivered over 10 per cent of record real economic growth in this country in the last two financial years. While Senator Chaney may be making a range of special points in regard to small business, the fact remains that the overwhelming beneficial impact for small business in this country has come from the real economic growth this country has achieved in the last two years. That is another point that should be made in keeping this debate in perspective. A specific tax on capital gains will at last bring Australia into line with most industrial countries of the Western world. When we have a capital gains tax we will be on a similar basis to the developed Western countries of the world. In fact, of all the countries which are members of the Paris-based Organisation for Economic Co-operation and Development only one-that is the Netherlands-apart from Australia, has not got a capital gains tax. So we are in a minority of two at present. The United States of America, the so-called home of free enterprise which is supported by those on the opposite benches, has taxed capital gains for many years, as has the United Kingdom. But the point remains that while tax rates have been reduced in recent years in the United States, small business has prospered under a regime of capital gains tax. That point cannot be denied. Incidentally, in regard to all the hysteria regarding taxing capital gains on a deemed realisation at death basis, all but two countries which tax capital gains in fact operate them on that basis. The two countries which are exceptions have death duties. That is a very clear difference from the current situation we face in Australia. I believe that capital gains specifically should be taxed. After all, they add to a person's economic welfare and to the ability to consume; they are just another form of income. It is very important that all forms of income be treated more equally instead of having a situation where direct taxes are essentially taxes on wages and salary earners. That is what they really boil down to-taxes on wage and salary earners. Consequently we have a very unfair tax system. A number of problems facing the Australian economy have been caused by the lack of a capital gains tax. I refer, for example, to over-investment in property. There has been a strong demand for assets in limited supply. Assets likely to rise in price have been favoured and investment in those sorts of areas has been favoured by the absence of a capital gains tax. The absence of such a tax has resulted in there being far too little investment in plant and equipment, particularly in the manufacturing sector, and it has tended to channel investment away from the productive areas into property development and speculative activities. Growth in manufacturing industry in my State of South Australia, and probably in other major manufacturing States such as Victoria and New South Wales, has been retarded by a lack of investment because investment has been channelled into other areas of the economy. The Leader of the Opposition, Senator Chaney, talked about the need to generate jobs. If we had a specific capital gains tax the manufacturing sector would get a shot in the arm because more investment would be channelled into that sector and less into speculative areas such as property. Therefore a capital gains tax would help make Australia's economy more efficient. One of the key reasons why a capital gains tax has been discussed in recent months is that the absence of such a tax provides an avenue for tax avoidance. Millions of dollars of tax revenue has been lost because Australia has no comprehensive tax on capital gains. We have seen in this country the practice of converting income, which is taxable, into gains, which are not taxable. Various schemes and devices have been marketed to encourage people to invest in activities to obtain capital appreciation and little income and so avoid paying income tax. By itself a capital gains tax would not generate vast amounts of revenue but it would significantly reduce haemorrhaging in the income tax system. It would help plug the gaps created by this ability to convert income into untaxed gains. So it is important when considering such taxes to look at how a capital gains tax would reduce the incentive for certain taxpayers to look for tax free investment avenues. Overall I believe that the introduction of a capital gains tax should help boost productive employment and investment in employment generating areas. It is no wonder that at the taxation summit in July the Business Council of Australia and the Victorian Chamber of Manufactures both endorsed a capital gains tax. They were two key business organisations at the taxation summit that supported such a tax. They certainly did not think that it would hit investment in industry; they did not seem to believe that it would reduce employment. How might a capital gains tax operate in this country? As I indicated at the beginning of my address, I do not yet have the details of what is in the tax package. Certainly the Leader of the Opposition does not. He has jumped the gun; he is debating a subject about which a decision has not yet been made. I make the following comments about what would probably be included in a taxation package involving a capital gains tax. It has been made clear by the Prime Minister that any capital gains tax introduced in Australia would involve indexing for inflation; that is, only the real gains would be taxable. Citizens would be able to deduct gains in the asset value due to inflation before paying tax. Only the gain after inflation is taken into account would be taxed. That is a very generous arrangement. Wage and salary earners do not have their tax brackets adjusted every year for inflation; so on that basis the taxation of capital gains would be extremely generous, and certainly it would be generous when compared with capital gains taxes in other countries. As Senator Robertson would know, the great majority of countries which tax capital gains make absolutely no allowance for the effect of inflation on asset values. That is an important point to bear in mind. It is possible that the capital gains tax would apply on a realisation basis; that is, gains would be taxed only when the asset was sold or disposed of. In such a circumstance it is more likely that small businesses and similar organisations would be in a more liquid position; they would have more funds available with which to pay the tax. The alternative system is to tax on an accrual basis, or on a tax as you gain basis, but that has certain administrative difficulties and certainly it would create liquidity problems for a number of small businesses. The Prime Minister has made it clear on many occasions that under the proposed capital gains tax the family home would be exempt. That is a very generous provision. The principal residence is the major asset for most Australian families and it would appear that under the proposals put forward the family home will be free from tax. That is a much more generous arrangement than that which applied in certain instances under the income tax system of the Fraser Government because, as I pointed out at the beginning, assets bought and sold within a 12-month period were subject to tax at the full marginal tax rate. Senator Messner —That was brought in by Whitlam. Senator MAGUIRE —It was never repealed by the Liberal Party of Australia. For many years the coalition Government operated a system whereby if a family home was bought and sold within a 12-month period-that does happen-those who sold that dwelling would pay tax at the full marginal tax rate with no adjustment for inflation on the increase in the value of the dwelling. So in that situation the proposal for a capital gains tax which has been circulated recently would be much more generous than previous arrangements. It has been made clear that the tax would not be a retrospective tax; it would begin to apply from a valuation date. Citizens would be able to consult share prices and various other asset values on that date to value their assets. That point must be borne in mind. My understanding is that there would be a full offset of capital losses against any gains made so that those who paid the capital gains tax in fact would be paying tax on the net gain after losses were taken into account. I thought that those on the Opposition benches who champion taking risks would be in favour of such a proposal because, surely, if losses are offset against gains the risk of investment is reduced. That is an important point to be borne in mind. We should explore what the Opposition would do following the introduction of a capital gains tax. For example, I have indicated that I believe that a capital gains tax would make the economy more efficient; it would get investment out of speculative areas and into more productive job generating areas. That is an important point to start with. We would have a more efficient and fairer tax system as a result of the introduction of a capital gains tax. One wonders what the Liberal Party would do with a capital gains tax in the unlikely event that it came to power in the near future. Recently we saw a video featuring Mr John Valder, who said that the Liberal Party was rather grateful that the ALP was taking a number of the hard decisions in the Australian community. I wonder whether he was referring to the introduction of a capital gains tax. On the other hand, last year the former Leader of the Opposition campaigned against the introduction of a capital gains tax. Now it seems that the policies of the Opposition are to be reviewed. They are up for grabs. I was rather interested to read the front page story of the Canberra Times yesterday in which Mr Neil Brown, the Deputy Leader of the Opposition, was on the record as saying that Liberal Party policies were to be revised. I wonder whether that means, that among other things, a capital gains tax would be acceptable to the Liberal Party and would be retained in the unlikely event that it occupies the Government benches in the other place. I would be very surprised if the Opposition were to get rid of a capital gains tax. It knows that such a tax would bring Australia well into line with all the other developed countries of the world with which we normally compare ourselves. Of all the other developed countries, only the Netherlands does not have a capital gains tax. The United States of America, the home of free enterprise and small business, has had a capital gains tax for many years. Apparently small business in the United States has prospered under a capital gains tax. A result of a capital gains tax being introduced into this country would be a fairer tax system in which the tax burden would not be borne largely by the wage and salary earners but would be shared more fairly by the whole community. However, whatever happens, it has been made abundantly clear that the forthcoming tax reform will mean no increase in the overall tax burden. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! The honourable senator's time has expired. Senator SIDDONS(Victoria)(3.53) —The Australian Democrats agree with the Government that this debate on capital gains tax would have been much more productive if it had been held after the Government had announced its tax proposals. However, that is not to be. The Opposition has brought on this debate now, so we can hope only that we can send some messages to the Government which may yet be in time to help bring down a capital gains tax package that is fair, equitable, and not disruptive to small business or to the economy at large. I was intrigued by the sudden concern of the Leader of the Opposition (Senator Chaney) for small business. One cannot help but ask where these concerns were when the Liberal Party of Australia held office. I seem to recall hearing a lot about the resources boom, a lot about encouraging multinationals to set up in Australia, and very little about small business when the Opposition was in government. Its sudden concern is touching. We hope that we can talk to the Opposition about this matter so that we can get some policies for small business which will be productive and worth while and which will encourage small business to develop. That is where job creation will occur in this country. It will not occur anywhere else. It will not occur in big business. During the last election it was very obvious that if there were to be a Labor government there would be a capital gains tax. As Senator Maguire pointed out, it was part of the prices and incomes accord. Anyway what has the Liberal Party done? It has said: `We are opposed to a capital gains tax'. Its attitude is flat-footed. It has no ideas on the matter, only absolute opposition to any sort of capital gains tax. A much more constructive and helpful approach would be for the Liberal Party to join with the Democrats, consider fairly a capital gains tax that would be equitable, and see whether we could not put pressure on the Government to bring in a capital gains tax that did not fall heavily on small business. A capital gains tax is inevitable; it cannot be avoided any longer. So why just stand flat-footed on it? During the last election the Democrats made it very clear that if there were to be a capital gains tax it would be indexed first for inflation. We enunciated that policy in 1977. Senator Maguire trotted it out this afternoon as an innovative idea of the Australian Labor Party. It is an unusual provision. It is not common for capital gains taxes around the world to be indexed for inflation. We thought up the idea ourselves. We put it into our policy. Our members voted on it and said: `Yes, that is the way a capital gains tax should be introduced'. That measure alone would make sure that there is no great disruption of the economy at large by the introduction of a capital gains tax. We said many years ago that capital losses should be taken into account with capital gains and that one should be deducted from the other. We have always said that the family home should be excluded. We do not believe that the great Australian dream should be taxed. That is also a policy the Democrats have made clear for many years. During the last election we said that there should be special consideration for the small business and the family farm. We have repeatedly stated that at every opportunity. We said that capital gains should be taxed on realisation and not on notional profits and that under no circumstances should a capital gains tax be retrospective. It is because we concentrated on these critical proposals that the capital gains tax which is to be introduced will not be disruptive to the economy. Most importantly, it will not fall disastrously on small business or the family farm. We make the point-we have always made the point-that a tax on capital gains, properly applied, should create employment. It will do so by discouraging non-productive investments in areas such as land and property trusts. It will encourage the channelling of money into job creation areas, particularly entrepreneurial and wealth-creating schemes by small business. Some form of capital gains tax-the right sort-is important if the tax burden is to be lifted from the back of the pay-as-you-earn taxpayer and spread evenly across the community. We believe that the two essential factors of production-labour and capital-should bear a fair and equitable burden of tax. One cannot produce things without capital. One certainly cannot produce them without labour. These two factors have to be looked at as essential factors of production and treated on an equal footing. They must be kept in balance. Until the present the burden has fallen on labour, on the pay-as-you-earn taxpayer. So we are very much in favour of a capital gains tax that is applied evenly across the community in line with PAYE tax. A flat rate of tax is not good enough. There is a rumour that the Treasurer (Mr Keating) has gone to water on this matter and that he is going to introduce a flat rate capital gains tax. We have advocated-we still do-that a capital gains tax be looked on in the same way as income and taxed at the same marginal rates. We have always said that. It is the only equitable way in which a capital gains tax can be applied. Unless we apply a capital gains tax at the same marginal rate as ordinary tax we will encourage people to turn their income into capital and thus avoid tax. We leave an opening for tax avoidance. The Democrats have always opposed the death provision as falling unfairly on the small farm and small business. If rumours can be believed, the Government has eliminated the death provision in its proposed capital gains tax. If that is true, we welcome the Government having seen the light in that area. We believe, however, that it would be a better way for a capital gains tax to apply from the date at which the capital gains tax law is introduced or from the date of acquisition of the asset. If that asset is passed on no capital gains tax should apply but it should apply when the asset is sold. The time of evaluating capital gains should apply from the date of acquisition and the death penalty should have no effect on it at all. In that way, of course, we overcome the problem of family businesses and family farms. We have always said that the family home should be completely exempt from any capital gains tax whatsoever. If we get a more equitable tax system in this country we can do something about marginal rates. We have often pointed out how disastrous a 46 per cent marginal rate is on the average Australian. We have advocated that there should be provision in any capital gains tax for averaging over a period of five years. This applies in the case of people, such as farmers, who have very seriously varying incomes from one year to another but we believe that the five-year averaging provision should apply to all capital gains. In the time that is left to me I wish to deal with fringe benefits. It has been proposed that the responsibility for taxing fringe benefits should rest with the employer rather than the employee or the individual. In equity we believe that this has no basis whatsoever. It is the employee-the individual-who is enjoying the benefit. Surely he is the one who should accept the responsibility for ensuring that the tax allowance of fringe benefits is shown accurately in his tax return. The argument in support of attaching responsibility for taxing fringe benefits on the employer is that it makes it easier to collect because it focuses on fewer people. Needless to say, that is politically expedient because those who enjoy the benefit will not have to bear the tax burden directly. Most countries have had to address this problem at some stage or another. The majority of countries have handled it by setting out guidelines to help determine the individual's tax liability. The notable exception to that is New Zealand which, unfortunately, has said that the tax liability for fringe benefits should be placed on the employer. We absolutely oppose that. When taxing fringe benefits the Federal Government could well take some guidance from some of the more enlightened States in this country in handling the problem as it applies to payroll tax. For instance, the Victorian Government has effectively set out guidelines for the treatment of fringe benefit payments in the payroll tax area. Admittedly, payroll tax applies tax to an employer, nevertheless, the principle remains that the tax is based on the payment of wages. The guidelines that the Victorian Government, in particular, has issued in this area make it relatively easy to determine the fringe benefits and the values to be included in the determination of wages for payroll tax purposes. The Victorian Government's guidelines cover, for instance, areas such as low interest loans, luxury cars and entertainment. It would be a comparatively simple matter for the Federal Government to copy virtually what the Victorian Government has done in this area and to lay down guidelines clearly and precisely so that the individual knows what his tax commitment is in the fringe benefit area. Nevertheless, the Government should place the responsibility fairly and squarely on the individual and not on business. In the last Budget the Government indicated its intention to proceed with a self-assessing basis for taxation. For such a system to be effective the area of fringe benefits must be addressed. If the Government is to adopt a self-assessing basis all individuals must be able to determine clearly what their tax liabilities are. They must be able to determine that in a way that is fair and equitable to all income earners at whatever level of income. Taxing benefits in the hands of the individual would ensure that all people are taxed fairly, whether they be employed by the Government or by the private sector. Originally, the Government wanted to exempt public servants and private sector workers who received fringe benefits as a result of award provisions. It would be difficult to imagine a more unfair way to proceed or a better way in which to inflame discontent in the community. All people must be taxed equally and fairly as far as fringe benefits are concerned. To do otherwise would be totally unacceptable to the Australian Democrats. In conclusion, it is very important to think carefully, at length and in great detail about equity in taxation in this country. No area has inflamed discontent more in Australia. We challenge the Opposition to join the Democrats in trying to enunciate constructive, worthwhile proposals which will make sure that tax reform falls fairly and evenly on the community, that it is equitable for all concerned and, in particular, that it does not apply unfairly on small business and the wealth-creating areas of this country. Senator WALTERS(Tasmania)(4.05) —The matter of public importance before the Senate today is in the following terms: The devastating impact on small business and employment prospects of the Government's proposed tax on fringe benefits and capital gains. This matter is crucial to the economy of the country. Senator Maguire accused the Opposition of jumping the gun. He assured us that nothing has yet been decided but the Minister for Industry, Technology and Commerce (Senator Button) told us today that the deliberations have been completed and the decisions have been made by Cabinet. Senator Maguire has missed the point of the matter of public importance before the Senate. We have been told that the whole matter has been decided. Caucus may be briefed and there may still be time for the back benchers to warn the Government about the problems we see coming out of capital gains tax and a tax on fringe benefits. The Government told us that this year's Budget was brought down by the world's greatest Treasurer and it was straight down the line on promises made by the Prime Minister (Mr Hawke) to the Australian people. Senator Maguire reiterated that statement today. The immediate reaction from the media was that it was only half a Budget and that the bad bits were still to come. Those bad bits will come on Thursday. There was a fair bit of approval for the lowering of the deficit. We then heard about all the things that were not mentioned in the Budget. I will mention some of them. We were not told that in 1985-86 inflation will be at least 8 per cent, almost double that of our major trading partners. Under the Hawke Government, the average real increase in government spending is still 4.9 per cent, more than double the average in the Fraser years. In 1985-86, outlays are expected to be 29.8 per cent of gross domestic product, the third highest level in Australia's history, beaten only by the first two Budgets of the Hawke Government and equalled only by the Whitlam years. We were not told that, this year, half a million people will move into the 47c tax bracket. We were not told that only the public sector component of overseas debts has risen from $864 to $1,670 per head of the population. We were not told that Australia has the highest real interest rates in over 50 years. Of course, this was substantiated by the recent annual report of the Reserve Bank of Australia. We were not told any of those nasty bits in the Budget. We were told by our Treasurer (Mr Keating): . . . Australia is poised to record one of the fastest growth rates in the developed world. There was lots and lots of rhetoric and not much Budget; it was only 20 pages and all in big print. As I said, the other half is about to come on Thursday, we are told. Senator Button said that it is already decided, but we will not know until Thursday because the Government does not want debate upon it. I wonder whether the promises will be straight down the line on this occasion. Let the Australian people not forget that Mr Hawke said: And here let me make one point so that even our opponents can understand it; and let me make it beyond all their powers of misrepresentation and distortion. There will be no capital gains tax. Let me make it quite clear, so that even the Government can understand it, that that is a broken promise. We are told that the rest will be treated as a Budget because the Government does not want its back benchers to interfere with it. We have been told that the Cabinet will treat it as a Budget proposition and that there will be no debate in the party room about it. This is why the Opposition has brought the issue up for debate in this place. If it is true, as Mr Keating said, that `Australia is poised to record one of the fastest growth rates in the developed world', this part of the Budget must allow that to happen. It cannot stifle small business, which a capital gains tax will certainly do. It must allow small businesses to grow. It must allow them to expand, to be able to sell a small businesses and buy a bigger one. It must allow small business to gather the fruits of their hard work. Anyone who works for himself says that when one works for oneself one works one's heart out, with no perks. The people employed by a small business often earn more than the owner himself. Let us look at statistics for small businesses. There are 700,000 firms which employ fewer than 10 people; that is not bad. There are 620,000 firms which employ fewer than five people and 4,000 firms which employ more than 100. Therefore, small business is certainly the employer. We did not hear one word about employment from Senator Maguire today. We heard him tell us only that the matter had not yet been decided and that we were jumping the gun. We know that the Hawke Government has been the highest taxing government since World War II. We know that taxes are too high. We know that in 1949-50, 15 per cent of income went in tax; that is, one worked eight weeks for the government. In 1970-71 the figures rose to 32.7 per cent of income paid in tax or 17 weeks worked for the government. In 1984-85, 47 per cent of income goes in tax or one works 25 weeks for the government. We had the taxation summit. According to Senator Maguire, Mr Valder said that he was pleased the Government was taking all the hard decisions. Perhaps we should look at some of the comments made. Honourable senators will remember that Mr Keating said: We're not shrinking violets and we're not about to disappear when the first whiff of grapeshot passes the trenches. He said that he was cutting off exemptions as a negotiating point; that they were nonnegotiable. He said that the Government was just killing that stone dead. They were all the hard decisions. Then he said that one wheel fell off his tax cart as it crossed the line. I wonder why. Following all those hard decisions that Senator Maguire said the Government took, we had headlines such as `How unions rolled Keating', `Hawke gives in to the unelected power', `Hawke gave unions bigger victory than necessary', `Hawke's tax fiasco' and `Keating's tax cart'. Those were the headlines about the hard decisions that this Government has taken. When it was all over we were told by Mr Keating that there would be no broadening of the indirect tax because Mr Hawke's motel room compromise with the Australian Council of Trade Unions did not add up. It was the big daddy of all backdowns. We find now that Ministers are all running for cover and all coming out on different tacks. Senator Button is running for cover in his portfolio. We had the headline `Button calls for a perks tax rethink'. He said that a tax on the use of company cars would be a disaster for the Australian car industry. He is not the only one who believes that. Mr Keating and the Minister for Primary Industry, Mr Kerin, also said similar things. What did Mr Kerin say? One headline stated `Farms may avoid capital gains net, says Kerin'. He is talking about his portfolio and running for cover. He does not want the Government to put such a tax on farms. But the Minister for Finance, Senator Walsh, defend a capital gains tax on farms and on everything else. It will be interesting to see what happens. Ministers are now fighting over the scraps left from the tax summit. According to Mr Keating, they are just the scraps because they do not bring in enough money to allow tax deductions. What has been the effect of all this on our standing with our peers overseas? Let us look at the value of the Australian dollar and what happened after the Budget. It had been worth 70.4c against the American dollar. What is it now? The ultimate indicator is what people overseas think of the Australian economy. The rate is now down to 67.3c against the American dollar. Mr Keating's deal with the ACTU over the wages accord has been a disaster. We have been told that there will be a full flow-on of 3.8 per cent with a compromise that a 2 per cent rise will be done away with next April, but a guarantee from the Government that from then on full indexation will be supported. This has added to the instability that all the headlines in the papers have brought forward. This morning the Sydney Morning Herald stated: Capital gains after inflation will be taxed at the top personal income tax rate . . . The Australian said that that was not the case and that the new capital gains tax will be taxed at 30 per cent. This instability is so disastrous to the economy. Senator Maguire says there has been over-investment by small business. We have the anomaly whereby if one over-invests in a private home, that is quite all right. But one must not over-invest in a small business. If one over-invests in one's private home, that will be excluded from a capital gains tax, but if one over-invests in something productive one will be caught. The same anomalies have caught the Government with the assets test under which someone can own a $1m home in Sydney and still receive a pension but one cannot own a $94,000 farm in Tasmania and still receive a pension. Unless the Government recognises all those problems about which I have spoken-the highest taxation by any government since World War II, the highest government spending in history and the highest interest rates in 50 years-Mr Keating certainly will not be able to proclaim, as he did in the Budget: The recent decline in the value of our dollar on current markets has restored our competitive edge . . . In short, Australia is back in business. What a dreadful thing to say, because overseas markets see us in the most horrific fashion. Our dollar is not worth a crumpet. The Treasurer said that that puts Australia back in business. I have never heard anything so ludicrous. Certainly he will be able to say that we are back in business, but we will not be able to repay our debts. The fact that the fall in the value of the Australian dollar has meant a 20 per cent increase in the payment of our overseas debts has completely escaped our Treasurer. We will never be able to afford them and it amazes me that he is so naive in the sorts of comments he makes. Senator RICHARDSON(New South Wales)(4.21) —I wish to speak on this matter of public importance introduced by Senator Chaney. I want to take up first Senator Chaney's point where he criticised the Government for daring to have a Cabinet meeting on a weekend. He said that that showed that we could not get our act together. He used words to that effect. It was a fascinating comment. I can recall during the years when Fraser and Howard ran Australia-the years that the Opposition is continually trying to forget-they had Cabinet meetings at very odd times. Of course, it all depends on attitudes and priorities. The priority for this Government to organise the full Ministry to meet for 2 1/2 days, including both days of the weekend, was the taxation system that affects each and every Australian. That was the priority that the Government set and that is why all the Ministers gathered in Canberra. The Fraser Government had a different set of priorities altogether. It had Ministers and their staff flying all around the country in the dead of night, after midnight, to race to Canberra for a Cabinet meeting on the issue of merino rams. We all remember what Mr Fraser's attitude was in the end with wool off the sheep's back and where it could be sent. His was packed off to Russia as soon as it could be taken off the sheep's back. That is what that Government did with Cabinet meetings. It thought that the real priority was anything that affected the country squire from Nareen. For that reason, many thousands of dollars were spent in rounding up the Cabinet members of the day and their staff from all around the country, throwing them into VIP aircraft in the dead of night and whizzing them to Canberra. This Government will only do the dramatic deed of calling together all Cabinet Ministers-I am sure that Senator Grimes will be able to confirm that they have other things to do on the weekend-- Senator Grimes —I would prefer to be watching Parramatta. Senator RICHARDSON —I know that other Ministers, who do not like giving up weekends, given the importance and gravity of any changes to the taxation system, saw it as their duty to come to Canberra to look at what the tax package might be. I am not privy to all its details; I can only go on what I have read in the newspapers, as I am sure that is what the Opposition is going on, but we will all know in the course of the next few days what is in store for each and every one of us. In looking at the words of the matter of public importance and the words used by Opposition senators speaking to it, we have to ask ourselves, on the question of taxation and the Liberal Party, just who can we believe? Which voice on the Opposition side should we believe when it comes to matters of taxation? I will refer to some quotations from someone who might be called an important person in the Liberal Party-not some fringe dweller; not someone who once walked past a room in which the Liberal Party was having a meeting. It is someone who has raised millions of dollars for the Party; so this bloke has the big entree; he is the king of the kids. More than that, he has been President of the New South Wales branch of the Liberal Party and was elected recently as the national President of the Party. I am sure it is not forgotten by anyone, least of all Andrew Peacock, that he was the stalking horse for John Howard. Within days of his election, and even before it, he was disowning Andrew Peacock at a hundred miles an hour because he wanted his man, John Howard, to get up. I am referring of course to Mr John Valder, who is now the national President of the Liberal Party. He did an interview-I think he regrets it now-on the Number One program which was financed by the Westpac Banking Corporation. I was asked many times to do that; thank God I had the good sense to say no. Mr Valder did not have such good sense; he said yes. He presumably told the truth as he saw it about the direction in which the Liberal Party might go. Mr Valder said: So if you are talking about reducing government spending, it is all very well to say we will privatise this and we will do that and fiddle about. That's all fiddling with the edges. The big reduction has to come in social welfare- He went on to say: Look what has happened over even the assets test which, if I can be a little candid on your private program, was a very small step in that direction. Senator Grimes —Did you see Johnnie Howard about that on television yesterday? Senator RICHARDSON —I will get to Mr Howard's beliefs on things like that, because they are important. Mr Valder went on to tell us how the outrage over the assets test was a demonstration of how one cannot take anything from people once they have it. I suppose that he could claim some sort of ambiguity on that statement. We are talking about fringe benefits in this matter of public importance, which states: The devastating impact on small business and employment prospects of the Government's proposed tax on fringe benefits- This next quotation is a little central, one would have thought, to the issue. Mr Valder said that there was no such ambiguity in his attitude to the `whole disease' of fringe benefits. He said: Paul Keating had been foolish in attempting to do it in one stroke. It would simply be better to do it over three or four years- His conclusion, therefore, was: So I have said many times, you know, let the Labor Party get on implementing the more necessary, but perhaps less popular parts of our policy. And let's hope they get them into place and promptly lose office. And I think that would be a very good scenario, don't you? In answer to whether we would lose office, I reply no, that would not be a very good scenario, but that comment shows up the absolute hypocrisy going on in the Opposition on the question of taxes on fringe benefits, because what Opposition senators say privately is very different from what they say in the chamber. I quote also from a journal which I think is read widely around Australia-not a socialist rag, not the Tribune or Direct Action-the Australian Financial Review. In its editorial of Friday, 2 August 1985 it said, in reference to what Mr Valder had been saying: The underlying implication is that in opposing such initiatives as the assets test, the tax on fringe benefits and other proposals of the Government, the Liberals are engaged in a sham. Actually they want the Government to succeed in imposing such measures, draw a full measure of public wrath (whipped up by the Opposition piously proclaiming contrary policies) and then go down to defeat. That is what the Opposition is really about. What it is really saying is yes, the tax on fringe benefits is a good idea; by all means do it. We are not going to touch it, of course, because we think some people might be upset. The Australian Financial Review states: The implication is quite clear that Mr Valder, at least, thinks that what Mr Keating is doing to cut government spending is quite correct. Then it goes on to say, and these are the telling words: There are at least reasonable grounds for speculating that his views in this regard are not far removed from those of-- as he was then-- Deputy Leader John Howard. The cat was really let out of the bag. Mr Valder naively believed that that program, shown to the top 300 Australians- Senator Grimes —I got one! Senator RICHARDSON —I got one too. I am almost happy to say that it was shown to the top 300 Australians. Mr Valder believed naively that that would in some way be kept a secret and that it would all be private. But we all know the way the world goes round and it got out. The cat was out of the bag. John Howard's stalking horse-the one who was publicly stalking Andrew Peacock for him-had come out and said, `Yes, we must have these taxes on fringe benefits'. The only concession he would make was that it should take three or four years; it should not be done in one go. Of course, it is not surprising that the Liberals lack the courage to do it in one go. They did not have the courage to do anything about tax reform in the seven years they were in office. Why would the leopard suddenly change its spots? Let us have a quick look at the record of the Liberal Party on tax. It had seven years in office. Most Australians, whether they be in the unions, big business or small business, would be trying to forget that. Let us look at what the Liberal Party did about its tax policy in seven years. Most honourable senators would have some little memory of a person called Costigan who had a royal commission. It was supposed to look at what were thought to be the activities of the Federated Ship Painters and Dockers Union. This was a clever political ploy by the Fraser Government to embarrass the Labor Party. But that is not quite what happened. A funny thing happened on the way to the forum and all of a sudden the Liberal-National Party Government found itself in the middle of a right royal scandal not only because so many of its supporters were up to no good in respect of tax avoidance, but also because Mr Costigan revealed to Australians the full extent of tax avoidance in this country and its growth in the Liberal Party. He said that no other industry has experienced such growth since the heady days of the Victorian gold rush. If one looks at the record of growth in business generally in the seven years of the Fraser Government, one sees that there was negative growth in the last two years and that the only industry which had any growth at all was tax avoidance. In June 1975, 861 individuals and companies were identified as being involved in tax avoidance schemes and the tax in dispute was $973m. By June 1983, the number had grown to 34,944 individuals and companies and the tax in dispute was $1,666m. That is the industry that really grew under the Fraser Government, that is where it had its real success. In 1980 Professor Russell Mathews said that tax authorities, governments and the courts had allowed tax avoidance to flourish on such a scale as to make personal income tax a voluntary tax for the rich, non-salary earner. That is really the record of the Liberal-National Party Government in its years in office. That can be contrasted with the record of the Labor Government which, as soon as it came in, brought in the prescribed payments tax and, not to anyone's surprise in the Government ranks, but no doubt to the extreme surprise of those on the Opposition benches, 51,000 Australians-that is, individuals, companies and partnerships-were suddenly discovered. In the course of less than one year 51,000 new tax entities were discovered and now they are paying their rightful share of tax into government revenue, tax that they were able to avoid with impunity and ease while the Liberal-National Party Government ruled the roost and, indeed, while John Howard was Treasurer. As I was sitting in my room trying to prepare some remarks for my speech, I heard Senator Chaney piously ending his speech, telling us that what we really need is to get employment going in Australia in 1985. He said that we must set about creating the conditions for growth in employment. Coming from a former Minister in the Fraser Government, that is almost fantastic. If one looks again at the record of the Fraser-Howard Government on employment one can get some idea of what all Australians might be able to expect. For every week that the Fraser Government was in office between 1975 and 1983, unemployment rose on average by more than 1,000; more than 1,000 every week. During the last year alone of the Liberal-National Party Government-a year in which Senator Chaney was a Minister and John Howard, the new leader for whom John Valder did all that stalking, was the Treasurer-unemployment went up by 270,000. In that last hateful, miserable year of government so much damage was done to our economy. In 1975 when the Liberal-National Party took office unemployment among 15 to 19-year-olds was 12.9 per cent. By the time it left office in March 1983 that figure had risen to 24.3 per cent and one in four teenagers was on the dole. That is the recipe that we were given for seven years by the Liberal-National Party Government-a government in which John Howard was so prominent. That is what we will get again if ever the Liberals return to the treasury bench. In response to that, this Government which has been in office less than three years has created 400,000 jobs and will exceed its promised target of 500,000 jobs well and truly. All Australians recognise that success, all Australians are now a part of it. As the years go by more and more will join in the economic miracle that is at last occurring in Australia, a miracle delayed for far too long by the unhelpful intervention of seven years of Liberal government. Senator MESSNER(South Australia)(4.37) —As Senator Richardson rose to speak I pulled out a piece of paper and headed it `Richardson' so that I could note down some of the points of his argument. As there were none, the page remains blank. One can only assume that Senator Richardson is saving his arguments and the points that he intends to make for the debate in the Caucus room tomorrow on the capital gains tax. No doubt he will save his strongest rhetoric for the point that the Government is about to introduce a capital gains tax at progressive rates of tax, rather than at a flat rate which the right wing of the Labor Party in New South Wales has been advocating against pressure from the left wing. The Left will win tomorrow and it will be interesting to see what Senator Childs has to say to us shortly on that subject. Perhaps we can compare some of his points with those of Senator Richardson. Senator Maguire, who has just left the chamber, at least gave us some points to discuss at this time. He got it all wrong, of course, and he told us that in fact no decision has been made. I can understand that possibly a decision still has to be made by Caucus, but that seems to be incidental as the left wing has already won. The point was made in Question Time today by the Leader of the Government, Senator Button, when he was asked whether the decision on the tax package had been made. His clear answer was that the deliberations were complete. He said that the decision had been made by Cabinet. Of course, Parliament will not be told about this until Thursday. It is quite clear why-because the Parliament gets up on Thursday night and will not sit for another fortnight. Therefore, this Government intends to get away without parliamentary scrutiny on this important legislation, in order to fool the people that it is actually achieving something. In the meantime, it will close down the Parliament so that it can get on with its sleazy business. Senator Kilgariff —It is afraid to face up. Senator MESSNER —That is absolutely right. Senator Maguire is delighted that we are getting a brand new direct capital gains tax and I suppose that this is part and parcel of the general feeling in the Labor Party. Yet it runs counter to the very solemn promise that came from our silver-haired messiah, the Prime Minister (Mr Hawke), during the election campaign up to March 1983 when he wanted the votes, having just hacked down Bill Hayden as Leader of the Labor Party. He said: Let me state in language so simple that even our opponents can understand: there will be no capital gains tax. This is what the Prime Minister said two years age. This statement joins the litany of all the other things that he supposedly did not promise. He said that there would be no assets test on pensions. He said there would be no tax on lump sum superannuation and there is. This is just a further indication of that man's lack of ability to keep the faith or at least keep his troops in order. He certainly cannot tell the truth. Let us turn to the main point of this debate; that is, that these new measures which are part of the Government's tax package will obviously have disastrous effects for small businesses. We should remind ourselves of some of the facts about small businesses. Seventy thousand firms in this country employ fewer than 10 people, 620,000 employ fewer than five people, and 4,000 employ more than 100. It will probably surprise people in the Government that 95 per cent of manufacturing enterprises are small businesses in those categories and 97 per cent of service industries. The most salient point I want to make today is that the Parliamentary Library estimates that in August 1984, just over a year ago, 5.7 million Australians were employed by enterprises with fewer than 50 employees-the greater part of the total working population of the country. Further statistics might make the point: From 1978 to 1982 in the United States of America-with conditions a little different from our own-the top 500 companies in fact shed 1.5 million employees while small businesses increased the number of jobs by 6.5 million-a five million difference. There was a significantly similar situation in Australia, where companies employing more than 50 people shed 288,500 jobs, while those employing fewer than 50 increased jobs by 310,000. Obviously the great generator of jobs in this community today is small business. The large industries are passe in the sense of creating new jobs. They have had to restructure and that has meant shedding labour. The difference has been picked up by small business. Yet this Government, having apparently started down that track of increasing jobs-at least that was one of its promises-through the institution of a new tax on capital gains and a new tax on fringe benefits is about to destroy all that. During the last election campaign the Liberal Party of Australia and the National Party of Australia campaigned very strongly on the point that the assets test on pensions was the first foot in the door towards the introduction of a capital gains tax. Of course we have been proven right. That point was ignored at the time by the media. Senator Grimes —Let's have Mr Howard's views on the assets test. Senator MESSNER —Yes. It is typical that the Labor Party at that time, during the election campaign, failed to tell us about any of the ideas it is now introducing, and it went into that campaign with no tax policy at all. On the other hand, the people of Australia knew then where the Liberal and National parties stood, as they know today-that we are opposed to a capital gains tax, that we are opposed to a fringe benefits tax, which in the end will destroy thousands of jobs in industry. Of course at that time the Treasurer, Mr Keating, said: `We have a mandate to do anything we like. We have a blank cheque on tax reform'. The people are having to pay for that cheque right now. Where in this community is there support for a capital gains tax and a fringe benefits tax? A survey by the New South Wales Chamber of Commerce of 5,000 businesses, reported in this morning's Press, found that 92 per cent of people were opposed to a capital gains tax. The Council of Small Business Organisations of Australia, a small business representative organisation, is opposed to it. The National Farmers Federation is opposed to it. Eighteen major businesses and industry groups announced their opposition to a capital gains tax on 27 August. The Australian Chamber of Commerce argues that it will push up interest rates, and I agree. Yet this Government goes blindly ahead with these propositions without any thought to what it is doing. It is clear that even if this is a modest tax, as it has been described by some commentators, it will certainly be immodest before long. I suppose the truth of the matter goes back to my opening point that the left wing is pushing the Government into this decision to introduce these taxes. When Senator Gietzelt spoke at the Australian Labor Party Conference on 9 July 1984 he said: We have in Australia some 120,000 people in the accountants, medicos, pilots and other professional people. We have 313,000 people who are self-employed and that comes to something over 430,000 people . . . as we have to raise more revenue, I think that (the) directions of the Government should be directed towards making that section of the wealthy portion of our society pay their due tax. That is what it is all about. The Government is attacking small enterprises, including doctors, accountants, lawyers and so on-professional people-along with the corner store and small manufacturing enterprises with this capital gains tax in order to destroy their incentive to build up industry and to create jobs. That is the basic point at issue. I now refer to one or two points of this proposed capital gains tax. The Government's apparent decision, as reported in the Press, to introduce a capital gains tax based on the progressive income tax rates scale I think is an absolute disaster, I ask the Government to contemplate the situation where the owner of a small business, which has been built up over a lifetime, 30 or 40 years, say, at retirement age decides to sell out and then finds that the whole of the value of the goodwill of his business is going to be taxed at the penalty rate of 60 per cent. That means that the whole of the effort put in year on year over 30 or 40 years will be wiped out in one year by the application of a 60 per cent tax rate. I think that is absolutely outrageous, and it is obviously intended to destroy the idea of capital appreciation and capital accumulation in this country. It is a socialist objective and it is obviously the objective of the left wing, allied with Senator Siddons, from the Australian Democrats, who made that point. Senator Grimes —Could I point out that this is your version, not anybody else's? Senator MESSNER —This is what the newspapers are telling us. Consider also the situation with death. It is apparently true, again according to the newspapers, that the Government intends that there will not be a deemed sale upon death. Consequently the so-called death duty will not be taken into account. That is all right, but the gifts still will be, and if there is any intention not to tax the gain until it passes out of the hands of a family, of course there will be a death duty applied further down the track, For the Government to mislead us in that way is entirely outrageous but, of course, it is typical. Senator Maguire asked why capital gains should not be taxed as income, and of course the Democrats support that view as well. The difference is that, as even Senator Siddons in his contradictory argument acknowledged, capital is designed to be invested in order to create opportunities and jobs. He admitted that it has to be combined with labour in order to create jobs. That is the essence of what we in the Liberal and National parties stand for. We need that kind of capital development in this country, and a capital gains tax along the lines that have been described here will destroy it. I ask the Government to explain something to me. Take as an example a small business starting from scratch, with nothing but a bit of stock and a lease on a shop or something like that, which over 20 or 30 years builds up an investment in the proprietor's own goodwill. How can the Government apply its so-called inflation rate discounter to a figure that starts from nil? If the Minister for Community Services (Senator Grimes) can explain to me how the Government can apply inflation in that fashion, I will then perhaps understand how the Government will work its capital gains tax. I suppose there is one point on which I should finish, and that is the so-called tax on fringe benefits, Only one thing needs to be said about that: This Government fails to acknowledge that the basic root of all evil in tax avoidance and the arrangement of people's affairs along the lines of fringe benefits lies in the simple fact that we have a far too steeply progressive rate of income tax. For that reason, people will arrange their affairs in those ways. This Government fails to recognise that point and fails to do anything about that important element. Consequently, when the Caucus meets tomorrow and has some opportunity to discuss these matters, I hope it will pay attention to the proper views of the Liberal and National parties. Senator CHILDS(New South Wales)(4.51) —We are discussing an Opposition matter of public importance which seeks to frighten Australians about proposed taxes on fringe benefits and capital gains. In particular the Opposition is seeking to frighten small business people, yet it knows that it is very clear that there will be no overall increase in taxation. So we are talking about how this Government plans to introduce equity into our tax system. Opposition senators have shown audacity in speaking here today-particularly the Leader of the Opposition, Senator Chaney. He was a Minister in the Fraser Government. He, with his deputy, for a period of seven years, assisted by Mr Howard as the Treasurer for most of that period, set out to divide and destroy small business, in effect, with increasing bankruptcies during their period of office and with vast increases in unemployment. The Opposition has been sprung today by our colleague Senator Siddons, who was here during that time. Because of his business background, he remembers that time, and he drew attention today to the fact that Opposition senators do not come here with clean hands. When they talk about the prosperity of small business. But I think it is much more than that, because we have just had a Budget. The only reasonable thing one can say is that this matter of public importance is a giant smokescreen, as the Opposition attempts to move people's attention away from the positive environment that that Budget gives to continue the progress that small business has made, under the Labor Government, for some time. We know, as Senator Chaney said, that one out of two people in the private sector work in small business. We have not just found them. This Government has worked over a period to introduce stability into the decision making process. Unemployment is down from the Howard peak of 10.4 per cent to 8.2 per cent. That is a significant figure for all small business people. More significantly, industrial disputes are at the lowest level for 16 years. That is particularly important for small business people because it gives them predictability. The Opposition cannot take that record from the Labor Government. Certainly, it is a great bonus to people working in small business and trying predict in a very difficult area what will happen to them. Most importantly, in our period of office we have halved the deficit as a share of the total economy. Senator Messner —What rot you are talking. Senator CHILDS —That is on page 3 of the Treasurer's Budget Speech, if Senator Messner wants to look up the detail. I can only refer to it as being a fact, and a fact that gives the lie to what has been said. Despite the figures cited by Senator Chaney and Senator Messner, we have given that factor of growth to the small business sector in this economy. The broad support that we have given means so much to people in small businesses. The Leader of the Opposition, Senator Chaney, has disparaged the democracy that we have seen in Australia, whereby Australians for the first time have been encouraged to debate taxation. What a strange thing that is. It is too much for Senator Messner; he cannot take it. He was a Minister in the Fraser Government, as were Senator Chaney and his deputy Senator Durack. They are all guilty men, because they were there when there was no light on tax avoidance and evasion, compared with what we have had in the last year. We had then an atmosphere more conducive to mushroom growing in regard to tax avoidance and evasion. This matter is very important, because thoughtful people in small business will know that the contrast exists. We had then no moves to prevent the haemorrhage that was taking place among the smart people. Ordinary people in manufacturing and in the service industries, to whom Senator Messner has referred in detail, battled to keep their heads above water during the Fraser years. When we came to power, one of the issues about which the Liberal Party had talked for years but had done nothing was deregulation. We now have an ongoing program, as announced last October, to identify regulations that are considered to impose substantial unnecessary cost on business, and we propose to modify and amend such regulations. I restate what some of my colleagues have already indicated, that is, that Australians must remember the Fraser Government's record, and the record of Senator Messner, sitting on the Opposition front bench with the dried blood on his hands from that period of Government. Senator Kilgariff —How ridiculous! Senator CHILDS —The honourable senator should ask Andrew Peacock if he thinks it is ridiculous. We also have the other promise about which people must be told if they want to get a balance on the matter of public importance which the Opposition has put forward. We must look at the industrial climate which the Opposition would generate if it came to power. Although such an event is extremely unlikely, people must remember that what was started by Mr Viner in the Fraser years has now been adopted by the Leader of the Opposition, Mr Howard, and a Liberal-National Party government would be a threat to the stable atmosphere that we have had in this country. One of the reasons for that stable atmosphere is the accord between the Government and the trade union movement, which has meant that not only have we had planning since the Hawke Government took control, but also we now have a projection for the next couple of years of calculated growth in all areas of economic activity, so as to allow people to do things that they could not do in the Fraser period. Under the Fraser Government, I remember very clearly small business people and the Council of Small Business Organisations of Australia pointing out to me the tremendous difficulties they had in getting finance. It was one of the problems that small businesses had in that period-it is a perennial for small businesses. They were too new, too small or had difficulties getting finance from banks. This Government has tried to make sure that our banking system is more flexible and open so that small business will have the opportunities that it certainly did not have during the period of the Fraser Government. That is the contrast between what small business faces today and what it faced in the Fraser period. The proposed capital gains tax is absolutely necessary if we are to introduce equity and if we are to make sure that different forms of income are taxed so that wage and salary earners are not put at a tremendous disadvantage. We have seen the recent example of the ineffective legislation, as it has been over the years, under which income derived from capital gains by Mr Robert Holmes a Court enabled him to make a tax-free profit of $27m overnight through share trading. That is only symbolic of a perversion in our tax system, in which we have not adequately balanced the needs of people each to be treated fairly in our economy at present. In contrast, I felt a tear come to my eye when Senator Messner talked about the problems of doctors, accountants and other typical people about whom he was concerned. I realise that he has been an effective advocate for some of the elite of small business. But when I speak of small business, I have in mind the people sweating in factories, the people battling in shops and service industries. Those are the people that I know our legislation will help. It is not designed to hurt small business people but it certainly will make it very difficult for doctors who are not doctoring. It certainly will make it very difficult for accountants who are making sure that people do not pay their fair share of tax because this Government is putting together a net that will make it impossible for people not to pay their fair share. As my colleague Senator Maguire pointed out, only the Netherlands and Australia do not have a capital gains tax. The latest country to accept such a tax is Ireland. It is some sort of Irish joke that it has taken us so long to conform to the standards of a modern society by introducing a capital gains tax. I turn to the question of fringe benefits. While Senator Messner said something nasty about the speech by Senator Richardson, the fact is that on the subject of fringe benefits Senator Messner and his colleagues have said nothing. They are not game to open up that story. They are not game to talk about the reality of fringe benefits. In the short time that I have left I shall remind them of the facts about fringe benefits. A study carried out in 1981 by the Social Welfare Research Centre of the University of New South Wales stated: The contribution to employment benefits by the Commonwealth Government through taxation revenue forgone is difficult to assess because of the lack of relevant data. The study went on to say: . . . from the the available data it can be deduced that the cost of that contribution for the year 1980-81 would have been in the vicinity of $5,000 million. In other words, $5,000m in revenue was lost in the various costs of fringe benefits. Indeed, that amount was half of the vote that was being expended on welfare payments in 1980-81. That shows how far in the Fraser years this avalanche in the development of fringe benefits got out of hand. The study went further and stated that the distribution of benefits correlates particularly with the vertical division of the labour market and that the higher an employee's position on the occupational ladder, the higher is the level of benefit both in relative and absolute terms. That sums up why the Opposition is squealing today about fringe benefits and will not accept that reasonable taxes should be paid on them. Taxpayers cannot afford to subsidise the meals and perks of the wealthy friends of the Liberal Party. All the Government intends to do is to introduce a moderate proposal that will address the distortion that has occurred over time. As I have just stated, one of the problems with fringe benefits is that significant amounts of money are lost to State revenue. This often results in higher costs to the community. Statistically, almost invariably male middle and upper salary earners are those who benefit. It is for these reasons that the Government is addressing a problem that has existed for some time. The Opposition is frightened to know the reasonable proposals that will be unveiled next Thursday, and it has attempted to create a smokescreen to take people's attention from the Budget that we have brought down and from the general prosperity that this Government has given to small business in Australia. Senator MESSNER(South Australia) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator HAINES(South Australia)(5.06) —I move: That the Senate take note of the paper. Some considerable concern has been expressed in the community with regard to the cuts in funding for the Institute of Family Studies that have been announced recently. The Institute is a statutory body, established under the Family Law Act whose functions, as the annual report states, are basically to promote: . . . by the conduct, encouragement and co-ordination of research and other appropriate means, the identification of, and development of understanding of, the factors affecting marital and family stability in Australia, with the object to promoting the protection of the family as the natural and fundamental group unit in society. I would have thought that just about every Australian would support that function and that it would have caused this Government and previous governments to fund the Institute with enthusiasm. Unfortunately, that has not been the case. It will be almost impossible for the Institute of Family Studies to carry out effectively the functions which I have just stated and which are laid out in the report without sufficient staff, without funds to employ staff and without funds implement the research necessary to collate material that it has access to and to update the computer facilities on which it relies to a large extent. As marital breakdown costs society so much in economic, emotional and social terms, I am puzzled that we always seem to approach the problem from the wrong end of the animal, so to speak. We allocate money for counselling at the time of divorce-this is a matter which has been raised repeatedly in this place-yet we refuse to provide enough funds for pre-marital or general marriage counselling. It seems to me that we are leaving it until the damage has been done before we, as a country and as a parliament, provide the necessary funds to help people sort out whatever problems they have. Furthermore, we complain repeatedly in this place about the cost of paying supporting parent benefits, but we do nothing to encourage, much less force, the generally male maintenance payer to produce the maintenance that a court says he must provide to enable his ex-wife and children to survive. This Government and past governments have provided no incentives by way of child care facilities or access to part time work to allow the supporting parent-the parent at home with children-to get out into the work force and bring up those children according to a reasonable standard of living; indeed, we do not even allow such people to earn a reasonable amount of money before their pension entitlement and fringe benefits are cut. Not only have we not done any of those things, which I would have thought would be perfectly reasonable if we wished to protect the family as a natural unit and basis for society's development, but also we have actually cut funds to the only organisation which has a statutory requirement to investigate issues of importance to stable family life, the only organisation which can provide statistics on which changes to government policy could be reliably based. What looks like being one of the last reports put out by the Institute of Family Studies is a little blue book entitled `The Economic consequences of Marriage Breakdown in Australia'. This book has a great deal to say about income security post-divorce and the problems facing many women and children after marital breakdown. On page 33 of the summary of the Institute of Family Studies it is stated that the research that has been done, whilst not telling anybody what to do, does at least indicate certain directions for law reform from the data that it has obtained in its study. Yet we are prepared, as a parliament, to sit back and watch the valuable work done by this organisation, such as its annual report for 1984-85, virtually be denied us for the rest of the decade. Senator MISSEN(Victoria)(5.11) —I support what Senator Haines has said. The report by the Australian Institute of Family Studies should be studied by all honourable senators. What Senator Haines has said is correct; we are generally looking at the wrong side of things. At a time when one would expect the Institute of Family Studies and its work to be recognised and more appreciated, one finds that at present an internal review is being conducted by an officer of the Department of Finance and an officer of the Attorney-General's Department. This review has been criticised in the report as being far from adequate. Moreover, it is thought that the Institute might be amalgamated with other bodies so that it would be, supposedly, more effective than ever. If one reads the report one finds most alarming things. For example, administrative expenses are being reduced this year by more than 40 per cent and the Institute is still expected to carry on its work. As Senator Haines has said, this will probably be the last report as the Institute will be unable to present reports with that sort of expenditure. In relation to amalgamation, the report states: In essence, amalgamation or reduction in resources is tantamount to abolition. There are plenty of ill-informed people in this community who complain about the amount of money which is spent on single parent families, yet we only have to go back to 1980 when the Joint Select Committee on the Family Law Act recommended that there should be a sensible system for the collection of maintenance. That matter was left in the hands of committees of public servants and was never attended to. People now complain that it is costing a lot of money. The people who make the complaints should realise that something should have been done a few years ago and that we have had excellent recommendations in the past. The Institute of Family Studies is investigating the real cause of family breakdown and the real problems that are arising. When the Joint Committee met, it did not have the ability to investigate many of these matters because the Institute of Family Studies was not formed for some years after it was created under the Act. We have gone constantly in a penny-pinching way towards this subject failing to realise that we should be looking at the essence of the matter and making use of the studies which are being carried out. I support very strongly what Senator Haines has said. I hope that the Government will respond. It did not respond at all to the remarks I made on a recent report on this subject. It decided that silence is the easiest way out. If we keep pushing this matter forward and asserting the fact that this is not the right way to go about things, perhaps even the Government might listen. Senator TATE(Tasmania)(5.15) —I take the opportunity presented by the tabling of this report to pay tribute to the Institute of Family Studies which has now completed five years of very good work on behalf of the Australian public generally. It has been of great assistance to parliamentarians not only in the production of many very worthwhile reports which have demonstrated considerable expertise in research techniques. The Institute has also written these reports in a way which is most helpful to those of us who have to engage in debates using its material. In addition to these reports, we have had the Institute's data base made available to us through the Parliamentary Library. Many honourable senators will have taken advantage of the data base on the Family Law Institute which is now available in the Parliamentary Library. This enables us to track trends and changes in marriage and families in relation to society generally. Senator Missen and Senator Haines have both pointed out that rather than this being an occasion when we can simply pay tribute to the work of this Institute over the past five years in the fulfilment of its charter, which has been to develop an understanding of the factors affecting marital and family stability in Australia-honourable senators should not that this has been a positive concept-with the object of promoting the protection of the family as the natural and fundamental group unit in society, we must note that the Institute is now under some sort of threat which seems to me to be most unjust, given the excellence of the work it has undertaken to this point. What seems to be most unjust about the review being carried out at the moment by the Government is that it is being undertaken by two departments which have an interest, one might say, in the outcome; namely, the Attorney-General's Department and the Department of Finance. I thought it would be helpful to the credibility of the conclusions of that review panel were it to be joined, in the case of the Institute of Family Studies, by some third party who had expertise in socio-legal policy issues or in social science research generally, somebody who had a very able understanding of the sorts of projects and the use to the community which can be performed by the Institute of Family Studies. I believe that such a panel could then have greater credibility if and when it suggested changes in the operations of the Institute or the ways in which the Institute could be perhaps modified to reach even better the objective which has been set by the Parliament. Having said that-it is perhaps negative note to intrude on the general laudatory comments which have been made around the chamber in respect of the Institute of Family Studies-I simply leave my remarks at that point. Senator WALTERS(Tasmania)(5.17) —I join with the comments made by Senator Tate. I could not agree with him more when he says that what the Institute of Family Studies needs is an independent group to reassess its value. The Institute has been going now for five years. This may be regarded as an appropriate landmark for us to judge how well it has performed as an organisation. I believe that every organisation from time to time needs not a review but a full evaluation. Like Senator Tate, I do not believe that can be done by people who have an axe to grind and who have some reason for coming to certain conclusions. I believe that the Institute should have a true evaluation. An independent body should have a look at what the Institute has done. We have a very clear situation where we have set out the roles and functions of the Institute, so there is a very clear description of what it should be doing and what it has come up with. If the review panel makes the decisions that it has not carried out the role and functions which are stipulated in the Institute's annual report, there would be every reason for the Government to cut funding and perhaps get rid of the body altogether. If the independent body makes the decision that it has given some very valuable service and advice to the Government-I am certainly not sure that it has given a lot of valuable advice to the Government; the Government will be able to let us know about that-the Government should be funding it in a correct fashion so that it can carry on its role. I believe that not just a review of the Institute is needed. A true evaluation should be carried out by an outside body that would lay to rest for all time whether the Government considers that its funding should or should not be cut. Question resolved in the affirmative. Senator VIGOR(South Australia) —by leave-The Inter-State Commission has quickly, in little more than a year, established a role for itself in the Australian transport industry. However, it is not an independent role. The Commission's role is qualified by the Inter-State Commission Act, by which it was created in 1975. The legislation was amended by the Senate so that only the Minister has the power to initiate investigations by the Commission. This means that the Commission is purely advisory and dependent upon the Minister. It cannot commence an investigation of any transport matter of concern without the Minister's reference; it has to report back to the Minister, and it is the Minister who decides whether the Commission's report of its investigations will be implemented. It does not have the regulatory role that was originally envisioned when as a Bill it was introduced into the Senate. The reliance upon ministerial initiative has created an appalling waste of talent and knowledge. An important feature of the Inter-State Commission is that it will be an ongoing independent body that will accumulate and retain expertise on Australia's transport. That expertise, generated by its investigations, will make it aware of other issues in the area of transport that even the Minister, himself, may not be aware of. Under the present legislation the Commission will not be able to initiate investigations. Another serious restriction upon the Inter-State Commission is that under section 6 of the Act it cannot investigate matters arising out of the Airlines Agreement Act 1952-1973. This prevents the total co-ordination of interstate transport and makes Australia's transport policy somewhat `itty-bitty'. An example of this problem is that the current review of the two-airline agreement is being carried out by one single person. But for section 6 of the Act that agreement could have been investigated by the three commissioners of the Inter-State Commission and fitted into the general pattern of Australia's land, sea and air transport needs. Although the Commission has an independent role that is restricted and qualified, that role is still important, as was recognised by the Australian Democrats in May when we supported the Australian Shipping Commission (Additional Capital) Bill 1985 after an undertaking was given by the Minister for Transport (Mr Peter Morris). He agreed to the Democrat proposal that the financial performance of the Australian National Line and its progress towards achieving its declared commercial goals be monitored and checked. This would be done by an independent report brought down in 1986-87. That investigation and report was the condition on which the Democrats supported the Bill and the injection of an extra $70m into ANL. Further, we requested, and the Minister agreed, that the report be carried out by the President or a Commissioner of the Inter-State Commission. That report, which we believe will be brought down in 1986-87, will be significant. With it this Parliament will be able to consider carefully, based upon a solid base of data and facts, the fate of ANL, Australia's national shipping line, and the role of Government in the provision of shipping services. It will also check ANL's record over the period of grace provided by the $70m capital input. The additional capital granted to ANL was important for its survival. It gave ANL a period of grace and provided the opportunity for our national line to grow in strength and importance. We must note that before this grant ANL had a very poor prospect and image. I am convinced that the important problems brought before the Commission will be handled properly. I commend the report to the Senate. I commend also the Commission's current investigations into matters relating to the cost recovery arrangements for road freight and road passenger vehicles engaged in interstate transport. It is extremely important to all Australians that the report should recommend at least that the Australian National Line and Australian National, our national railway system, should be given the same type of accounting structure and advantages as we have for our roads system so that we can effectively compare these various methods of transport. Senator MESSNER(South Australia)(5.26) —I move: That the Senate take note of the paper. As yet I have not seen the annual report on the operation of the Bankruptcy Act and consequently I cannot make a great deal of comment on it. However, I do note that it is a report for the 1983-84 financial year, which means that it is over 12 months old. I wonder why it is out of date and I wonder also what period it discloses. In recent times figures have indicated that there has been a fall in the number of bankruptcies in this country. That is a trend which everyone in this Senate would support and claim to be a positive one, but without an up to date report it is a little difficult to know precisely the situation for the current year. Everybody knows how difficult the administration of bankruptcy is, and those people who have had anything at all to do with the administration of affairs under the Bankruptcy Act understand the problems and limitations of the Attorney-General's Department and of private trustees in handling the affairs of bankrupts. Not only is it an emotionally difficult time but also there are considerable gaps in the availability of information and knowledge about the affairs of bankrupts prior to their sequestration. This presents many difficulties for both creditors and debtors who are endeavouring to find out exactly what their positions are in dealing with bankrupts subsequent to their entering into the state of sequestration. I raise that point merely in passing. There has been in the past some complaint about the administration of estates, and there has been a great deal of difficulty in that area. I do not mean in any way to criticise the operation of the administrators in their most difficult task, but the Government ought to review this area constantly as there does appear to be some difficulty in administration, as evidenced by the fact that this report is so far out of date. Senator MAGUIRE(South Australia)(5.28) —I wish to address some remarks to the annual report for 1983-84 on the operation of the Bankruptcy Act. It is pleasing to note that in the 1983-84 financial year we saw another significant fall in bankruptcies under the present Government. In 1982-83, the last year in which the Fraser Government was in power, there were 5,151 bankruptcies in Australia. That was reduced to 4,909 in the first year of the Hawke Government, and I believe that the figures for 1984-85, which will be available soon, show an even more dramatic reduction in the level of bankruptcy in Australia. However, the decrease in 1983-84 of 4.7 per cent was a very welcome reduction in the bankruptcy level, and that figure reflects the improved national economy, because bankruptcies are a lagged response to economic activity. Most Australian States recorded reductions in bankruptcies in 1983-84 and, as I say, that reflected the national economic trend. In my own State of South Australia, under the Bannon Government, there was a 17.7 per cent reduction in bankruptcies-a rapid reduction as a result of the policies in South Australia of the Bannon and Hawke governments. In Victoria there was a 15.8 per cent reduction in bankruptcies. There was also a fall in Western Australia, where bankruptcies fell by 3.4 per cent in 1983-84. Regrettably, bankruptcies in Queensland are rocketing. In the three bankruptcy districts in Queensland there was a 23 per cent increase in the number of bankruptcies-from 703 in 1982-83, to 865 in 1983-84. Clearly, judging by the number of bankruptcies there, the Queensland economy is out of step with the national economy. Certainly, I believe that the bankruptcy level indicates that in yet another area the Queensland economy is holding back national economic recovery. Queensland is going in the opposite direction to the rest of Australia, economically as well as socially. Unfortunately, there is an error on page 22 of the report, which understates the rise in the level of bankruptcies in the southern Queensland district. It states that the number of bankruptcies in that area rose from 592 to 746-a 20 per cent increase. In fact, there has been a 26 per cent increase. A 20 per cent increase would have been bad enough; a 26 per cent increase is disastrous. When one looks at page 53 of the report it is possible to ascertain the reasons for the high level of bankruptcies which have occurred in Queensland in the last couple of financial years. For instance, it is indicated that, nationally, 410 businesses which failed gave economic conditions as the problem. Of those 410 businesses, 130 were in Queensland. The figure recorded in Queensland was much higher than in any other State. Clearly, this indicates yet again the very parlous economic conditions in Queensland. Taking a national view of the bankruptcy figures, once again they indicate two very high risk areas in the economy. One of those areas is building and construction, the other is transport and storage. Together those two sectors account for a very large proportion of Australian bankruptcies. In 1983-84, in the building and construction industry there were 463 business bankruptcies and 128 non-business bankruptcies-a very large figure. A large proportion of those bankruptcies occurred in Queensland. In the transport and storage sector, which is another high risk area, there were 376 business bankruptcies and 193 non-business bankruptcies-a large share of the total figure. Again, Queensland contributed significantly. Clearly, there are high failure rates in the building and construction sector and the transport and storage sector. New entrants into those sectors of the economy-persons proposing to establish new firms-should take a great deal of care in considering their prospects because very great risks of insolvency are involved. As I have indicated, it is now possible to calculate some of the figures for the 1984-85 financial year. They show that a further large reduction in bankruptcies has occurred under the present Government, even lower than the improved figures for 1983-84. A further large fall was recorded in my own State, I am pleased to say, from around 700 to 600. The DEPUTY PRESIDENT —Order! The honourable senator's time has expired. Senator HAINES(South Australia)(5.34) —Senator Maguire has covered quite adequately the statistical information relating to bankruptcies in the annual report of the operation of the Bankruptcy Act for 1983-84. I do not want to go through them again, but I shall take up a couple of issues. One relates to the fascinating section in the report on the causes of business bankruptcies. Page 51 indicates, amongst other things, that a lack of business ability, acumen, training and so on, are major causes of business bankruptcies, as are factors such as insufficient working capital and failure to keep proper books. I wonder whether that perhaps indicates that the Government should provide more funding and expertise to assist people who are thinking of starting up a small business and, more importantly, providing those sorts of facilities to people who look like getting into trouble. I have noted with interest that the Government has sent to the Australian Law Reform Commission a request that it undertake a major review of insolvency legislation. I ask that, in particular, the Commission look at some of the anomalies in the law relating to things such as technical bankrupts which allow people such as Brian Maher to get legal aid and classify primary industry people as unsecured creditors when a cannery or a winery goes into liquidation, forgetting that if it were not for the primary industry people, the growers, the wage and salary earners who are classified as secured creditors would not get the work that would entitle them to any part of the estate after it has gone into liquidation. The Commission might also like to look at the question of small creditors who take a larger company to court in order to get their payments. The DEPUTY PRESIDENT —Order! The time allocated under Sessional Orders for the consideration of Government papers has expired. Senator MISSEN(Victoria) —Mr Deputy President, I seek leave to move a motion to take note of the President's statement on the last day of sitting regarding the delay in publication of the daily Hansard and to make a short statement in connection with it. Leave granted. Senator MISSEN —I move: That the Senate take note of the statement made by the President on 13 September 1985 relating to the delays in the production of the Senate Hansard for the week beginning 9 September 1985. On Friday, 13 September, the President pointed out that during last week there had been delays in the delivery of the daily Hansard and that the fault was not of the Hansard staff but related to the problems experienced with the computer at the Government Printing Office. As we know, there were several days of delay, so we did not get our copies of Hansard for some days. One hopes that we will be saved by the President from further progress such as this. It was good in the past to get our copies of Hansard in the early morning of the following day. We now get it a couple of days later. Senator Lewis —That is progress. Senator MISSEN —If that is progress, I hope the President might save us from any further progress in that direction. A further horrifying aspect of this situation is that the new computer seems to have taken to chomping up part of our speeches. Last week I had the misfortune of having had some four pages of my speech, which were properly attended to by me and by Hansard, not printed. Senator Puplick —It is obviously an intelligent computer. Senator MISSEN —I have the same feeling as Senator Puplick-that perhaps there is a mind working in the computer which has decided that honourable senators are speaking for too long and it is cutting them down. It is also happening to the House of Representatives. I am told that a number of honourable members also lost parts of their speeches last week. I think the matter ought to be put on record. I hope that, whatever happens, we get back to a state of affairs where we get our Hansard with the speeches we actually make. Question resolved in the affirmative. Senator CHILDS(New South Wales) —I present the report of the Committee of Privileges on the improper disclosure and misrepresentation by a departmental officer of an amendment prepared for moving in the Senate. Ordered that the report be printed. Senator CHILDS —by leave-I move: That the report be adopted. The question which is the subject of the Committee's report was referred by the Senate, on the motion of Senator Haines, on 23 April 1985. The report includes, at appendices A and B, details of the case. The Committee has concluded that it is unfortunate that the situation arose and reminds officers of the Australian Public Service that they have an obligation to treat information received in the course of their employment in accordance with their responsibility as public servants. The Committee considers, however, that further action is not appropriate and therefore recommends to the Senate that the matter be not further pursued. Debate (on motion by Senator McIntosh) adjourned. Senator GEORGES(Queensland) —by leave-In connection with the report of the Public Accounts Committee tabled last Wednesday, as chairman of the Public Accounts Committee I announce that I have called a meeting of the Joint Parliamentary Committee of Public Accounts to consider a request from Dr Geoffrey Edelsten that, firstly, he be given an opportunity to appear before the Committee; and secondly, he be provided with information from working papers of the Committee's medical fraud and overservicing pathology inquiry. The meeting will be held tomorrow. Honourable senators will be aware that Dr Edelsten has already been invited to make a submission to the Committee. That submission has not yet been received. I shall advise the Senate of the outcome of the Committee's deliberations. Bills received from the House of Representatives. Motion (by Senator Gietzelt) 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 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 Gietzelt) read a first time. Second Readings Senator GIETZELT(New South Wales-Minister for Veterans' Affairs)(5.41) —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- EXPORT INSPECTION CHARGES (MISCELLANEOUS AMENDMENTS) BILL 1985 The purpose of this Bill is to amend the Export Inspection Charge Act and the Export Inspection Charge Collection Act so as to provide for collection of charges to be imposed consequential upon passage of the Export Inspection (Service Charge) Bill 1985 and the Export Inspection (Establishment Registration Charge) Bill 1985. The registered occupier of an establishment which receives an inspection service upon which a service charge is payable will be required to record the particulars on which the calculation of the charge is based. The arrangements are similar to those applying to the collection of quantity based charges under the collection Act. Returns containing these particulars will need to be lodged at a specified office of the Department of Primary Industry together with payment of the charge. Honourable senators should note that returns and the information therein cannot be used as evidence in criminal proceedings, other than prosecutions for the offences of failing to submit returns or give information or submitting false returns or giving false information. Twenty eight days will be allowed, after the end of the month in which the inspection service was provided, for payment of the charge. The registered occupier of an establishment subject to a registration charge will become liable for payment of that charge on the day on which registration or annual renewal of registration comes into force. The Department of Primary Industry will forward a debit notice well in advance of this date. The Bill provides in respect of both new charges that no further export permits will be granted to a person who failed to pay charges by the due date, and any penalty where applicable, until payment has been made. Provisions in the Bill dealing with penalty for non-payment of the new charges, access to premises and recovery of unpaid charge are in similar terms to existing provisions in the Collection Act relating to quantity charges. The collection Act will provide a facility for collection of an estimated $5.15m revenue from industry in 1985-86. The commodities concerned are grains, fish, dried fruit, canned and processed fruit and vegetables, eggs, dairy products, poultry meat and game meat. I commend the Bill to honourable senators. EXPORT INSPECTION (SERVICE CHARGE) BILL 1985 The primary purpose of this Bill is to extend the range of legislative options for imposing charges on industry to recoup part of the costs of inspecting rural produce for export. This Bill provides for a charge to be imposed on a manhour basis for inspection services provided to a registered export establishment. This Bill, coupled with the associated Export Inspection (Establishment Registration Charge) Bill, will provide meaningful options for charging which can be used separately or together to impose inspection charges which accord closely to the user pays concept. Under current arrangements export inspection is carried out for a range of different products in a range of establishments such as abattoirs, fruit canneries and fish processing plants. A flat rate charge is imposed regardless of costs in each establishment. The new methods of recouping costs will give industry an opportunity to streamline their operations and so promote fairness in the application of inspection charges and efficiency in both the delivery and use of the inspection services provided. For the products covered by this legislation, the Export Inspection Service has recently completed a major review of inspection practices which has resulted in the development of new objectively based inspection arrangements requiring greater industry self regulation. These arrangements are being progressively trialled and implemented. Simplified inspection procedures will be introduced between now and June 1986 which will lead to significant savings in the cost of running the inspection service and immediate costs savings to industry. These new arrangements which will benefit industry by some $18m per annum have been taken into account in calculating the 1985-86 charges. As the new inspection initiatives are being implemented industries are being progressively approached for discussions on the appropriate method of applying inspection charges. The fish industry has already decided that it wishes to change from the current system of per kilogram charge and a new system of registration charges combined with a manhour charge is expected to be implemented before the end of 1985. Discussions have commenced with the meat industry and the Department of Primary Industry will be approaching the dried fruits and canned fruits industries in the near future for consideration of the charging options. The poultry meat industry has recently agreed to a system of registration charges. The Inspection Service has reached the point where any further major cost reductions beyond those contained in this year's Budget will require industry itself to modify its own practices as they affect the level of inspection. To sum up, the charging legislation being introduced in this package of Bills will enable industries to make a choice. They can opt to adopt a new charging system which encourages individual operators to establish systems which reduce their export inspection needs and costs while maintaining the required standards of hygiene and quality. Alternatively, they can remain on the current flat rate charging system whereby operators with less expensive export inspection systems tend to cross subsidise the operators with more expensive systems of inspection. These new charging arrangements provide industry with an opportunity to work positively with Government to reduce costs to farmers and to taxpayers who subsidise inspection activity. The passing of this legislation will have no immediate impact on government revenue or costs as the policy for 1985-86 is to maintain the level of recovery at 50 per cent of the cost of inspection. The manhour charge for fish is estimated to result in revenue to the Government of $530,000 this financial year. I commend the Bill to honourable senators. EXPORT INSPECTION (ESTABLISHMENT REGISTRATION CHARGE) BILL 1985 The purpose of this Bill to to provide for a charge to be made upon the registration of an export registered establishment where this is requested by an industry. This charge complements the existing quantity based inspection charges and the proposed manhour charges. It could be applied in isolation or in concert with either of the other types of charges. As I indicated in the second reading speech on the Export Inspection (Service Charge) Bill both the fish industry and the poultry meat industries have already opted for the introduction of registration charges. Where a charge is imposed under this Bill, it will be subject to Commonwealth policy on the level of recoupment of inspection costs so that other inspection charges applying to a commodity will be reduced accordingly. The Government will continue to meet costs which are not recouped from industry. For fish and poultry it is expected that some $470,000 will be collected in relation to the charge on registered premises during 1985-86. This charge together with the inspection service charge provides industry with an opportunity and incentive to make more effective use of inspection resources so that both inspection costs and the drain on the public purse through the subsidy provided by taxpayers will be minimised. I commend the Bill to honourable senators. Debate (on motion by Senator Reid) 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 Gietzelt) read a first time. Senator GIETZELT(New South Wales-Minister for Veterans' Affairs)(5.42) —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 Bill gives effect to the Government's decision announced in the 1984 Budget to guarantee a loan of $5m as initial funding for a Voluntary Adjustment Scheme initiated by fishermen in the northern prawn fishery. The voluntary adjustment scheme is a major component of the new management plan being progressively introduced into the fishery. The main objective of the plan is to achieve a significant recovery from the depressed economic conditions that have affected the fishery in recent years. Although production from the northern prawn fishery is valued at about $80m per annum, the presence of substantial excess fishing capacity has resulted in the fishery becoming unprofitable in the existing economic environment. To overcome this problem, industry has proposed a voluntary adjustment scheme whereby fishermen wishing to leave the fishery will be compensated from the surrender of their rights in it. To maximise the early impact of the voluntary adjustment scheme, arrangements are being made with a commercial lender to provide initial funding by one or more loans, of which the Bill guarantees repayment. It is intended that the full expense of repaying the loan will be met by those remaining in the fishery through an annual levy to be imposed under the Fisheries Levy Act 1984. Collection of levy will begin in the 1986 licensing year. The risk of the Government having to honour the guarantee is therefore extremely small because the industry will repay the loan and the interest on it. In the absence of any representative industry organisation with power to borrow money, the Queensland Fish Management Authority, which also has considerable involvement in the management of the northern prawn fishery, has agreed to act as agent for the fishing industry and borrow money against the Commonwealth guarantee using its powers under the Queensland Fishing Industry Organisation and Marketing Act 1982. The Bill empowers the Treasurer to guarantee borrowings by the Queensland Fish Management Authority not exceeding $5m, together with interest, subject to the Treasurer approving the terms and conditions of the borrowings. Honourable senators might note that following receipt of the report of the working group on the impact of fuel price increases on the fishing industry, which arose out of meetings between Ministers and representatives of the rural and fishing industries, the Government decided, in view of the particularly severe impact that fuel cost increases have had on prawn fisheries across northern Australia, to provide grants of $3m a year for the three years 1985-86 to 1987-88 for adjustment assistance. The full $3m of the 1985-86 grant is to go to the Voluntary Adjustment Scheme for the northern prawn fishery. At the request of industry this grant is to be additional to, rather than a substitute for, the segment of the Voluntary Adjustment Scheme that industry will fund. The Government is confident that this combination of public and industry contributions will lead in a comparatively short time to the removal of a significant amount of the excess fishing capacity from the fishery and to the return of profitability to the fishermen who remain active in it. I commend the Bill to honourable senators. Debate (on motion by Senator Reid) adjourned. Bills received from the House of Representatives. Motion (by Senator Gietzelt) agreed to: That so much of the Standing Oders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of the Bills being put in one motion at each stage and the consideration 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 Gietzelt) read a first time. Second Readings Senator GIETZELT(New South Wales-Minister for Veterans' Affairs)(5.44) —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- FOREIGN FISHING BOATS LEVY AMENDMENT BILL 1985 This Bill amends the Foreign Fishing Boat Levy Act 1981, which imposes a levy in the grant of licences to foreign fishing boats not exempted under the Act. At present the classes of exempted vessels include those licenced under an agreement with a foreign government and those temporarily imported for use by and under the control of Australians and deemed to be an Australian vessel in accordance with Section 4 (2) of the Fisheries Act 1952. The only fishing agreements Australia has with a foreign government are with Japan and the Republic of Korea. All other foreign vessels licenced to operate in the Australian fishing zone are liable to pay levy unless there is a formal agreement requiring the foreign operators to provide other benefits to Australia, in consideration of which the Minister may waive the levy. In recent years, it has been necessary to conclude agreements with Australian principals covering the processor/carrier vessels used by the southern bluefin tuna fisherman last season to facilitate the processing and transport of sashimi quality tuna to the Japanese market. These vessels generate significant benefits for Australia and the purpose of the agreements is to provide a basis for waiving the levy in such cases. However, the conclusion of a formal agreement required under the Fisheries Act 1952 to achieve this is complex and time consuming. The proposed amendment to Section 4 of the Principal Act will simplify the Adminstrative processes necessary for exempting those foreign vessels, whether temporarily imported or not, which are operated by or on behalf of, or in accordance with the instructions of Australians and confer benefits on Australia. The amendments proposed in clauses 5 and 6 relate to the payment of fees for access by foreign interests other than a foreign Government to the Australian fishing zone. Foreign fishing vessels may be licensed to fish in the Australian fishing zone under agreements. Agreements may specify the total access fee to be paid to Australia. To secure the payment of the lump sum access fee under the Principal Act in its present form, a levy is prescribed, calculated by dividing the total access fee by the agreed number of boats to be licensed. If fewer than the agreed number of boats apply for a licence, a portion of the access fee, although paid previously as part of the total lump sum payment of the fee, remains unauthorised under the present legislation. This produces a loophole which is open to legal challenge. The Bill closes this loophole by providing proper statutory authority for collecting the full amount of lump sum payments specified in any agreement irrespective of the number of licenses issued. Other amendments are of a machinery nature. The Bill has no direct financial implications. I commend the Bill to honourable senators. FISHERIES AGREEMENTS (PAYMENTS) AMENDMENT BILL 1985 This Bill amends the Fisheries Agreements (Payments) Act 1981 in parallel with the amendments proposed by Clauses 5 and 6 of the Foreign Fishing Boats Levy Amendment Bill. The Fisheries Agreements (Payments) Act 1981 authorises the refusal of licences for foreign boats unless amounts specified in agreements between Australia and a foreign government with respect to operations of those boats in the Australian fishing zone have been paid to Australia. The amendment proposed by clause 4 of the Bill will extend the power to refuse licences to cover fisheries agreements between Australia and one or more parties who are not foreign governments. The Bill requires the Minister to have regard only to the terms of such an agreement when deciding whether or not to license foreign boats under the agreement. It also prevents the issue of any such licences unless the amount has been paid to Australia in the manner specified in the agreement. The Bill has no direct financial implications. I commend the Bill to honourable senators. Debate (on motion by Senator Reid) adjourned. Motion (by Senator Puplick) agreed to: That Business of the Senate, Notice of Motion No. 1 standing in his name for this day for the disallowance of the Customs Regulations (Amendment), be postponed till Tuesday, 8 October 1985. Debate resumed from 11 September, on motion by Senator Grimes: That the Bill be now read a second time. Senator LEWIS(Victoria)(5.47) —The Snowy Mountains Engineering Corporation Amendment Bill 1985 was debated in the Senate on Wednesday of last week. The Bill provides for a number of amendments to the Snowy Mountains Engineering Corporation which is the remnant of the once great organisation which constructed the Snowy Mountains scheme in Australia. Let me make it perfectly clear that I am not critical of this body as an engineering corporation. In the past it was probably one of the great Australian organisations. Senator McIntosh —It still is. Senator LEWIS —The comment from the Government side is that it still is. I do not dispute that but the question which the Opposition parties have raised is why the employees of this organisation are still public servants. It was okay for the Australian Government to be in the business of engineering when we lacked engineers of this calibre at a time when we wanted to construct an enormous scheme such as the Snowy Mountains scheme but Australia now has a number of very competent engineering bodies, including this one, and there is no massive government requirement for engineers as there was in the late 1940s and early 1950s. The Opposition is, therefore, of the view that there is no need for this body to continue as a government body. It really should be in the private sector with all other engineering bodies of similar ilk in Australia. When this matter was last debated, I referred to the Corporation's statement of profit and loss for the year ended 30 June 1984 and I pointed out that it had an operating loss of over $5.4m. I indicated to the Minister for Industry, Technology and Commerce (Senator Button) that the Opposition would be seeking the profit and loss figures up to 30 June 1985 at the resumption of debate on this Bill. It took the Corporation only three months to prepare the figures for 1984 and I see no reason why it cannot provide us with the figures for 1985 in the Committee stage. I was also pointing out that, although it is not disclosed in the balance sheet of the Corporation, by some fairly simple deduction it appears that this body may very well have liabilities of around $15m for superannuation and retirement allowances for its staff. Senator Siddons —How much of that has already been funded? Senator LEWIS —We will be interested to know. I hope that the Minister will be able to tell us what is the liability, how much of it has been funded and where the funds for it are retained. I have some difficulty in discovering them in the balance sheet, which shows that the capital made available by the Government in 1983 was $2.6m and in 1984, $6.6m; in other words, during 1983-84 the Government gave this body $4m. I would be interested to know how much the Government gave this body during 1984-85 and how much it intends to give it during 1985-86. We will ask the Minister those questions at the Committee stage of the debate. What the Government proposes with this legislation is somehow or other to extend the life of this body by putting it in a privileged position vis-a-vis the private sector. Of course, it will be in a privileged position because it is a wholly-owned subsidiary of the Australian Government and as such it is able to borrow unsecured funds. It gets all sorts of advantages. What the Government also proposes is to allow this body to enter into agreements with overseas corporations and generally to move into a number of areas in which the legislation indicates that as best as it is able to it will act as an Australian body involving Australian organisations so far as is practicable but in effect it will be able to expand its overseas activities and indeed its activities in Australia. I happened to be a member of the Senate Standing Committee on Finance and Government Operations when that Committee inquired into the affairs of the Australian Dairy Corporation and its Asian subsidiaries. Mr Deputy President, you may recall that there was considerable concern about the activities of Asia Dairy Industries (Hong Kong) Ltd, which was a wholly-owned subsidiary of the Australian Dairy Corporation. When the Senate Committee reported-I point out that the report on this section was unanimous and, for instance, the Minister for Finance, Senator Peter Walsh, was a member of that Committee at the time-it indicated its grave concern about the creation of subsidiaries by statutory authorities. It pointed out that at the time of the report there were at least 42 wholly or majority owned subsidiaries of Commonwealth statutory authorities. It indicated that this practice was growing and that authorities were tending to create their own subsidiaries. It pointed out that at that time there was no legislative necessity for authorities, when creating subsidiaries, to seek parliamentary or ministerial approval or even to inform the Parliament or the Minister. The report indicated that of the 42 wholly owned or majority owned subsidiaries, 18 were created without prior ministerial approval. The report stated: In no case was prior Parliamentary approval obtained nor was the Parliament informed at the time of incorporation. The important thing about that is that this Parliament sets up the statutory authorities. It is not the Government but the Parliament which passes the legislation which establishes an authority. For an authority, having been established by an Act of Parliament, to be able to create a subsidiary without even bothering to tell the Parliament that it has done so is, I believe, contemptous of the Parliament. It is something which the Committee reported should not be allowed to continue in the future. Another problem with statutory authorities was revealed by that investigation. This was that Asia Dairy Industries (Hong Kong) Ltd apparently had wider powers under its memorandum and articles of association than did the Australian Dairy Corporation, its parent authority. What in fact happens is that a statutory authority created by the Parliament has certain powers. Without telling the Parliament that it was going to do so, that authority created a subsidiary which had wider powers than the authority which was established by Act of Parliament. The Committee unanimously reported that that sort of thing should not happen in the future. Paragraph 16.11 of the Committee's report states: The Committee further considers that it is inappropriate for authorities to create subsidiaries without prior ministerial approval. One can understand why a Minister ought to be told before an authority creates a subsidiary. The Committee considered whether the Parliament ought to be informed before a subsidiary was created but it said: `No, we will not go that far and require the authority to let the Parliament know, but the Parliament should be informed within a reasonable time after the incorporation'. What the Comittee recommended was that the relevant Minister be required to inform the Parliament within 15 sitting days of the establishment of a subsidiary and to table the memorandum and articles of association or other constitutional documents of the subsidiary so that the Parliament could see what the subsidiary had been set up to do. When I looked at this legislation which the Government has brought before the Senate, I discovered that the Government had not taken up that recommendation in the Committee report. I had a discussion with my colleague Senator Archer, and with Mr Beale in the other place, as a result of which we have prepared, and the Opposition will move at the Committee stage of the Bill, amendments to clause 7 which cover the points that I have raised, which I acknowledge are not my points but points raised by a Committee of the Senate. My recollection is that that recommendation was a unanimous one. I have indicated the nature of those amendments and they have been distributed around the chamber. I endeavoured to make them available to the Australian Democrats on Friday but I understand that I was not successful and that the Democrats did not receive them until this morning; thus they may have had some difficulty in giving them consideration until fairly recently. Also, I did not make them available to the Government until I had finalised the precise wording I intended to use and was sure that I would use that wording. I made them available to the Minister for Housing and Construction, Mr West, in the other place earlier this afternoon, about two hours or so ago, in the hope- Senator Siddons —Don't you think it was a bit rough to give that sort of notice? Senator LEWIS —Senator Siddons asked if I consider that to be a bit rough. I acknowledge that it is a bit rough to do that, but it is the sort of thing that happens in Parliament. In any event, there is a rule called the two-hour rule which enables Ministers of the Crown to give the Opposition shadow Ministers no more than two hours notice of making all sorts of decisions. No doubt the first time that the Opposition Treasury spokesman will find out what the Government will do with its tax deal will be about two hours before the Treasurer (Mr Keating) makes the announcement in the House of Representatives. So the Government has had two hours notice of an amendment which, quite frankly, Government departmental officers ought to have picked up and ought to pick up all the time, in regard to statutory authorities. I acknowledge to the two Ministers sitting in the chamber at present-the Minister for Education and the Minister for Veterans' Affairs (Senator Gietzelt)-that when we were in government, as a back bencher I endeavoured to persuade our Ministers to accept this sort of amendment. I had the devil's own trouble because Ministers seemed to be swamped by their departmental officials who said that it would be difficult. I cannot see that there is any difficulty about this. All it means is that if the authority wants to create a subsidiary-after all, it is not like buying a packet of chips; it will not be creating a subsidiary very often-it should first seek the approval of the Minister. I do not think that any Minister of the Crown would find that an unreasonable suggestion. The second suggestion is that when the subsidiary has been created the Minister will have 15 sitting days-it could be up to a month or six weeks, or even longer if it happened during a parliamentary recess-in which to come into the Parliament and say: `This authority, the Snowy Mountains Engineering Corporation, has set up a subsidiary. The subsidiary's name is such and such and this is the copy of its memorandum and articles of association', or that `the Corporation has entered into a partnership agreement or some other arrangement and these are the terms and conditions of the new subsidiary which has been created.' It seems to me that that proposition is most reasonable. I would have thought that it is the sort of proposition that any Minister of the Crown, knowing his or her responsibilities to the nation, would be willing to adopt. I will be interested to see the Government's reaction to that proposal. In conclusion, I repeat what I said earlier, that the Snowy Mountains Engineering Corporation really is in a position where it ought to be sold to the engineers and other officers who in fact are running it. It ought to be sold on terms and conditions which make it quite a reasonable, viable proposition for them to continue the operation in their own way, being fully financially responsible for their own investment, rather than committing the organisation to a lingering death, which is what this Government is doing at present. I do not see that the proposal before the Senate will do anything other than enable this organisation to linger on for another two years or so before it comes back to the Parliament. By then it will probably be so financially destitute that the only option the Government will have will be to wind it up. Instead, it should say to the body at this stage: `You ought to be in the private sector. This is the best way we can put you in the private sector; you take it over. Here is a financial package that will enable you to take it over on reasonable terms; you take it over'. I am sure that that would give it an injection of adrenalin that would be needed to revive this organisation so that once again it is a great body of which all Australians can be proud. Senator RYAN(Australian Capital Territory-Minister for Education)(6.04) —The Senate is debating the Snowy Mountains Engineering Corporation Amendment Bill. Having listened to the debate, I reiterate that the Government considers it important to continue with the Snowy Mountains Engineering Corporation. The matters raised by the Opposition certainly have not dissuaded the Government from this course of action. I remind the Senate that SMEC has the role of flag carrier for the Australian engineering consultancy industry and this role alone warrants Government financial support. If the SMEC activities were to be curtailed through sale or disbandment, there is no guarantee that void could be filled effectively by another Australian organisation. In an article entitled `Top International Design Firms', the Engineering News Record, an American journal, rated the SMEC as the forty-first most successful organisation. The next Australian firm is listed at 154th spot which demonstrates the success the organisation has had in the past and the crucial nature of the role it is fulfilling in terms of the promotion of Australian engineering consultancy services. The loss of overseas projects which would follow from the abolition of SMEC would undoubtedly mean the loss of our skill base which, as honourable senators know, has been built up over a long period. We predict that there would be an immense loss to the Australian economy as a consequence. The Opposition in the very last hour has foreshadowed amendments which are not acceptable to the Government. I will give more explanation for our rejection of those amendments in the debate in the Committee stage. At this point I commend the Bill to the Senate. Question put: That the Bill be now read a second time. The Senate divided. Ayes . . . . . . . . . . . 35 Noes . . . . . . . . . . . 28 —— Majority . . . . . . . . . 7 —— Aulich, T. Haines, J.Black, J. R. Jones, G. N.Bolkus, N. McClelland, DouglasButton, J. N. McIntosh, G. D. (Teller)Childs, B. K. McKiernan, J. P.Chipp, D. L. Macklin, M. J.Coates, J. Maguire, G. R.Colston, M. A. Morris, J.Cooney, B. Ray, RobertCrowley, R. A. Richardson, E. A.Devlin, R. Ryan, S. M.Elstob, R. C. Sanders, N. K.Evans, Gareth Siddons, J. R.Foreman, D. J. Tate, M. C.Georges, G. Vigor, D. B.Gietzelt, A. T. Walsh, P. A.Giles, P. J. Zakharov, A. O.Grimes, D. J. Archer, B. R. Lewis, A. W. R.Baume, Michael Messner, A. J.Bjelke-Petersen, F. I. Missen, A. J.Boswell, R. L. D. Parer, W. R.Brownhill, D. G. C. Puplick, C. J. G.Carrick, Sir John Rae, PeterCollard, S. J. Reid, M. E. (Teller)Crichton-Browne, N. A. Short, J. R.Durack, P. D. Teague, B. C.Guilfoyle, Dame Margaret Townley, M.Hamer, D. J. Vanstone, A. E.Hill, R. Walters, M. S.Jessop, D. S. Watson, J. O. W.Knowles, S. C. Withers, R. G. Sibraa, K. W. Baume, PeterColeman, R. N. Sheil, G.Cook, P. F. S. Kilgariff, B. F.Reynolds, M. MacGibbon, D. J.Robertson, E. A. Chaney, F. M. Question so resolved in the affirmative. Bill read a second time. The Bill. Senator ARCHER(Tasmania)(6.14) —During the second reading debate we gave notice that we would oppose the legislation. As a result, I have listened to all the speakers and I have read Hansard very carefully. The position is really very clear. The Minister for Housing and Construction (Mr West) was very critical in another place-mainly by innuendo-of selected issues that he introduced as requiring improvement. The amendments indicate that he was looking for improvements in the commercial practices, the financial provisions, the redundancy provisions and in the broadening of the board. No Government speaker has covered any of the issues that we have raised. The Opposition expressed concern at the declining business, the declining numbers of staff, the declining profitability and the high contingencies. So far the Government has been unable to give us any of the information for which we have asked and we still have not yet seen the figures for the 1984-85 year or the projections for 1985-86. The Government has not given one explanation to show us how this Bill would automatically introduce a turnaround in the operation of the Snowy Mountains Engineering Corporation-not one. We are aware of how highly this business rates on its performance among the international design firms of the world and we give credit to it. We do not want SMEC to disappear. I want to see a strong, viable and profitable SMEC, as I said during the second reading debate. Most of all I want to see a home for many years to come for the excellent staff and management that goes with the organisation. However, I am concerned about what will happen now to SMEC, as a government organisation, if it has one more bad year. I believe we must consider first the position of the staff. I do not think that the staff of the organisation are being given adequate consideration at this time. What will the Government do if there is another bad year? The Government plan, through this legislation, will not provide security for the staff and the organisation, and no Government speaker showed us how it could. I implore the Government not to take the sort of action which can do no more than allow the Snowy Mountains Engineering Corporation to just fade away. I am a great appreciator of the people involved; I greatly appreciate the work that they have done in so many places. I am not in any doubt that the present staff can continue to make a very adequate contribution in some way if they are given the opportunity, under the guidance of Mr Price and the operators that are now there. I have looked at clauses 6 and 7 very closely. When one looks at the amendments one is reminded a bit of the old woodheap axe. By the time we change the Corporation, the functions and the powers, will it still be the same Corporation that we have been dealing with? While those changes have been proposed, I cannot see that they will really change the operation of SMEC in any way. I cannot see how the people of SMEC will see any difference as far as their future is concerned. Clauses 6 and 7 are props clauses; they are not reconstruction clauses. I would like to see reconstruction clauses. I believe it is necessary for SMEC itself and especially for the staff that we should make big changes which will alter the whole function. We have pursued amendments and I am sorry that they have not been universally agreed by our friends the Australian Democrats. I think it would be inconsistent if we did not support them in the light of the Australian Dairy Corporation case. It would be inconsistent if we did not pursue them, if the Government did not pursue them and, equally, if the Democrats did not pursue them. Senator Siddons —Why didn't you introduce them when you first spoke about it? Senator ARCHER —Senator Siddons asks why we did not introduce them earlier. As a matter of fact this matter was not picked up in the House of Representatives by either the Government or the Opposition at the time. It was not picked up in here until some time on Thursday or Friday and it has taken us quite an amount of time to get the wording right and to produce the amendments in a form that could go forward. It would have been absolutely delinquent of us once we had found this obvious deficiency, which surely must be totally patent to Senator Siddens, had we not brought it forward as soon as possible. Senator LEWIS(Victoria)(6.19) —Can the Minister tell us whether the Government is able to table a statement of profit and loss for the year ended 30 June 1985 and a balance sheet for 30 June 1985? There may be some problems about some notes forming part of the figures, but is the Government able to tell us what the financial position of this body was as at 30 June this year? I point out that it was able to give the Minister the 1984 report on 25 September 1984. I think it is therefore not unreasonable to ask the Minister whether the body has yet been able to provide the Government with the report for the year ending 30 June 1985. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(6.20) —I suppose I can dispose of that issue fairly quickly. The answer is that the two documents requested by Senator Lewis are not yet available. It is anticipated that they will be finalised shortly, but they have to go through procedures under the Audit Act before publication, and for that reason they are not available. Senator LEWIS(Victoria)(6.20) —I understand that these things have to go through the Auditor-General before they are published as the actual statements of the body. Apart from the three-month period, this body has had notice since last Wednesday, when I mentioned this matter in the Senate and said that we would be raising it during the Committee stage and seeking information. The Minister might say that that is only a few days, but it has had three months to prepare its figures. I draw the Committee's attention to a note forming part of the accounts of the annual report ending 30 June 1984. It states: During the year 53 employees were voluntarily retrenched due to a reduction in work level. An amount of $1,229,402 was paid to these employees under the terms and conditions as prescribed by the Public Service . . . I ask the Minister whether he can tell the Committee how much was paid to employees who were voluntarily or otherwise retrenched during the year ending 30 June 1985? Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(6.22) —I am instructed that the figure is approximately $1.9m. Senator Lewis —How many employees would that be? Senator BUTTON —Approximately 90. Senator LEWIS(Victoria)(6.23) —I now ask the Minister whether he can tell us how many employees the Corporation is intending to retrench during the current year? Also, what is the estimated pay-out for the current year? Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(6.23) —I am not going to bob up and down in answer to interrogatories all the time. If the honourable senator has any more questions, perhaps he will put them altogether and we will try to get a comprehensive answer. Senator Lewis —I have asked for the balance sheet and the profit and loss account. That would settle it. Senator ARCHER(Tasmania)(6.24) —At the same time, can we have details of the contingency in the superannuation and redundancy fund? Can we be assured that the figures for 1984-85 provide us with the recovery that goes with this? Can we also be assured that the Corporation is currently operating profitably and has an expectation of profitability for the balance of this financial year? Senator MacGIBBON(Queensland)(6.24) —Mr Chairman, I wish to make a personal explanation under standing order 410. During the second reading debate of the Snowy Mountains Engineering Corporation Amendment Bill 1985 on Wednesday of last week Senator Tate followed my speech and made the allegation that I used the expression `very seedy management' about the management of the Corporation. The CHAIRMAN —Order! Senator MacGibbon, this explanation should not be made in Committee. Do you seek leave? Senator MacGIBBON —I thought it was an appropriate time because this is the first opportunity we have had to come back to this question and it is a relevant matter. The CHAIRMAN —If leave is granted, you may do it. Is leave granted? Senator Button —I would be happy to grant leave in a minute if Senator Archer could repeat the question he asked a minute ago about superannuation. I am trying to obtain an answer and I could do that while Senator MacGibbon is making his tortuous explanation. Senator Archer —I asked what contingency there is for the covering of superannuation and redundancy. Senator LEWIS(Victoria)(6.26) —While the Minister is thinking about that, I have another question on exactly the same matter. We appreciate that he is under a lot of pressure and we do not want to rush him off his feet. I refer to the notes forming part of the accounts for the year ending 30 June 1984, and in particular to note No. 16. I hope Senator Siddons will look at this note because it is relevant to an interjection he made when I was making my speech earlier. The note relates to the commitment for employer superannuation liability, and states: The statements do not include the possible liability of the Corporation to the Commonwealth by way of employer contributions for post-retirement pension increases. The result of an actuarial study being undertaken by the Department of Finance and referred to in the 1981-82 Report has not been finalised. That was referred to in the 1981-82 report. As at 30 June 1984 it had not been finalised. I would like to know whether it was finalised as at 30 June 1985 or since-by 6.26 p.m. on 16 September 1985. The CHAIRMAN —Senator MacGibbon, you may speak in the Committee stage and adequately explain your problem in a speech during that stage. One thing you cannot do is use standing order 410, because this is not the same debate as it was when you made the previous statement. Senator MacGIBBON(Queensland)(6.27) —Thank you, Mr Chairman, I accept your ruling on that quite cheerfully. During the second reading debate Senator Tate made the allegation that I used the expression `very seedy management' about the Corporation. I corrected him on that immediately because I found it to be a very offensive charge, and no doubt any employee of the Corporation would have found it even more offensive. Despite the support from everyone on this side of the chamber, Senator Tate persisted with it. It is now five days since that allegation was made and four days since the Hansard came out, and we have not had the courtesy of an apology from Senator Tate in the interim. I take the opportunity now of putting on the record that I did not make that allegation. The word I used was `senior' not `seedy' and I am sorry that Senator Tate misinterpreted me. Senator LEWIS(Victoria)(6.28) —Is the Minister yet able to answer the questions I have raised about this matter? If he would make a financial statement to the Committee that provides all this information, we would not have to go through this rigmarole, which obviously will take some time after dinner tonight. It appears clear that this Government is not prepared to answer questions which, I suggest, are reasonable questions for the national Parliament to put to a body which is seeking to have its powers extensively extended to enable it to enter into all sorts of contracts overseas, where it will represent Australia as an arm of the Australian Government. It is proposing to enter into financial arrangements with other bodies, to create subsidiaries and perhaps enter into partnerships with overseas bodies. I draw the attention of honourable senators to what happened when Asia Dairy Industries (Hong Kong) Ltd got into such a situation. I put to the Committee that this body, the Snowy Mountains Engineering Corporation, ought not to be allowed to have its powers extended to such an extent while the Minister refuses to supply the Committee with any semblance of information as to what is its current financial situation. How on earth can the Committee deal with a body on which it has not had a financial report for over 15 months, and which 15 months ago was shown to be highly inadequate? Not only did it have a loss of $5.4m for the year ending 30 June 1984, but the previous year its disclosed profit was only $41,000. Yet, as I have indicated, on my simple arithmetic this body must have liabilities in excess of $15m, and probably more. Sitting suspended from 6.30 to 8 p.m. Senator LEWIS —When we adjourned for the evening meal we were in the Committee stage of considering the Snowy Mountains Engineering Corporation Amendment Bill. My colleague Senator Archer and I had pointed out to the Senate that the financial situation of the Snowy Mountains Engineering Corporation was a matter for grave concern; that the national Parliament had been provided with an annual report only for the year ending 30 June 1984; and that we had sought from the Minister information relating to the figures of the Corporation for the year ending 30 June 1985. If the Minister could indicate that he was prepared to supply me with those figures, I would sit down and allow him to do so. I seem to be getting a blank look across the table, so I am obliged to go on and draw the Senate's attention to the report on the Australian Dairy Corporation and its Asian subsidiaries, which was a unanimous report. I am pleased to see in the chamber the Minister for Finance, Senator Peter Walsh, who was, with me and others, a member of the Senate Standing Committee on Finance and Government Operations which reported concern about subsidiaries of statutory authorities. I hope we will hear from Senator Walsh as to whether he retains his concern about the creation of subsidiaries and the unanimous report of the Committee as to the nature of material which should be in legislation dealing with statutory authorities. I am surprised that the Government has not accepted the proposed amendments. I am surprised to hear-outside the chamber, but ultimately it will be disclosed-that the Australian Democrats are not prepared, apparently, to support the proposed amendments. I would have thought that the amendments were-- Senator Sheil —Reasonable. Senator LEWIS —Not just reasonable, as one of my colleagues says, but apolitical. I would have thought that they had nothing to do with political parties, but very much to do with the control of the Parliament and the control of Ministers over statutory authorities created by the national Parliament at the request of the Government. After all, all we are proposing in these amendments is, firstly; that the Corporation shall not join in the formation of a partnership or a company unless the Minister has approved in writing of the participation of the Corporation in that partnership or company. How any Minister of the Crown can say that he does not want that control is absolutely beyond me. I see Senator Button looking at the proposed amendment. I hope that he reads and digests it. It is not a difficult one. It would give him control over his own statutory corporations. I would have thought that that is totally apolitical and has nothing to do with being a member of the Liberal Party, the Labor Party or even the Democrats. The second proposed amendment is that after giving approval, the Minister should approve the creation of a subsidiary. He would not have to tell the Parliament at that stage. After the subsidiary has been established, then the Minister shall lay before each House of the Parliament, within 15 sitting days of that House, a statement of the particulars of the partnership or the company that has been created. In other words, we would like to see the memorandum and articles of association, or the partnership constitution, which the subsidiary is establishing. Again I say to parliamentarians-and this time I turn to the Democrats, they will never be in the Ministry, but they will remain in the Parliament, one presumes, although I do not know for how long-that this would give them an opportunity to find out that a statutory corporation has created a subsidiary, and it would give them an opportunity to find out what that subsidiary proposed to do. But apparently the Democrats do not like that proposal. The next amendment we are proposing is that the Corporation shall not join in the formation of a partnership or a company which has any function or power which is not a function or power of the Corporation. That is a very simple amendment. I am pleased to see that some other members of the Government ranks are coming in to listen to what this is all about, because it is vital for the sake of the Parliament. In other words, a corporation should not extend its own powers by creating a subsidiary. The Snowy Mountains Engineering Corporation could, under the Bill, as at present framed, create a subsidiary which would have power to enter into trade. It could set up a subsidiary which could create a McDonalds and go into the fast food business. That is the way the legislation is framed at present. There is no control. The Parliament does not have any control over it. We are proposing by this legislation to allow this authority to create subsidiaries and we will not even find out what the subsidiary will be allowed to do, let alone being able to restrict the powers and functions of that subsidiary to make sure it does not extend the power of the statutory corporation. If the Ministers do not believe that that is a possibility, let me remind them of what happened with Asia Dairy Industries (Hong Kong) Ltd. We heard Senator Walsh, when he was on this side of the chamber, make repeated speeches attacking Asia Dairy Industries (Hong Kong) Ltd and what it had done. He made all sorts of speeches attacking it when he was on this side of the chamber. Now that he is on the Government side of the chamber, apparently the activities of subsidiaries such as that are perfectly all right, because, after all, he is now in government and he does not have to worry about this sort of thing. Well, I am worried about it and I believe that my colleagues on this side of the chamber are very worried about these sudsidiaries. I remind Senator Walsh that he was a subscriber to the unanimous report of the Senate Standing Committee, which said that in future, this sort of limitation should be placed on subsidiaries of statutory authorities. The final amendment which the Opposition parties are proposing is that when the authority itself reports to Parliament, it will tell the Parliament what its subsidiary has been doing. Again, how any parliamentarian could find anything wrong with that is absolutely beyond me. In the past, statutory authorities have been able to get away with not disclosing to the national Parliament what their subsidiaries have been doing. In fact, I believe that in the past a number of authorities have managed to get away without telling their Ministers what they have been up to, certainly not in detail. I would have thought that the whole thing had nothing to do with what party one belongs to. I would have thought that even the left wing of the Labor Party would support the proposed amendment-although I know it would be most unusual. But it is beyond belief that the Government can come here and say that the proposed amendments are not reasonable and that it is not prepared to accept them. How the Democrats could have the audacity to say that they are members of parliament and that they are representing the interests of the people of Australia but are not prepared to accept these amendments, is absolutely beyond me, because, as I said, to my mind the amendments are totally apolitical. They have to do with the control of the national Parliament over statutory authorities and their subsidiaries. I can see that Senator Tate is anxious to tell me where I am wrong. I shall sit down to allow him to do so, because I shall be very interested to hear what part of what I am saying is not correct. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(8.10) —Senator Lewis, in the course of his comments, kept saying that things were beyond him. That is a view with which I totally agree. There are many things beyond Senator Lewis, and one of them is sitting on this side of the chamber. That leads me to the great attention and enthusiasm he displayed for the very important amendments he has foreshadowed. They are so important that they were not moved by the Opposition in the House of Representatives and so important that the Opposition did not think about introducing them in the Senate until two hours before debate on the Snowy Mountains Engineering Corporation Amendment Bill started today. That is how important they are. Senator Lewis —Does that make something wrong with them? Senator BUTTON —No, it does not, but it says something about the level of rhetoric which the honourable senator devoted to their importance. Senator Lewis —Well, I- Senator BUTTON —There is no point in the honourable senator blustering at me; that is what he did. He attached a tremendous importance to those amendments. He said that it was beyond him that any parliamentarian could not see these things the moment he looked at this legislation. The honourable senator could not see them. His Party could not see them when the Bill was before the House of Representatives and the Opposition in the Senate could not see them until today. I come to some of the questions about which honourable senators opposite are concerned. A question was asked as to what provision had been made for retrenchments or reductions in staff in 1985-86. A figure of $300,000 has been appropriated in the budget of the organisation for redundancy pay. That will involve some eight or ten employees. A question was asked about the contingencies for superannuation. That shows a penetrating analysis of the legislation. The employees of SMEC are members of the Commonwealth superannuation scheme and are covered by that scheme. It is not a financial calculation in respect of the Snowy Mountains electricity authority. Senator Peter Rae —What? We are not on the electricity authority. Don't they make any employers' contribution? Senator BUTTON —If Senator Rae had been listening he would know that that was not the question I was asked. A question was asked about the current profitability. I had explained beforehand about the current profit and loss statement and the balance sheet. I make the point that there is nothing unusual about not having those statements available at this time. There is nothing delayed in their publication this year. The answer to the question on the financial situation in 1984-85 which was asked either by Senator Archer or Senator Lewis was revealed by the Minister for Housing and Construction (Mr West) in the House of Representatives in the course of debate on this Bill. The Minister informed the House that in 1984-85 there would be a likely loss of $3.45m. I say to Senator Lewis that that figure would be revealed on a careful reading of Hansard. Senator Lewis —I am glad you got around to reading it. Senator BUTTON —I am just sorry that the honourable senator did not. I am now informed, in terms of the update, that that is still likely to be the situation; as of now, that is the view of the authority. There was another question about superannuation, the Department of Finance study and a footnote on the accounts of the annual report published on 30 June 1984. I refer to note No. 16. Senator Siddons wants to make a contribution to the debate. I will just shuffle through my papers while he is doing so and find the response to that question. Senator SIDDONS(Victoria)(8.15) —One gets used to receiving all kinds of abuse in this chamber, but I have just sat through a prize example of being accused unfairly. The Australian Democrats are not prepared to sit here and remain silent when accused by Senator Lewis of not embracing amendments he gave us two hours ago. Some weeks ago, Senator Archer led for the Opposition in the debate on the Snowy Mountains Engineering Corporation Amendment Bill. We made a point of trying to get across to the public at large what a magnificent job the Snowy Mountains Authority had done and we said we were very happy to accept this legislation in its present form without amendment. Two hours ago, Senator Lewis raised a whole series of amendments. Because we did not race around and say `Right, we'll accept those. That's great' we had to sit here and be accused of all kinds of terrible things. In fact, in the two hours available to us we have considered the amendments. I wish to comment on them in detail. The first amendment to proposed new section 18 that Senator Lewis and the Liberal Party have suggested we adopt states that the Corporation shall not join in the formation of a partnership of a company unless the Minister approves in writing of such a partnership. It seems to us that throughout this debate the Opposition has berated the authority as hard as it can for not making sufficient profits, for being inefficient and for being everything the Opposition can accuse it of. Yet the Opposition, in its first amendment, is endeavouring to weave a web of bureaucratic red tape around the authority. I could not imagine an amendment designed more to inhibit the entrepreneurial spirit in the authority than this amendment. We will oppose it absolutely. Nevertheless, we accept part of the amendments Senator Lewis has foreshadowed. He proposes to add to new section 18 a sub-section (5) which states: The Corporation shall not join in the formation of a partnership or a company which has any function or power which is not a function or a power of the Corporation. We believe that there is a precedent in the dairy industry, where subsidiaries were formed with powers beyond those which the original Act intended. That precedent can provide a loop- hole. We will wait to hear what the Government has to say about this. We certainly do not want a repeat of what happened in the dairy industry. We believe that it would be reasonable for any government authority to make clear what subsidiaries and partnerships it intends to form. In the absence of any assurance by the Government in the legislation as it now exists, we could be persuaded to accept proposed new section 18 (5) providing-this is a very important proviso-it stated: `The Corporation shall not join in the formation of a partnership or a company which has any function or power which is not a function or a power of the Corporation unless the Minister has approved in writing of the participation of the Corporation in that partnership or company'. That would give the Parliament some guarantee to stop a government authority going off the rails. Frankly, I cannot imagine that an organisation set up to control the affairs of SMEC would under any circumstance consider getting involved in an activity outside its area of expertise. Senator Chipp —Our amendment sheets home ministerial responsibility. Senator SIDDONS —It does sheet home ministerial responsibility. As such, we cannot object to that, although, I reiterate that it is a great pity that if the Opposition were so concerned about this issue it did not raise it when the debate first started. Senator Archer —You did not pick it up either. Senator SIDDONS —Let us hear what the Government has to say about it. I am blaming the Opposition for accusing the Democrats of all kinds of terrible things because we did not, immediately we were approached by the Opposition, say: `Oh yes, we will embrace an amendment'. We insist that we need more than a few hours to consider amendments fully. We are going to insist that reasonable time be given to consider these important matters. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(8.21) —I apologise to Senator Lewis in relation to footnote 16 to the 1984 accounts. The position is as he says-broadly that the qualifications to the Snowy Mountains Engineering Corporation accounts with regard to superannuation was outside that body's control and within the responsibility of the Department of Finance. Those decisions by the Department of Finance were finally made in 1984-85. The qualifications regarding terms and conditions of employment referred to are only a minor matter in relation to the employment of locals on overseas projects. The contributions by SMEC to the Commonwealth superannuation fund were increased from 15 per cent to 21.9 per cent as from 1 July 1984. That is what has happened as a result of the matter raised in the footnote referred to by Senator Lewis. I ought to indicate an attitude to the amendments to be moved by the Opposition. The Government will not accept the addition of sub-sections (3) and (4) to proposed new section 18 for very much the same reasons as Senator Siddons advanced in the course of his comments; namely, that it seems to me to be an incredible sort of bureaucratic interference in the affairs of what is, essentially, an independent statutory corporation which has a wide range of management and business authority vested in it. With regard to the addition of sub-section (3), we do not think that is necessary in terms of the wording of the legislation as a whole, but we will not divide against the amendment if it includes an expression to the effect that the Corporation will not join in the formation of a partnership or a company, et cetera, without the approval of the Minister. I do not know whether that is suitable to the mover of the motion, but if words to that effect are included, the Government will not divide against the amendment. The amendment to clause 8-proposed new section 52-states: `after paragraph (b), insert the following word and paragraph . . .' The Government will not vote against that amendment. Senator LEWIS(Victoria)(8.25) —I have a number of matters I wish to raise in connection with the amendments to the Snowy Mountains Engineering Corporation Amendment Bill. The Minister for Industry, Technology and Commerce (Senator Button) is involved in a private conversation at present which may be important; so perhaps I might just turn to a matter which I found somewhat distressing. Senator Siddons said that we had held the Australian Democrats responsible for something or other because we had only given them notice of amendments two hours ago. The truth of the matter is that the Senate met last Friday morning. After Question Time the Senate Estimates committees met. I went to Senator Siddons' office at 8.15 a.m. and he was not present. I went there again before the Senate commenced at 9 o'clock on Friday morning. I went there throughout the course of that morning and he was not present. I looked for him in the Parliament and he was not present. Senator Chipp —How do you know that? Senator LEWIS —He was not present in the chamber. I asked his Whip if he was present. He told me he believed he was present. I continued to search for him around the corridors. The Senate adjourned to enable Estimates committees to meet and I was still unable to find him. Ultimately the only way I felt I could make any communication with Senator Siddons on this matter was to leave all the papers carefully marked-a copy of the Senate report, a copy of part of the Bill and a copy of the amendment-with his Whip's secretary. Senator Siddons —We do have some other things to do. Senator LEWIS —Senator Siddons interjects: `We do have other things to do'. I agree with him. He has been saying that I gave him only two hours notice. Did he think I had nothing else to do but to rush around and give him notice? I have given him notice. I actually went again today to talk to him about the matter. I have given the Minister for Housing and Construction (Mr West) notice. I agree with Senator Siddons that we are all terribly busy. We can only do whatever we are able to within the time available to us. Senator Chipp —There is no recrimination on our part. Senator LEWIS —Senator Chipp says `There is no recrimination', but the truth of the matter is that Senator Siddons was saying that we gave him only two hours notice. At least five hours ago I gave him two hours' notice. The truth of the matter is that the Democrats have had time to consider this matter and it is not such an in-depth amendment that it requires any great consideration. After all, there are only a few Democrats. I have heard what the Government and the Democrats are saying. They will accept the proposed third and fourth amendments. I say to the Democrats and to the Australian Labor Party: `I and my colleagues shall remember that you rejected amendment 3 and amendment 4 moved in our names. If any subsidiary of this body goes wrong, we will hold you responsible for it totally and completely. You have been given the opportunity. In the past, other people have not been given this opportunity to move these sorts of amendments or consider amending the Bill in this way, but you have been given the opportunity. If any subsidiary of this body goes wrong, you will be held 100 per cent to blame'. That applies to both the Australian Democrats and the Australian Labor Party. I turn now to the addition to the fifth amendment. It is very difficult to say something to the Minister when he is involved in a conversation with someone else in the chamber. That makes it extremely difficult but in due course I hope he will turn back to the Parliament and listen to what I have to say. Senator Tate —Mr Chairman- The CHAIRMAN —Do you have a point of order, Senator Tate? Senator Tate —It is not a point of order. I am just making a suggestion that Senator Lewis might care to listen to me for three or four minutes and then the Minister may- The CHAIRMAN —Order! Senator Tate, please resume your seat, there is no point of order, unless Senator Lewis- Senator LEWIS —Let him speak. The CHAIRMAN —Senator Tate may speak. Senator TATE(Tasmania)(8.28) —I came into the debate on the Snowy Mountains Engineering Corporation Amendment Bill to hear Senator Lewis say that it could be possible, in the way in which the amending Bill is presently before the chamber, for the Snowy Mountains Engineering Corporation to find itself running McDonald's franchises throughout Australia. It immediately occurred to me that if an engineering firm in the private sector were suddenly to find itself in the fast food market, the shareholders would seek to ensure that the directors were not misusing the funds by having a look at the memorandum and articles. We find in the functions and powers of the Corporation as set out in this statute before the chamber that the powers to join in the formation of partnerships and companies are very strictly limited to the functions. Clause 18 says: Subject to this Act, the Corporation has power-- including power to set up partnerships and companies- to do all things necessary or convenient to be done for or in connection with the performance of its functions . . . They are limited words. They set the parameters within which it is lawful for the exercise of the power to establish companies or partnerships; indeed if the Snowy Mountains Engineering Corporation went outside the functions-which are on the facing page of the Bill; namely, primarily to investigate, advise on, design, supervise and construct engineering works in Australia and overseas-it would be acting ultra vires. So already within the Bill we have the sort of structure which ensures that this Corporation cannot enter into partnerships or companies which go outside the functions outlined and mainly to do with engineering works in Australia and overseas. I would have thought that this is not really the problem that Senator Lewis has thought it to be. To that extent, and only because it is declaratory of the present situation, I believe that the Government could perhaps cop proposed new sub-section (5) in that it merely states what is the law anyway. The proposed sub-section states: The Corporation shall not join in the formation of a partnership or a company which has any function or power which is not a function or a power of the Corporation. I believe that that is purely stating what is the case without the amendment but if, out of an abundance of caution, the Opposition wants to put those words in I would be prepared to go along with it. However, I would not say it was necessary in order to establish the sovereignty of Parliament over the possible partnerships or corporations which could be established. Therefore I find the words `except with the authority of the Minister' somewhat odd because I believe that that would take us outside of the functions and powers of the statute, which is precisely what Senator Lewis does not want. Senator LEWIS(Victoria)(8.32) —I understand the point Senator Tate is trying to make but, with respect, it just meant that the Government would not accept it. There are two problems. Firstly, Senator Tate was not a member of the Senate when it conducted its inquiry into the Australian Dairy Corporation. Senator Tate —Of course I was here. Senator LEWIS —Were you really? I apologise to Senator Tate if I have suggested something in error. All I can say is that he did not read the report because the truth of the matter is that if the Snowy Mountains Engineering Corporation wanted to involve itself in the McDonald's fast food enterprise it would be able to bring itself within clause 18 by in some way or other having a contract, perhaps for the construction of one of the buildings, and that would enable it to perform its functions and then enter into the fast food business. That is the practical aspect of the matter. Secondly, Senator Tate is just raising an academic argument because the truth of the matter is that, the way it stands at present, the subsidiary can in effect do whatever it wants to do unless this sort of limitation is incorporated in the legislation. I do not know why we are continuing to argue this matter. I see that there is some discussion going on in the back benches. Maybe we ought to report progress and seek leave to sit again later this evening. Is that a good suggestion? Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(8.34) —I do not think that is necessary. Senator Lewis has talked pretty well non-stop since 8 o'clock and I guess I can do a bit of that for a while too while it is sorted out. I reiterate that the first two proposed sub-sections on the Opposition's notice are not acceptable to the Government for the reason I indicated earlier. The amendment on the second page cannot be objectionable and we will not be voting against it. In the light of Senator Tate's argument, which relates to clause 18 of the Bill and the associated clause which defines functions of the Corporation, the Opposition may not wish to proceed with the third proposed sub-section. Senator Lewis —I don't accept what he said. Senator BUTTON —I think both the powers and the functions of the Corporation are explicitly spelt out. It may be that that clause is redundant, that it is a repetition of the powers and functions as spelt out in other clauses of the Bill. Perhaps we could hear what the Australian Democrats' view is on that. Senator SIDDONS(Victoria)(8.36) —The Australian Democrats are indebted to Senator Tate for drawing our attention to the very explicit wording of the functions of the Corporation. I will read it out. The Bill says: Subject to this Act, the functions of the Corporation are to investigate, advise on, design, supervise and construct engineering works in Australia and overseas. As these are the clearly expressed functions of the Corporation I fail to see how it could legally enter into activities outside those clearly defined functions. Senator Archer —You were not listening to him; that is why you do not know. Senator SIDDONS —I am sorry; I am only talking about the amendments and the point has been made that we do not want the Corporation to get involved in the fast food business. There is no way that it could do so legally with these clearly spelt out functions, so I am leaning very much to the opinion that Senator Lewis's great song and dance about his amendments is really a waste of the Committee's time. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(8.37) —On reconsideration that must also be our view, except for the amendment relating to reporting, to which I do not think there can be any serious objection. Consequently the Government will oppose the first amendment and not vote against the other one. Senator LEWIS(Victoria)(8.38) —It is clear that what has been going on on the back benches between the Australian Democrats and the Australian Labor Party is that, as usual, the Democrats have agreed to support the Government. All I can say is, as I have said before, that the Australian Labor Party and the Australian Democrats will carry the national burden of rejecting these three proposed new sub-sections which may have given some parliamentary control and some means of reporting to the Parliament in respect of the creation of subsidiaries. Senator Tate —We have agreed to reporting. Senator LEWIS —Yes, reporting to the Parliament as to the nature of partnership agreements entered into or subsidiaries created. If Senator Tate cares to read proposed sub-clause (4) he will see that that would have required the Minister to table in the Parliament the constitution of any subsidiary created. If the Australian Labor Party and the Australian Democrats do not think that that is a reasonable proposition, all I can say is that to my mind they are not thinking very clearly. I would have thought that according to one of the fundamental principles of the national Parliament, it would not be unreasonable at all, and certainly it would not hamstring the body, to ask a statutory corporation-which is after all an instrument of the Parliament; it is created by the Parliament, not by the Government-if it creates a subsidiary to table the constitution of the subsidiary that it has created. We are not saying that it needs to get the consent of the Parliament before it creates the subsidiary. We have heard both Senator Siddons and Senator Button talking about entrepreneurial enterprise. If they want to talk about entrepreneurial enterprises, why do they not support our proposal, which is that this organisation should be sold to its current employees? That would make it an enterprise that might be worth backing. I ask the Minister a further question in regard to the number of employees who are still with the Corporation. The report shows that in 1984 some 53 employees were voluntarily retrenched. The Minister has told us that it is anticipated that eight or ten employees will be retrenched in 1985-86. I think he said that some 90 employees were retrenched during the past year. So all in all, in the last two years this body has reduced the number of its employees by about 140, which should leave it with over 500 employees. I would be interested to know how many employees the body currently has. Senator Button —It has 345. Senator LEWIS —Will the Minister provide me with details of how the number of Snowy Mountains Engineering Corporation employees has dropped from 650 to 345, when it has lost only 145 employees? Those figures do not seem to add up. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(8.43) —A number of factors have contributed to the employment attrition such as natural retirements, long term retrenchments, and the cessation of fixed term contracts which covered some employees. Those figures, plus the 90 retrenched last year, plus the figure the honourable senator was given for the earlier year, plus the small number in the can for this year, gives the current figure of 345, plus the eight or ten foreshadowed retrenchments. Senator SIDDONS(Victoria)(8.44) —The Australian Democrats try to be objective in regard to amendments the Opposition moves in this chamber. Nevertheless, it seems to me to be a very funny way of going about seeking support from the Democrats when we have to sit here and listen to an hour or so of abuse by Senator Lewis, who then says that the Democrats will not support him. We have carefully considered the case Senator Lewis has attempted to make amongst all the rhetoric and abuse that has been flying around. We are prepared to accept that it is reasonable for the Snowy Mountains Engineering Corporation to have to report to the Government, in the interests of accountability, on the operations of any partnership or company in the formation of which the Corporation has joined. Other than that, we make the point that the functions of the Corporation are clearly set out. We believe that very much of what Senator Lewis has said is huffing and puffing over a matter that does not exist at all. Senator LEWIS(Victoria)(8.45) —I can see no reason to prolong the debate. I therefore move: (1) Clause 7, proposed new section 18, add the following sub-sections: `(3) The Corporation shall not join in the formation of a partnership or a company unless the Minister has approved in writing of the participation of the Corporation in that partnership or company. `(4) An approval given under sub-section (3), together with a statement of particulars of the partnership or company to which the approval relates, shall be laid before each House of the Parliament within 15 sitting days of that House after the giving of that approval. `(5) The Corporation shall not join in the formation of a partnership or a company which has any function or power which is not a function or a power of the Corporation.'. Question put: That the amendment (Senator Lewis's) be agreed to. The Committee divided. (The Chairman-Senator D. J. Hamer) Ayes . . . . . . . . . . . 26 Noes . . . . . . . . . . . 34 —— Majority . . . . . . . . . 8 —— Archer, B. R. Lewis, A. W. R.Baume, Michael MacGibbon. D. J.Bjelke-Petersen, F. I. Missen, A. J.Boswell, R. L. D. Parer, W.R.Brownhill, D. G. C. Puplick, C. J. G.Carrick, Sir John Reid, M. E.Collard, S. J. Sheil, G. (Teller)Crichton-Browne, N. A. Short, J. R.Guilfoyle, Dame Margaret Teague, B. C.Hamer, D. J. Vanstone, A. E.Hill, R. Walters, M. S.Jessop, D. S. Watson, J. O. W.Knowles, S. C. Withers, R. G. Black, J. R. McClelland, DouglasBolkus, N. McIntosh, G. D. (Teller)Button, J. N. McKiernan, J. P.Childs, B. K. Macklin, M. J.Chipp, D. L. Maguire, G. R.Coates, J. Morris, J.Colston, M. A. Ray, RobertCooney, B. Reynolds, M.Devlin, R. Richardson, G. F.Elstob, R. C. Robertson, E. A.Foreman, D. J. Ryan, S. M.Georges, G. Sanders, N. K.Gietzelt, A. T. Siddons, J. R.Giles, P. J. Tate, M. C.Grimes, D. J. Vigor, D. B.Haines, J. Walsh, P. A.Jones, G. N. Zakharov, A. O. Baume, P. E. Sibraa, K. W.Rae, P. E. Coleman, R. N.Kilgariff, B. F. Cook, P. F. S.Durack, P. D. Reynolds, M.Townley, M. Evans, G. J.Messner, A. J. Aulich, T.Chaney, F. M. Mason, C. V. J. Question so resolved in the negative. Senator LEWIS(Victoria)(8.53) —I move: (2) Clause 8, proposed new section 52, after paragraph (b), insert the following word and paragraph: `and (c) a report on the operations of any partnership or company in the formation of which the Corporation has joined,'. Amendment agreed to. Bill, as amended, agreed to. Bill reported with an amendment; report adopted. Bill (on motion by Senator Button) read a third time. Debate resumed from 9 May, on motion by Senator Grimes: That the Bills be now read a second time. Senator COLLARD(Queensland-Leader of the National Party of Australia)(8.56) —These Bills, which were floating around all through the autumn session, are an indication that, once again, the current Minister for Primary Industry (Mr Kerin) brought them in with little or no discussion with the various rural organisations. The legislation had passed through the House of Representatives before the National Farmers Federation even had a chance to meet and discuss it. As I have said, once again we have an indication of the apparent contempt in which this Government holds the rural industry by bringing in these various pieces of legislation. Negotiations between the Government and the NFF were held. Various amendments were proposed-some by the NFF-some of which were not accepted by the Government and so the drama went on. In fact, this legislation was never discussed in the Senate before we rose for the winter recess. I am led to believe-I find it rather astounding-that Mr Kerin claimed that the Opposition blocked the passage of these Bills through the Senate. Of course, anybody who had anything to do with the Bills and who was waiting to speak on them would know that that was not the case. They were listed quite regularly on the Notice Paper and on the red business sheet for the day, but because of the discussions that were going on, they never quite made it before the list was ruled off and we went home for the winter recess. We have had the consultations and negotiations and we now have amendments that have been agreed to by the Government and the NFF. I understand that Senator Cooney will foreshadow those amendments when he speaks after me. Those amendments will be moved in the Committee stage and the Opposition will support them. They relate mainly to the Rural Industries Research Bill 1985 and a couple of consequential amendments relate to the Rural Industries Research (Transitional Provisions and Consequential Amendments) Bill 1985. Despite all the problems that the rural industries have had, such as the weather and markets, they still represent 45 per cent of our exports. I think it is essential that the people of Australia realise that, at a time when our current account deficit is in the vicinity of $10 billion, the rural industries still play their part in our balance of trade. Of course, it is necessary for research to be done to help the industry in its marketing, in developing new strains or breeds, or whatever it is that is needed to upgrade the herds and the grain crops to keep us in the forefront of world primary produce and thus help us with our balance of payments. I saw some interesting figures the other day that indicated that the debt accrued by the rural industries currently stands at $6 billion, which works out at about $35,000 per farm. Currently, the average farm income is less than $7,000. That indicates that all is not bright with the primary industries even though they make a substantial contribution to our balance of trade. The Rural Industries Research Bill amalgamates existing rural research legislation and provides one Act for the administration of rural industry research funds. As I understand it, at present there are 14 trust accounts covering barley, chicken meat, cotton, dried fruits, dairying, fish, honey, oilseeds, pigs, poultry, wheat, wine, wool and tobacco. The Federal Government will help with dollar for dollar assistance for research. Of course, these dollars will be obtained by means of levies on the various commodities I have mentioned. One major concern which has been expressed all the way through, which has not been addressed by amendment, is the Government's attempt to recover administrative costs from the various bodies. In fact, under this Bill, it would appear that the Minister can direct any research council to pay Department of Primary Industry administrative costs without any accountability to the industry. A statutory charge of about 84 per cent of all salaries seems to be charged on top of those salaries in the area of administration. I will look at a couple of those things in a minute. It is interesting that the Australian Chicken Meat Federation, in a letter to Mr Hunt, pointed out this fact. The letter, from Dr J. G. Fairbrother, stated: Our industry is not opposing the proposed legislation. We believe we can operate within the legislation without any detrimental effect on the research program. We are concerned however that the Department of Primary Industry is embarking on a cost recovery program which is out of proportion to the service offered. Nevertheless we see little point in assuming the role of secretariat . . . ourselves. I raise that point because there is concern; the industries that are encompassed in this legislation are worried about the administrative costs. I give the example of dairying. The expenditure on research programs for dairying was $1.4m over 60 projects with administrative costs of $78,478. Yet for beef, which is not within this program, there was an expenditure of $12.2m, or about 10 times that spent on dairying, on 180 projects with administrative costs of only $51,000. We are also concerned that the charges may soak up a disproportionate amount of funds in the smaller industries. While administrative charges take up only 5 per cent of wool funds, administrative charges take up to 20 per cent of poultry research funds and 17 per cent of honey funds. The National Farmers Federation actually took this up in one of its proposed amendments, which was to delete clause 9 (1) (e), but I understand that the Minister did not agree to that and in his letter stated: I am not prepared to accept your proposed amendment regarding cost recovery for Investment Management. However, he did give this undertaking in page 2 of his letter: I undertake that my Department will continue to review the administration of investment services and to consult annually with Research Council Chairpersons on the key elements of costs to be recovered. I will also have this matter discussed at the annual RIRF co-ordination meeting. Through these two means, industry will be provided with an opportunity to assess the efficiency with which investment management is conducted. I will also have these details clearly stated in the Senate debate, which action, as you are aware, brings an obligation for implementation of the action so stated. With that guarantee from the Minister, the NFF did not seek to pursue its amendment to delete clause 9 (1) (e). As I have said, this legislation is here in the autumn session because of lack of consultation with the industries. They ran into all sorts of problems. The consultation did take place, there has been agreement and the amendments will be made. As I have said, Senator Cooney will foreshadow amendments. We in the Opposition will support those amendments and thus support the Bills. Senator COONEY(Victoria)(9.03) —I have some comments to add to those that Senator Collard has already addressed to the Senate. As he has said, the Rural Industries Research Bill 1985, in its eventual form after the amendments to be proposed by the Minister for Finance (Senator Walsh) have been inserted, will be agreed to by the Senate. As I understand it from Senator Macklin, the Australian Democrats will also support it. Senator Collard has said some generous things about the Bill. However, one objection which he had was to the provisions of clause 9 (1) (e) which requires that, from the moneys in the research funds, payments be made for the management of the various funds. He said that, depending on the fund involved, such management costs will take a disproportionate amount of the income in the funds. He said that, depending on the fund involved, such management costs will take a disproportionate amount of the income in the funds. It is to be remembered in this context that the Government is putting in half of the amounts in the funds, up to a level equivalent to half a per cent of the gross value of production of the particular industry. It should also be remembered that one of the ideas of this Bill is to make research more separate than perhaps it has hitherto been from government. Those two considerations make it proper, at least at this stage, that the management funds be taken from the research funds rather than that they be paid for by the Government. Senator Collard pointed out, quite correctly, that the rural industry is still central to the economy of the Australian nation. Of course, I agree with that. This Government, in recognising that, recognises the value of investment in the rural industry, particularly of research in that industry. For that reason it has worked closely with the rural industry in getting this Bill into the form it will be after the amendments have been made. In that respect, it has conferred, as Senator Collard said, with the National Farmers Federation. The Bill will upgrade the operations of at least 11 rural industry research funds. The philosophy behind all this is that industry and government in this area should in the future act together, as they have in the past. It is intended that from now on the rural industry research councils will be more commercial in their orientation. In that context there has been much discussion recently on privatisation of government bodies. I make the point that, in considering whether something ought to be privatised and in considering whether government ought to enter into the field of any particular industry, the question is not so much whether privatisation as a creed is correct; the consideration is whether a particular result can be more effectively obtained from the private sector, the public sector or, as in this case, a combination of both. It is my submission to the Senate that this case is a very good example of how government and the private sector in the form of rural industry can get together to set out a plan which will help, as Senator Collard has said, a very central industry, a very vital industry to the Australian economy. It is hoped that the partnership that will be formed through this will be most effective. It will be interesting to see how things have gone at the end of the five-year period contemplated in this Bill as the first of the planned periods that will be addressed by the various councils. I hope that Senator Collard will be back here then so that perhaps at that stage we can debate how things have gone. There are three features of the Bill which I wish to comment on at this stage. Firstly, this Bill provides for greater participation by each rural industry concerned in the direction of the form of research into its own factors. In other words, the machinery set up by the Bill-this will be particularly so in its amended form-will enable an industry to give direction to the form of research which it considers is correct for its industry. As the amendments which I will come to shortly show, it also contemplates that the Minister for Primary Industry, particularly in the initial stage, will give an indication of where he thinks that research ought to be carried out and an indication of what he considers are the correct priorities in investigating the way in which particular rural industries can be affected. That is the first thing. Secondly, in a sense the Bill will deregulate research in rural industry more than has been the case to date. Up to now the Minister has given very precise directions as to how research in any particular industry ought to occur. Under this amendment, the Minister will give his initial indications of where he thinks research ought to occur in the five-year period. The council will then be able to direct its own research unhampered by any close direction from the Minister. To that extent, these Bills will open up the area of research and make it freer from government direction than was previously the case. The third thing the Bill will do is to require the council to play a more active role in the direction in which research ought to go. In other words, up until now the particular body or person undertaking the research has determined to a large extent the direction of that research. As things are arranged under this Bill, it will become the duty of the fund to give direction as to how research funds ought to be devoted. It will work out the appropriate areas of research and look for the appropriate people to carry out research in these areas. At this stage I indicate the amendments which will be moved by the Minister and which, as I understand it, will find acceptance from the Opposition and by the Australian Democrats. These are the amendments to the Rural Industries Research Bill. The first amendment is to clause 8. The effect of that amendment will be that, in respect of the Barley Research Trust Fund and the Wheat Research Trust Fund, interest earned on the funds will be distributed proportionately amongst the various bodies that contribute to them. That is the item referred to in proposed new section 9 (1) (e). The Barley Research Trust Fund and the Wheat Research Trust Fund are two funds to which the various States contribute. That amendment will ensure that the interest that becomes available from those funds will be distributed in proportion to the amounts that have been contributed by the various entities. Under the second amendment, which I have already mentioned, the Minister will determine in writing the form of the research and development that he considers is appropriate for the research fund to develop. That amendment was sought by the industry because, understandably, it was concerned to know exactly what the Minister thought was the appropriate area within which the Research Council should operate and should look for people to carry out the appropriate research. That amendment will make clear to the fund what the Minister considers is the appropriate policy for it to adopt. In the light of that, the fund can go ahead and make its own choices as to where the research ought to go, keeping account of what the Minister has had to say. The Minister shall say what he wants over the five-year period and within that context each fund will make its own choice. It is in that context that I said before that the funds will have much more freedom of choice than was formerly the case. The next amendment sought, which is agreed to by the Government, relates to the composition of the selection committee. Under that amendment there will be at least three people from the industry, instead of up to three, who will join the selection committee. This will mean that the industry will have the determining voice in deciding who will join particular research councils. The next amendment is a very sensible one. It is that the selection committee, in determining who shall be on a research council, will advertise the fact that it is looking for people to be appointed to that body. Firstly, it will advertise in newspapers that circulate throughout Australia, and, secondly, by giving notice in writing to orgainsations in the relevant industry which may be concerned to have people appointed to the particular council. Again, that will ensure that the work of the council is known to the best people available. Hopefully, several applications will come forward so that the range of talent available can be looked at and the best person can be obtained from that area. As I understand it, they are the amendments to the main Bill. There are also some consequential amendments to the subsidiary Bill, which go to matters of drafting only and which cause no particular concern to the Senate. In the light of the amendments which will be moved by the Minister, the Bill is very non-controversial. The fact that the Bill is non-controversial does not mean that it is not one of the more important Bills to come before this place. Hopefully, it will advance rural industry in Australia and will help it over the struggles it is going through presently. The Bill has come before the Senate after discussion with all the appropriate bodies, including the National Farmers Federation, and it has unanimous support. Senator BOSWELL(Queensland)(9.19) —Tonight we are debating the Rural Industries Research Bill and cognate Bills, including Bills covering the tobacco industry and assistance to the poultry industry. The Tobacco Charge Bills provide that the various tobacco levies will go to the Australian Tobacco Board once the tobacco industry has come under the Rural Industries Research Act. The Poultry Industry Levy Amendment Bill and the Poultry Industry Assistance Amendment Bill will apportion part of the hen levy to research, although the hen levy will be abolished from 1 July 1987. The Rural Industries Research Bill embraces rural industries and consolidates them under one Bill. As my colleague Senator Collard, said, the rural industries are diverse. They include barley, cotton, dried fruits, oil-seed, pigs, poultry, dairying, honey, tobacco and wheat. More industries may be added by later legislation from time to time. The existing industry research committees are to be replaced by research councils of five to nine members for each industry and the research council selection committee will be created. The committee consists of a chairperson appointed by the Minister, a ministerial appointee from the area of science research and development or marketing, a representative from the Agricultural Council and one nominee from the National Farmers Federation. We are told that research councils will be accountable, having their annual report tabled in Parliament, and that the chairperson will present the annual report to an executive meeting of the industry body. One factor that concerns the various research councils is the heavy cost that they fear they will experience as a result of the Department of Primary Industry administering these councils. I do not wish to be derogatory to the Department of Primary Industry but it is a fact of life that this Department will have a lot heavier charges as it has a lot more overheads. Thus its charges will be quite substantial compared with those that would be incurred if the rural industries research councils were responsible for running their own management. This is one of the main points that concern all the various industries. People are concerned that a heavy percentage of the costs will go on administering the research councils. The Bill is presented by the Government as a commitment by it to increase rural research. However, my scrutiny of the Bill does not indicate that. The Prime Minister (Mr Hawke) promised increases to rural research in the last election campaign. This was one of his many promises made during the last election. In fact, this Bill imposes a limit on the Federal Government's contribution to rural research, whereas before there was no such limit on its contribution. The Government matched dollar for dollar any amount put into rural research. Now the Federal Government is limiting its dollar-for-dollar contribution to 0.5 per cent or 5c in the dollar on the annual gross value of production. Over this level the industry contribution will not be matched by the Government. This was not the case under the previous Act. Yet the Government has indicated that this Bill will increase rural research. I say that this is not so, that it will limit rural research. At present-not in five years-there are already rural industries that are paying more than 0.5 per cent of their gross annual value of production. I believe there are two industries in this position; one is the barley industry. The limit introduced by the Bill means that the industry contribution of more than 0.5 per cent will not be matched by the Government, so I fail to see how, by putting a limit on its contributions to research funding, the Government can represent that it is increasing its contribution to rural research. The limitation imposed by this Bill is a double limitation. First, it places a limit on the Government's contribution where one did not exist before; secondly, it limits the amount of the industry's contribution. When times are bad and production rates are down, the Government's contribution to rural research will go down. This will happen at a time when rural research is most needed. This does not show any appreciation of the needs of the rural industries. I will give an example of that. In the wheat industry there is a continual breakdown of old varieties of wheat as they succumb to new types of disease. This is a natural, botanical process that requires continuing research to fund new varieties which will be resistant to known diseases and known pests. There is also a continuing need for the development of better quality standards as our export markets change in their demands. Rural research has made a major contribution to keeping Australia's produce competitive on world markets and has led to Australia's proud boast of being one of the most efficient rural producers in the world. As both Senator Cooney and Senator Collard have indicated, 40 per cent of our export earnings come from rural exports. When the Labor Government refuses to hold down our deficit, our export earnings are very important to this country and should be given every encouragement instead of being subject to the limitations that this Bill proposes. It is acknowledged by experts that agriculture will remain the most important single source of export earnings for Australia for at least the rest of this century. In imposing cost after cost on the rural sector, this Government fails to understand that rural industries are the only way that we can meet our commitments to our national debt. With 40 per cent of our export income coming from rural production, it is absolutely essential that we keep on top of rural research. Since the 1960s the volume of agricultural production has been growing at a rate of 2.8 per cent and it cannot be denied that rural research has made a great contribution to this figure. Yet despite this, and despite relatively good seasonal conditions, farm income is predicted to fall this year by 17 per cent. We have all heard time and again that the average farm income is $7,000 per farmer per year. The Labor Government has shown its attitude to all research, including rural research, by its treatment of the Commonwealth Scientific and Industrial Research Organisation. In the August Budget I believe the funds to the CSIRO were cut by 3 per cent. The National Party in particular takes a special interest in the CSIRO, not only because of its proud record of rural research, but also because the organisation was established in 1926 as a National Party initiative. With great foresight the National Party saw the CSIRO as being of great importance; therefore it organised its funding to be held in a trust fund so that forward planning could be made with confidence. This also attracted public financial contributions of considerable proportion. Labor governments have been attacking the CSIRO ever since then. The Scullin Labor Government attacked its resources and the Chifley Government altered its independent basis, which removed the public contribution. To this day the Labor Government continues to attack and undermine the CSIRO with a 3 per cent or $24.9m Budget cut. The CSIRO was giving priority to the area of water research, but Budget cuts affected irrigation research in areas such as salinity problems, high crop yields with economic water use and safe ways of reusing water. Even the Minister for Science, Mr Barry Jones, in answering a question from Mr Hunt, indicated that he wished that more of the CSIRO's funds could be turned away from rural research and put into secondary and tertiary manufacturing research. That would just constitute another broken Labor Government promise on water resources. There is a great deal of fear in the various research councils. They have agreed to go along with the amendments to this Bill as being the best they can expect. They fear that although they have not lost control of the research boards they have lost numbers. They also have grave reservations about the costs that will be imposed. As has already been indicated by my colleague Senator Collard, the Honey Research Committee will have 17 per cent of its research budget taken up by administrative costs within the Department of Primary Industry and the dairy industry will have 20 per cent of its research funds going to pay management commitments to the Department of Primary Industry. When presenting this Bill the Minister referred to the accountability provisions, which are very acceptable. The National Party believes firmly in the principle of accountability for government spending. Senator Walsh —Not in Queensland. You do not have a Public Accounts Committee. The ACTING DEPUTY PRESIDENT(Senator Elstob) —Order! Senator BOSWELL —Thank you, Mr Acting Deputy President, for your protection. I look forward to the consistency of policy that the Federal Government and Senator Walsh say they are going to provide on public spending. I wish that consistency had been forthcoming in relation to the payments made to the meat inspectors at Mudginberri when they would not perform their duties and cross the picket line. I would like to know where Senator Walsh was when that happened and why he was not giving a lead to help Australia maintain her export industries. He was very quiet then. He always sets himself up as the de facto Queensland Government outside Queensland. It is a great disappointment that the Rural Industries Research Bill represents another broken promise made by the Labor Government as recently as the last election. The Government has chosen to represent it as a measure to boost rural research. Unfortunately, when viewed with the Government's cuts to the CSIRO, and now with the limitations imposed on the Government contribution under this Bill, research for our rural industries will not receive the assistance that it rightly deserves. Senator MACKLIN(Queensland)(9.34) —The major Bill in the package we are discussing, the Rural Industries Research Bill, concerns the restructuring of the rural research boards as they affect the major commodities in Australia. The introduction of this Bill into the House of Representatives in May was, I think, an interesting example of what has gone wrong with much of the rural legislation that has been presented. The Bill was introduced into the House of Representatives without the type of discussion that was needed with the various research councils, when it could have been expected that many of these groups had a valuable contribution to make to its drafting and to the various aspects which concerned their research efforts. After the passage of the Bill in the House of Representatives the Government entered into discussion with the National Farmers Federation and, as a result, there has been acceptance by the Government of eight major amendments and a number of consequential amendments. The intent was originally that the Rural Industries Research Bill and allied Bills would have passed both Houses during the last session, but that was not possible due to time factors. Hence this is the first occasion on which the Senate has had a chance to debate the Bills. The Government has foreshadowed that it will be moving amendments in the Committee stage to a number of principal items that the National Farmers Federation, on behalf of some, but not all, of the research councils, has put forward and the Government has agreed to accept. I will leave more detailed comments on a number of those amendments until the Committee stage. The rural research effort in Australia has always been extensive and, over the years, has been funded in a variety of ways. The Government has used this Bill to bring in some type of systematisation to the various methods which have been used for the various commodities. The research efforts on various commodities have tended to be of historical development and, in the past, certainly, in some industries, have been patchy. However, recently there has been a telling point with these industries and their research efforts that I am concerned we might lose in the implementation of this Bill. I believe the amendments will alleviate most of the problems I have, but I would still like to refer to the essential notion that I think is too often missed in research. I refer to the notion of dissemination. The Australian community, in a wide range of fields, has been eminently successful in research in world terms. As a nation in our research effort we have contributed far and above certainly all the nations in the Organisation for Economic Co-operation and Development listing per head of population. Our major failing, and it is one that the Minister for Science, Barry Jones, points to time and again, is in the implementation of research and not in the research itself. In the rural sector the construction of the boards, which have had their practitioners on them, has played a very important part in that dissemination. I shall spell out in general how many of the people have seen their jobs, and they have carried them out in this fashion. The practitioners have been selected by the commodity councils of one kind or another to serve on those research boards and they have seen their role very largely as representatives of the practitioners. They have brought to the research effort a telling point: What is the practicality of the research which is being carried out? The two types of research of which most people are aware are the fundamental research efforts which are carried on, by and large, in our tertiary institutions and in the Commonwealth Scientific and Industrial Research Organisation, and the applied research that is often funded through these boards. It is the second variety in which I think the practitioners have a particularly important role. Having urged that research be carried out and having received the results of that research, those people representing the various commodity groups have then gone out and sold that research to the practitioners. They have been eminently successful in that type of operation. There are some suggestions in the second reading speech of the Minister for Primary Industry (Mr Kerin) in the House of Representatives that cast doubt, as it were, on that particular activity. In considering these various boards, as I did when we looked at the Bill when it was introduced into the House of Representatives, I was astounded at the effort many of these people put in when travelling around the country, selling to people in various industries the products of the research that had been carried out. No matter how good the research is, if it is not applied it is not worth a dollar. Essentially, in its application and implementation, dissemination is a vital factor that has so often been missing in Australia's research efforts. I am concerned that in some of the moves made in this Bill, that dissemination process will be lessened by putting less reliance on those practitioners who are representatives of the various commodity producers in Australia. It is not an esoteric point by any means. The money which is being expended is coming from the various groups by way of levies, and they wish to see that money used effectively and efficiently. The balance that needs to be maintained in the promotion of basic and applied research, I think, has been and can be maintained almost 100 per cent. I am happy to admit that there are some exceptions-certainly I know of some-but the type of balance which is necessary in rural research has been maintained in the major commodity areas that I have surveyed. When the Government introduced this Bill, I wrote to a wide range of people who would be affected. It was disappointing to see from the replies of industry councils, those groups representing producers, the lack of consultation that they had had. They were naturally apprehensive about the introduction of legislation with which they had not been involved. It was a very useful activity that occurred, after the passage of the Bill through the House of Representatives, in the entry into swift and meaningful negotiations with those groups. However, I do not believe that that, as a model, is a way to go. Picking that up as an analogy to the type of research that is often referred to, it seems to me that without asking the practitioners in the field and without constantly remaining in touch with them to find out what their pressing concerns are, our research effort will not be applied by those practitioners, who are, after all, in many cases strapped for cash, time and effort in a very tight international commodity field. That is my only major concern about the Rural Industries Research Bill. We congratulate the Government on its belated discussions with the industry and on the very real way in which it has sought to pick up the additional concerns which have been brought forward on behalf of the various commodity groups by the National Farmers Federation. I should like to say something more about each of those items on technical grounds in Committee. Senator WATSON(Tasmania)(9.43) —I have concern about the impact of the costs involved in this legislation on the farming community. In relation to the value of production, costs might appear to be minimal; but in relation to the net return, I think they are fairly significant. The great worry in the primary industries today is those costs which are beyond the farm gate, in addition to the rapid escalation of on-farm costs. Our rural production is extremely important to the continued growth and development of this country. We recognise that our farmers are amongst the most efficient in the world. It has been estimated that the average Australian farmer produces enough for 70 people. In this decade, agriculture earned around 43 per cent of Australia's export earnings-an unrivalled contribution to our economy. The 1984-85 record return of $14.5 billion will be passed on this financial year and the cash flow from that could be significantly greater because of the devaluation of the dollar. Agriculture, both directly and indirectly, provides employment for more than three million Australians and, in addition to exports, it produces the raw materials for a considerable part of Australia's manufacturing industry. The quality of our agricultural production is of world-class standard and we can boast of a renowned skill in agricultural research and techniques, developed by individuals and other bodies, including the Commonwealth Scientific and Industrial Research Organisation. Why then, if we are doing so well, do we need new legislation such as the Rural Industries Research Bill? It is because appearances are deceiving. Our rural economy is really in a very poor position. Our farmers are fighting a seemingly endless and unwinnable battle against the pressure of rising costs, on the one hand, and despair in the face of stagnant commodity prices in often over-supplied markets on the other. Despite the record value of our rural production, farm incomes are again expected to fall by about 17 per cent this financial year and by a further 20 per cent next year, despite the effects of devaluation. I think that those who attended the rally of farmers in Canberra were very impressed by the sincerity of their utterances and their concerns. Judging from the number of placards, one of their major concerns was the big increase in fuel costs. Our ability to compete on world markets, unfortunately, is declining. Over the last 10 years, our share of world exports has fallen from 1.7 per cent to 1.3 per cent and, therefore, we should be concerned that our penetration of most overseas markets, especially in South-East Asia, has declined. In my view, our declining competitiveness is not a reflection on our primary producers today. We have been the victims so often of unfair and, at times, unscrupulous competition from such centres as the European Economic Community. Its massive over-production has had disastrous effects on world markets, and has kept commodity prices low. Subsidies to farmers cost the EEC taxpayers $70 billion in 1984, and their mountains of surplus beef, butter, wine, fruit, cereals, sugar, vegetable oil and potatoes have been literally dumped on many of our traditional markets, at prices with which we cannot compete. Aggressive marketing programs by the United States, which include subsidies, export benefits and bonuses for new sales, will deal further blows in both income terms and lost marketing opportunities for our primary producers. It would not matter how efficient our farmers were, they would not be able to compete without similar subsidies. However, we cannot blame the EEC for all our problems. New Zealand, with better marketing strategies and often-as in the case of sheepmeat-with a better product, has captured some of our markets. New Zealand recognised changing consumer demand years ago, and, through research, developed products that would meet these changing needs. The fact that the New Zealanders have plant variety rights legislation must give them a distinct advantage in the horticultural field. They are already producing new varieties of fruit and vegetables which are very acceptable to South-East Asian and Pacific markets. If we are to reverse our present uncompetitiveness, we must put more money and expertise into research and the development of new products and new markets. I wholeheartedly support the move to co-ordinate rural research and development, and to develop a more sound administrative structure to do this. I agree that it is of the greatest importance that those who administer and undertake research are accountable to both the Government and the industries and that the greatest possible returns are made from each dollar spent on research. The 11 industries coming under the umbrella of this legislation will be encouraged to take a much greater part in the development of their products and the direction of rural research. Australia's economic advancement in the future will largely depend on our rural industries' ability to remain competitive and profitable, and attuned to changing market demands. Thus, the development of a progressive and constructive five-year plan for rural research, in addition to an annual research and development program, I believe, is a step in the right direction. However, the best scientists, with the best marketing team and the greatest agricultural production experts in the world, will be a waste of time and taxpayers' money if there are not enough farmers left to produce the goods in the long run. Unfortunately, many farmers are being forced to sell their farms because farming can no longer offer a family a reasonable standard of living, a reasonable return on investment or even a reliable income. World-wide investigation by the National Farmers Federation has shown that Australian farmers pay up to three times the price paid for basic farm inputs by American and New Zealand farmers. The Australian farm cost problem is mainly a function of five government activities; namely, excessive tariffs on many imported goods, excessive borrowing and spending at all levels by governments, a rigid labour market, over-regulated service industries, particularly transport, and government charges and taxes on imports. Research and development are vital. Until this problem and other problems are resolved, I am afraid that our rural returns will continue to decline in real terms. Senator WALSH(Western Australia-Minister for Finance)(9.51) —The debate has been about seven allied rural Bills, although that has not been explicity referred to by more than one speaker. I have only one comment to make on the points made during the debate. Senator Boswell claimed quite erroneously that the Government had reduced funding for agricultural research. In fact, in the three Budgets that this Government has brought down, expenditure has increased in nominal terms, with the industry contribution, from $40m to $68m. That is a nominal increase of about 70 per cent and, in real terms, an increase of something like 40 per cent. As indicated by Senator Cooney, I will be moving on behalf of the Government a number of amendments to the Rural Industries Research Bill and an associated Bill during the Committee stage. Question resolved in the affirmative. Bills read a second time. RURAL INDUSTRIES RESEARCH BILL 1985 The Bill. Amendments (by Senator Walsh)-by leave-agreed to: (1) Page 10, clause 8, line 9, leave out ``paragraphs 7 (1) (d) and (e)'', insert ``paragraph 7 (1) (d)''. (2) Page 10, clause 8, at the end of the clause add the following sub-clause: ``(4) So far as the Barley Research Trust Fund or the Wheat Research Trust Fund is concerned, the amounts required to be paid into that Research Fund that are referred to in paragraph 7 (1) (e) shall be credited to the various separate accounts kept in accordance with sub-section (2) in the same proportions as funds have been contributed from those various separate accounts for the purposes of making the investments referred to in that paragraph.''. (3) Page 21, clause 22, line 34, after ``form,'', insert ``in accordance with a determination in force under sub-section (6),''. (4) Page 22, clause 22, line 2, after ``form,'', insert ``in accordance with a determination in force under sub-section (6),''. (5) Page 22, clause 22, at the end of the clause, add the following sub-clauses: ``(6) The Minister shall determine, in writing, the form of, and, subject to the other requirements of this section, the matters to be dealt with by, each research and development plan that is provided to be prepared in accordance with sub-section (1) or (2) and may, from time to time, vary any determination so made. ``(7) The Minister- (a) shall not make a determination under sub-section (6) or vary any determination so made unless the Minister has consulted with the persons attending a co-ordination meeting convened under section 61 concerning the proposed determination or the proposed variation and has had regard to the views expressed at that meeting in relation to that determination or variation; and (b) shall notify, in writing, any determination or variation so made to the Chairperson of each Research Council or State Research Committee as soon as practicable after that determination or variation is made.''. (6) Page 38, clause 44, lines 25 to 27, leave out ``such number of further members, not being a number greater than 3, as the Minister determines, in writing, to be appropriate'', insert ``3 further members, or, if the organization, or each organization, that is a relevant industry organization in relation to goods of the kind or kinds in respect of which that Research Council is established requests that a lesser number of further members be appointed, such lesser number of further members as is requested by that organization or by all of those organizations.''. (7) Page 38, clause 44, lines 28 to 34, leave out sub-clause (2). (8) Page 40, clause 46, lines 9 to 12, leave out sub-clause (2), insert the following sub-clause: ``(2) For the purpose of enabling it to nominate a person or persons for appointment to a Research Council, the Selection Committee- (a) shall invite the nomination of persons for consideration by the Selection Committee- (i) by advertisements placed in a newspaper that circulates throughout Australia; and (ii) by notice in writing given to the organization, or each organization, that is a relevant industry organization in relation to goods of the kind or kinds in respect of which that Research Council is established; and (b) may invite the nomination of persons for consideration by the Selection Committee in any other manner it considers appropriate.''. RURAL INDUSTRIES RESEARCH (TRANSITIONAL PROVISIONS AND CONSEQUENTIAL AMENDMENTS) BILL 1985 The Bill. Amendments (by Senator Walsh)-by leave-agreed to: (1) Pages 1 and 2, sub-clauses 2 (2), (3), (4) and (5), omit the sub-clauses, insert the following sub-clauses: ``(2) An amendment effected by section 11, being an amendment of- (a) an Act that imposes a levy; (b) an Act that would, upon the making of regulations referred to in section 5, be a relevant Act in relation to a levy; or (c) an Act that amends an Act that would, upon the making of such regulations, be a relevant Act in relation to a levy, shall not take effect until the day that is specified in those regulations to be the day with effect from which that levy is declared to be a prescribed levy or a class of levies in which that levy is included is declared to be a prescribed class of levies. ``(3) A repeal effected by section 12, being a repeal of- (a) an Act that would, upon the making of the regulations referred to in section 5, be a relevant Act in relation to a levy; or (b) an Act that amends an Act that would, upon the making of such regulations, be a relevant Act in relation to such a levy, shall not take effect until the day that is specified in those regulations to be the day with effect from which that levy is declared to be a prescribed levy or a class of levies in which that levy is included is declared to be a prescribed class of levies.''. (2) Page 15, Schedule 2, after the amendments of the Cotton Research Act 1982 insert the following: ``Dairying Industry Research and Promotion Levy Act 1972 Sub-section 5 (1) (definition of `Committee')- Omit the definition, insert the following definition: ` ``Council'' means the Dairy Research Council established by sub-section 11 (2) of the Rural Industries Research Act 1985;'. Sub-section 13 (2)- Omit `Committee' (wherever occurring), insert `Council'.''. (3) Page 15, Schedule 2, after the amendments of the Dairying Industry Research and Promotion (Miscellaneous Amendments) Act 1976 insert the following: ``Dried Fruits Levy Act 1971 Sub-section 4 (1) (definition of `the Committee')- Omit the definition, insert the following definition: ` ``the Council'' means the Dried Fruits Research Council established by sub-section 11 (1) of the Rural Industries Research Act 1985;'. Sub-section 6 (3)- Omit `Committee', insert `Council'. Honey Export Charge Act 1973 Section 4 (definition of `Committee')- Omit the definition, insert the following definition: ` ``Council'' means the Honey Research Council established by sub-section 11 (2) of the Rural Industries Research Act 1985;'. Sub-section 7 (3)- Omit `Committee', insert `Council'. Honey Levy Act (No. 1) 1962 Section 3A (definition of `Committee')- Omit the definition, insert the following definition: ` ``Council'' means the Honey Research Council established by sub-section 11 (2) of the Rural Industries Research Act 1985;'. Sub-section 5 (3)- Omit `Committee', insert `Council'. Honey Levy Act (No. 2) 1969 Section 3A (definition of `Committee')- Omit the definition, insert the following definition: ` ``Council'' means the Honey Research Council established by sub-section 11 (2) of the Rural Industries Research Act 1985;'. Sub-section 5 (3)- Omit `Committee', insert `Council'. Meat Chicken Levy Act 1969 Section 4 (definition of `the Committee')- Omit the definition, insert the following definition: ` ``Council'' means the Chicken Meat Research Council established by sub-section 11 (1) of the Rural Industries Research Act 1985;'. Sub-section 7 (2)- Omit `Committee' (wherever occurring), insert `Council'.''. (4) Page 16, Schedule 2, at the end of the Schedule add the following: ``Pig Slaughter Levy Act 1971 Section 4 (definition of `Research Committee')- Omit the definition, insert the following definition: ` ``Research Council'' means the Pig Research Council established by sub-section 11 (1) of the Rural Industries Research Act 1985;'. Sub-section 6 (2)- Omit `Committee' (wherever occurring), insert `Council'.''. (5) Page 16, Schedule 3- Omit ``Meat Chicken Research Act 1969''; insert ``Chicken Meat Research Act 1969''. Rural Industries Research Bill 1985 and Rural Industries Research (Transitional Provisions and Consequential Amendments Bill 1985, as amended, agreed to. Tobacco Charge (No. 1) Amendment Bill 1985, Tobacco Charge (No. 2) Amendment Bill 1985, Tobacco Charge (No. 3) Amendment Bill 1985, Poultry Industry Levy Amendment Bill 1985 and Poultry Industry Assistance Amendment Bill 1985 agreed to. Rural Industries Research Bill 1985 and Rural Industries Research (Transitional Provisions and Consequential Amendments) Bill 1985 reported with amendments and Tobacco Charge (No. 1) Amendment Bill 1985, Tobacco Charge (No. 2) Amendment Bill 1985, Tobacco Charge (No. 3) Amendment Bill 1985, Poultry Industry Levy Amendment Bill 1985 and Poultry Industry Assistance Amendment Bill 1985 reported without amendment; report adopted. Bills (on motion by Senator Walsh) read a third time. Motion (by Senator Grimes) agreed to: That, notwithstanding anything contained in the standing and sessional orders and unless otherwise ordered, the order of business for Tuesday, 17 September 1985, be as follows: (1) Petitions; (2) notices of motion; (3) formal motions-discovery of formal business; (4) questions; (5) ministerial statements, by leave; (6) presentation of papers; and (7) adjournment. 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)(9.57) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- The main purpose of this Bill is to authorise payments in 1985-86 arising out of decisions, taken at the 30 May 1985 Loan Council meeting, which fall outside the provisions of the Financial Agreement Act 1928. Specifically, this Bill seeks to authorise: The payment of general purpose capital grants to the States in 1985-86; the prepayment of capital grants during the first six months of 1986-87, pending passage of similar legislation in that year; the continued payment in 1985-86, 1986-87 and 1987-88 of loans on concessional terms and conditions of amounts nominated by the States and the Northern Territory from their approved borrowing programs as being for the purposes of public housing; and to provide scope for the payment of concessional housing loans in the first six months of 1986-87, 1987-88 and 1988-89. The amount to be advanced to each State under this last provision is limited to an amount equal to one half of the amount it was permitted to nominate in the previous year. Loan Council decided to hold the total State governments' borrowing programs to $1,564.5m in 1985-86, the same money level as in 1984-85. This will assist the Commonwealth in further reducing the public sector borrowing requirement in 1985-86. Since 1975-76 one-third of the State governments' borrowing programs have been provided by the Commonwealth as interest free capital grants. For 1985-86 only, the capital grant provision is to be increased by 7 per cent ($36.5m), to $558.0m (or approximately 35.7 per cent of the total program) and the loan component reduced by an equivalent amount. The effect of these grants is to relieve the States of debt charges (that is, interest payments and sinking fund contributions) which they would otherwise have to pay, and the grants accordingly have a substantial beneficial effect on the overall financial positions of the States. The grants were introduced to help States finance works, such as schools and other capital works, from which debt charges are not normally recovered. There are, however, no conditions attaching to the manner in which the grants are applied by the States. The arrangements whereby the States and the Northern Territory are able to nominate part of their approved borrowing programs for public housing were introduced in 1982-83. As a condition of the payment of these funds, the Bill contains provision that a State of the Northern Territory must be able to meet its matching requirements for the purposes of the Housing Assistance Act 1984. Subject to that, the nominated funds will be provided to the States and the Northern Territory at the loan terms and conditions set out in the Commonwealth-State Housing Agreement, and hence will bear interest at the highly favourable rate of 4 1/2 per cent per annum and will be repayable over 53 years. In deciding to continue the arrangements the Government has recognised the considerable contribution made by the arrangements to the financing of public housing in the States and the encouragement it has given the States to increase their housing expenditures. However, the concession represents a large and growing ongoing cost to the Commonwealth in terms of the reduced interest payments received from the States, and as a result, the Government has found it necessary to introduce some limits on the application of the concession. The Bill therefore imposes limits on the proportion of Loan Council borrowings which States and the Territory can nominate of 30 per cent of the loan component of their programs. This exceeds the proportion of the loan component which has so far been nominated by any of the States except for South Australia and Western Australia, which in 1984-85 each nominated the whole of their loans. As a transitional arrangement, the Bill provides that those two States will again be able to nominate the whole of their loans in 1985-86, 60 per cent in 1986-87 and 30 per cent thereafter. This Bill forms an important part of the Commonwealth's overall financial assistance to the States and the Northern Territory and I therefore commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. Debate resumed from 23 April, on motion by Senator Button: That the Bill be now read a second time. Senator MESSNER(South Australia)(9.58) —The Superannuation Legislation Amendment Bill amends legislation in respect of superannuation arrangements for employees of the Commonwealth. The Opposition welcomes the general thrust of the legislation but, as I will point out a little later, there are a number of matters of detail which the Opposition shall address and on which it shall move amendments during the Committee stage of the debate. The sudden rush in the passage of this legislation has left me without an opportunity to speak to Senator Siddons and the other members of the Australian Democrats about the nature of those amendments and we will have an interesting time in the half hour ahead. Senator Walsh —What are you talking about? They have been around for months. Senator MESSNER —I will debate those points when I come to them. The main point at issue with this legislation for the Opposition is the Government's proposed membership of the Superannuation Fund Investment Trust. As the Bill stands at present, the Government proposes to appoint five members in the following format: A full time principal member will be appointed by the Minister. In addition, a full time member will be nominated by the Australian Council of Trade Unions in accordance with clause 7 (4) of the Bill. Two part time members will be nominated by the Australian Council of Trade Unions and a part time member will be nominated by the Minister. The point that concerns the Opposition is that three of those five members will be appointed specifically at the nomination of the Australian Council of Trade Unions. First and foremost we see the Australian Council of Trade Unions, which has absolutely no role in its direct relationship with the employees whose contributions go into these superannuation funds, as being a totally inappropriate body to represent those employees of the Superannuation Fund Investment Trust in the direction of the Trust's affairs. The second point is that obviously this is a further example of the way in which this Government is beholden to the ACTU and the way in which it does its bidding at its beck and call. Clearly, the pressure which has been exercised by the ACTU upon this Government to obtain membership of this superannuation trust is a further example of the way that the unions hold total sway over this Government. It is not as though there is just a question of representation on this Trust that is at the core of the issue. It is of course a far broader matter because clearly the majority of members of the Board of the Trust will be specifically nominated by the ACTU. It is those points to which we take severe objection. We will be moving our amendments during the Committee stage. They are aimed at establishing only one criterion for the appointment of members to the Board which relates specifically to the qualities of expertise and investment on the part of the Board members. I will outline to the House the Opposition's amendment in this respect. It contrasts with the Government's amendment which places control in the hands of the ACTU. The amendment will change the Act to provide that the Trust is represented by the following five people: Firstly, a full time principal member nominated by the Minister; secondly, a part time member nominated by the Minister after consultation with employees associations representative of the contributors to the fund-that is the employee association; the trade union, if you like-which is specifically representative of the members of the fund itself. This is in stark contrast to the Government's approach in that we believe somebody entirely outside the ACTU should be appointed to represent those employees. We then propose as a third limb to our amendment that three part time members be nominated by the Minister but after consultation with the Securities Institute of Australia, the Life Insurance Federation of Australia, the Australian Bankers Association, the Australian Merchant Bankers Association and the Actuaries Institute of Australia. Lest anybody be in doubt, I reiterate that it is specifically our concern that, given the enormous amounts of capital involved in such a Trust, there are proper and appropriate people who have the understanding, expertise and the knowledge to make the proper judgments about the investment of such enormous sums of capital and that the very best available minds in Australia should be at least consulted by the Minister for Social Security (Mr Howe) to ensure that he appoints the appropriate people to the Trust to conduct its affairs. We believe that that is a very important aspect of the conduct of the affairs of any government. Indeed, it should have reference to expertise wherever possible. The Opposition parties think that this is a particularly important matter when we relate it to the circumstances of this particular investment trust. Anybody would know that at present superannuation is of highest importance and is a growing issue right across the Australian community not only for the public servants employed by the Commonwealth of Australia but also for private individuals, those employed in private industry. The Government has recently been undertaking negotiations with various unions to try to establish a system of occupational superannuation which will bring about the membership of superannuation funds for all working Australians. That is part and parcel of the so-called accord, mark II, and is a major thrust of the deal that has been done with the trade unions. It represents a cave-in to them and consequently a step down the road towards occupational superannuation as the Government perceives it. The Opposition has had grave doubts about the way the Government has been allowing the so-called trend to superannuation in the market place to develop in the last year or so. Indeed, we have seen a very loose hand upon the reins in the development and establishment of schemes such as the builders unions superannuation scheme, the Queensland United Employers Superannuation Trust scheme, the Australian scheme and all those schemes which are being directly sponsored by various trade unions with the object of ensuring that they extract the best possible deal in the form of deferred wages from employers. Anybody with any knowledge of the industrial scene knows that the trend to so-called superannuation, as it has been called over the last 12 months, is nothing else but a sham. This is particularly exemplified by the trend towards the BUS scheme. The BUS scheme is merely a sham which has been established to create a system of tax deductibility for deferred wage increases that have been forced upon employers because if they had been called deferred wages, which is what they properly are, they would not have been deductible to the employer under the taxation legislation. So the unions have cajoled and forced employers into extra payments which they have called superannuation. This is not the case. It is not superannuation because, firstly, employees are not contributing anything to it. Employers are the only contributors. Secondly, employees can draw out those funds virtually at will upon winding up their employment with a particular employer. Of course, that can be virtually a voluntary decision in any circumstance. There has been no attempt to establish the preservation of benefits towards long term retirement income and consequently we see that as nothing else but a sham to get around the present so-called mark I wages and incomes accord. We have taken a very strong line on that matter and have tried to draw the attention of the public to this rapidly growing development in the industrial scene. Indeed, if the Government does not take a hold of it very quickly we will see this development get way out of hand so that there will be little chance for the Government in the future to be able to retrieve the situation to establish a proper industrial superannuation scheme right across the community. For that reason we have been putting our views very clearly on that matter wherever possible and drawing the Government's attention to these concerns. I might add that it seems that this has all been done with the collusion of the present Minister for Employment and Industrial Relations (Mr Willis). Indeed, I recall that 12 months or so ago he was advocating to the unions, particularly those in the building trades, that they should seek wages outside of the accord by seeking to establish these so-called superannuation arrangements. As a result, pressure has been brought to bear on employers and a situation has developed which is very dangerous insofar as many employees, many workers who would like to be able to obtain work on a building site, cannot obtain entrance to that building site without the production of a so-called BUS scheme card. My colleague Senator Boswell may have some detailed information on that which no doubt he will develop, but the point is this: It is simply a form of compulsory unionism to use the weapon of a false form of superannuation to encourage workers to become members of a union in order to obtain work. They are trying to get a form of deferred wage not a form of superannuation, as they euphemistically call it. I provide that as a background to the situation into which the Government is rapidly getting itself. We are seeing vast sums of capital flowing into these new `superannuation schemes' and this obviously is putting considerable sums of money into the hands of and under the control of various trade unions. It is clearly the objective of the Government to encourage that but fortunately we now see some sense of rationality. Hopefully the Government will change the direction of its thinking towards proper superannuation which is aimed at providing retirement benefits for employees in the long run. That is what we would like to see. Senator Townley —Those funds aren't doing very well at the moment, are they? Senator MESSNER —They are not doing so well at the moment. We have discussed that at other times. They are the simple facts. The same thinking that has been evident in the positive encouragement of those developments, of false superannuation schemes, by the Government and by the Minister, Mr Willis, to circumvent his own accord with the trade union movement-- Senator Robertson —That is ridiculous. It is typical of your nonsense. Senator MESSNER —It is not. Mr Acting Deputy President, the major point is this: The Government is encouraging the development of schemes which put as much control as possible into the hands of union representatives, or the unions themselves, because it is under pressure from the trade union movement so to do. This point is certainly brought home very clearly in the legislation before us tonight. As I said earlier, the key point is that we have an investment trust to run the huge Commonwealth superannuation scheme. That trust is to have five members, four of whom-80 per cent of the voting capacity-are to be appointed by the Minister and nominated by the Australian Council of Trade Unions. Eighty per cent of the control of the funds of the huge Commonwealth superannuation scheme will be under the control of a foreign body altogether, the Australian Council of Trade Unions. If we need any evidence that this Government is under the control of the union movement, we need look no further than this Bill, the Superannuation Legislation Amendment Bill. That is the situation that we face and that is why there is such widespread concern amongst Opposition members about this Bill-and rightly so-and why the Australian Democrats are also greatly concerned about the matter. Because we believe that the problem is of such magnitude and of such importance we will move amendments which will lead to a more rational approach to the control of such huge amounts of money. One would have thought that the key purpose behind all of the Government's thinking in managing the affairs of such a huge superannuation fund would be to ensure that proper controls, with proper management and proper expertise, were exercised to ensure maximum return for contributors. That certainly would have been the guiding hand in any decision that the Opposition would have taken; it is a most important part of any decision-making process. Anybody who has any concern at all for or involvement in financial affairs in this country knows how difficult it is to find people of expertise and quality to make appropriate decisions and to have them appointed to control funds of any size, let alone the largest superannuation fund in the land. Yet this Government sees fit to appoint unqualified people who have no control whatsoever; in effect they are appointed and nominated by the Australian Council of Trade Unions. Senator Robertson —Who says they are unqualified? We picked the right people, which is more than you lot did. Senator MESSNER —Senator Robertson makes the point very well. He says that they picked the right people. He picked the right people and Mr Willis and the Prime Minister (Mr Hawke) picked the right people-they are picking the people from the Australian Council of Trade Unions. They are the people they want. They are not picking people with expertise in the market-place or with any kind of investment know-how. That is not their wish at all; all they want are people who will do the bidding of the trade union movement. That is what this is all about. It is about union control of huge sums of money. That is what this whole business is about. This is evidenced not only in this legislation, as I have mentioned, but it is also evidenced by the growth of such schemes as the BUS scheme, the Australian scheme, the QUEST scheme, and so on. Senator Townley —Jobs for the boys. Senator MESSNER —It is more than jobs for the boys. There are very sinister overtones which I know Senator Townley appreciates. I know that he can see that these people lack the ability to control such huge sums of money. One must ask what they intend to do with that money once they establish control over it. That is a very important question. Obviously one must have regard for the fact that there could well be motives other than the altruistic ones which could influence how they decide to direct resources toward particular development projects. One may imagine trade unions have particular investments in mind. I can remember one or two that were absolutely, terribly spectacularly unsuccessful. I recall the Bourke's-ACTU store in Melbourne which ended up going broke. Solo petrol was another great ACTU project which went the way of all things. Of course we must recall that it was the object of the present Prime Minister to establish those businesses. In fact he was the chief executive of them all. Look what a great manager he was. That has been demonstrated very clearly to the people of Australia. Senator Robertson —He didn't manage the business. Get your facts straight. Senator MESSNER —The honourable senator is dead right. He did not manage the business. I think the point is made. We in the Opposition will move amendments to the legislation during the Committee stage of the debate. I say again that we are looking to establish a means by which the Government can consult with very experienced people in the area of investment before making appointments to the Superannuation Fund Investment Trust, providing at the same time for one part time member of the Trust from the employee organisations who represents those contributors directly. We are not against trade unions in the sense of not wanting them involved to some degree and understanding what is going on. Our point is that the person who represents them should be genuinely representative of the individual members of the Fund itself. That is the point. That is why we say not that some remote body such as the ACTU should nominate people, but rather that people should be appointed after consultation, from the body of employees themselves. We agree that that is quite appropriate. Indeed, our amendment covers that point. As we have said earlier, the other one of the five appointees remains as the nominee of the Minister. They are our propositions. We believe that they would be effective. I will debate them in more detail during the Committee stage of the Bill. Senator BOSWELL(Queensland)(10.21) —Tonight we are debating the Superannuation Legislation Amendment Bill 1985 which is, on the surface, a fairly insignificant Bill. However, when it is examined more closely we see that it has very serious connotations-- Senator Townley —Sinister. Senator BOSWELL —Even sinister connotations. This Bill seeks to give effectively to the Australian Council of Trade Unions and the Australian Labor Party-its coalition partner-control of $2 billion of Federal public servants superannuation funds. It hands over the control of the Superannuation Fund Investment Trust to five members of the ACTU-the industrial wing of the ALP. It is a classic example of how things are now run in Australia. We have socialism by stealth and by raids on superannuation funds. This legislation, if passed, could allow raids on stock exchanges and attacks on the board rooms of Australia. Senator Richardson laughs. I wish he would put his name down to speak on the Bill, instead of sniping at people who want to make a worthy contribution. The Superannuation Legislation Amendment Bill increases the membership of the Trust from three to five-two full time members and three part time members. The appointees are as follows: One full time member to be appointed by the Minister after consultation with the ACTU and the other full time members to be appointed directly by the ACTU. Of the three part time members, two will be directly appointed by the ACTU and the third by the ACTU and the Minister. Even without the Minister's appointees, the biggest superannuation fund in Australia will be in the hands of Trades Hall. The Bill requires no special investment skills to handle Australia's largest investment fund, a fund of over $2 billion, growing by $1m a week. How are the public servants represented? Surely at least one member of the Public Service Board should be placed on the Superannuation Fund Investment Trust? Thirty groups are represented in the Public Service, many of which are not affiliated with the ACTU or the ALP. Yet 300,000 public servants will have no one on the Trust to protect their interests. The principal Act has been amended to remove investment guidelines. No longer will the Superannuation Fund Investment Trust have to balance its portfolio by investing 60 per cent of public servants funds in blue chip, Government-guaranteed investments. The ACTU will be able to invest in any scheme it wishes. The ACTU may have philosophical differences with investments in commerce and industry. It may have conflicts of interest. It may take the opportunity to invest in schemes that will give the ALP political advantage, schemes such as television, radio stations and newspapers. The investments made on behalf of the Commonwealth public servants by the ACTU-controlled Trust could well be made on political and philosophical criteria and not on sound commercial judgments. Many public servants are not aligned with or represented by the ACTU. Many do not support the ALP. They should demand that they control their own retirement investment fund and not hand over their lifetime retirement funds to the ACTU. The Trust is not even required to have anyone on it with any qualifications for managing an investment trust. We have seen the tactics of the Labor Government on various agricultural boards, which have been shifted away from grower control by ministerial appointments. Now we see the largest superannuation fund in Australia being placed in the hands of the industrial wing of the Government. This move should concern every thinking Australian, particularly when it is viewed in the light of the comments of Mr Kelty, who said at an ACTU conference in February of this year: We have to ensure that everyone gets superannuation with the rights to the funds in the hands of workers controlled by the unions. That every worker should have superannuation will be an issue taken up by the ACTU and I think we will succeed. We can see the game plan between the ACTU and its political wing being set up, with the ALP working to ensure that all superannuation, both private and public, will be controlled by the ALP and the ACTU. If Mr Kelty and the ACTU get their way, every worker in Australia will receive $11 a week in superannuation. The ACTU will control a trust increasing by $58.3m a week, or $3 billion a year. If one were to add this amount to the $2 billion that would go into the control of the ACTU if this Bill were to pass the Senate without amendment, it is not unlikely that the Labor States would also hand over their superannuation control to the ACTU and we would have a fund of $10 billion in the hands of, and controlled by, the ACTU. The ACTU's building unions superannuation scheme is spreading rapidly. It has dominated the building industry and is moving into the plumbing, transport and metal industries. If the ACTU scheme is allowed to spread throughout other industries, it will nationalise the life insurance industry and put many genuine life insurance representatives out of business. An ACTU-controlled superannuation scheme would have many obnoxious characteristics: No competition allowed, union control of funds, the elimination and banning of the existing superannuation scheme, the railroading of all people into the scheme, even those vaguely involved in the industry, no flexibility, and little accountability. Again, we only have to look back to last Thursday week, when another deal was done between the ACTU and the Government. The Government agreed to support an ACTU claim for wage indexation of 3.8 per cent. Before the Budget we heard the Treasurer (Mr Keating) say that the financial strategy and the success of the Budget depended on discounting of the consumer price index to allow for the depreciation of the dollar. After one meeting with the ACTU the Government backed down, as it always does, allowed full indexation, and shot its Budget strategy to pieces. The most significant part of that ACTU agreement was the deal made last week-the trade-off between the ACTU and the Government on the productivity claim. It was said that a 3 per cent superannuation payment would be made by employers. Mr Keating has stated that the Government will have consultation with employees and unions and issue guidelines covering vesting, preservation, contribution and control. If the legislation before the Senate tonight is any indication of what will happen, we certainly will have a nationalised superannuation scheme with all contributions being made by employers, whether they have the capacity to pay or not. It will be another redundancy case all over again, wrecking hundreds of businesses. Whilst we are not opposed to superannuation payments, we oppose a government-controlled superannuation scheme which states that one must pay whether or not one can pay. Such a scheme would have only one result. People would not be able to pay and a great many small businesses would be bankrupted. Senator Robertson —Ha, ha! Senator BOSWELL —Senator Robertson laughs. He has no concern for small business. I challenge the Minister for Education (Senator Ryan), who is at the table tonight, to deny that the superannuation deal, agreed to last Thursday week, will go the same way as Federal Public Service superannuation. Debate interrupted. The PRESIDENT —Order! It being 10.30 p.m., pursuant to sessional order, I put the question: That the Senate do now adjourn. Senator REID(Australian Capital Territory)(10.30) —Tonight I want to ask some questions of the Government and, in particular, I want to refer to the picket that has been outside the South African Embassy for some three months now. I am not challenging the right of people to express a point of view; in fact one could not do so. But I challenge the way in which those concerned have behaved. In particular, my concern relates to the way that they have been harassing Australian staff employed at the Embassy-people who are working there with a view to earning a living to support their families and who are not in any way involved in the political situation, nor is there reason to assume that they are involved. Goodness knows what views they may have on the issue that is the subject of the picket. The picket has been put in place by the local branch of the Trades and Labour Council and the Builders Labourers Federation. I do not know which people are there or who is paying them. One can ask questions about that also. When was permission granted for these people to camp on Commonwealth land outside the South African Embassy? For how long has permission been granted? That is a very fair question if we cast our minds back to March this year when the Vietnamese people who were on the lawns outside Parliament House were unceremoniously removed because it was suggested that they had outstayed their time and were in breach of the permission for them to be there. I have a copy of a letter dated 1 April 1985 which was written to the president of the Vietnamese community which, amongst other things, stated: For your information, you are advised that it is an offence under the Trespass on Commonwealth Lands Ordinance to erect a structure on Commonwealth land unless a permit has been issued for such a purpose. Anyone who has been past the South African Embassy in recent times will have seen a number of structures there; they are erected all over the place. To say that they are untidy is an understatement. Have all these structures been permitted to be erected on Commonwealth land? If not, when will they be removed? If permission has been given, until when does that permission apply? A number of things are going on at the South African Embassy. Damage has been done to the Embassy. One need only drive past to see red paint on the white walls of the Embassy which has been splashed there by the demonstrators. It was reported the other day that the doors of the Embassy had been glued up so that it was necessary to break in. One might well ask: Where were the police when this was going on? The police have been there for the whole of the time and I suggest that it is fairly clear that, early on, a blind eye and deaf ear were being turned to the activities that were being carried out. More recently, I understand, it has been a little less that way. As far as the damage to the Embassy is concerned, I refer to Article 22 of the Vienna Convention on Diplomatic Relations which states: The receiving State-- in this case Australia-- is under a special duty to take all appropriate steps to protect premises of the mission against intrusions or damage and to prevent any disturbance of the peace of the mission or impairment of its dignity. I suggest that those obligations have been breached by the picket line and the people on it. It seems to me that Australia is doing nothing about it. We could be looked upon as a disgrace by the international community for allowing this to happen at an embassy in our national capital. I repeat that I am not challenging these people's right to express a point of view or to have a point of view on political matters presently occurring in South Africa. But I challenge their right to behave in this way and to carry on as they have before the South African Embassy. Section 7 of the Diplomatic Privileges and Immunities Act refers to causing damage to property, obstructive behaviour and the use of weapons, missiles and destructive noxious or repulsive substances. I suggest that red paint comes into that category. The demonstrators have been harassing Australian staff members, as I have indicated. They have been harassing at least one Department of Foreign Affairs courier who, in the course of his employment, has had reason to go to that Embassy. The demonstrators have been throwing missiles. They have been bouncing motor cars and they certainly have been verbally harassing people who have been going in and out of the Embassy. Mr President, I know what you would think if someone said to you: `That is a nice shirt and tie you are wearing but it would look better with three holes in it'. You might even think it amusing the first time but when people put up with this sort of verbal abuse for over three months it begins to get to them. It begins to cause them very great concern. One woman had this said to her as she was going out of the place: `You think your family is safe at home but you may find otherwise when you get there'. The Australian employees who have been working at the Embassy have reason to know, from what has been said to them, that their car numbers have been taken and the people picketing have bothered to find out their addresses and they are able to make threats against them which they regard as very serious harassment. These threats have also been heard by the police. At one stage, a few weeks ago, a generator was delivered by the Australian Capital Territory Electricity Authority but obviously someone thought better of that. It stayed there for only about a week and was replaced by a generator from a local hire firm. There have been stories of timber being delivered. One wonders under what circumstances some of these things have occurred. I have a copy of a letter which was written by an Australian employee at the Embassy to the Commissioner of Police referring to an incident when his son had visited him at the Embassy. It related what happened to him when he was leaving. He said that his son: . . . was able to drive his vehicle inside the grounds without hindrance due to the lack of attention of the picketers. However, when at 15.15 hrs he was leaving, the half dozen picketers completely obstructed and blocked his exit by standing across the open gateway. In an attempt to leave the grounds my son sounded his horn and proceeded slowly forward necessitating the other people to move clear so as not to be struck by the vehicle as it approached them. At this point one of the picketers struck the bonnet of the moving vehicle with his clenched hand causing a loud banging sound, whereupon my son stopped and got out of his vehicle to protest at the action taken by the picketers and the lack of it by the two Policemen who stood in close proximity, observing all that happened. During the discussion that followed a torrent of obscene language was used against my son, in particular by the females of the picket group. That is just one extract. I have other letters, for example, a copy of a letter to the Minister for Foreign Affairs (Mr Hayden). Letters have been sent to the Prime Minister (Mr Hawke) and I believe that there have been official complaints to the Australian Government about what is going on. The letter to the Minister for Foreign Affairs states: These demonstrators are intimidating members of the Australian public and staff with the taking of motor registration numbers and photographs, sheer abusive language, death threats and the turning away of company vehicles with threats of black banning, while at the same time giving the impression that this is an official trade picket. By what authority does the TLC have the right to determine public policy and to force their values on the rest of the community? That is a very fair question asked by one of the Australian employees at the Embassy. She continues: The main objective of this letter is to complain about the behaviour of the demonstrators. The demonstrators have now resorted to threats of violence against members of the Australian staff. These threats have become increasingly more vociferous and numerous. The Australian staff have made a statement to this effect to the police and it is with alarm that I notice the police force is unwilling or have their hands tied by political expediency to take any form of action. The employee wrote that letter on 31 July 1985. I also wrote to the police and got a reply from them which confirms some of the things that I have said have gone on. I seek leave to incorporate in Hansard a copy of the reply to me dated 12 August 1985. Leave granted. The letter read as follows- AUSTRALIAN FEDERAL POLICE P.O. Box 401, Canberra City, A.C.T. 2601 Telephone (062) 49 7444 12 August 1985 Senator Margaret Reid 1st Floor 4 Mort Street Canberra City, A.C.T 2601 Dear Senator Reid, I refer to your letter of 1 August 1985 regarding harassment of employees of the Embassy of South Africa by anti-apartheid demonstrators. Police have been maintaining a 24 hour presence at the Embassy since the picket was established on 13 June 1985. I assure you that I have not received instructions to ignore offences committed by the picketers. Drivers entering and leaving the Embassy are shouted abuse by those maintaining the pickets. On occasions it has been necessary for Police to escort vehicles through the picketers. On Friday, 9 August 1985, 40 women were arrested from the picket line for preventing free access to vehicles in Rhodes Place. Complaints from staff, mostly concerning the verbal obscenities they receive, have been investigated. In most instances neither the Police nor the complainant are able to identify the offender in the crowd. On 19 July 1985 a disturbance between the picketers and the son of an employee of the Embassy, occurred where the picketers blocked the path of the vehicle and struck the bonnet with closed fists. Police intervened and allowed free passage of the vehicle. As a result of this incident, a re-appraisal of Police numbers at the Embassy was made whereby additional members, including a Sergeant, are now stationed at the Embassy at the main times staff arrive and depart. Following complaints received from two members of the staff, a Police Inspector on 8 August 1985 spoke to the protesters and told them they were liable to arrest if they continued to threaten violence to employees of the Embassy. You question the structures which have been erected on Commonwealth land by the picketers including a caravan, portable toilet and scaffolding. Those structures have been sighted without the permission of the Minister (or his delegate) for Department of Territories. I have received no complaint from the department on that matter. Thank you for your interest in this matter. Yours sincerely, P. D. (Val) McCONAGHY Assistant Commissioner Senator REID —I thank the Senate. The incidents that I have referred to are confirmed by that. I wonder what are the costs to the Australian Government and to the taxpayers of this country of police being on duty there, as they have been for the last three months. I should like to know that. What will be the costs of repairing the damage to the Embassy and to the site where this camping is presently going on? Many people have said to me: `How long will it be allowed to stay there?' I wish I could tell them. I remind honourable senators that the Vietnamese were allowed, with permission, to stay two weeks outside Parliament House earlier this year. They were not throwing paint and were not harassing people; they were merely peacefully trying to make a point. But they were bundled off by the police, quite unceremoniously, and chased away from a peaceful demonstration expressing a point of view. We are allowing Australian employees of the South African Embassy to be harassed in this manner. I regard it as totally unacceptable and a disgrace. It appears that the Australian Government is in cahoots with those demonstrating there and is quite happy for that to continue in spite of the Vienna Convention and in spite of the way that constituents of mine are being treated. I repeat for the third time that I do not disagree with the right of these people to have a point of view but I do disagree with their being allowed to continue to behave in the way they are behaving at present. Senator CHANEY(Western Australia-Leader of the Opposition)(10.42) —I speak in the adjournment debate this evening at the request of a group of citizens in the State of New South Wales and the city of Sydney who have been engaged in seeking to obtain the support of their fellow citizens for the existing Australian flag. The group concerned has written to me under the letterhead of the Patriotic Research Council of Australia. It has advised me that it is running a campaign to keep the Australian flag in its present design. On Anzac Day 1984, Australia Day 1985 and Anzac Day again this year the group collected several thousand signatures on individual petition forms informing the Governor-General that they wanted the flag to remain unaltered. On Anzac Day 1985 the group also had about 1,000 snap poll votes signed showing that the great majority of people who came to its table were in favour of the present flag. A sample of the forms was sent to me and I was asked to have recorded in Hansard the result of that vote. The numbers which have been advised to me by the group are that, of the 908 individual poll forms that were signed, 861 voted to save the Australian flag in its present form and 47 voted to change it. Of course, the Opposition has put through the Senate a Bill which requires the Government, if it should wish to change the Australian flag, to go to the Australian people and to have a referendum. That Bill was not opposed in the Senate when it was passed after being introduced in this place on behalf of the Opposition by Senator Durack. It had been the hope of the Opposition, given the Government's at least tacit support of the proposal that the Opposition put forward, that the Bill would be dealt with in the House of Representatives. That has not been done and on this occasion I request the Government to consider putting the Bill through so that the shape and form of the Australian flag can be a matter which comes within the control of the Australian people rather than any particular government. On behalf of this group of people who have raised this matter with me, I am pleased to record in Hansard the result of their efforts. I hope that the Government will accede to the Opposition's view that control of the flag should be a matter for the Australian people. That might take out some of the heat which is evident in the current debate surrounding the competition for a new flag and which does seem to attract a quite passionate view on both sides, if one has been reading some of the correspondence columns in, for example, the Bulletin. One feels that people really do have a most violent attachment to the flag-of course some have a violent attachment the other way-and I think that, if there was a general view that it was in the hands of the people rather than any particular government, that might enable a more sober assessment on this important issue. I commend to the Government for its consideration the views of the group. Senator KILGARIFF(Northern Territory)(10.45) —Briefly tonight I wish to speak on a particular matter relating to Kakadu National Park. But, before I do so, I will certainly support Senator Margaret Reid, who is the Liberal senator for the Australian Capital Territory, in her complaint about the actions that have taken place outside the South African Embassy. I have always thought, as I guess most Australians have, that Australia and its people stand for a fair go. Under those circumstances one wonders how on earth we can raise our heads and be proud of the way Australians act within their own country. The protection of embassies is a very responsible and serious matter. As you will well recall, Mr President, around the world these days one hears of embassies being attacked, with bombings, shootings and people taking refuge within them. Indeed, many embassies of our friendly nations, and perhaps Australian embassies, have been attacked in some overseas countries. When this happens, we say: `What a deplorable state that country is in when such things can happen in embassies which come under the Vienna Convention'. In the Press and where Australian people mingle, it is said what terrible things happen overseas. I wonder whether we can continue to say things like that when within our own midst such things are beginning to happen. I have always taken pride in the fact that, regardless of our attitude towards nations of the world, whether they are considered friendly or otherwise, within Australia their embassies, their staff and their employees are looked after and safeguarded. But here we see a most unusual situation and this is where I support Senator Reid. For some 13 weeks or so there has been a picket in front of and around the South African Embassy. I agree with Senator Reid that people have the right to express quiet or silent objection to their feelings about things which they consider sacred or which are offensive to them. But I think it a very different situation when Australian people can, by force and by other means, take action against a building and its inmates-the people from overseas, the Ambassador and his staff, and the Australian staff who work within the South African Embassy. I take the matter very seriously. As Senator Reid has said, and I will repeat some of it, Article 22.2 of the Vienna Convention on Diplomatic Relations states: The receiving State- that is, Australia- is under a special duty to take all appropriate steps to protect premises of the mission against intrusions or damage and to prevent any disturbance of the peace of the mission or impairment of its dignity. I emphasise the words `of its dignity'. This convention was ratified by Australia in January 1968 following the enactment of the Diplomatic Privileges and Immunities Act in 1967. Section 7 of that Act gives force of law to certain of the Articles of the Vienna Convention, including Article 22. The Public Order (Protection of Persons and Property) Act 1971 in Part III deals with diplomatic premises and personnel. Under section 7 of that Act a public assembly of more than three persons assembled for a common purpose commits an offence if they cause bodily harm or damage to property. The penalty is not more than five years imprisonment for bodily harm or three years for damage to property. Under section 8 they commit an offence if they are instructed by the police to disperse and fail to do so. Under section 9 they commit an offence if they engage in obstructive behaviour. Under section 10 they commit an offence if they use weapons, missiles, destructive, noxious or repulsive substances. Section 11 makes it an offence for a person to be unlawfully on the premises of missions. Section 18 makes it an offence to harass a protected person or interfere with the freedom or safe discharge of a protected person by (a) assault, (b) harassment, (c) behaviour of an offensive, threatening or insulting manner, or (d) unreasonable obstruction. The penalty is not more than $250, three months imprisonment or both. The Australian Government in this case would be responsible for any damage to the mission's property. It would be obligated to protect such property or replace it if damaged as part of its international law obligations. I submit that all those sections I have read out have been broken by the people who have abused the people who work and live in the South African Embassy. Not only have the people been harassed by this thuggery, this un-Australian type of action, but also paint has been thrown on buildings and vehicles several times. The doors of the Embassy have been glued up and, as I understand it, a window was smashed to gain entry. All of those things point to and embassy here in Canberra under seige. I do not care what people think about it-everyone has the right to his opinion-but do they have the right to carry on in such a way here in Canberra? It disturbs me and it disturbs very many people. There are several questions to be answered: Firstly, if one looks back on various instances that have happened in Canberra over the years, one sees that the prompt attention of the police and authorities have ensured that the particular disturbances have not continued. In fact, some disturbances could have been very serious, but because of the immediate action taken by authorities that abusive or threatening action has been severly resricted. What has happened here? For 13 weeks this type of activity has continued. I believe that the Australian authorities are not carrying out the work designated to them under the Vienna Convention relating to the protection of diplomats. Surely they would see the harassment and the attacks on the embassy. Why is it that Australian authority is not taking action to protect that building and the people who work there, who are its responsibility? I believe that the matter is extremely serious. Who has said that no action will be taken to prevent this thuggery from taking place? Is it a direction to the Australian Federal Police? Are the Federal Police looking the other way? As far as I and very many Australians are concerned, the whole matter is extremely worrying and obnoxious. We call upon the Australian Government to take the necessary action to ensure that it carries out its authority according to the Vienna convention. I think that it is a most miserable situation and I hope that, whether they be Australians or South Africans who work in the embassy, the Australian authorities will ensure forthwith that those people can live in a peaceful manner as can any other Australian in Canberra. I will not take up the second matter tonight. It had been my intention to speak on matters of concern regarding Kakadu National Park, Stage III, but because I believe that the matter brought up by Senator Reid is one of some considerable importance, I have chosen to speak on that. Out of respect to you and not to keep you up unduly, Mr President, I will raise the matter of the Kakadu Stage III on another night. Senator PETER RAE(Tasmania)(10.56) —I shall not be long in referring to the delayed annual report of the Australian Capital Territory Gaming and Liquor Authority which was presented to Parliament today. It is the Authority's third annual report, for the year 1983-84, which is presented to the Parliament almost 15 months after the close of the year for which it is reporting. It is not just the fact that it is delayed that concerns me; it is also the fact that no one on the Government side appears to be interested in the qualifications which the Auditor-General has made about the unlawful investment of $4m. Does that not matter to this Government? Apparently not. We have not heard any explanation of any action being taken or any new procedures being implemented. The report states: Investments in Bank Accepted Bills of Exchange to the value of $4,087,959 have been made by the Authority in contravention of Section 25 of the Betting (Totalisator Agency) Ordinance 1964--- If that were done in the private sector, the persons concerned would be prosecuted and would face a severe penalty for having breached the laws relating to the trust placed in people who are directors of corporate bodies. Here we have a statutory corporation which apparently can breach the law with impunity. Not only has the Authority got into strife with its TAB operations, but also in relation to its poker machine operations-the other half of its function-there is a separate report by the Auditor-General which states: The Authority invested moneys standing to the credit of the Trust Account established pursuant to section 42 of the Poker Machine Control Ordinance 1975 during the year. As the Ordinance does not provide for the investment of these moneys the Authority was requested to obtain a legal opinion on the subject. The Authority was of the opinion that as the Ordinance was silent with regard to the investment of these funds it did not specifically prohibit the Authority from investing them. Oral advice from the Department and the Authority is that it is proposed to proceed with draft amendments which if adopted will authorise the Authority to invest moneys held under section 42 of the Ordinance. Audit- that is, the Auditor-General- is of the view that unless the amendment can be effected quickly, and this seems unlikely, a legal opinion should be sought forthwith. In other words, the Auditor-General believes that there is a very real ground for believing that the investment is unlawful. Again, what has happened? The report was introduced with no explanation from the Minister for Territories (Mr Scholes); there was no statement that action will be taken as a result of the Auditor-General's report; no statement by the Australian Capital Territory Gaming and Liquor Authority-this qango-that it will do anything. Does reporting to this Parliament-accountability-mean nothing at all to Ministers and authorities? Do they think that they can just table with impunity reports which show that they have breached the law, or have probably breached the law, and that they have failed to take the action recommended by the Auditor-General's Office? Are we going to accept this sort of report and let it pass without comment? I believe that the Senate would be recreant in its duty if it did not say: `This is not good enough. This requires an explanation from the Government, an explanation from the Authority and a positive plan of action to correct that which is wrong.' If actions which are unlawful have been undertaken, they should be treated as they would be in the private sector under the Companies Act and prosecutions should be undertaken if necessary. The people should be replaced if they are not prepared to act and act quickly to correct whatever has been found to be wrong and make sure that it does not happen again. I think of the absolute arrogance of those who are involved in the administration of the Belconnen Mall, with their thumbing of the nose attitude in relation to the administration of that fairly major statutory authority. They were found to have continually thumbed their noses at the audit department, at the departments responsible for overseeing them and at parliamentary committees; yet they were then reappointed to their positions. I find it absolutely and utterly amazing that that could happen in a country where there is supposed to be accountability and a checks and balances system, ensuring that public money is dealt with as trust money and that people act in a position of trust with the sort of responsibility that that involves. Mr President, I am glad that you were able to be here tonight because I know of the interest that you have taken in matters such as this in the past. I wanted to express my concern that a report such as this should be presented to this chamber without anybody in government apparently taking any action or even thinking that it was necessary to make any explanation at all. I do not propose to leave the matter where it is. I have raised it and I shall now keep an eye on what happens in relation to it. I thank you, Mr President, for the opportunity to speak tonight and to indicate that this situation is not good enough. Senator RYAN(Australian Capital Territory-Minister for Education)(11.02) —Senator Reid and Senator Kilgariff both expressed their concern about the conduct of persons involved in a picket outside the South African Embassy. I shall refer their remarks and concerns to the Minister for Foreign Affairs, Mr Hayden, and see whether I can get a comment from him on these matters, including the question of the responsibilities of the Australian Government under the Vienna Convention. Senator Chaney raised matters relating to the Australian flag and Senator Peter Rae expressed his concern and criticisms about the delay in the annual report of the Australian Capital Territory Gaming and Liquor Authority. He has made a number of claims about the lateness of the report and the seriousness of this matter. I shall refer it to the Minister responsible, the Minister for Territories (Mr Scholes). Question resolved in the affirmative. Senate adjourned at 11.03 p.m. The following papers were tabled: Companies Act-Regulation-Statutory Rules 1985 No. 228 Defence Act-Determination 1985 No. 57-Overseas Living Out Allowance and others. Federal Court of Australia Act-Rules of Court-Statutory Rules 1985 No. 227. Public Service Act-Determinations 1985 Nos 69, 72, 73. Quarantine Act-Determination-Notice under section 86E, dated 31 August 1985. Radiocommunications (Transmitter Licence Tax) Act-Regulations-Statutory Rules 1985 No. 225. Seat of Government (Administration) Act- Ordinances 1985- No. 42-Betting (Totalizator Agency) (Amendment). No. 43-Bookmakers. No. 44-Crimes (Amendment) (No. 4). No. 45-Litter (Amendment). Notice of Variation of the Plan of Layout of the City of Canberra and its environs (85th (Special) series), dated 12 September 1985. Superannuation Act-Regulations-Statutory Rules 1985 No. 226. Wildlife Protection (Regulation of Exports and Imports) Act-Declaration under section 9, dated 29 July 1985.