Tuesday, 8 October 1985 The PRESIDENT (Senator the Hon. DouglasMcClelland) took the chair at 2 p.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled; the humble petition of the undersigned citizens of South Australia respectfully showeth that: Without any warning and at the worst possible moment, the Federal Government has abandoned the pensioner patients in South Australia's Nursing Homes. These people are suffering undeserving hardship and trauma as a result of the Government's decision to freeze the nursing home benefit levels in South Australia. The pensioner patients and those on fixed incomes now cannot expect any relief from recent significant fee increases approved by the Department of Community Services and which have coincided with the decision to freeze benefits. 80-85 per cent of nursing home patients are pensioners and the majority are now required to pay in excess of their pension for their nursing care for the very first time. Some are paying over $5 per day on top of their pension. Many are looking for cheaper nursing care that doesn't exist. We request that the Federal Government: 1. alleviate the distress of South Australia's nursing home patients and their families by effective restoration of the principle that pensioner patients should not have to pay more than their pension for nursing home care 2. restore the review of the benefit rates in November 1985 3. resolve its concerns over health care costs with the South Australian Government rather than inflicting unnecessary suffering on nursing home patients. And your petitioners, as in duty bound, will ever pray. by Senators Bolkus (from 113 citizens) and Vanstone (from 155 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned shows: That human embryos deserve legal protection to enable the development of their full human potential. Your petitioners request that the Senate, in Parliament assembled, should: Pass Senator Harradine's Bill to prohibit experiments involving the use of human embryos created by in vitro fertilisation. And your petitioners as in duty bound will ever pray. by Senator Peter Baume (from 75 citizens). To the Honourable the President and members of the Senate in 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 the 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 `Infertile (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 afore-mentioned Bill and not support its passage through the Senate. by Senator Peter Baume (from 79 citizens). To the Honourable the President and members of the Senate in Parliament assembled. This humble petition of the undersigned citizens of Australia respectfully showeth: That in November 1978 more than sixty two per cent of the voters of the Australian Capital Territory in a Referendum rejected the introduction of Territorial Government or Local Government in the Australian Capital Territory. That until the Government's decision on the Commonwealth Grants Commission Inquiry into Australian Capital Territory finances have been made public and there has been a Referendum of the Australian Capital Territory as to their attitude to Territorial or Local Government. Your petitioners most humbly pray that the Government take no further action or legislation in respect of Territorial or Local Government in the Australian Capital Territory. And your petitioners as in duty bound will ever pray. by Senator Walsh (from 100 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The Petition of certain citizens of South Australia respectfully showeth: That the Australian flag symbolises the continuity between Australia's past, its present and its future; That the presence of the Union Jack on the flag represents not a subservience to Britain, but a reminder of our inheritance of the fruits of hundreds of years of struggle for individual liberty against the forces of tyranny and oppression; Nonetheless recognises the rights of Australians should they so wish to change the design of their flag. Your petitioners humbly pray that no change be made to the Australian flag except with the consent of the people in a referendum. And your petitioners, as in duty bound, will ever pray. by Senator Messner (from 27 citizens). To the Honourable the President and members of the Senate in Parliament assembled. We the undersigned citizens of the Commonwealth do humbly pray that the Commonwealth government 1. Uphold the principle that the seeds and cuttings of plants are a public resource and a common heritage to all and that accordingly seeds should be freely available to all, freely multipliable, able to be sold, exchanged, exported and imported by anyone who wishes. This is seen as a matter of national food security. 2. Recognise that plant breeding is a highly co- operative venture often involving private enterprise at the very last stages after basic seed collection, storage, and research has been publicly funded. 3. In view of the aforementioned paragraphs, recognise that any system giving `property' or ownership rights over seeds to individuals, organisations or enterprises is inappropriate and unjust. 4. Recognise that legislation establishing plant patenting schemes overseas has had serious effects namely: (i) a slowing-down of scientific information exchange and exchanges in basic plant breeding materials, that is, germ plasm, (ii) subordination and/or curtailment of public breeding programmes, (iii) farmer unrest at seed prices, (iv) monopoly control of seed production and sales has passed into the hands of giant petrochemical and drug corporations also marketing crop chemicals, (v) increased uniformity of crop varieties leading to a vulnerability to pest and disease attack. 5. Reject any proposal to legislate for any system such as the drafted Plant Variety Rights Act, which gives exclusive ownership rights over seeds to individuals, organisations or enterprises. And your petitioners, as in duty bound, will ever pray. by Senator Zakharov (from 41 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens respectfully showeth: That we deplore the proposed cut-back of funding for pre-school and child care in the mini-Budget as the proposal adversely affects young families, women's employment prospects and children's development in their most formative years. We urge you to reverse proposals for cuts in children's services. by Senator Crowley (from five citizens). To the Honourable the President and members of the Senate in Parliament assembled we the undersigned citizens of Australia respectfully showeth that (1) the 29th April 1985 will be the 33rd anniversary of the operation of the A.N.Z.U.S. treaty (2) that for a third of a century Australia has remained free from an external threat (3) that the strength of the Western Alliance as a whole has helped preserve its freedom and democracy whilst other more poorly defended nations such as Afghanistan have been invaded and subjugated (4) Accordingly we call on the Federal Government to give its active support to such alliances (5) that the government pursue mutual and verifi- able nuclear disarmament. And your petitioners as in duty bound will ever pray. by Senator Chaney (from 109 citizens). Petitions received. Senator MASON(New South Wales) —I give notice that, on the next day of sitting, I shall move: That the following matters be referred to the Standing Committee on Foreign Affairs and Defence for report by 31 March 1986- (a) the need for an area of land for the purposes of the relocation and colocation of the Army's School of Infantry and Infantry Centre, Artillery Training and for Army manoeuvres, having regard to strategic and training requirements appropriate to the Australian Defence Force, existing defence facilities and training practices in comparable countries; (b) the availability of sites including existing Army training areas suitable for these purposes, whether in New South Wales or elsewhere, having particular regard to the availability of Crown land, and having regard to the Army's needs and any countervailing public interest; and (c) the adequacy and appropriateness of current procedures in protecting the rights of individual landholders and communities in areas where acquisition is contemplated, in providing for fair and prompt compensation, and in providing for appeal procedures. Senator MASON(New South Wales) —I withdraw General Business Notice of Motion No. 69 standing in my name. Senator ZAKHAROV(Victoria) —I give notice that, on the next day of sitting, I shall move: That the following matter be referred to the Standing Committee on National Resources: The potential of the Kakadu National Park region with particular reference to- (a) the nature of the resources available for exploitation; and (b) the impact of utilisation of these resources, particularly mining and tourism. Senator MISSEN(Victoria) —I give notice that, on the next day of sitting, I shall move: That the Freedom of Information (Miscellaneous Provisions) Regulations (Amendment), as contained in Statutory Rules 1985 No. 106 and made under the Freedom of Information Act 1982, be disallowed. Senator MISSEN(Victoria) —I give notice that, on the next day of sitting, I shall move: That the Freedom of Information (Charges) Regulations (Amendment), as contained in Statutory Rules 1985 No. 113 and made under the Freedom of Information Act 1982, be disallowed. Senator GRIMES(Tasmania-Manager of Government Business) —I table papers in accordance with the list circulated to honourable senators and seek leave to incorporate the list in Hansard. Leave granted. The list read as follows- 1. Outlook for the Aviation Industry-an information paper. 2. Australian Telecommunications Commission- annual report and financial statement for the year ended 30 June 1985-pursuant to section 99 (3) of the Telecommunications Act 1975. 3. Australian Agricultural Council-resolutions of the Council's 122nd meeting held in Darwin on 21 July 1985. 4. Australian Fisheries Council-resolutions of the Council's 15th meeting held in Darwin on 21 July 1985. 5. National Debt Commission-annual report for year ended 30 June 1985-pursuant to section 18 of the National Debt Sinking Fund Act 1966. 6. Aboriginal Employment and Training Programs-report of the Committee of Review. 7. Remuneration Tribunal-1985 review-pursuant to sections 6 and 7 of the Remunerations Tribunals Act 1973. 8. National Research Fellowships Advisory Committee-report on fellowships awarded for 1984 and 1985. 9. Outboard engines-IAC interim report. Senator MESSNER —My question is addressed to the Minister representing the Treasurer. In connection with the recent tax package, will goodwill built up by the founder of a business be subject to the full marginal rate of capital gains tax on the sale of a business? Will this have the effect of demolishing by about half the life's work of small businessmen, thereby destroying the incentive for people to develop the businesses which currently employ about 60 per cent of the private work force? Senator WALSH —I do not know how anybody objectively measures what is goodwill. Senator Chaney —But it is saleable, isn't it? Senator WALSH —I said an objective measurement. One can give opinions about anything at all. Of course, we know that the Opposition is opposed to a capital gains tax on realised gains being applied at the marginal income tax rate, because the Opposition is in favour of tax avoidance. The Opposition presided over an epidemic of tax avoidance that went on unchecked for year after year until such time as the Fraser Government saw its political survival as being threatened. At the heart of most tax avoidance schemes was the conversion of what was notionally income, and should have been taxed as income, into some form of capital gains. To stamp out that anti-social practice it is essential not only that there be a capital gains tax but also, to put an effective net under the income tax system, that that tax be applied at the marginal personal rate. We know that the Opposition is opposed to that because the Opposition is in favour of tax avoidance in opposition just as it condoned and allowed an epidemic of tax avoidance to flourish when it was in government. We also know, of course, that the Opposition sees alternative methods of raising finance, or at least it used to. The Opposition said that it would shift the emphasis on revenue raising from income tax to a consumption tax or an extension of indirect taxation. But we now read in today's Australian Financial Review that that policy, espoused for a period of several years by the now Leader of the Opposition, was yesterday torpedoed and buried by Senator Messner. Senator Durack —Answer the question. Senator WALSH —I am about to do that. Let me respond to the interjection from the former Attorney-General, who left a tax avoider's file to gather dust and mould in the bottom drawer for five years, which was completely consistent with the policy of the former Government of allowing tax avoidance to flourish and enormous erosion of the income tax base to occur. On properties or businesses sold after 19 September and subsequently resold, a tax will be levied at the personal rate for any real gain which has accrued. In the case of a private business I know that it is argued by many people that the proprietor, rather than drawing personal income from the business, reinvests accrued profits year by year and ultimately harvests those profits, accrued tax free over many years, in the final business sale price. Previously these people have avoided paying tax on that tax free income deferred over very many years. It is true that that practice will no longer be possible for businesses which change hands after 19 September or are established after 19 September and are subsequently sold. It is claimed by some that it is unfair to tax at the personal marginal rate what are effectively earnings on which the tax is deferred year by year. The answer to that ultimately is a mathematical one and it depends on the length of time for which the asset is held. But let us assume that a particular asset has been held for 20 years or that gains have been accruing year by year over a 20-year period. An alternative to applying the personal tax rate on the real gain in the year of realisation would be to tax notionally the gains on an accrual basis and, of course, then to apply compound interest at the bond rate to the tax which accrued, but was not levied, in those years. If that system were to apply over a 20-year period, the effective rate of tax which would be applied on average would be seven times the marginal tax rate which would have applied in the year in which the gain accrued. Since the difference between the present or prospective marginal tax rate and the lowest marginal tax rate and the highest marginal tax rate is just over two, that actual tax rate is highly concessional compared with a tax rate with accrued interest of seven times the marginal tax rate in the particular years. In conclusion, it is worth saying again that the Opposition is in favour of tax avoidance. It allowed tax avoidance to flourish when it was in government and it continues to support tax avoiders now that it is in opposition. It has also given a spurious or specious undertaking to its ragbag clientele out in the electorate that, if it is ever elected to government, it will repeal the capital gains tax legislation, knowing full well that that is an undertaking upon which it will not be able to deliver because, even if it had a majority in the House of Representatives, it would require a majority in the Senate and a majority in the Senate it will not have. Senator MESSNER —Mr President, I ask a supplementary question because, obviously, the Minister has no idea what he is talking about. The point needs to be made- The PRESIDENT —Order! Will the honourable senator ask his question? Senator MESSNER —I ask the question again: How is goodwill of a business created from virtually nothing to be taxed under the capital gains tax legislation? Will that be taxed at the full marginal rate of tax? What will be the effect of that upon the person who has built up that business over a lifetime? Senator WALSH —I repeat-I would have thought that even Senator Messner might be able to understand this-that there is no formula which can measure goodwill. Indeed, goodwill is somewhat nebulous. To the extent that goodwill is said to be related to the effort put in by an individual over many years, it could be argued that that effort has earned income except that the income was not taken at the time it was earned but was capitalised in the business. Under those circumstances, the proposition which Senator Messner is putting up is that the tax on income earned should not only be deferred but should be deferred forever in order that it would not be taxed when the business is ultimately disposed of. Senator Messner —You just don't understand it. Senator WALSH —I concede to Senator Messner that I do not understand as much about tax avoidance as he and his colleagues did. Half of them were up to their ears in it and the other half were supporting them. What the Opposition wants is to return to the dark days of the 1970s when there was massive tax avoidance because members of the Opposition and all their friends followed the practice of converting what should have been income, and taxed as income, into a tax free capital gain. It is into that dark age that the Opposition wishes the country to return. Senator MAGUIRE —My question is also to the Minister for Finance and is on the question of taxation. Has the Minister noted the Hansard record of Senate Estimates Committee C of 19 September in which an expert from the Bureau of Agricultural Economics suggested that over the long period rural `land values in real terms are showing virtually no trend'? What are the taxation implications, if any, of this finding? Senator WALSH —Regarding tax implications, I presume Senator Maguire refers to the capital gains tax and its effect on agriculture. Senator Maguire quoted part of this, but the more comprehensive quotation from Dr Fisher delivered on 19 September to Estimates Committee C is: Basically, I suspect that over the long period land values in real terms are showing virtually no trend. In other words, we would not expect a strong trend in real land values although, obviously, they are going to go up in nominal terms. That is what I have been saying for a very long period and what everybody who has had a long and direct association with agriculture, as I have, and has bothered to remember or write down the figures, knows to be true. It follows, therefore, that a gains tax levied on real gains, that is after adjustment for inflation, will on average have no effect whatsoever on the agricultural sector. Given that there are short term fluctuations which vary from the long term trend it is of course possible that somebody who buys land in a period when prices are unduly depressed and subsequently sells the land in a time when prices are above the trend line could achieve some real gain and be liable to taxation on it. My view is that it is reasonable enough that that should be done because that is a fortuitous windfall gain. There is extensive evidence that in the late 1970s and the early 1980s-this varies somewhat from industry to industry and State to State-there was a significant real appreciation in land prices. One of the reasons for that significant appreciation in real land prices was the expectation of untaxed capital gains. There is also widespread evidence-indeed, I believe decisive evidence-that the reason why a large proportion of farmers are in financial difficulties is that they purchased land at excessively high prices during that period. So to the extent that the absence of a capital gains tax contributed to that necessarily short term increase in real land prices, the absence of a capital gains tax has helped to get those farmers into financial trouble, not the existence of a capital gains tax. Senator HILL —My question is directed to the Minister representing the Treasurer and is in relation to a particular matter left a little ambiguous by the Treasurer in his statement on the reform of the Australian taxation system. I refer to the purchase of corporate boxes at sporting engagements, such as horse race meetings, tennis tournaments and the Grand Prixs for the obvious purpose of entertaining clients. In the past, as the Minister would be aware, this has generally been accepted as a legitimate business expense and a tax deduction. Does the Government still intend that to be the case? Does the Government see a distinction for tax deductability purposes if purchased corporate boxes at sporting events are dressed in such a way as to advertise or promote the purchaser's business? Senator WALSH —That is a question of fine detail which I will refer to the Treasurer for a definitive reply. Senator COLSTON —I direct a question to the Minister representing the Minister for Communications. Since the Australian Broadcasting Corporation took the unbelievable step of discontinuing its State-wide Saturday racing service in Queensland, has it been able to justify its decision to race followers throughout the State? How long had this service been provided? What was the real reason for the service being discontinued? What provisions have been made for race followers, particularly those in rural areas, to receive a radio racing service? Has the ABC been able to determine whether these provisions are satisfactory? Senator WALSH —I will answer the different parts of the question but not necessarily in the order asked. I understand the ABC has provided a racing broadcast service in Queensland for some 50 years and that the ABC Queensland radio management recently decided to review its allocation for sporting programs. In view of the duplication in the metropolitan area of race broadcasting-that is, duplication by commercial stations and the ABC-it decided to terminate ABC race broadcasts in Brisbane through station 4QR and to provide alternative programs. As a result the ABC no longer had a requirement for an on-course commentator. However, the ABC will continue to broadcast the results of all Brisbane and major interstate races as part of the Brisbane radio sporting services. The races are broadcast by commercial stations. So far as the country areas of Queensland are concerned, the ABC, with assistance from the Queensland Totalisator Administration Board, has arranged for the relay of the course commentator's description of Brisbane races to its regional Radio 3 listeners, that is, the on-course descriptions provided by the commercial station or stations. As I understand it, the ABC has not yet conducted any follow-up research to see whether those arrangements are satisfactory to its country listeners, but, prima facie, they should be. Senator COLSTON —Mr President, I ask a supplementary question. I understand that the Minister said that the service had been discontinued, at least partially, because there was a duplication of services by the ABC and other Brisbane radio stations. Are we to assume from that that where there is any duplication by the ABC and commercial stations in Brisbane, for example, in breakfast shows and news reports, they will also be discontinued? Senator WALSH —The answer to that is that I do not know whether they will be discontinued. I will refer the supplementary question to the Minister. It seems that an air of unreality surrounds the making of exact comparisons between a breakfast session and the description, admittedly by two different commentators, of precisely the same horse race. One would expect more variation from one breakfast session to another than from two people describing the same horse race. Senator CHIPP —I ask a question of the Minister representing the Minister for Foreign Affairs. In relation to the bombing of the Rainbow Warrior, did the Administrator of Norfolk Island order the return of passports to the crew of the Ouvea? In doing so, did he seek the advice of the Department of Territories, the Department of Foreign Affairs or the Attorney-General's Department? If he did, what was the result of that contact? Is the Government aware of the DGSE report that the order signed by the French General Saulnier giving funding to the operation specifies that `at least 15 people were involved and that the operation involved New Zealand, Australia and New Caledonia'? In view of this stated intention of the French Government to involve Australia, are the Australian Security Intelligence Organisation or the Australian Federal Police currently investigating the use of Australia by French agents for the bombing? Senator GARETH EVANS —I am seeking information on the subject matter that has been raised by Senator Chipp. I will give him an answer as soon as possible, possibly by the end of Question Time, but otherwise tomorrow. If he wants to know about the National Times story about why suspects were freed, I am happy to tell him now, but that does not seem to be what he is asking me. Senator MORRIS —I refer the Leader of the Government in the Senate to the recent reforms of the taxation system by the Government which have resulted in a fairer and more balanced taxation package. In particular, the Government decided not to introduce a broad-based consumption tax, although the Opposition Leader, Mr Howard, has pledged to introduce such a tax. Is the Minister aware of Senator Messner's rejection of the Howard proposal? Does this lend support to the decision by the Government not to proceed with such a tax? Senator Messner —What a load of nonsense. Senator BUTTON —Senator Messner interjects: `What a load of nonsense'. Senator Walsh has already made some comment on this issue. Because Senator Messner describes it as a load of nonsense, perhaps it is appropriate that I make a comment too. The Government's rejection of the consumption tax option certainly was not mirrored by Mr Howard, now Leader of the Liberal Party, who has maintained that he would introduce such a tax, although being remarkably short on the specifics of such a tax, as a lot of commentators have pointed out. As I understand from Press reports, Senator Messner has now thrown cold water over Mr Howard's plans in this matter and has said that there would be no consumption tax. Senator Messner was reported as saying that yesterday. It reminds one of Senator Messner's much vaunted comments about the assets test, which we are not sure whether his Leader supports or otherwise at this stage. Just what the Opposition's policy is on taxation matters remains a mystery to most people and clearly to the Opposition itself at this stage. I make the point that the Government has made a clear and major reform of the taxation system. The Opposition, by contrast, seems to have even less policy than it did before that major tax change was made. Senator Chaney —Who wrote this for you? It is awful. Senator BUTTON —Of course it is awful, and very painful. Senator Messner apparently has tipped a bucket on Mr Howard. He will have an opportunity to deny that at a later stage, in much the same way as the Deputy Leader of the Liberal Party, Mr Neil Brown, has ducked Mr Howard's commitments at one stage in relation to labour relations issues. Senator Walters —Gee, you are trying hard and not getting anywhere. Senator BUTTON —That is not for Senator Walters to decide at all. The Australian Financial Review has commented: The Liberals have come up with a policy which is by definition divisive. If they are going to make industrial relations a major election issue, they will have to do better than this. That comment was made late last week. We in government are a little concerned to see what the situation is at present and can only be bemused by the variety of comments made by Opposition spokesmen. Of course, those divisive and different statements made by various Opposition spokesmen are confusing to everyone. If one reads the minutes of the taxation sub-committee of the Liberal Party, signed by Senator Messner, one sees the endemic nature of that confusion written into those minutes. The point I make is that these sorts of exercises have to be contrasted with the clear directions the Government has laid down in respect of taxation policy which, looked at as a whole, have received-- Senator Durack —You don't sound very enthusiastic about it. Senator BUTTON —I am not enthusiastic about anything, least of all Senator Durack. The important point is that the Government's proposals in respect of the taxation changes have received a fair degree of community acceptance, which is the most we expected. If one makes changes in this country, there are likely to be criticisms from various interest groups which see themselves as disadvantaged by any such changes. That would not have been an experience of the Opposition when it was in government because it did not make any significant changes in respect of the economic management of this country, other than to see it slowly slide down the gurgler during its seven years in government. Senator Durack would not have had that experience. We have had that experience and we expected criticisms and carping of one kind or another, but the tax package has been generally well received by the community. Senator PARER —Is the Minister representing the Treasurer aware that the Treasurer said on the Sunday program that the Prime Minister gained no personal benefit from living at the Lodge and therefore should not be taxed for his use of that residence and other official residences? In what ways are the Prime Minister's uses of the private living quarters of the Lodge different from those of policemen and school teachers occupying government-owned premises in the course of their postings, whose benefit will be taxed under the Government's fringe benefit tax proposals? Senator WALSH —This is not an exhaustive reply, but one very clearly identifiable difference between the policeman or the school teacher and the Prime Minister is that the Prime Minister's residence-or the greater part of it-is used for official purposes, for official government entertainment. I was aware that the Treasurer had made a statement on the Sunday program a couple of weeks ago along the lines that Senator Parer indicated. But having drawn one of the important distinctions between the Prime Minister's occupancy of the Lodge-the greater part of which, I stress, is not for the Prime Minister's personal quarters at all-and the situation of a policeman or a teacher, I think it is worth putting on the record another important difference between the Prime Minister and every other member of this Parliament, other than those who represent the Australian Capital Territory. That is, every other member of this Parliament is entitled to an overnight allowance for every night that he or she spends in Canberra and, in many cases, for places other than Canberra. Senator Messner —What has that got to do with it? Senator WALSH —Perhaps Senator Messner does not apply for his allowance; if he likes, I will have the record checked, see how many days travelling allowance Senator Messner has claimed, and tell everybody what the situation is. The PRESIDENT —Order! Will the Minister please ignore the interjections and reply to Senator Parer's question. Senator WALSH —The Prime Minister gets no overnight allowance and that sets him apart from every other member of this Parliament except the four members who represent the Australian Capital Territory. Senator BOLKUS —My question is directed to the Minister for Finance. Is it a fact that the Northern Territory Government has organised and paid for an extravagant and misleading media campaign against the decision to hand over the Uluru (Ayers Rock-Mount Olga) National Park to its traditional owners? Is it a fact that this campaign will cost $300,000, which amounts to a staggering $3 for each individual Territorian? Will the Minister agree that this move indicates that the Northern Territory Government has more money than good sense? In the interests of good economic management, will the Minister review the Northern Territory Government's allocation from the Federal Government to ensure that such financial irresponsibility does not continue? Senator WALSH —Senator Bolkus referred to the `extravagant and misleading' campaign. I have not actually seen the advertisements so I cannot comment on whether they are misleading or not, except to say that, if this campaign is consistent with the Northern Territory's normal type of political campaign, it is likely to be misleading. It is certainly extravagant. I understand that the figure mentioned by Senator Bolkus of $300,000 is correct; I do not think that is quite $3 per capita in the Northern Territory but it is something of that order. If we were to apply that sort of per capita expenditure on an advertising campaign nationally, the Commonwealth Government would spend something like $40m. I dare to suggest that if the Commonwealth Government were to misappropriate $40m of Commonwealth money for a blatantly political advertising campaign-as the Northern Territory has done-the Commonwealth Government would receive a great deal of criticism, and justifiably so. The question of the Northern Territory's grants is primarily a matter for the Treasurer and I will refer that to him. Apart from this evidence of gross misuse-I would suggest close to misappropriation-of public funds that this advertising campaign for blatantly political purposes represents, the Northern Territory Government has shown other very serious examples of financial mismanagement. In the style of a banana republic government or a dictatorship, the Northern Territory Government misappropriated the property of Federal Hotels-- Senator Chaney —I rise to a point of order, Mr President. Several times you have referred the Minister to the fact that he is debating questions. He has now moved on in this answer to debate something which has nothing to do with the issue that was raised in this question. I ask you to call him to order. The PRESIDENT —Again I emphasise, as I have emphasised before, that I cannot tell a Minister how to answer a question. That is purely a matter for him. However, I draw the Minister's attention to standing order 100, which clearly says that the Minister is not entitled to debate any question asked of him at this stage. I ask the Minister to confine his remarks as much as possible to the answer. Senator WALSH —Certainly, Mr President. In my view I was not debating; I was supplying information for the benefit of the Senate-information that the Northern Territory Government has expropriated the property of Federal Hotels in the style of a banana republic dictator. Unlike most banana republic dictators who expropriate property and make some money out of it, the Northern Territory Government has the unique distinction of expropriating Federal Hotels' property and losing money on it to boot. Senator MICHAEL BAUME —My question is directed to the Minister representing the Treasurer. Is he aware that a tax seminar, at which participants are being provided with papers, lunch and refreshments and at which the Treasurer is to be keynote speaker, is being advertised as tax deductible? Is it correct that if a person attends this seminar and has lunch, that expense will be tax deductible, but if he has lunch, say to discuss business with clients, that expenditure, which is incurred in the earning of income, will not be deductible under the Government's new taxation regime? Senator WALSH —I am aware of that. Indeed, Mr Keating answered a similar question in the Caucus meeting this very day. He has also made some statements-I am not sure whether they were public statements-about this before. There are obvious, quite severe administrative difficulties in separating the lunch component of a seminar for educational purposes from another. While conceptually Senator Michael Baume may have a point-that is, that the lunch should be treated the same as any other lunch would be-in all taxation matters a balance must be struck between what might be conceptually perfect and what is administratively enforceable at an acceptable administrative cost. We know that the Opposition, when in government, did not believe in enforcing the taxation Act at all. Senator Durack, as I mentioned earlier, stuck a tax dodger's file in the bottom drawer and left it there gathering dust for five years. It is not this Government's intention to do that. The Government believes the taxation laws which it has put in place are enforceable and it will make every effort to enforce them. On the broader question of the business lunch, I think the recent Press reports regarding the devious means which assorted tax avoidance consultants are suggesting can be used to get round the spirit and letter of the proposed law is an indication of just how phoney the typical business lunch was, that it was not a venue for the conduct of business at all, as Senator Baume naively or cynically suggests, but was a device through which the people who took their lunches to work in brown paper bags, as the Treasurer put it, were forced to pay for the self- indulgences of the sort of people that Senator Baume represents and whose interests he tried to protect. Senator MICHAEL BAUME —Mr President, I have a supplementary question. Would the Minister now like to answer: Where will the line be drawn in deciding which functions involving meals are deductible and which are not? For example, would a lunch attended by Mr Mick Young, as invited by a member of a public relations organisation, be an acceptable deduction? Would a two-person seminar be accept- able? Would a lunch such as that addressed by the Minister, organised- Ther PRESIDENT-Order! The honourable senator is entitled to ask a supplementary question, not four or five. Senator MICHAEL BAUME —They relate to the drawing of a dividing line. It is, with respect, Mr President, really one question asking where the dividing line would be. Would it encompass these various possibilities? The last one I want to raise as a possibility is whether a lunch such as that addressed by the Minister, organised by the Australian Labor Party in Perth earlier this year- The PRESIDENT —Order! The honourable senator is clearly out of order. I call the Minister for Finance to answer the first supplementary question. Senator WALSH —I can only endorse your comments about his being out of order, Mr President. He is out of order- The PRESIDENT —Order! The Chair does not ask for the Minister's endorsement; I ask for an answer to the question. Senator WALSH —As out of order as he was anxious to be out of Patrick Partners when he reapplied for his dealer's licence on the Sydney Stock Exchange, although he claimed he was not a member of Patrick Partners at the time. The PRESIDENT —Order! Will the Minister answer the supplementary question? Senator WALSH —Certainly, Mr President. I will refer this to the Treasurer for confirmation, but such matters as Senator Baume has referred to, as is customary for many provisions of the Taxation Act, will I expect be left to the discretion of the Commissioner of Taxation to determine. Senator TATE —Has the Minister representing the Minister for Primary Industry received representations from Tasmanian Labor senators and Mr Ken Wriedt, the Leader of the Opposition in Tasmania, asking for the Bass Strait scallop fishery task force recommendations on fishing of new scallop beds in Banks Strait to be modified? Has the State Minister for Fisheries been supportive of this approach to exclude the Victorian fishing boats from this bed? In any case, what modifications, if any, has the Minister made to the joint task force proposals? Senator WALSH —I understand that Tasmanian senators-or Tasmanian Labor senators, at least; the others probably do not care-along with the Tasmanian Leader of the Opposition, have made such approaches to the Minister for Primary Industry. I am advised by the Minister that the Government is moving to implement the off shore constitutional settlement. It was agreed last July at the Australian Fisheries Council that 20-mile State zones for the Bass Strait scallop fishery will be established under the OCS. However, implementation of the zones must await discussions with Victoria and Tasmania on elements of the OCS affecting all fisheries of those States. Commonwealth and State officials will be reporting to Ministers before the end of the year on the outcome of these discussions. Pending implementation of the OCS and the zoning arrangements, this fishery will continue to be managed under Commonwealth law. Recently, surveys by the Tasmanian Department of Sea Fisheries have identified beds of large scallops in good condition in Banks Strait off north-east Tasmania, within 20 miles of the Tasmanian coast. They are adjacent to beds of small scallops. In order to protect these small scallops, the Bass Strait Scallop Fishery Task Force has agreed on various regulatory and enforcement measures, including the provision of considerable assistance for surveillance from Victoria. The Minister advises me that he is well aware of the concerns in Tasmania that beds of small scallops should be protected for future fishing and has, therefore, agreed to the request of the Tasmanian Minister for Sea Fisheries that there should be only a limited period of fishing on the beds of large scallops. Consequently, only the area containing large scallops is to be open to fishing from 8 to 28 October, by which time most of the large scallops could have been taken. In the meantime, it is not possible or appropriate to discriminate against fishermen from Victoria in management of the scallop grounds currently located in Commonwealth waters. Senator Chaney —I ask the Minister to table the paper from which he was quoting. Senator WALSH —I was going to have it incorporated. It suits me fine. The PRESIDENT —The Minister has tabled the paper in accordance with the request from the Leader of the Opposition. Senator TATE —Mr President, I ask a supplementary question. I still want to know-and perhaps the Minister will obtain the information from the Minister for Primary Industry, Mr Kerin-whether the State Minister for Fisheries has been supportive of the approach of Tasmanian Labor senators to exclude Victorian fishing boats from this bed. Senator WALSH —I understand that it is the case that the State Minister has been supportive. If that is wrong, then I will let Senator Tate know. Senator COLLARD —I address my question to the Minister representing the Treasurer. The Minister would be aware that all the Premiers have now voiced their opposition to the Government's proposal to tax fringe benefits enjoyed by State government employees, and that some States have threatened a constitutional challenge. What legal advice has the Government sought or received about the legality of the fringe benefits tax as it applies to the States? Will the Government agree to Mr Wran's suggestion that the States should be compensated at the next Premiers' Conference for any loss of revenue because of the new tax? Senator WALSH —In determining the tax reform policy, the Government applied a number of guidelines, one of which was that so far as is possible the same rules as apply to the private sector will be applied in the public sector. That is a view with which evidently some people-and by implication, Senator Collard is one-disagree. Notwithstanding that, the Government committed to a belief that so far as is possible the same rules that apply in the private sector should be applied in the public sector, making special allowance for isolated areas. One of those rules is the preference that income to employees should be paid as wages and not paid in kind. As we all know, in recent years in particular there has been an explosion in the amount of income paid in kind rather than paid as wages. I think Senator Collard said that all Premiers have challenged these measures, or something like that. I do not think that is quite true. I realise that most have. I have noted over many years that Premiers and State governments in general have a propensity to complain about any measure which a Commonwealth government adopts to raise revenue while simultaneously holding out their hands for the revenue which those measures finally raise. On the constitutional question, so far as I know no opinion has been sought but I will refer the matter to the Treasurer or the Attorney-General. Personally, I do not see it as a real problem because the Commonwealth makes payments to the States and, if the States refuse to divulge the information on which the notional liability can be calculated, the option is always open to the Commonwealth to deduct a Commonwealth-assessed amount from the State payment. Senator BLACK —My question is addressed to the Minister for Industry, Technology and Commerce. Given Telecom's policy of fostering Australian industry through the purchase of 90 per cent of its telecommunications equipment from local suppliers, can the Minister advise the Senate of the effects which privatisation, the accompanying removal of purchasing preference policy and possible foreign ownership would have on the Australian telecommunications manufacturing industry? Senator BUTTON —I thought this question of privatisation had gone into limbo over the last fortnight. It was the flavour of the week before that as far as the Opposition was concerned, but I thought it had disappeared until Senator Messner, of course, resurrected it again in an interview yesterday when he announced that the Liberals would finance their mini-tax package by cutting government expenditure and by privatisation. I thought that Mr Valder and Mr Howard between them had more or less laid that issue to rest when Mr Valder described it as fiddling at the edges and Mr Howard backed away from it very fast after being elected Leader of the Liberal Party. Apparently it is still on the political agenda. In that context, Senator Black's question becomes important-more important, perhaps, than it might have been, with respect, a week or so ago. Of course, Telecom's practice of purchasing 90 per cent of its equipment from Australian manufacturers is very beneficial to those manufacturers and the telecommunications industry in Australia. It is a very strong protective device for the telecommunications sector in this country. I guess it has been important to the development of that industry that Telecom has done that over a number of years. It has been beneficial in terms of employment and for the companies concerned. However, there are disbenefits in that, as one could well understand. Operating in a fairly small domestic market, telecommunications manufacturers not only have had the benefits of protection but also have idled along in the knowledge that, while those protective arms are there, they do not have to do much about exports or research and development and so on. That issue is currently being discussed with the telecommunications industry in this country. The effects of what has happened in Britain since the Thatcher Government made its decision to sell British Telecom are somewhat diffuse and varied. For example, it has no doubt been damaging to companies such as Plessey, STC, GEC and others in the British telecommunications industry. However, some good things can be said about it. The attachments market, which has been served by small companies in the United Kingdom, has become more vigorous, with greater opportunities being opened up. The things that are detrimental as a result of that policy in Britain on the sale of British Telecom are that the standard of service is said to have deteriorated and that a major problem has developed with the emergence of a new web of regulations enforced by an organisation called Offtell, leading to a process in Britain which is now identified in the terminology of British industry as reregulation. This has followed directly from the decision to dismantle British Telecom. I point out also that it was said that one of the great virtues that would result from selling British Telecom would be diffuse shareholdings spread across a number of people and institutions. In fact, a month after the sale of British Telecom, there were four million identifiable separate shareholders in what had been British Telecom. In 18 months, that figure had reduced from four million to 500,000. There had been an aggregation in shareholdings in what was British Telecom. All those experiences in a country such as Britain are relevant, but, in my view, they are only marginally relevant because of the very different circumstances which pertain in a country like Australia, where we have a public instrumentality like Telecom serving a small population in a vast continent. For that reason, the differences are very real and apparent. To summarise my answer to Senator Black's question, the purchasing policies of Telecom Australia have been beneficial to the Australian telecommunications industry. It is my view that those policies have to be supplemented by some other stimulus to the telecommunications manufacturing industry in Australia if it is to grow as that industry is growing in the rest of the world. Senator SIDDONS —My question is directed to the Minister representing the Minister for Employment and Industrial Relations. Is the Government aware that the leader of the Australian Building Construction Employees and Builders Labourers Federation, Mr Norm Gallagher, has promised members of that union a 35-hour week in the near future and that this would be outside the wage indexation guidelines and would imperil the prices and incomes accord? Is the Government concerned that moves by prominent Australian Labor Party people and Mr Gallagher's legal advisers may well result in his conviction being quashed and no further trial being held-a situation which would be a travesty of justice in view of the fact that those who gave the secret commissions were found guilty? Does the Government still hold to its commitment to deregister the BLF if the Australian Conciliation and Arbitration Commission finds that that is necessary? Senator WALSH —Senator Siddons asked whether the Government was aware that Mr Gallagher had promised his members a 35-hour week. I was not aware of it. Mr Willis may or may not have been aware of it, but I would not take it terribly seriously, whether I was aware of it or not. The second part of the question related to the nullification on legal grounds of Mr Gallagher's previous conviction in Victoria and whether he will be committed for trial again. That is a matter for the Victorian Government and not this Government to determine. The third question related to whether the Government is proceeding with its attempts to deregister the BLF. The answer to that question is yes. The Government not only is proceeding with that policy but also is using what methods are available to it to discourage employers from continuing to do business with the BLF in the way that they have done in the past. This is a matter of public record. The record of building contractors is a factor which will be taken into consideration in future in the awarding of Government contracts. By `record' I mean whether particular firms have a history of doing the sorts of under-counter deals with the BLF which ultimately resulted in the conviction, though not imprisonment, of a number of Victorian builders and the conviction of Mr Gallagher himself. Senator AULICH —I refer the Minister for Veterans' Affairs to a letter from a former employee of the Australian War Memorial published in today's Canberra Times and alleging serious administrative problems at the Memorial, particularly in relation to staff matters. Can the Minister comment on these allegations? Senator GIETZELT —I have seen the letter from a former senior officer who held the position of Senior Curator of Military Technology at the Australian War Memorial and who is now residing in the United Kingdom. He made a number of allegations concerning staff morale and the administration of the Australian War Memorial. Naturally, of course, I undertook this morning to make some inquiries in respect of the rather lengthy letter that he wrote to the Canberra Times. I have satisfied myself that, to a great extent, his allegations have very little substance. All those who have held senior positions at the Australian War Memorial and have left in recent years have done so for personal reasons associated with domestic problems, career advancement or moving to institutions of a similar nature-museums. I believe that all those decisions were taken by the individuals to suit their own needs. Therefore, the suggestion that there has been a high turnover of staff has not, I believe, been borne out by the investigations I have made. It is true that there have been problems associated with the War Memorial and that is one of the reasons why, in December last year, the Prime Minister moved responsibility for the War Memorial to my ministerial area-the Department of Veterans' Affairs. That was not because it was considered that the previous Minister had done insufficient-he had a whole number of institutions under his control-but the Government was of the view that the Australian War Memorial required some specific attention to detail, recognising that it is the most patronised public institution in Canberra. There is no doubt that, over a period of years, the financial and human resources available to the War Memorial were quite inadequate. The honourable senator and the Senate generally will be aware that in this Budget considerable sums of money have been made available to improve the resources of the Memorial. Additional staff have also been appointed. Therefore, the suggestions that the problems associated with the War Memorial have not been addressed by this Government are not borne out in our examination of the actual details of what we have given the War Memorial since it came under my jurisdiction. There are problems associated with the gallery but they are problems of lack of space and lack of resources. I believe that the steps that have been taken in the Budget this year will see a marked improvement in the amount of floor space and gallery space available to the public generally and I believe that the staff question has been properly addressed by the Government. Senator PETER RAE —Is the Minister representing the Treasurer aware that restaurants around Australia are already dismissing staff as a result of the loss of trade following the Government's announcement of its taxation proposals and, further, that a group of management consultants has predicted that at least 10,000 jobs will ultimately disappear from the restaurant industry? What is the Government's own estimate of job losses in the restaurant and catering industry? What can the Government offer to the thousands of workers who will be laid off as a direct result of the Government's attack on one of the very few sectors of the economy which had been enjoying rapid employment growth, in particular in the employment of young job seekers, during recent years? Senator WALSH —As Senator Grimes just indicated, I tend to concur with one of the judgments made by the present Leader of the Opposition. After hearing that question I tend to concur with his judgment; that is, to move Senator Rae back a bit further from the front table than he was before. I recall that in 1983 the Government was being lobbied by the breweries. Although I do not recall the exact figures, we received literature with assertions of the employment effects of a 10 per cent increase in the excise on alcohol. If the same proportions were applied backwards, the result of a fairly simple calculation was that all we had to do to abolish unemployment was to abolish the excise on beer. All governments are subject to that sort of propaganda and they take it with a grain of salt. I take the propaganda from the restaurateurs, which has just been regurgitated by Senator Rae, with the same grain of salt. I find it astonishing that a party which purports to believe in the free market complains when a particular industry is exposed to market forces; that is, required to compete with other industries without the benefit of a tax shelter. Senator Messner —Restaurants pay tax the same as everybody else. Senator WALSH —It is possible-indeed, I would say probable-that the restaurant industry is somewhat larger than it would have been had it not been a tax shelter, enjoying tax shelter status, in order to indulge those bludgers who had free lunches at the expense of people who took their lunches to work in brown paper bags. To the extent that the restaurant industry does contract because it will no longer be a tax shelter, that will reflect a vote by the public that they do not want the services provided by that industry in the volume in which they had previously been provided when it had the benefit of tax shelter status. I would have thought that anyone who believed in market forces and consumer choice would support a policy which had that effect. Senator Messner —It is going to lose jobs. The PRESIDENT —Senator Messner, you asked a question and a supplementary question. I ask you to give everyone a fair go. Senator WALSH —I think it likely that there will be some contraction of the restaurant industry and some reduction in employment although, as I said before, the wild figures quoted by Senator Rae and others should be viewed with a great deal of scepticism. Senator Rae asked about employment opportunities. What he seems to have forgotten is that the money previously spent on business lunches for the self-indulgent at the expense of ordinary people and ordinary taxpayers will be spent somewhere else, resulting in increased demand for goods or services from other industries, with a concomitant increase in employment in those industries. So, while it is probable that there will be some reduction in employment in the restaurant industry, that reflects consumer choice undistorted by tax lurks and tax havens. There will also be increased employment in other areas as expenditure patterns change. How that works out on balance is something that cannot be calculated with any precision either now or afterwards. Senator PETER RAE —Mr President, I ask a supplementary question. The matter upon which my question was based was a reference to the Australian newspaper of 25 September. Does the Minister regard the management consultants of Horwarth and Horwarth Services Pty to be people who are untrustworthy, unreliable and all the other names which he attributed to them or does he accept that if they made an assessment as management consultants of a loss of 10,000 jobs it was based on some reasonable basis or hypothesis? Senator WALSH —No, I do not accept that at all. They were hired guns for a particular vested interest. If one wants to use the emotive terms that Senate Rae used, the liquor industry propaganda to which I referred a while ago came from Carlton and United Breweries Ltd. I wonder whether Senate Rae would like to put on to Carlton and United Breweries all the epithets that he says I am putting on to some other firm. It is a fact of life that vested interests and those guns which are hired by vested interests habitually exaggerate the effects of whatever policies they do not like; this will have some adverse effect on the vested interest, though not necessarily an adverse effect on the community as a whole. Senator SIBRAA —My question is directed to the Acting Minister for Foreign Affairs. Does the Government have any further information as to the nature of the visit to South Africa by the rugby union players Messrs Ella, Campese and Gould? Does the Government know whether other Australian players will be participating? Has the Government yet formed a view as to whether the visit is in breach of the Gleneagles Agreement? If the Government has formed a view, what action does it propose to take? Senator GARETH EVANS —The information available to the Department of Foreign Affairs is still somewhat limited, but it does appear that the forthcoming seven-a-side competition is an annual event organised by the Natal Rugby Union and usually involving eight teams, seven of them provincial and one from the rest of South Africa. The three Australian players will be taking part in an invitation match in this competition on 12 October. They will form part of a team which may include players from other countries but the composition of which is still at present unclear. The Government has been unable to confirm reports that three additional Australian players will take part in the match. We simply do not know at this stage whether there is any substance to those rumours. The visit of the three is clearly in breach of the spirit of the Gleneagles Agreement, which requires governments, and I quote from the relevant paragraph: . . . to combat the evil of apartheid by withholding any form of support for, and by taking every practical step to discourage contact or competition by, their nationals with sporting organisations, teams or sportsmen from South Africa . . . To the extent that the Agreement deals with governments' responsibilities, then it is, as a technical matter, not in practice possible for individuals to breach the Agreement, only governments. The three players do appear to be in breach of the more explicit and detailed terms of the Brisbane Code of Conduct, a document that was drawn up by the Commonwealth Games Federation in 1982 to establish guidelines for member countries to follow in applying the Glen- eagles Declaration. That Code defines a breach of the Gleneagles Declaration for individual sportsmen, for sportsmen's members of teams and for individual sporting administrators. For individual Commonwealth sportsmen a breach is defined, among other things, as follows: . . . competing in a sports event in a country which practises apartheid . . . So it would seem clear from not only the general language of the Gleneagles Agreement but also the more specific language of the Brisbane Code of Conduct which implements and carries it out in a particular context that a breach is here involved in a contact of this particular kind. Under the Brisbane Code of Conduct, where there is an impending or actual breach of the Gleneagles Declaration-that is a sporting contact of the kind I have mentioned-a series of steps are to apply. Which steps they are depends on whether the sport in question is a Commonwealth Games one or not. In the present context the obligations are as follows: Firstly, the Australian Commonwealth Games Association is to notify the Australian Rugby Football Union of the fact of the apparent breach and to make known its opposition. Secondly, it is to notify the Commonwealth Games Federation of the matter and of the action to be taken by the Commonwealth Games Association and the Australian Rugby Football Union. Thirdly, the Association is to notify the Australian Government of any action contemplated or taken and request the Government to take steps to discharge its obligations under the Gleneagles Agreement. I am advised that the Australian Commonwealth Games Association has been made aware of its obligations under the Brisbane Code. The Government would certainly wish to see these obligations fully discharged without delay. In fulfilment of its own obligations under the Glen- eagles Declaration the Government is today writing, through the Minister for Sport, Recreation and Tourism, to the Australian Rugby Football Union seeking information about its involvement, if any, in the visit and what action, if any, it proposes now to take. I conclude by saying that in keeping with its obligations under Gleneagles it has been Australian Government policy to strongly oppose and discourage sporting contact with South Africa. The Government deplores the action of sportspersons in engaging in any sporting contact in or with South Africa. There is no doubt that in a game such as rugby union, which is so important to the South Africans, the participation of the Australians in the seven-a-side tournament will be seen in that country as a major breakout from its sporting isolation and, as such, as giving aid and comfort to a regime, which manifestly deserves nothing of the kind. From any point of view the decision of the three players to go to South Africa is deeply regrettable and one which it is hoped they will come to regret deeply. Senator BUTTON(Victoria-Leader of the Government in the Senate) —Mr President, I seek leave to make a statement on the reform of the Australian taxation system, which was made in the House of Representatives on 19 September by the Treasurer (Mr Keating). Leave granted. Senator BUTTON —Mr President, I seek leave to have the text of the statement incorporated in Hansard. Leave granted. The statement read as follows- Since its election in 1983, the Hawke Government has consistently pursued policies directed towards restoring strong economic growth and creating a fairer Australian society. By any measure our strategy has been an outstanding success. For the past two financial years this nation has recorded growth rates that are the envy of the Western world. Under this Government over 430,000 more Australians have found jobs, inflation has been cut significantly from the double digit legacy of our predecessors and we have arrested and turned around the blow-out that we inherited in the Commonwealth Budget deficit. We now confidently anticipate a third year of strong growth. And despite the protestations of the doomsayers after I brought down the Budget last month, that prospect is being confirmed repeatedly by a series of positive economic indicators. Mr Speaker, the achievement of sustained high growth rates remains the overriding economic objective of this Government. We have policies set for growth. Not because that is an end in itself, but because it is only through economic growth that we can cut unemployment. It is only through growth that we can increase assistance to the needy. And it is only through growth that we can generate the higher living standards that the whole community desires. If we are to maintain the momentum of growth it is essential that we act now. We must be prepared to tackle head on the issues that in the past have been consigned to the too-hard basket. We must be prepared to debunk the myths and overturn the barriers that stand in the way of our goal. This Government is prepared to do that. Today we are taking the hard decisions, confronting the issues and embarking upon a very substantial reform to the Australian national economy. For the first time in Australia's recent history a government has been willing to place tax reform on the political agenda. But much more than that, for the first time a government has been willing to act. We have invited debate, we have asked the people of Australia to express their views and we have listened carefully to what they have said. The tax reform measures I am announcing today are the outcome of that unprecedented process of consultation. While they do not include a broad based consumption tax of the kind proposed by the Government at the July tax summit, they do represent the most far reaching reform of the Australian tax system to be undertaken by a government in living memory. Today we are addressing a crisis in our national taxation system that has been left by a succession of governments to compound year upon year. There was a time when Australia had a reasonably sane and credible taxation system. But that time is long gone. The system has been broken and beaten by an avalanche of avoidance, evasion and minimisation. And more so than in any other period in Australia's history, the taxation system deteriorated during the stewardship of the previous Government. During those seven years tax avoidance became the norm for hundreds of thousands of Australians. Taxpayers were allowed the indulgence of moving into contrived artificial paper avoidance and evasion schemes-including those of the criminal variety. The Government of the day was tardy in acting to stem the blatant abuses that were ocurring before its very eyes. More than that, it failed to act at all to tackle the underlying problems. It is the deterioration and decay that occurred during the late 1970s and early 1980s that has now made substantial reform so essential. For years Australians have gained satisfaction from believing that their tax system was progressive; that those who could afford to shoulder a greater share of the burden did so. Today, that is a fiction. The system no longer works that way. The top marginal tax rate-the 60c in the dollar rate-has been paid by barely a few of those whose incomes should place them in that bracket. Tens of thousands of these people have walked away from the system. In their place middle income Australians have been forced to take up the load. These are the people who have not been in the position to arrange their affairs to take advantage of the tax shelters, the schemes and the concessions. They have not joined in what had for higher income earners become the socially acceptable business of avoidance and evasion. But it is they who have sustained the system during the past decade. What we have seen is a dramatic compression in the application of the marginal tax rates, so that where at the beginning of the 1970s the top rate came in at the current equivalent of $110,000, today it comes in at $35,000. In the early 1970s the top rate applied at five times average weekly earnings. Today it applies at 1 1/2 times. It is for these reasons that from the outset a major objective of tax reform has been to substantially lighten the heavy hand of high marginal tax rates on honest taxpayers in this country. It would be stupid not to recognise the lesson of recent history; taxpayers just will not pay ridiculously high marginal tax rates. The system invites abuse if it attempts to impose such a burden. The time has come when the facts must be faced. Change is needed and, if this nation is to continue to progress, it is needed now. Lower marginal rates will enhance our economic performance by better rewarding initiative. They will help generate growth by increasing rewards for work relative to those from tax avoidance and evasion and they will make for a better nation by reducing distortions in the savings and investment decisions of ordinary Australians. A fundamental and major reform which this Government will undertake is to reduce the top rate of income tax from 60c in the dollar to 49c in the dollar. Further, we will cut the intermediate rate of personal income tax from 46c in the dollar to 40c. This slashing of marginal tax rates represents a dramatic and permanent reform to the Australian tax system. It will mean that in future no Australian will be required to pay more than half his or her income in taxation. It is this action along with the abolition of shelters and the introduction of stronger penalties which will act to end the rorts and abuse of the system. Combined with our extensive reform a year ago to drop the bottom personal income tax rate from 30c to 25c in the dollar, today's measures will restore the system's effective progression. They also make possible the vital innovation of aligning the top personal income tax rate with the company tax rate. In a stroke this will make a whole host of tax avoidance devices futile. Further, in this package for the first time a government in this country will have recognised the call from shareholders of Australian companies to remove the double taxation on dividends. This is a reform which was denied in 30 years of coalition government. From today the Government will also have ended the debate which has persisted in Australia for decades as to whether income taken as capital ought to be exempt from tax. We will establish a capital gains tax so that in the future taxpayers who take their income in the normal manner will not be disadvantaged as against taxpayers who choose to take their income as capital. The benefits of tax reform will be shared among all Australians. A number of measures are to be taken to relieve poverty traps in our social security system. These changes will involve easing the income tests applied to pensioners and beneficiaries and will increase the incentive available to these people to earn extra income. This whole group of reforms-reductions in marginal rates, the alignment of the top personal rate with the company tax rate, the full imputation system for relief of dividend tax, the capital gains tax and the action to relieve poverty traps-makes this statement of reform the most comprehensive in the modern era. This reform package launches an attack on tax shelters and sectional concessions. Measures that even up the taxation treatment of different industries will attract resources to where they earn the greatest real profits, rather than to where they attract the greatest concessions or generate the largest tax deductible losses. It is true that tax shelters and other minimisation devices may, on occasions, stimulate particular industries or activities. But it must be understood that whenever such a subsidy is conceded it involves a real-and largely hidden-cost to the rest of the community. Ultimately, every tax concession, minimisation scheme or evasion rort means that all of those who do not benefit must shoulder a greater burden. More often than not, it is the higher income earners who benefit from exploitation of these practices. Again, it is the middle income earners-ordinary taxpaying Australians-who must shoulder the difference. By broadening the income tax base and closing loopholes, today's measures will achieve a return to fairness in the Australian tax system not seen for decades. Australian society will be much the stronger for it. These measures, and this reform package, are not about raising revenue for the Government. The total yield of this package will be returned to taxpayers. Not only that; it incorporates tax cuts to be delivered in satisfaction of the Government's commitment to continued wage restraint. In all, significant cuts will be delivered to everyone in the community save those taxpayers who have made a feast of tax avoidance and evasion. Next financial year tax cuts totalling $2 billion will be delivered to all Australians. Of this $2 billion, $800m will be netted in that year from the tax reform measures. In the following financial year the cost of the tax cuts will be about $4.5 billion, of which the growing yield from the tax reform measures will account for about $1.5 billion. In other words, the cost to revenue of the cuts will far outweigh the proceeds from the new tax measures. Putting these figures in individual terms will mean that in the first year the average income earner will receive an income tax cut of $9 per week. In the second year, a further reduction in the tax scales in July 1987 will bring the total tax cut for the average income earner to $15.20 a week. None of these tax cuts will be financed by adding to the Government's deficit. They will be achieved by the most rigorous restraint on public sector outlays. This Government has already demonstrated its economic credentials. We are committed to responsible and prudent fiscal policy. We have more than halved the deficit as a proportion of gross domestic product in three years. We have curtailed outlays growth to its lowest rate in six years. The Government entered the discussions with the trade union movement on wage restraint with a total commitment that the budgetary scope to finance these cuts would be found through expenditure restraint. The tax package is part of our overall strategy designed to promote growth. This Government knows that responsible and appropriate fiscal policies are an essential element of macroeconomics management. We will not put sustained economic growth at risk by relaxing fiscal discipline. Details of the proposed measures are provided in attachments to my printed speech, which I shall table on conclusion. I shall now outline the main features of the Government's reforms. FRINGE BENEFITS There has been an accelerating shift in recent years toward the payment by employers of remuneration in the form of fringe benefits. While not readily admitted as such, this shift often has all the hallmarks of outright tax evasion. High marginal income tax rates have played a major part in providing the incentive for this trend-and we will rectify that problem in this package. However, the growing shift to fringe benefits has been a major factor in reducing the tax liabilities of predominantly higher income taxpayers. An increasing awareness of these perks has highlighted the unfairness of the tax system and has contributed to undermining taxpayer morale. As a consequence, the Government will be proceeding with the taxation of fringe benefits broadly along the lines described in the draft White Paper on reform of the Australian taxation system. That will mean taxing all of the major fringe benefits, whether received in cash or otherwise. Non-Cash Fringe Benefits In the case of non-cash fringe benefits, the tax will be payable on the assessed value of the benefits provided to employees and will be levied on the employer at the prevailing company tax rate. Initially that will be 46c in the dollar, changing later in line with the alterations to the company tax regime. The type of benefits to be taxed include employer-provided motor vehicles, free or low interest loans, residential accommodation, goods and services sold at below cost or provided free by an employer and expenses paid on behalf of an employee. The valuation rules to apply in each case are detailed in the attachments. In the case of motor vehicles where no records of costs or business use are maintained, a proportion of the purchase price of the car will be subject to the tax at the relevant company tax rate. Under these rules, the maximum tax payable on each car will be around 11 per cent of the purchase cost. Lower levels of tax apply where the total distance travelled by the vehicle during the year exceeds specified threshold levels. If a higher proportion of business use can be substantiated there will be the option of maintaining cost records and log books detailing the breakdown between private and company use. The fringe benefits tax will not apply to benefits associated with employer contributions to superannuation funds and employee share acquisition schemes, which are already subject to specific taxation provisions. The tax will be designed to have little or no effect on the many small, traditional employer-provided benefits such as most staff discounts. A complete exemption applies to staff canteens, free commuter transport fares, the home to work use of taxis and commercial vehicles and child care facilities on employers' premises. Special concessions will apply to housing and travel benefits provided to employees in specified remote areas. All employers, with the exception of religious bodies, will be liable for the tax, including the Commonwealth, State and local governments. Clearly, government bodies other than the Commonwealth will incur a direct liability if they choose to provide such fringe benefits. In the case of the Commonwealth any payment of the tax will be shown in the Budget papers and will be subject to the Government's own on-going expenditure restraint guidelines and to parliamentary scrutiny. In addition, measures are to be taken to equate more closely the treatment of non-cash fringe benefits for Commonwealth public servants with that which is likely to apply to their counterparts in the private sector. For example, the same rules that the Tax Office applies to private sector employees will be applied to public servants when apportioning the cost of government provided home telephone services. Commonwealth financed provision of credit cards to senior public servants is to cease forthwith and existing cards will not be renewed. The private use of Commonwealth-owned cars provided to employees will be stringently controlled. With the introduction of this tax it is expected that some employers and employees may see advantage in replacing fringe benefits with cash payments. As this would bring currently non-taxable benefits to book, such a development would be consistent with the Government's objectives in taxing these benefits. The Government will consult with employers and the Australian Council of Trade Unions about possible adjustments to the wage fixing principles to provide for such `cashing-out' of benefits under appropriate conditions. The Government does not expect, and would not wish to see, any further build-up in the provision of fringe benefits. The Government will review these arrangements, with a view to tightening their application, should any significant increases occur. The tax will commence on 1 July 1986 and be paid quarterly, with the first payment due in October 1986. The amount of tax revenue to be recouped is estimated at $320m in 1986-87 and $515m in 1987-88. Living Away from Home Allowances While most living away from home allowances are not paid at excessive rates to avoid tax, there has been growing abuse in this area. The Government has decided to tax the remuneration component of living away from home allowances at the employer level in the same way as for non-cash fringe benefits, with effect from 1 July 1986. The taxable value for this purpose will be equal to the amount of the allowance in excess of the proportion which represents reasonable compensation for additional expenditures on accommodation and on food. The revenue gain is estimated at $10m in 1986-87 and $15m in subsequent years. A complete exemption will apply to gains on the taxpayer's principal residence and reasonable curtilage, on all motor vehicles, on other personal-use items such as furniture up to a sale value of $5,000, and on gains with respect to superannuation and the proceeds of life insurance policies. There will be provision for nominal losses to be offset against gains; The tax will be levied, on real gains, at ordinary rates of personal and company income tax. The existing capital gains section 25A of the income tax law will not apply in respect of assets acquired after today, but will continue to apply for assets acquired before midnight tonight. The existing section 26AAA will continue to apply for all relevant assets. Because of the wholly prospective nature of the tax, revenue is expected to build up gradually over a lengthy period, as newly-acquired assets are disposed of. As an illustration of the fact that this tax will affect only a tiny section of the population, its expected revenue yield, in the fifth year of operation is estimated to be only $25m. The tax will mean that for assets acquired after midnight tonight, taxpayers will simply need to keep their records of purchase price, spending on improvements and sale price. Valuation of assets already held will not be necessary as all are exempt from the new provisions. To cite an example, suppose an asset such as an office was purchased tomorrow for $100,000 and assume it is sold five years later for $130,000. If during that five-year period inflation totalled 25 per cent, the gain would be assessed only as the difference between $130,000 and $125,000. The gain of $5,000 would be taxed at the taxpayer's marginal rate-which in the case of a 40c in the dollar taxpayer would amount to only $2,000 in tax. I repeat, however, that every asset already owned by taxpayers will be exempt from the tax. WHOLESALE SALES TAX I announced on 13 August 1985 that the Government had decided against any major extension of the indirect tax base but would carry out a rationalisation of the existing wholesale sales tax schedules and rate structure. As a result of this rationalisation, the rate structure is to be simplified to reduce the existing four-step scale to three. These steps will be 10, 20 and 30 per cent, in lieu of the existing 7 1/2, 10, 20 and 32 1/2 per cent schedules. The rationalisation will include the incorporation of the current 7 1/2 per cent category into the 10 per cent category. The rate for chocolates and other confectionery will be reduced from the current 20 per cent to 10 per cent, while the tax at that rate will be extended to close substitutes of the existing taxable items including snack foods, ice cream and biscuits. Also to be taxed at 10 per cent will be non-oil-burning domestic space heaters, domestic cooking stoves, domestic water heating systems and wrapping materials for household use. Each of those items is currently excluded from the sales tax base, a treatment inconsistent with that accorded almost every product of a similar kind. The rate of tax on items currently subject to 32 1/2 per cent is to be reduced to 30 per cent in the case of televisions, radios, videos and other electronic equipment, jewellery, furs, cameras, watches and clocks, cosmetics and perfumes and poker and amusement machines. Other items currently taxed at 32 1/2 per cent will fall to only 20 per cent including pens, most brushes and shaving utensils, sound and video tapes and records. A number of other anomalies and inconsistencies in the wholesale sales tax are being addressed, and details of all the changes are included in the attachment. These changes will apply to goods passing the taxing point after midnight tonight. Safeguarding measures will protect the revenue against any last minute transactions that attempt to avoid tax liabilities arising from the changes. These measures are estimated to result in a net revenue gain of about $75m in 1985-86 and about $110m in a full year. The estimated net effect of these changes in the comsumer price index is very small at around 0.1 percentage points. AUSTRALIAN CARD In order to combat tax evasion and reduce health and welfare fraud, the Government has decided to implement a national identification system involving the issue to individuals of a card to be known as the Australia Card. A companion system for entities such as companies and partnerships is also being developed. Planning and development for the system will be completed over the next 18 months and Australia Cards will be issued from March 1987. The aim is to create an accurate register of all Australians which will contain only the most basic information, such as full name, address and date of birth. It will assist the Government to verify records and payments, but it will do no more than that. The privacy of every individual will be maintained. People will need their Australia Card in only three situations-in connection with employment, conducting specified financial dealings and other matters with tax implications and when claiming Commonwealth benefits. The Australia Card will help to ensure that everybody in the community contributes a fair share towards the costs of providing government services and that no individual or group takes from the community more than their fair and equitable entitlements. It is estimated that taxation revenue gains will amount to about $100m in the first year of full operation of the system, expected to be 1989-90. Revenue will rise to around $540m per annum after the third full year of operation. TAX-FREE THRESHOLD The tax-free threshold is primarily intended to recognise the limited capacity to pay tax of low income earners who are required to support themselves for the whole of the year on that income. In its present form the threshold provides an overly generous concession to part-year workers who are not wholly reliant for the full year on the taxable income returned. The Government has decided that from 1 July 1986 the tax-free threshold will apply only on a pro rata basis in the case of those taxpayers joining the Australian work force on a full time basis for the first time and those leaving Australia permanently. The full threshold will continue to apply to other taxpayers. This measure is expected to yield around $90m per annum from 1987-88. PRESCRIBED PAYMENTS SYSTEM Contrary to the alarmist claims made at the time of its introduction in 1983, the prescribed payments system has proved extremely successful in combating tax evasion by contractors and sub-contractors in the building, transport, motor vehicle repair and cleaning and other industries. On the scheme's introduction, the 10 per cent deduction rate that currently applies to payments by the relevant industries was set on a conservative basis in order to facilitate its implementation. Having reviewed the arrangements, the Government has decided to increase the deduction rate from 10 per cent to 15 per cent from 1 July 1986. As at present, those with a responsible tax record may apply to have this rate lowered where appropriate. This measure will assist in countering evasion by applying a higher withholding rate to those payees who provide false information on deduction forms. Also from 1 July 1986, owner-builders are to comply with full prescribed payments system requirements by making deductions from payments in connection with construction projects in excess of $10,000 that begin after that date. The Government proposes to review further the operation of the prescribed payments system, including the desirability of extension to other industries. The net revenue gain from these changes is estimated at $105m in 1986-87 and $45m in subsequent years. QUARTERLY PROVISIONAL TAX The existing system for the collection of provisional tax places stress on the money markets due to the substantial seasonal withdrawal of liquidity from the financial system in each June quarter. To overcome this problem the Government has decided to introduce an instalment system for the payment of provisional tax by individuals, to commence in 1987-88. When fully implemented four instalments will be payable. I emphasise that taxpayers will not be called upon to pay, in any financial year, a greater amount of tax than under the current system. Self-assessment procedures will continue to ensure that taxpayers will not be required to pay an amount which exceeds their estimated net tax payable for the year. The new system will not apply to taxpayers whose provisional tax liability does not exceed $2000. Such taxpayers will continue to pay provisional tax on an annual basis. This will exclude about three quarters of a million provisional taxpayers, about half of the total. An alternative pattern of instalment payments with later due dates will be available to taxpayers, such as some primary producers, whose income flow is concentrated in the second half of the financial year. The reduction in sales of government securities that will result from the measure is estimated to generate interest savings of the order of $55m annually from 1987-88. QUARANTINING OF FARM LOSSES One of the most heavily used tax shelters set out in the draft White Paper is the write-off of farm losses against income from another source. The manner in which the tax system is currently structured allows other than genuine farmers to generate significant tax gains by directing investment to what otherwise would often be considered unprofitable ventures. The proposed measure is along the lines of that canvassed in the draft White Paper, but with significantly more generous treatment of non-farm income. The new rules will commence in the 1986-87 income year. There will be two approaches. The first will allow farm losses to be fully written off against non-farm income of up to $15,000 with a dollar for dollar shade-out for non-farm income between $15,000 and $30,000. These thresholds will be subject to indexation. The second approach will allow farm losses to be written off against non-farm income up to the aggregate of the previous five years net farm income if this provides a greater write-off. This profitability test will cater appropriately for those cases where farm losses are caused by downturns and disasters, rather than tax sheltering activity. Both approaches are designed to ensure that a genuine farmer who needs to take outside work to supplement farm income will in general not be adversely affected. Revenue gains are estimated at $125m in 1987-88 and $95m annually thereafter. Partly offsetting these revenue gains will be a significant improvement in the primary production averaging provisions. An additional $20m per annum benefit to farmers will arise from a complementary increase in the notional farm income limit for primary production averaging purposes, from the current level of $5,000 to the new level of $15,000. This represents a significant increase in the amount of non-farm income which may benefit from the averaging provisions. WATER CONSERVATION The Government has decided to replace the immediate deduction currently allowed for expenditure by primary producers on conserving or conveying water with a write-off in equal instalments over five years. The change will apply to expenditure incurred under contracts entered into after today. Having regard to concerns expressed about land degradation problems, the Government has decided not to change the immediate 100 per cent deduction currently allowed for expenditure on soil conservation. The revenue savings are estimated at $25m in 1986-87 and $20m in 1987-88. FILMS The very generous tax treatment granted to the Australian film industry has in recent years led to a burgeoning cost to the revenue and to accompanying doubts about whether this subsidy is returning value for money. The cost has grown from $13m in 1981-82 to $135m anticipated this financial year. Consequently, the Government has decided that the concessional treatment currently provided for film investments will be reduced to a 120 per cent tax deduction and 20 per cent income tax exemption for income. This will apply to investments made under contracts entered into after today. The grant to the Special Production Fund administered by the Australian Film Commission is to be increased from $4m to $6m in 1985-86, and to $7m in 1986-87. The estimated net saving to revenue of the changes is around $35m in both 1986-87 and 1987-88. PETROLEUM AND AFFORESTATION COMPANIES As canvassed in the draft White Paper, the Government has decided to withdraw from midnight tonight the special rebate and deduction available for certain capital subscribed to petroleum and afforestation companies. Revenue savings from these changes are estimated at $10m for 1986-87 and $15m for 1987-88. INCOME TAX ON PUBLIC UNIT TRUSTS The draft White Paper drew attention to the increasing use of trusts to avoid company tax. Although the reforms to the company tax arrangements, which I shall mention shortly, will reduce the incentive to use trusts, there would still be advantages for tax-exempt institutional investors in the trust form. The Government has therefore decided to extend company tax arrangements to public unit trusts but only those which operate a trade or business, as distinct from the great majority which are vehicles for investing in property, equities or securities. These latter public unit trusts, and all private trusts, will be unaffected by this measure. The new arrangements will apply to trusts established after today to operate a trade or business. There will be reasonable transitional arrangements to phase in the new treatment for existing trusts of that kind, with first company tax payments not required before 1988-89. FOREIGN TAX CREDIT SYSTEM Under current arrangements the income of Australian residents from foreign sources is generally exempt from income tax if it has been subject to tax overseas. That exemption applies, however, regardless of how little that foreign tax may be. As a consequence the Government has decided to replace the existing arrangements with a general foreign tax credit system along the lines set out in the draft White Paper. Under the proposed system the foreign source income of Australian residents will be taxed in Australia and a credit for foreign tax paid will be allowed against Australian tax payable on that income. Salaries and wages will generally remain exempt in Australia if taxable in the source country. The new system, which is similar to systems operated by the United States, the United Kingdom and West Germany, will apply to income derived from the beginning of the 1987-88 income year. I stress that, in proceeding with this measure, the Government will, through appropriate measures, give recognition to the position of regional countries that provide tax incentives to attract legitimate investment from Australia and elsewhere as a means of fulfilling their development aspirations. The direct gain to revenue is estimated at about $45m per annum at 1984-85 levels of income, with the first revenue gains accruing in 1988-89. GOLD MINING The draft White Paper proposal to tax income from gold mining has not been adopted. An independent inquiry has been established to examine the impact of the White Paper proposal on the gold mining industry. That inquiry will report to the Government during the first half of 1986. TAXATION RELIEF The measures I have announced will raise about $1 billion in 1986-87 and $1.7 billion in 1987-88. As I stressed earlier, the government is engaged in a tax reform exercise, not a tax raising exercise. Consequently, every dollar raised by these measures-and more-will be returned to taxpayers and social security beneficiaries by reform of the income tax rate scale and the company tax regime and by reductions in poverty traps. I turn now to these proposals. MINING At present, excess deductions for exploration and development expenditure cannot be transferred to another company, even where the companies satisfy the 100 per cent common ownership test. Mining companies therefore cannot take full advantage of the group loss provisions available to other companies. As canvassed in the draft White Paper, the Government has decided to extend that opportunity to petroleum and general mining companies. This will apply to excess deductions from exploration and development expenditures incurred in 1985-86 and subsequent income years. The estimated revenue costs of this measure are $70 million in 1986-87 and $65 million in 1987-88. The Government also proposes to freeze, until the 1986-87 Budget, the difference between the diesel fuel excise and the diesel fuel rebate for diesel fuel used in mining operations. The rebate will be further reviewed in the context of the 1986-87 Budget. IMPUTATION SYSTEM OF COMPANY TAX It has long been a complaint of taxpayers that dividend income is effectively taxed twice-once as company profits and once as personal income. A further problem has been that the company tax rate is less than the maximum personal marginal tax rate. This has provided an advantage for some higher income earners who can avoid the higher marginal tax rate by establishing comapanies for tax sheltering. While the existing tax system provides a positive incentive for some people to channel income through companies, it effectively discourages most investors from buying shares altogether. For decades the pattern of investment by Australians has been distorted away from productive enterprise owing to the double taxation of dividends. The Government believes the raising of equity for our continuing national development should be encouraged. Accordingly, the Government has decided to proceed with a system of full imputation on company income distributed to resident individual shareholders. To help defray the cost of this measure, the company tax rate will be increased from 46 per cent to 49 per cent. However, there will still remain a significant net cost of about $250m per year to Commonwealth revenue. People receiving dividends will receive a credit when they determine their own personal tax liability. Thus, for each $51 of dividends received, $100 will be included in the shareholder's assessable income, and a credit of $49 allowed against the taxpayer's assessed income tax bill. For a taxpayer with a marginal tax rate of 49 per cent, this will effectively free the dividend from any tax. Individuals facing lower marginal tax rates will be able to apply the excess credit to reduce their tax liability on non-dividend income. The credit will not give rise to cash refunds where it exceeds tax otherwise payable. Imputation credits will not extend to non-resident shareholders. Because of the changes, some renegotiation of Australia's double taxation treaties could be involved. It is intended that the 49 per cent company tax rate first apply to company tax collections in 1987-88-that is, relevant to company incomes for the 1986-87 income year-and that imputation credits first apply to dividends paid in 1987-88. On the basis indicated, the annual cost to revenue of these measures could be approximately $250m from 1988-89. I will be interested to hear honourable members opposite refer to small business, medium business and large business now because they denied the shareholders of this country this reform for 30 years and they subjected their dividends to double taxation for 30 years. They had no appreciation of the needs of investment in the community and no appreciation of the need to raise equity in the community. Again they have been exposed for failing even to consider the necessary and fundamental reforms to which they are supposedly committed. So the small business lobbies, the medium business lobbies and the large business lobbies can weigh the value of the Opposition's rhetoric on these issues and make the appropriate judgment that, as usual, it is worthless. POVERTY TRAPS As part of the reform package, the Government has recognised that certain social security arrangements presently provide little incentive for pensioners and beneficiaries to earn extra income. Accordingly, the Government will take a number of steps to alleviate the problems caused by these poverty traps. First, from 1 November 1986, the amount of private income that a pensioner may earn before his or her pension is reduced under the income test will be increased by $10 per week for single pensioners and by $20 per week for pensioner couples. This increases the amount single pensioners can earn each week without affecting the pension from $30 to $40, and for couples, from $50 to $70. As a result the pension payment received by all of the 450,000 recipients who currently receive a part-rate pension will increase by up to $5 per week. Those pensioners earning in the range $30 to $40 per week may continue to face a small tax liability, but will no longer be subject to the 50c in the dollar income test as well. Secondly, the Government will abolish the separate income test on rent assistance. This test at the moment leads to the withdrawal of 50c in rent assistance for the first and each subsequent $1 of income earned. The inclusion of rent assistance in the general income test will reduce the marginal rate of income withdrawal faced by some 700,000 pensioners and beneficiaries receiving rent assistance, in most cases from 50 per cent to zero. A benefit of up to $15 per week will flow to some 300,000 pensioners with non-pension income in private rental accommodation. Thirdly, the Government proposes to further assist pensioners with children. At present, the weekly income a pensioner may earn without reduction of pension is increased by $6 for each child. This allowance is to rise to $12 per child. The measure will increase the pension of all part-rate pensioners with children by up to $3 per week for each child. All three measures will be introduced from the first pension and benefit payday in November 1986 as the tax reform measures begin to take effect. The effects of the three measures I have announced may be illustrated by the case of a supporting parent or pensioner with two children living in rental accommodation. At present, if such a pensioner earned $100 a week of private income, the social security pension plus rent assistance is reduced by $44. From November next year, this pensioner would lose only $18 in reduced benefits for a total gain of $26 per week. The full year effect on outlays of the measures is estimated at about $215m. Net full year costs will be around $185m as some part of the outlays will be clawed back in personal income tax in later years. THE INCOME TAX RATE SCALE Mr Speaker, as I said at the outset, our major objective has been to substantially lighten the heavy weight of high marginal tax rates on honest taxpayers and to restore fairness to the operation of the taxation system. That is what we set out to do. With this reform package, that is what we will achieve. The new tax schedules I will announce shortly have been framed with a number of factors in mind. First, they represent the fulfilment of the Government's commitment to provide tax cuts from September 1986, equivalent to a 2 per cent wage increase, as part of its agreement with the Australian Council of Trade Unions for continued wage restraint. In addition, the tax cuts take account of the distributional impact of the reform measures that I have outlined. These impact most heavily upon higher income earners; that is, the reform measures are highly progressive. While that, of itself, does not establish a case for providing greater relief at such income levels, I come back to the point that reductions in the higher marginal rates have been, and remain, a prime objective of tax reform. It is the high rates of personal income tax which have provided a major incentive for people to avoid and evade their tax and which involve the most severe disincentive to work, save and invest. But few of the people in the top bracket have paid the 60c in the dollar asked of them. They have arranged their affairs to evade, avoid or minimise that liability. Instead their share of the burden has been carried by ordinary middle income Australians. It must be clearly understood that the measures I have announced today will impact most heavily upon high income avoiders and evaders. Those people will very definitely be worse off because of the Government's actions. At the same time, when this package is implemented the Government of the Commonwealth of Australia will no longer be seeking to collect in income tax more than half the income of any citizen. The tax cuts that I will now detail have been timed to take effect as the extra revenue from our tax reform measures comes on stream. On top of that, the Government fully recognises that the making of these tax cuts imposes very substantial constraints on future government spending proposals. The following changes will be made to the personal income tax rate scale from 1 September 1986: The tax free threshold will be increased from $4,595 to $5,100, and the $12,500 threshold will be increased to $12,600; the 25 per cent marginal rate will be reduced to 24 per cent; the 30 per cent marginal rate will be reduced to 29 per cent; the 46 per cent rate will be reduced to 43 per cent; the 48 per cent rate will be reduced to 46 per cent; and the 60 per cent rate will be reduced to 55 per cent. From 1 July 1987, by which time the revenue yield of the income tax base broadening measures will have built up significantly, the Government will complete the reform of the scales by making further reductions in the higher marginal rates. Specifically; the 43 and 46 per cent rates will be reduced to 40 per cent; and the 55 per cent rate will be reduced to 49 per cent. With the alignment of the top personal tax rate and the company tax rate at 49 per cent from 1987-88, the special tax on excess profit retentions by private companies-the so-called Division 7 tax-will be unnecessary and will be removed, a further plus for small and medium business. Further details of these tax cuts, and their impact on various categories of taxpayers, are included in the attachments. CONCLUSIONS What I have announced today are far-reaching genuine, and substantial tax reforms. They achieve the fundamental objectives we set ourselves at the outset of this ambitious endeavour, namely: To significantly reduce marginal tax rates; to curtail tax avoidance and evasion and restore fairness to the tax system; and to gear our tax system for economic growth by providing the greater rewards for initiative, removing distorting shelters and ending the double taxation of dividends. The Government's tax reform exercise is completed. We will, however, continue to act where necessary to stamp out any avoidance and evasion practices that develop. Furthermore, the package I have announced today commits the Government to unprecedented fiscal responsibility over the years ahead. In bringing down this package, the Government has confronted the issue of tax reform. We have been willing to consult with the people of Australia. We have been willing seriously and responsibly to consider the issues involved and we have been willing to take the hard decisions. These decisions are essential to secure the future economic well-being of the nation. They are essential if we are to recover respect and integrity for the taxation system. They are essential if all Australians are to be treated with fairness and equity. The Government is confident that the people of Australia will recognise that these significant measures are taken in the best interests of the nation and for the greater good of every individual Australian. Senator BUTTON —In moving that the Senate take note of the statement, I indicate that it was tabled in the House of Representatives before we rose for the two-week recess. I hope to be able to arrange with other parties in the Senate a timetable for discussion of the statement. I move: That the Senate take note of the statement. Debate (on motion by Senator Chaney) adjourned. Senator MAGUIRE(South Australia)(3.13) —I move: That the Senate take note of the paper. I address some remarks to the report entitled `Outlook for the Aviation Industry' dated September 1985 and published by the Department of Aviation. The report indicates that in the current financial year there is expected to be a 4 per cent growth in airline passenger numbers. It is pointed out that in regard to 1984-85, which has just ended, there was a growth of 7 1/2 per cent in passenger kilometres performed by the major airlines. That growth rate is far in excess of those which have been recorded by the Australian airline industry in the previous financial years. For example, the 7 1/2 per cent growth in passenger kilometres for 1984-85 compares with only 3.8 per cent growth in 1983-84 and a decline in passenger kilometres of 8.2 per cent in 1982-83, which I think was the bottom point of the Fraser Government's period of economic recession. It is evident that the total task performed by Australia's airlines, measured by tonne kilometres, grew by 6.7 per cent for the whole of the financial year 1984-85 compared with the previous year. What is particularly interesting is the accelerating growth trend in the industry. I refer to the June quarter growth for 1985 compared with the June quarter growth for 1984 and the 8.8 per cent increase in the total task performed by Australian airlines in that period compared with only 6.7 per cent growth for the whole year. So there has been a marked improvement recently, a further sign, I believe, of the economic recovery occurring in this country. The airline industry is very responsive to economic activity. I noted also with a great deal of interest that a 5 per cent increase was measured in the last financial year, 1984-85, in total aircraft movements at the eight capital city airports in Australia. That indicator includes both Canberra and Darwin as well as the six State capital cities. Overall there was 5 per cent growth in aircraft movements at those airports. As a result, aircraft movements equalled the Australian all time record level set in 1980. So the airline industry has come out of the recession. It has recovered. It is now achieving levels of activity equal to those set in 1980 before the recession which occurred earlier in this decade. It is particularly interesting that while the number of aircraft movements grew by an average of 5 per cent in 1984-85 for the eight capital cities, there were very wide variations between those capital cities. It is noteworthy that in Brisbane there was a decline in the number of aircraft movements; so on yet another indicator it seems that activity in Queensland has gone against the national trend. While there was a 5 per cent rise nationally in aircraft movements at major airports, in Brisbane there was a decline of 0.6 per cent for the whole of the financial year. For the June quarter of this year, compared with the June quarter of last year, aircraft movements at Brisbane airport fell by 3.2 per cent, which is very much an indicator of an increase rate of decline. Aircraft movements in Hobart declined by 2.1 per cent. On the other hand, aircraft movements in Perth rose by over 5 per cent. At the moment a review is being conducted into the two-airline policy. I hope that that review will take a very close look at the most disastrous practice of parallel scheduling; the widespread practice in Australia of duplicated aircraft departure times. It is a major problem which particularly affects the outlying States of Australia. My colleagues from Western Australia are particularly aggrieved by the inconvenience caused by parallel scheduling and it certainly hits travellers from my own State. Adelaide airport has a very high degree of duplicated departure times. I recently conducted a study into the schedules of the major airlines between Melbourne and Adelaide, which showed that virtually all flights are duplicated on that sector. That should be looked at. Senator VIGOR(South Australia)(3.17) —The Department of Aviation paper `Outlook for the Aviation Industry' is basically the Department's response to Dick Smith's attack on the structure of the Department. If the report is to be taken at face value, it indicates that all is well in the garden and there are no problems anywhere. However, this does not appear to be the case. With the review of the two-airline policy upon us, decisions are being made now which will have a profound effect on the industry and consumers. The Australian Democrats are firmly of the belief that the airline industry needs to be deregulated. For too long the two airlines have dictated policy to the Australian travelling public; when we travel, what we pay and what type of plane we travel in. It has been a licence for Trans Australian Airlines and Ansett Airlines of Australia to print money at the expense of the consumer. Consumers and industry would benefit from deregulation in Australia. Deregulation would allow firms like East-West Airlines Ltd to have a fair share of the market place and Lloyd Aviation of South Australia also could gain a foothold. There is no evidence to suggest that safety would suffer and there is no rational reason to suggest that flying would be any less safe than it is now. The same high standards for aircraft and air crew would apply, whether or not deregulation took place. The two airlines, once they got over the original shock of change, could find it quite stimulating to be in a competitive situation. There would be a lot of moaning and groaning on the part of Ansett and TAA, but others, such as Bob Ansett, East-West, Lloyd and the smaller charter firms would be quite overjoyed with deregulation. Cheaper fares would prompt a number of people to fly who are now unable to afford this type of travel and would open up a number of new markets. I quote from an article in the Brisbane Courier-Mail which states: Michael G. Kirby, formerly of the Australian National University and now an economist with the Bureau of Agricultural Economics, has closely examined the US experience and its implications for Australia. He finds that the changes in the US have been dynamic, that cost efficiency has increased, that there is a less `unionised' work force, that the number of discount air fares and the size of discounts have risen, and that the airline network is better integrated. He says commuter airlines have been quick to replace any services to smaller communities that were terminated by bigger airlines, and that air safety has not suffered. Kirby finds that the Australian two-airline policy is more restrictive than the former US regulatory framework and that the Australian regulatory system can be criticised for its lack of competition, minimal innovation, poor consumer choice and high costs and fares. We are backing deregulation not because of an ideological desire for privatisation, but because the existing policy simply does not work. As to the other aspects of the real outlook for the aviation industry, we will not know what still remains to be done until the House of Representatives Standing Committee on Expenditure inquiry has finished taking evidence and the Committee has put up its recommendations. Only then will we know the real outlook for and future of the aviation industry. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator TATE(Tasmania)(3.23) —I move: That the Senate take note of the paper. I rise to pay tribute to Telecom Australia. I do so because not only is this an annual report of some significance, but it also marks 10 years of operations by Telecom Australia. The great benefits that have flowed to the Australian people and the nation as a result of the dedicated work of many thousands of Australians in the Telecom work force ought to be noted by the chamber. In 1984-85 some $5.2 billion was outlayed by way of total cash outlay, maintenance operation, capital works, et cetera; $2,310m was paid in salaries, wages and on costs; $1,995m was paid to manufacturers, builders and suppliers of goods and services; $890m was paid out in interest to the Government and to Telecom stockholders-a very important point to note in the context of the coming privatisation debate. In other words, we have an immense enterprise which, I believe, is operating in a very efficient fashion on behalf of the Australian people. Some $600m was paid to the Government last year in interest on borrowings and some $290m was paid to 70,000 Telecom stockholders throughout Australia, and the net profit left of $385m was invested back into a capital works program. I mention these enormous figures merely to offset the individual and personal character of the operations carried out by many hundreds of dedicated members of the workforce of Telecom, particularly in my home State of Tasmania. I have had the great privilege and pleasure of visiting Telecom in Hobart, Burnie and Devonport and I will visit Telecom in Launceston in the next fortnight of recess. In visiting those particular works and telephone exchanges, I have been greatly impressed by the dedication of the work force, by the evident grasp of new technology and the retraining that goes with it in order to enable the service to become ever more efficient and accessible. The figures themselves indicate that that is the case. Last year there was a record installation throughout Australia of 590,000 new telephone services, 8,870 telex services and 26,500 data services. That is the measure of the tremendous activity of this organisation right across the country. Having outlined that tremendous success of this enterprise we then come against the hard political fact that the Opposition is determined to destroy this organisation by dismembering it and selling off its most profitable parts, no doubt, to those particular private enterprise organisations which are baying and craving for a part of the very intensely used operations within Telecom, such as between Sydney and Melbourne, or in relation to the new projects and data services that have been made available. Mr Howard made it clear in his speech to the National Press Club that he intends to sell off the most profitable parts of Telecom and to do so he is prepared to sell to the workers of Telecom shares at less than market price. So this great private enterprise market force party is prepared virtually to offer a bribe to the workers of Telecom to take out shares at less than the market price which they could then sell on a future occasion, of course at a higher price, and make a gain. That is the sort of mess that the Opposition's present ideological crusade has got it into. But I believe it will be resisted not only by the Telecom employees, whom I found to be a contented and dedicated group of men and women, but also by the Australian people, who know that this Australia-wide service has provided an unparalled system of communication across such a huge continent, where vast distances separate centres of population. Any of us can pick up a telephone and telephone anywhere in Australia at a reasonable STD rate. This often recurring and often unnoticed and underrated service is provided by this great organisation. Senator VIGOR(South Australia)(3.27) —The Australian Telecommunications Commission has now completed 10 years of providing nation-wide telecommunication services to the Australian people. In that time the proportion of homes with telephones has increased from 62 per cent to 88 per cent. Telecom has continued to expand its range of services and to be the largest employer of staff in this nation. Last year it recruited 12,434 people. Telecom's capital expenditure program of $1,568m for the past financial year continues to play a major role in business opportunities for companies based in Australia. I would like to see it buying leverage of nearly $1,000m-for things other than buildings-to foster an Australian owned telecommunications manufacturing industry that can supply our needs and stimulate vital export growth. Telecom represents 2 per cent of the international telecommunications market. Other countries have stimulated employment growth by funding research and development in the high technology area. Both Sweden and Ireland export quite a deal more than they import. In Australia imports of high technology run at about 10 times our exports. No wonder we are shedding jobs, especially in the Australian electronics industry. We have to use our skills and Telecom's forward planning process and massive buying power to re-establish a viable industry in Australia. For instance, in 1984-85 Telecom spent $24.9m on research and development. Roughly one per cent of Telecom staff time is devoted to that area. The presence of appropriate skills is attested by the development of the digital radio concentrator system, as proudly announced in this report. Unfortunately, Telecom could not find a suitable Australian manufacturer to take the concentrator up, so the licensing arrangements and the jobs have gone to NEC in Japan. During a recent hearing of a Senate Estimates committee we were told that Telecom is shortly to introduce an industry strategy committee. I applaud that step, but I also sound a note of caution about the need for a change of mental approach within Telecom because also at the Estimates Committee we were told: We are largely importing the technology . . . Our research and development efforts are basically an attempt to have an understanding of the current technologies, run trials and make an assessment of their suitability for application in our network. That, with respect, is colonial mentality. It is an expression of our cultural cringe. Our skilled research staff should not spend their time modifying overseas products and, worse still, assembling bits and pieces or even translating specifications for Australian use. This research staff could be exploring satellite technology for remote areas, for instance. There are two other points I wish to raise. In the financial year ended July 1985, 1,389 employees of Telecom had to be replaced because of repetition strain injury. That compares with 482 for the previous year. It is a major problem that shows up in the accounts. There is an abnormal item of $373m assessed as the Commission's liability for workers compensation as at 1 July 1984, and an increase in the liability of $78m occurred during the past year. Management will have to ensure that steps are taken to modify equipment and the working environment to do something about this. It is clearly a factor which can weigh heavily on Telecom's financial performance. The last point I want to raise is that the figures for unsatisfied demand for services deal with the number of deferred applications for services, but not with the actual number of services required. This is particularly problem- atic for Aboriginal communities without telephone services. It would be better to have the estimates of the actual number of services which are required than just the number of unsatisfied applications. I note that demand for phones was higher than forecast in the last year. I look forward to further improvements in Telecom's services and approach. Senator COONEY(Victoria)(3.33) —Perhaps I could add a few remarks to what my learned leader, Senator Tate, has said about the Australian Telecommunications Commission. Senator Puplick —What is this, the new faction? Senator COONEY —The new faction of the back bench. Senator Tate made two good points. The first was that Telecom Australia is the subject, and will be the subject in the future, of debates about privatisation. Secondly, he said that this is an organisation that has been successful. Those two things go together, of course. The concepts of deregulation and of privatisation will gain more and more currency in the life of this Parliament. I think that Telecom is a useful organisation to examine in respect of those concepts. Telecom has delivered two things. First, it has delivered social benefits to areas where those benefits were needed. In looking through the annual report of the Australian Telecommunications Commission we see at pages 40, 41 and 42 the sorts of services that this organisation provides and has provided in the past. For example, there is Viatel, which I understand is a service which ultimately may well make redundant the sorts of libraries we have now. It is a facility which provides information retrieval. That is the social contribution that this Commission makes. The Commission makes an economic contribution in the sense that it makes a profit which benefits Australia, as a whole. Privatisation ought to be looked at in terms of the results of a particular organisation rather than its origin. Simply to condemn an organisation because it has an origin in the public sector seems to me to be shortsighted. Any organisation, whether in the public or private sector, must be measured, not in terms of where it comes from, but in terms of where it is going. I see on the front cover of the report a photograph of the Minister for Communications (Mr Duffy). This organisation has done well under his guidance. I notice that his tie is hidden, and perhaps, given the results of recent weekends, if the tie could be properly seen it would contain an Essendon logo. Question resolved in the affirmative. Senator WATSON(Tasmania)(3.36) —I move: That the Senate take note of the paper. The report shows the movements in the receipts and expenditure of the sinking fund of the Commonwealth account. It also shows movements in State responsibility so far as receipts and payments are concerned. It gives a summary of the balance sheet of the national debt sinking fund account and details of redemptions, et cetera. I would like to use this opportunity to comment on the structure and the degree of debt and the implications for the Australian economy as such. Commonwealth debt has increased at an alarming rate-to almost $30 billion in June 1984. Total foreign debt has increased sevenfold since 1980. It now stands at $52 billion. Heavy borrowings by State and Federal government enterprises have been one of the biggest single factors in this rapid increase, but we must also acknowledge the significance of the borrowings of semi-government authorities, which have tended to pull down the Australian dollar against other currencies. The payment of interest and principal on debt accounted for about 8 per cent of export income in 1975-76 but skyrocketed to almost 28 per cent in 1983-84. The debt servicing costs, which are the largest single item in Australia's growing invisible deficit on the balance of payments is indeed a matter of concern. It is not surprising, therefore, that some overseas countries, and some authorities in Japan, for example, are expressing concern at this situation. In fact, one or two commentators have claimed that Australia could well need bailing out through the International Monetary Fund in the not too distant future unless positive steps are taken. The major problems seem to be a failure to develop an export-oriented industrial base and the continued low prices for primary produce and commodities, which are causing major difficulties. But hand in hand with this problem of foreign debt is the fact that it has tended to increase interest rates. These high interest rates, of course, are due to our high international deficit on the current account, which is now running at $10 billion per annum. This deficit works in two ways. It causes a depreciation of the Australian dollar, but it entails a long-term problem of causing inevitable price increases in the internal system. The Reserve Bank of Australia understands the problem, which I do not think the Government understands. In order to achieve a conterbalancing inflow of overseas funds, and to get an adequate level of inflow of funds, it must pitch interest rates pretty high so as to maintain a satisfactory level of foreign investment to cover that deficit gap. In summary, the current account deficit has caused a rise in interest rates because it causes a depreciation in the dollar and causes a consequent inflationary expectation. Unless the Government comes to grips with managing the economy in a much more satisfactory manner than it has in the past, we will be in for a horrendous time in the future. I commend the report to the Senate. Senator VIGOR(South Australia)(3.40) —The sixty-second annual report of the National Debt Commission has just been tabled in the Parliament. The national debt sinking fund began operations on 11 August 1923. In 1927, separate sinking funds were established for each State pursuant to a financial agreement between the States and the Commonwealth. The National Debt Commission is responsible for the management of these funds, designed to ensure repayment of public sector loans, securities and other borrowings, as these fall due. The Commission's report provides a comprehensive series of tables which detail the history of the Commonwealth's involvement in sinking funds. It also includes transactions for the financial year ending 30 June 1985 which have been conducted on behalf of the National Debt Commission. The report brings together in one place the balance sheets and outstanding securities for moneys owed by the Federal and State governments. It outlines moneys paid to the sinking funds from Consolidated Revenue, interest earned, repayments and redemptions as well as repurchases of securities. Table 8 on pages 34 to 35 of the report lists the receipts and expenditure in respect of the Commonwealth's commitment for its own contributions to the national debt sinking fund. It will hardly come as a surprise to honourable senators that these figures have increased at an exponential rate in recent years. From 11 August 1923 to 30 June 1980-that 57 years-the total expenditure for debt redemption was approximately $8.7 billion. In 1980-81 this figure was $1.4 billion. I seek leave to continue my remarks later. Leave granted; debate adjourned. The ACTING DEPUTY PRESIDENT(Senator Jones) —Order! The time for consideration of papers has expired. Senator PETER BAUME(New South Wales) —by leave-I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator REID(Australian Capital Territory) —On behalf of the Joint Committee on the Australian Capital Territory, I present a report on variations to the plan of lay-out of the City of Canberra 1985, eighty-sixth series. It is the first report and deals specifically with the infrastructure for the development of roads and other works to enable the Tuggeranong town centre to proceed. I also table minutes of the proceedings. I seek leave to incorporate in Hansard a short statement relating to the report. Leave granted. The statement read as follows- The report I have just tabled deals with Item 6 of the 86th Series of Variations to the plan of layout of the City of Canberra. The Committee is considering this particular variation, dealing with roadworks associated with the construction of the Tuggeranong Town Centre, as a matter of urgency. This is at the request of the Minister for Territories who asked the Committee to report separately to Parliament on Variation 6 and to do it as quickly as possible so that the necessary approvals and tenders for the work could be carried out with the minimum of delay. The estimated cost for public works associated with this variation including roads, services and landscaping is $3.5m. In considering this proposed Variation the Committee took evidence from five witnesses representing the National Capital Development Commission and the Department of Territories. Variation 6 is part of the plan of expansion to the primary network for the Tuggeranong Town Centre to provide access to major development sites for the retail complex, major government offices, post office, library, college complex, secondary retail uses and a range of private enterprise mixed office and retail development. The Committee in the 85th Series of Variations expressed concern that adequate safeguards would be taken to protect the Murrumbidgee River environment from any pollution associated with the construction of the town centre. It has received assurances from the Department of Territories that such monitoring will be carried out and that these control measures are adequate. The Committee Members have also noted the high cost of developing the Tuggeranong Town Centre and is concerned that development costs be kept to a minimum with a suggestion that perhaps some of these costs could be passed on to the private developers. However, the Committee is conscious that residents of Tuggeranong have been deprived of adequate services and retail facilities for a very long time and is anxious that no further delays occur to provide such services. For this reason, the Committee is more than happy to comply with requests to consider the development of the Tuggeranong Town Centre as a matter of urgency and not to contribute to any delays in the process. The Committee approves the Variation. Motion (by Senator Haines) agreed to: That leave be given to introduce a Bill for an Act to amend the Social Security Act 1947 to ensure that payments made under the Federal Restitution Act of the Federal Republic of Germany as compensation, restitution or reparation for persecution inflicted by the Nazi regime do not affect social security entitlements. Bill presented by Senator Haines, and read a first time. Senator HAINES(South Australia)(3.43) —by leave-I move: That the Bill be now read a second time. I seek leave to incorporate my second reading speech in Hansard. Leave granted. The speech read as follows- The intention of this Bill is to exempt from consideration as `income' for the purposes of the assets test, the reparation payments made by the German Government to survivors of Nazi Concentration Camps. Only a month or so ago the Senate passed, without dissent, a motion by Senator Peter Baume acknowledging the brutality and inhumanity of the Holocaust. To do this, in a rare moment of unaniminity on the fortieth anniversary of the liberation of concentration camp victims, and then allow them to be financially penalised because they are in receipt of reparation payments would be an intolerable inconsistency. What would be worse is the Parliament taking no action on this issue in the light of recent Administrative Appeals Tribunal decisions. On 5 March this year the AAT had this to say with regard to an appeal by Mrs Edwarda Artwinska: During the war the applicant's mother and family, except one sister, were killed in concentration camps. Her mother was killed either in Treblinka or in transport to the camp. The applicant herself was sent to a concentration camp then to an ammunitions factory and later to Birkenhau which was the extermination section Auschwitz. She was next sent to a work camp at Bergen-Belsen, then went to an aircraft factory at Ashenlebben and was then put on the road in a column and made to walk. Eventually the applicant went to Torgau concentration camp but it was full and she was then taken into the woods to be shot. She lost consciousness and was thrown on to a heap of dead bodies. She heard different sounding voices which turned out to be those of American soldiers who retrieved her and put her in a hospital. The Russians took over and the standard of care at the hospital diminished. Five times it was thought she was dead. At one stage her body was so swollen from poisoning that she was thought to be pregnant.'' There are now only 2,000 or so people with experiences such as those suffered by Mrs Artwinska left alive in Australia. For their incredible suffering and as an acknowledgement of the injustice done to them they receive reparations under the West German Restitution Act. Those reparations are known as `Wiedergutmachung', literally `again to make good'. Previous Australian governments have tried to tax these reparation payments from Germany and were told by the German Government that the nature of the payments meant they could not be subject to taxation-that they were, in effect, an attempt to `make good' in some small way for the horror and butchery of the Second World War nazi concentration camps. Madame Artwinska's case would not have come before the AAT had the true nature of those reparation payments been known and understood. They are not a form of pension or benefit. To call them so is absurd. Neither are they a form of compensation payment. The AAT found that: In short, the definition of `income' under S.6 of the Social Security Act 1947 does not comprehend or encompass restitution payments. The purpose of such payments is totally distinguishable from any other type of payments answering the description of `income'. Nothing is clearer than that this tribunal considers that reparation payments are not `income' as far as section 6 of the Social Security Act 1947 is concerned. Rather than appeal against this decision, the Government should acknowledge the justice of the situation and accept the fact that these people do, indeed, make up a special case and legislate accordingly. To argue that other forms of war pension from either the Australian Government or any other government would also have to be excluded from the definition of `income' is to ignore the limited and special nature of this payment. To ensure, however, that there can be no ambiguity and no risk or a `flow on', this legislation has been quite specifically directed at enshrining the AAT judgement with regard to recipients of `Wiedergutmachung' in legislation. If we believe the fine words and sentiments of Senator Peter Baume's motion earlier this session then I believe we can do nothing other than pass this legislation and accordingly I commend the Bill to the Senate. Debate (on motion by Senator McIntosh) adjourned. Assent to the following Bills reported: Poultry Industry Assistance Amendment Bill 1985 Poultry Industry Levy Amendment Bill 1985 Tobacco Charge (No. 1) Amendment Bill 1985 Tobacco Charge (No. 2) Amendment Bill 1985 Tobacco Charge (No. 3) Amendment Bill 1985 Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Walsh) read a first time. Senator WALSH(Western Australia-Minister for Finance)(3.45) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- The purpose of the Foreign States Immunities Bill 1985 is to set out in clear and accessible form the law relating to the jurisdiction of Australian courts over foreign States, their agencies and instrumentalities. This matter is currently determined according to the common law. The legislation will implement the recommendations of the Law Reform Commission in Report No. 24 on `Foreign State Immunity' which was tabled in the Parliament on 10 October 1984. The Report was prepared after thorough examination of similar legislation in other countries and extensive consultation with relevant organizations and individuals. The matter was referred to the Commission by the previous Government. It is non-contentious and we look forward to bipartisan support. The Bill is concerned only with immunity from suit and related matters such as the proper scope of enforcement measures and service of process. It does not confer immunity from substantive laws nor does it concern liability to criminal proceedings. The Bill is strictly prospective in effect. Since the early nineteenth century it has been recognized that foreign States are at least in some ways in a special position when action against them is brought before the courts of other States. The basic justification for immunity is the notion of sovereign equality of States. Until the early 1970s, it was generally thought that at common law foreign States and their agencies were entitled to absolute immunity from jurisdiction. The civil law countries, by contrast, have long distinguished governmental and private transactions of foreign States, according immunity only to the former. In a series of recent decisions United Kingdom courts applied a `restrictive' immunity approach and declined to accord immunity in respect of commercial transactions. The United Kingdom, the United States, Canada, Singapore and other common law countries have legislated to apply this restrictive immunity approach. There have been no recent Australian cases on the matter. Although it is likely that Australian courts would adopt the `restrictive' approach taken in the United Kingdom prior to enactment of legislation, there are many areas of uncertainty. Because other common law countries have now legislated on the matter there will be little case-law to develop and clarify these areas of uncertainty. The main argument for the `restrictive' theory of foreign State immunity is that commercial or trading activities conducted by or on behalf of foreign governments should not attract the special jurisdictional immunity enjoyed by foreign States. Australia's increasing involvement in international trading and financial activities, including the involvement of foreign State agencies in investment and banking or other trading or financial activities in Australia, make the subject of increasing importance to Australia. The proposed legislation follows the United Kingdom State Immunity Act 1978 in laying down a general rule of immunity for foreign States which is made subject to exceptions: Commercial transactions will not be immune. This includes all contracts for the supply of goods or services, or for loans or guarantees. This will bring Australian law into line with the law of other major financial centres such as New York, London and Singapore. It is an essential step if Australia is to develop as an international banking centre conducting sovereign risk lending. Torts resulting in death, physical injury or damage to tangible property will not be immune if committed in Australia by the foreign State or by its servants acting in the course of their employment. As an example of such a case, a person injured in a road accident involving diplomatic personnel acting in the course of their employment will be able to sue the State for damages. (The diplomat personally will continue to be protected by diplomatic or consular immunity in accordance with internationally agreed rules.) The foreign State will retain its immunity where only economic loss is suffered, that is for torts such as defamation, misrepresentation, deceit, and negligent mis-statement unless the tort occurs in the course of a commercial transaction. Employment contracts entered into by foreign governments will not be immune from suits unless the contract is made with a person who is a foreign national and not a permanent resident or national of Australia. Disputes concerning immovable property (for example land) will not be immune. This lack of immunity will apply accordingly to claims that the foreign State is using its property here in such a way as to constitute a nuisance. Other matters for which immunity will to some extent be removed include disputes involving industrial and intellectual property, membership by the foreign State in a locally formed partnership, company or body corporate, and the conduct of arbitrations. Apart from these circumstances prescribed by the legislation, a foreign State is also able to submit voluntarily to the jurisdiction. This may be done, amongst other ways, by a written agreement in advance or by submission in the face of the court. `Foreign States' are defined to include political sub-divisions or component units, such as provinces or states, and hence the Bill extends immunities to them. This could assist the Australian States to claim similar treatment in foreign States on the grounds of reciprocity. The proposed legislation will also deal with the immunities of `separate entities' such as State trading corporations or investment commissions that are agencies or instrumentalities of the foreign State but have a separate legal existence. `Separate entities' are given, in most respects, the same immunity as the State. In practice, this means that entities with exclusively commercial functions, the majority of those involved in dealings with Australia, will lack immunity. Consistent with the approach taken to immunity from jurisdiction, the property of foreign States is made immune from execution to satisfy judgments obtained against it, subject to specified exceptions. Commercial property is not immune from execution. This is defined as property being used by the foreign State substantially for commercial purposes and can never be military or diplomatic property. Consistently with the lack of immunity of immovable property, such property loses its immunity from execution consequent upon successful suit against that property. A foreign State may also waive its immunity from execution with respect to any property. The third area of major reform which the Bill implements is an area about which currently there is considerable uncertainty; that is the appropriate way to serve court documents on a foreign State. The new legislation will also enable service of writs on foreign States to be carried out by the Department of Foreign Affairs using diplomatic channels. It also makes service of an initiating process effective where it is in accordance with an agreement or treaty. Certain procedural requirements additional to those imposed by the general law will apply where foreign States are parties to a suit. For example, there is an extension of the time for entering an appearance before judgment in default of appearance can be entered against foreign States. The legislation does not affect any immunity or privilege conferred by the Diplomatic Privileges and Immunities Act 1967, the Consular Privileges and Immunities Act 1972, and the Defence (Visiting Forces) Act 1963. Nor does it affect immunities conferred on foreign States by or under other Commonwealth legislation. Where the immunities and privileges under the Bill exceed those allowed to Australia by the laws of a foreign State, regulations may be made modifying the operation of the legislation in relation to that State. Regulations may also be made to modify the operation of the legislation where a treaty is concluded between Australia and a foreign State in which different provisions have been agreed. An additional matter covered is the immunity of a head of State acting in a private capacity. The position at common law is unclear. The legislation provides that a foreign head of State acting in a private capacity has the same immunities as a head of a diplomatic mission similarly acting. These immunities extend to the spouse of the head of State. This is the approach of the U.K. legislation and has the advantage of bringing a rarely litigated issue under a well-developed body of law which has been specifically developed to satisfy the needs of both the sending State and the receiving State. The financial impact of this legislation is likely to be minimal. Any additional administrative workload resulting from my Department's role as recipient of process to be served on foreign States, or from the role imposed on the Department of Foreign Affairs to secure service through diplomatic channels, is not expected to impose any significant financial costs. Finally, I take this opportunity again to congratulate the Law Reform Commission on its excellent work on this reference. It is a shining example of legal scholarship and of the continuing relevance and importance of the Law Reform Commission. The Report will prove, I am sure, of lasting importance and of use not just in relation to this legislation, but also to other countries and international bodies like the International Law Commission which are continuing to work in this area. I commend the Bill to the House. Debate (on motion by Senator Sheil) adjourned. Bills received from the House of Representatives. Motion (by Senator Walsh) 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 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 Walsh) read a first time. Second Readings Senator WALSH(Western Australia-Minister for Finance)(3.49) —I move: That the Bills be now read a second time. I seek leave to incorporate the second reading speeches in Hansard. Leave granted. The speeches read as follows- INTERSTATE ROAD TRANSPORT BILL 1985 The importance of the road transport industry to Australian transport cannot be over emphasised. Some 75 per cent of all freight is moved at some stage by this industry. Overall the industry performs almost 30 per cent of the total domestic transport task. For all that, it is an industry that is not without significant problems, notably a history of a lack of clear national direction. It generally experiences all the difficulties associated with an over-supply of capacity. These problems are exacerbated in times of economic downturn such as that which occurred in 1982-83. The road transport industry has more than its fair share of instability. It is easy to get into, yet once in operators find it virtually impossible to leave of their own accord. This instability is reflected by the rate of bankruptcies, amongst the highest for any industry. It is compounded by the `shonky' or fly-by-night operator who often disappears leaving the battling small truckie unpaid. The lack of clear national direction has contributed to the development of inequities within the industry, where some operators do not contribute as much as others to the maintenance of our roads through registration fees. These circumstances have their human face-the small businessman who having invested everything in his trucking operation finds he loses not only his business but his house and often his family. Those who stay in the industry face the prospects of a continuing battle of living hand to mouth often working long hours pushing themselves and their trucks to the limit. Whilst claims are often made that some even go beyond limits to endanger safety, the vast majority in the industry attempt to do a good honest job in the most professional manner possible. It is regrettable, however, that previous Federal Governments ignored the pleas for help until industry circumstances became so bad that some operators felt they had no alternative but to take the extreme action that led to the Razorback blockade of 1979. Whilst the States provided some assistance, when the dust had cleared there was still no real Federal leadership. It was only when we assumed office that there was a Federal Government prepared to take a comprehensive look at the industry. We commissioned a National Road Freight Industry Inquiry with, I am pleased to say, the full co-operation of all State and Territory governments. This initiative was welcomed by the industry, unions and users. The Inquiry, comprising Mr Tom May (Chairman), Professor Gordon Mills and Mr Jim Scully presented its report in September 1984. This excellent report provided a blue-print for a new and vigorous direction to improve the industry. The general thrust of the Inquiry's Report was endorsed in December 1984 by the Australian Transport Advisory Council (ATAC) which comprises Federal, State and Territory Ministers responsible for transport and marine matters. An initial fast-track package of reforms based on the Inquiry's recommendations was subsequently endorsed by ATAC in June 1985. The report and the subsequent fast-track package have received broad industry and general community support as these groups have recognised that the recommendations must be implemented as a package. I cannot recall any other transport initiative of such importance which has generated and maintained the goodwill and co-operation between Federal, State and Territory governments and all sections of the industry. The fast-track package endorsed by ATAC involved the following initiatives: For the Federal Government: the introduction of legislation providing for the registration of vehicles and the licensing of operators engaged in interstate trade and commerce the establishment of the Australian Road Freight Transport Advisory Committee (ARTAC) within the Transport Industries Advisory Council. For State Governments: the introduction of graduated truck driver licences which will require that the drivers operating the large interstate vehicles have had appropriate experience improvements in railway cost recovery to match any improvements in cost recovery in the road freight industry (this would also apply to Australian National) the introduction of May reforms relating to finance and insurance to provide owner-operators with access to existing consumer protection arrangements removal of fees charged by some States on vehicles already registered in another State removal of the speed limit differential between trucks and other vehicles outside built up areas. The fast-track package represents a balanced set of reforms for the industry designed to increase professionalism, improve overall safety and set in place a workable cost recovery program. This legislation is the first step in implementing the recommendations of the May report. It is landmark legislation. It also represents another element in achieving the Federal Government's national transport objectives which include: the development of safe, efficient transport systems for the movement of goods and people both within Australia and in international trade providing the opportunity for all Australians to have reasonable access to transport services for employment, business, recreational and other needs and implementing these aims in the most efficient and socially effective way. This legislation should also be seen in the context of the principles which guide our involvement in transport. Simply stated these principles include: investing in transport infrastructure where there is clear economic and social justification. requiring users to meet the full costs of government provided infrastructure and services to improve economic efficiency the only exceptions should be where there are clearly identified social requirements. I cannot emphasise too strongly the importance of the co-operation that has been shown by the States and Territory governments, the industry, unions and users. All recognise the value in maintaining the package aproach so strongly advocated by the National Road Freight Industry Inquiry. Accordingly I envisage the progressive implementation through proclamation of the two elements contained in this legislation. I expect the vehicle registration scheme to be proclaimed once substantial progress has been made on implementing the other parts of the fast-track package. Introduction of the operator licensing scheme will follow and is expected to be proclaimed to complement equivalent State legislation. In both cases it is intended that the administration of the Federal schemes will be undertaken by the States and Territory governments as they already have the experience and administrative infrastructure substantially in place. Through this practical example of Federal and State governments working together and with industry we will be able to minimise administrative costs to the industry and reduce bureaucratic involvement. I would now like to turn to the details of the Interstate Road Transport Bill, the first step in implementing the recommendations of the National Road Freight Industry Inquiry. The legislation before us today can be divided into the following two parts: that providing for the registration of vehicles engaged in interstate trade and commerce, and that establishing a system of operator licensing for those engaged in interstate trade and commerce. As I noted earlier, sections 6 and 7 of the Bill provide the arrangements under which the existing State and Territory authorities will operate as agents for the Federal Government in the implementation of both the registration and operator licensing schemes. This approach allows these schemes to be introduced in a manner that minimises the cost to industry. Operators who use vehicles solely for Interstate, State-Territory, and Territory-Territory operations may choose to register their vehicles under the Federal scheme. As provided by section 8, however, any vehicle which has full State or Territory registration can still engage in interstate trade and commerce. Section 8 will remove the current situation where some vehicles solely engaged in interstate trade and commerce can register under some state schemes where they pay only a nominal fee. Where it is intended that a vehicle be registered under the Federal scheme the owner will be required to ensure that, in accordance with the provisions of section 9, the appropriate fees have been paid, the vehicle has been inspected by an approved authority, the vehicle is safe and that requirements relating to insurance have been met. Sections 10 and 11 provide that where a vehicle does not meet safety requirements or have appropriate insurance, it should not be driven on the roads and the appropriate authority can cancel or suspend registration. Section 12 allows the owner to surrender Federal registration and in such circumstances, under Section 18, be entitled to receive an appropriate refund. Section 13 provides for regulations in regard to registered vehicles covering such matters as the display of appropriate registration labels and plates and the maintenance of vehicles. Under the provisions of sections 14 to 19, the conditions under which Federal registration charges are payable are defined. There is provision for an owner to nominate either a rate based on the actual distance travelled by the vehicle or accept a flat fixed fee. In circumstances where an owner wishes to utilise the actual distance amount the vehicle must be fitted with an approved charge monitoring device. Such devices are required to reduce the risk of evasion of appropriate charges through tampering or falsification of records. We could not afford to rely on the notorious log books of yesterday. Under both charging arrangements it will be a requirement that an initial fee equivalent to the fixed registration fee will be paid at the commencement of the registration period. In the event that a Federally registered vehicle is used for part of the year in intrastate operations, section 19 permits a refund to be paid on the basis of the proportion of total distance travelled in approved intrastate operations to total distance travelled during the registration period. Sections 21 to 23 establish the Interstate Road Transport Trust Fund to be operated on the same basis as the Australian Bicentennial Road Development Fund and the Australian Land Transport Program Trust Fund. All vehicle charges will be paid into this Trust Fund. Payments from the Trust Fund shall be made to the States and the Territories for the maintenance and upkeep of roads used by vehicles registered under the Federal scheme. As established by the principles described in section 23 the distribution of Trust Fund moneys will be based on the actual road usage by these vehicles in the respective States and Territories. This arrangement guarantees that the integrity of the Trust Fund will be maintained as expenditure of monies raised by the registration scheme will be directly related to road damage caused by these vehicles. Normal conditions relating to the provision of appropriate information and audits are also included in section 23. In addition, a condition of payment from the Trust Fund is that the States will not impose fees or charges on interstate or other States' registered vehicles to which they do not also subject their own vehicles. Regulations would be introduced to rule ineligible any such State scheme, thus providing Federal Parliament with the opportunity to ensure that the regulations are consistent with the stated objective of the fast-track package of eliminating `out-of-State fees'. It is intended that the operator licensing provisions of Part 5 of the Bill will be introduced in conjunction with similar schemes operated by the States. Section 25 will require that all those involved in interstate trade and commerce hold a Federal or State operator's licence whether engaging in business as a truck operator, freight forwarder or agent. The granting of a Federal licence will be automatic provided the applicant is not a disqualified person or the declared associate of a disqualified person. However, section 26 provides that the Federal licence will not be granted until at least 7 days after the application is made. This will allow any person who proposes to become an interstate road transport operator to consider appropriate information on the pitfalls that can be encountered in the industry. In this way we are maintaining freedom of entry into the industry whilst providing the means to ensure that people who join do so with their eyes wide open. Arrangements under which a person is disqualified from participating in the interstate road transport business are established in section 27. In simple terms these provisions are directed at the person who has operated in a manner that compromises public safety. Disqualification will be determined by the courts. Section 28 provides that records obtained from monitoring devices cannot be used in an application for disqualification until any criminal proceedings have been dealt with by the courts, have been dropped or are not to be initiated. Section 30 establishes the circumstances under which a person may be declared to be the associate of a disqualified person. This association is taken to be established if the disqualified person has the capacity to influence the operation of an interstate road transport business. Sections 31 and 32 provide for appropriate registers to be kept and require that annual notice be given by those people wishing to continue to hold their Federal operators licence. Section 34 allows the Minister to establish Federal road safety standards. These standards may be used as part of the criteria against which the conduct of those engaged in interstate transport can be judged to determine whether public safety is at risk. Part 6 of the Bill relates to the installation and use of appropriate monitoring devices. This will enable the objective assessment of claims of unprofessional conduct by parts of the industry. Section 43 provides drivers and operators with a number of protections regarding the use of records produced by monitoring devices. In essence, these records will not be available to prosecute individual breaches of traffic laws. However they may be adduced by the defence. Through the use of appropriate monitoring devices the Federal scheme will contribute to greater professionalism and safer operating arrangements within the industry. Under Sections 44 to 47 appropriate arrangements are established to allow authorised officers to stop and inspect vehicles and to examine records. Section 49 formally establishes that this legislation is subject to the requirement to maintain section 92 of the Constitution. Section 52 also guarantees that those operating under the Federal registration and licensing schemes will not be impeded by any State or Territory arrangements that are in direct conflict with the Federal provisions. Delegations which are necessary for a comprehensive national scheme are authorised by section 50. Under section 51 certain decisions taken by the authorities are made subject to the Administrative Appeals Tribunal Act. This legislation represents a major advance for Australian land transport. As I emphasised earlier it is part of a broader package of balanced measures to continue the development of the road transport industry. It is legislation that is long overdue. This legislation complements our land transport initiatives which include: the Australian land transport program (ALTP) which continues our road funding efforts at record levels the Australian land transport program also determines which portion of fuel excise is related to roads investment and which portion is a general tax the Australian National Railways Commission Act which establishes a more commercially oriented Australian National with clear targets against which its commercial performance can be judged establishment of the Inter-State Commission to function as a standing committee of inquiry on interstate transport matters. The Minister for Transport has referred to the Commission the vexed issue of the relative levels of cost recovery for interstate road and competing rail operations. With these matters the Hawke Government has established the first comprehensive and coherent land transport strategy for this nation. I commend the Bill to the Senate. INTERSTATE ROAD TRANSPORT CHARGE BILL 1985 This Bill is an integral part of the Federal interstate vehicle registration scheme established by the Interstate Road Transport Bill. It provides for charges to be paid by motor vehicles and trailers registered under the Interstate Road Transport Bill. These charges are to recover road maintenance and upkeep costs resulting from damage to roads by motor vehicles and trailers engaged in interstate trade and commerce. Clause 5 refers to the two charging options established by the Principal Bill. It provides for a schedule of vehicle charges to be established for either the actual distance option or the nominal distance option. Clause 6 provides for these charges to be made by regulation. The Minister for Transport has already directed the Inter-State Commission to review the issue of cost recovery from vehicles engaged in interstate trade and commerce. The Commission is to report by 30 April 1986 and has been asked to recommend appropriate charges to apply under the Federal scheme having regard to equivalent State charges and the cost recovery rates achieved by competing rail services. In the event that it is necessary to establish charges not based on the Commission's report these will reflect the views of the National Road Freight Industry Inquiry. The Inquiry saw an initial fee of $1,400 for a 38 tonne unit as appropriate. Accordingly should such charges be required the fixed annual fee would be determined on the basis of the following schedule: SCHEDULE OF FEDERAL INTERSTATE VEHICLE AND TRAILER CHARGES GVM/GCM * Charge up to 2.5 Tonnes... $3.20 / Quarter Tonne 2.5 to 5 Tonnes... $32 Plus $0.90 / Quarter Tonne 5 to 7.5 Tonnes... $41 Plus $1.30 / Quarter Tonne 7.5 to 10 Tonnes... $54 Plus $1.60 / Quarter Tonne 10 to 12.5 Tonnes... $70 Plus $2.20 / Quarter Tonne 12.5 to 15 Tonnes... $92 Plus $2.80 / Quarter Tonne 15 to 17.5 Tonnes... $120 Plus $3.70 / Quarter Tonne 17.5 to 20 Tonnes... $157 Plus $4.80 / Quarter Tonne 20 to 22.5 Tonnes... $205 Plus $6.30 / Quarter Tonne 22.5 to 25 Tonnes... $268 Plus $8.10 / Quarter Tonne 25 to 27.5 Tonnes... $349 Plus $10.70 / Quarter Tonne 27.5 to 30 Tonnes... $456 Plus $14.00 / Quarter Tonne 30 to 32.5 Tonnes... $596 Plus $18.20 / Quarter Tonne 32.5 to 35 Tonnes... $778 Plus $23.90 / Quarter Tonne 35 to 37 Tonnes... $1,017 Plus $31.10 / Quarter Tonne 37.5 Tonnes and over... $1,328 Plus $40.60 / Quarter Tonne * Gross Vehicle Mass or Gross Combination Mass as applicable. I commend the Bill to the Senate. Debate (on motion by Senator Sheil) 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 Walsh) read a first time. Senator WALSH(Western Australia-Minister for Finance)(3.50) —I move: That the Bill be now read a second time. I seek leave to incorporate the second reading speech in Hansard. Leave granted. The speech read as follows- The provisions of the Bill before the Senate have two effects. The major amendment is to extend the ambit of the Census and Statistics Act to enable the external territories to be included in the 1986 and future censuses of population and housing conducted by the Australian Bureau of Statistics. Earlier censuses of the external territories were conducted under local ordinances. The amendment implements, in part, the Government's policy that the inhabitants of the territories will be treated in the same way as other Australians. The provision relates to such territories as are prescribed. This avoids the necessity to conduct the Australian census in external territories where there would be significant operational difficulties and cost for relatively little benefit. The amendment does not extend Part III of the Census and Statistics Act to the external territories. This is because the needs of the territories for statistics other than those derived from the census are likely to be significantly different from those required by other parts of Australia. The extension of the Australian Bureau of Statistics statistical activities (other than the censuses of population and housing) is therefore unlikely to be necessary or cost effective. The additional cost to the ABS of extending the census to the external territories is estimated as $58,000. The Bill also provides for an amendment to section 14 of the Act. This will overcome a technical difficulty of the existing wording. It does not change the intention of the existing provision, which is to ensure that a person is not liable to any penalty for omitting, or refusing to state the religious denomination or sect to which they belong or adhere. An explanatory memorandum is available to honourable senators. I commend the Bill to the Senate. Debate (on motion by Senator Sheil) adjourned. Bills received from the House of Representatives. Motion (by Senator Walsh) 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 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 may be taken through all their stages without delay. Bills (on motion by Senator Walsh) read a first time. Second Readings Senator WALSH(Western Australia-Minister for Finance)(3.52) —I move: That the Bills be now read a second time. I seek leave to incoporate the second reading speeches in Hansard. Leave granted. The speeches read as follows- GRAIN LEGUMES LEVY BILL 1985 The purpose of this Bill is to provide for the imposition of a levy on grain legumes produced in Australia. The moneys raised by the imposition of the levy will be used to finance research into grain legumes. Administrative and organisational arragements for the research scheme, including the establishment of a Trust Fund and Research Council will be provided pursuant to the Rural Industries Research Bill 1985 which has already been introduced into the Parliament. The Grain Legumes Levy Collection Bill 1985 provides the machinery for collecting the levy. The levy will be applied initially to lupins and field peas which are the major grain legumes produced in Australia. Provision is made for other grain legumes to be brought into the scheme by regulation at a later date. Grain legumes, which are also known as protein crops, are becoming important as crops in their own right as well as replacements for traditional pasture legumes in cereal crop rotation programs. The total value of production of lupins and field peas for 1984-85 for example has been estimated at some $107m. Australian production of lupins has increased significantly in recent years, rising from 379,000 tonnes in 1983-84 to an estimated 630,000 tonnes in 1984-85. Western Australia is the largest lupin producing State and exported some 315,000 tonnes in 1984-85. Research is currently undertaken in Western Australia by way of a State statutory research scheme funded by growers. Research into lupis in other States has been undertaken only on an ad hoc basis. The other grain legume on which levy is to be imposed is field peas. Australian production in 1984-85 is estimated at 140,000 tonnes. South Australia is the major producing State where growers pay a voluntary levy to fund research. Some research work into field peas has also been funded by State Governments and the Commonwealth Special Research Grant. If the full potential of grain legumes as rotational and alternative crops is to be realised there needs to be an increased research effort into the production, processing, storage, transport and marketing of these crops. The grain legume industry has recognised this need and has sought a national grain legumes scheme as the basis for an expanded research effort. The national scheme will take over from the existing West Australian scheme, the major responsibility for lupin research in that State. The legislation provides for an initial levy rate of 75c per tonne of grain legumes processed or delivered. Provision exists for the rate to be varied by regulation up to a maximum of $2.60 per tonne. Provision is also made for any recommendation from the relevant growers' organisation to be taken into account prior to any adjustment to the operative rate of the levy. The levy is payable by growers, but in practice will be paid on their behalf by receivers or purchasers. There is provision in the Grain Legumes Levy Collection Bill for the receiver or purchaser to recover the amount paid on the grower's behalf. However, it is not economically feasible to collect small amounts of levy and therefore provision is made to exempt levy collection on receivals or purchases less than 15 tonnes in any levy year. Similarly, a grower who also processes his own grain legumes will be exempt from paying levy if that grower produces less than 15 tonnes in a levy year. Amounts equal to the levy collected will be paid into a Trust Fund established under the Rural Industries Research Bill. The Commonwealth will match expenditure of industry moneys from the Fund on a dollar for dollar basis up to a maximum level equal to 0.5 per cent of the average Gross Value of Production of leviable grain legumes. It is expected that given normal seasonal conditions the levy will raise about half a million dollars in 1985-86. Research under the scheme will not begin until 1986-87 when the level of funds should be sufficient to finance a research program. The actual level of expenditure on research will be determined by the Research Council. This level is not expected to exceed $500,000 initially and hence the Commonwealth's contribution under the matching arrangements should not exceed $250,000 in 1986-87. On the basis of present production levels, it is anticipated that the Commonwealth contribution will rise to some $500,000 annually in subsequent years. The Commonwealth will meet its share of administrative costs. These are estimated at $11,000 in 1985-86. The commencement date of the legislation is to be set by proclamation. It is intended that proclamation take place prior to the 1985 harvest of lupins and field peas, which begins in November. I commend the Bill to honourable senators. GRAIN LEGUMES LEVY COLLECTION BILL 1985 The purpose of this Bill is to provide the machinery necessary for collecting the levy imposed by the Grain Legumes Levy Bill 1985. This Bill should be read as one with the Grain Legumes Levy Bill 1985, and is to come into operation on the same day that the levy Bill becomes operative. The Bill specifies the liability of growers, purchasers and receivers under the scheme, outlines penalties for non-compliance and provides appropriate powers of enforcement. It is intended that levy collections will commence at the beginning of the harvest period in 1985, with research being financed under the Research Scheme from the 1986-87 financial year when sufficient funds are available. I commend the Bill to honourable senators. Debate (on motion by Senator Sheil) adjourned. Messages received from the House of Representatives intimating that it had agreed to the amendments made by the Senate to the following Bills: Rural Industries Research Bill 1985 Rural Industries Research (Transitional Provisions and Consequential Amendments) Bill 1985 Snowy Mountains Engineering Corporation Amendment Bill 1985 Motion (by Senator Puplick)-by leave-agreed to: That Business of the Senate, Notice of Motion No. 1, standing in my name, be postponed until Monday, 14 October 1985. Consideration resumed from 22 August of House of Representatives message. Message No. 150 Schedule of the amendment made by the House of Representatives in place of the amendment made by the Senate to which the House has disagreed- After clause 4, insert the following new clause: Co-operation with law enforcement agencies and co-ordination with overseas authorities ``4A. Section 17 of the Principal Act is amended by adding at the end the following sub-section: `(2) In performing its functions under this Act, the Authority may co-ordinate its activities with the activities of authorities and persons in other countries performing functions similar to functions of the Authority.'.''. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(3.55) —I move: That the Committee not insist on the amendment disagreed to by the House of Representatives, and agrees to the amendment made by the House of Representatives in place thereof. On 29 May the Opposition in the Senate moved the amendment to the National Crime Authority (Miscellaneous Amendments) Bill 1985 with which the House of Representatives disagreed, here on 29 May. As was noted in the Committee stage of the debate on that day, the Commonwealth was at that time considering a request by the National Crime Authority for an amendment in very similar terms. The amendment was to be considered on the following day by the Inter-Governmental Committee and the Government anticipated introducing a similar amendment early in the Budget sittings. So, in effect, we supported the principle of the Senate amendment that the Authority be able to co-ordinate its activities with similar overseas agencies. But at the time the matter was being debated in this chamber, we were unwilling to endorse precisely the form of words that was embodied in the amendment then before us. One of the reasons that we were so reluctant is that, borne out by further analysis, there is a distinction that must properly be made between giving the Authority a new function under section 11 of the Act, as would be the case with the Senate amendment, and giving the Authority a new power in respect of the performance of its existing functions under another section of the Act, which is in effect, what the House of Representatives amendment proposes. After careful consideration, we came to the view that the appropriate course, given the structure of the National Crime Authority Act, was to place the power enabling the Authority to co-ordinate its activities with overseas agencies under section 17 of the Act. Section 17 would then cover co-operation with Australian law enforcement agencies in the existing provision, and co-ordination with similar overseas agencies in the new provision. This would avoid possible difficulties of interpretation that would flow from placing the amendment in section 11. The Act would continue to emphasise that the functions of the NCA are, first and foremost, to investigate relevant criminal activities. The Crime Authority agrees that this would be more in line with the intended nature of the proposed overseas co-ordination provision. Accordingly, with this explanation, which I hope will satisfy everybody as to our bona fides, I commend the Government's amendment to the Committee and hope that the Committee will accept it in lieu of the Senate's amendment essentially to a similar effect. (Quorum formed) Senator LEWIS(Victoria)(4.00) —The Opposition has no objection to this motion. Question resolved in the affirmative. Resolution reported; report adopted. Debate resumed from 18 September, on motion by Senator Button: That the Bill be now read a second time. Senator COATES(Tasmania)(4.01) —When the Superannuation Legislation Amendment Bill 1985 was being debated on 18 September I was commenting on the reaction of the Opposition and the Australian Democrats to the Bill. The Bill had been referred to the Senate Standing Committee on Finance and Government Operations, which reported back, approving the Bill in general terms and making some recommendations, most of which the Minister for Finance (Senator Walsh) was able to adopt. I informed the Senate several weeks ago that the Minister for Finance had agreed to these recommendations. We now find that the Opposition and the Democrats are opposing key parts of the Bill. Senator Messner said in his contribution that the main point with which the Opposition took issue on this legislation was the Government's proposed membership of the Commonwealth Superannuation Fund Investment Trust. Apparently, the Opposition is upset that three of the five members will be appointed as nominees of the Australian Council of Trade Unions. Of course, at the moment, the Opposition is trying to make out that the ACTU is a grand ogre in the overall scheme of things in this country. I need to explain that the ACTU is the logical organisation to appoint trustees on behalf of the members of the fund because that is the way in which the Public Service organisations have their peak representation. As I have tried to explain before, there is no longer a Council of Australian Government Employee Organisations because the ACTU, by agreement with all the Public Service unions, has replaced CAGEO as the peak body. So it is the obvious organisation to appoint representatives on behalf of the contributors to the Superannuation Fund Investment Trust. I emphasise, for the benefit of the Opposition, that we are talking about contributors' funds, not government funds. Those people who are appointed to the Trust are there as trustees. They are there to represent the contributors. They are not there as direct puppets of the ACTU. I wish to quote what Mr Gradwell had to say when he gave evidence to the Committee on 5 March. In answer to Senator Vanstone's question about constraints that might apply to members of the Trust he said: I think it is important to answer that question as a matter of principle. The ACTU will be involved in a process of canvassing the contributory base and putting forward names to government for appointment. By `the contributory base' he means the contributors and the Public Service unions that represent them. Mr Gradwell went on: On appointment, however, those appointees will assume the responsibility of trustees for the Trust and will be acting independently. It most certainly will not be the ACTU's intention to give them instructions about how they carry out their duties. That assurance ought to be enough for Senator Messner. Senator Messner ought to be ashamed of himself for his bumbling lack of attention to the detail of this Bill. He unreasonably dismissed the Senate Committee report without even explaining why. I would be interested to hear why he dismissed that report. He rejected the opinions of members of his Party who were on the Committee, although I gather that some of them have changed their opinions since the unamimous report. Senator Messner also ignored the changes which the Minister for Finance said he had agreed to make and the amendments which he said he would move in the Committee stage. The Finance and Government Operations Committee went through all of this in great detail. If members of the Opposition are not willing to acknowledge that unanimous report they ought to think again before agreeing to the referral of such Bills to the Committee; otherwise it makes our operation a waste of time. I emphasise that this Bill gives the Superannuation Fund Investment Trust specific objectives and duties for the first time. One of the reasons which led to problems in the Trust was that its objectives and duties had not been specifically set out for its members. This led to some of the confusion and the lack of direction that have manifested themselves over the last few years. The Bill is in line with the Committee's recommendations. I suggest that Senator Messner should reread what the Committee said about the Bill in its unanimous opinion and perhaps reconsider his opposition. There are not the sorts of dangers that the Opposition suggests. The obligation of the trustees is to the contributors. We are not talking about government funds, but contributors' funds. I imagine that most of the detail of this Bill will be dealt with in the Committee stage but I urge the Opposition and, in particular, the Democrats to reconsider their problems with the Bill. The Democrats had a representative on the Finance and Government Operations Committee in former Senator Jack Evans, who took an active interest in this matter and who agreed that the compromise that we suggested in our recommendations, which recommendations have been adopted by Senator Walsh, was appropriate. I commend the Bill- Senator Siddons —This method of appointing the trustees, as set out in your Committee's report, did not spell out that three members were to be appointed by the ACTU. Senator COATES —It certainly did. In fact- Senator Siddons —Jack Evans was not aware of that. Senator COATES —He certainly was. With his agreement we proposed that those people whom the ACTU appointed had to be people who had been suggested by Public Service organisations. The original draft of the Bill merely said `ACTU appointees'. What we suggested, and what Senator Walsh has now agreed to, was that they should be selected from amongst those people whom the Public Service organisations put forward to ensure that some person who had not been nominated by any Public Service organisation was not appointed. Senator Messner —But still nominated by the ACTU. Senator COATES —By the ACTU on behalf of the Public Service organisations. Senator Siddons —That gives the ACTU control. Senator COATES —Not at all. The ACTU, in consultation with the organisations, appoints the people. Those organisations represent the contributors. One may regret that there is not longer a Council of Australian Government Employee Organisations. That organisation voluntarily disbanded and merged with the ACTU, which is now the peak representative body. One cannot have a situation of the Minister having to consult with dozens of individual organisations about who should be appointed when they have a peak organisation as their representative. That is the appropriate way for it to be done. I acknowledge that if CAGEO were still in existence that would be the appropriate organisation. It is not because it has been subsumed into the ACTU; there is an Australian Government employees' section of the ACTU which will have this responsibility. The Opposition really is worrying about nothing in this matter. Senator Siddons —Certainly it was Senator Jack Evans's understanding that it would not be the ACTU that would be nominating the trustees. Senator COATES —You should read the report which he signed. Senator Siddons —I have read it. It doesn't make that clear, to my mind. Senator COATES —It does. The ACTU appoints those people from among those suggested by Public Service organisations; that is the totally appropriate way for it to be done. There were contributor appointees on the former trust who acted as trustees for the organisation. I commend to the Senate the Bill and the Government's amendments, which will be moved by the Minister. Senator WALSH(Western Australia-Minister for Finance)(4.11) —I do not intend to speak at great length on this, but some of the things that have been said should be answered. Firstly, through most of the speeches by members of the Opposition there is a recurring error based on an assumption that trustees are investment managers. In fact trustees are not normally regarded as investment managers. Indeed, trustees do not usually require trustee qualifications so there is nothing unusual in what the Government is proposing in the original legislation or in the three amendments which it has accepted. This Superannuation Legislation Amendment Bill has a very long history. Most, indeed almost all, of the early discussions and negotiations were conducted by my predecessor, Mr Dawkins, on behalf of the Government. Of course, the Bill was first introduced in the autumn session. As a result of its first presentation to the Senate it was sent to the Standing Committee on Finance and Government Operations for examination, with the concurrence of the Government. That Committee, comprising two members of the Liberal Party of Australia, one member of the Australian Democrats-I acknowledge that he is no longer here-and three members of the Government, unanimously signed the report. In view of his subsequent criticism, it is worth noting that one of the members who signed that report was Senator Short, who apparently now finds unacceptable what he found acceptable a few months ago. The Committee recommended four amendments, three of which I have accepted on behalf of the Government and one of which I have rejected. The one rejected required the trustee whom I would appoint on a part time basis to have specified investment qualifications. I did not accept that amendment because I believe it was too restrictive and also for the reason I gave earlier, that trustees are not normally investment managers and are not regarded as such. Most importantly, however, that Committee, which I think reported in May, found no other fault with the Bill. That Committee of one Democrat and two Liberals including Senator Short found no other fault. Now, after six months, we are confronted with a deluge of amendments from both the Opposition and the Democrats. It is quite apparent that the essential reason for the Opposition amendments is that the Opposition sees this in a quite cynical fashion as an opportunity to exploit the anti-union campaign which the Liberal Party has been running for some time. Indeed, one could even see the villainous hand of the Leader of the National Party of Australia (Mr Sinclair) behind this when he was reported in the Australian of 20 September as follows: The Opposition would propose amendments to superannuation legislation before the Senate to prevent the ACTU and its member unions gaining control of ``vast'' funds belonging to Commonwealth employees, the Leader of the National Party, Mr Sinclair, said yesterday. Even if that allegation were true, which it is not, I am sure that the Walsh families at least would rather have their funds under the control of the Australian Council of Trade Unions than under the control of Mr Sinclair, as they were in the late 1970s to their enormous ultimate cost. I do not think they would want to have Mr Sinclair signing the cheques either because one could never be too sure whose name he would put on them. Senator Messner referred-this is indicative of the phoney nature of the campaign which the official Opposition is running against this legislation and the essential phoneyness of the amendments which have been suggested-to the sudden rush in the passage of this legislation. This legislation, as I said earlier, was first introduced into the Parliament about six months ago and was sent off to the Finance and Government Operations Committee, which duly reported unanimously recommending four amendments, three of which the Government has accepted. With the normal propensity of Senator Messner and others to rewrite history, that has suddenly been transformed into a sudden rush in the passage of this legislation. Again as a point of fact, I mention that Senator Messner said that the Opposition had grave doubts about the way in which the Government allowed trends in superannuation to develop and said that the building unions superannuation scheme, the Australian scheme and the Queensland United Employers Superannuation Trust simply provided tax deductibility for deferred wage increases forced on employers. Senator Boswell referred to the serious sinister connotations of legislation which would effectively give the ACTU and the Australian Labor Party control of funds, et cetera, et cetera. It is interesting to note that one of the funds condemned by both Senators Messner and Boswell was QUEST, a fund set up by the Queensland Confederation of Industry, which somehow has been transformed or metamorphosed in the paranoid minds of the members of the Opposition into some ACTU hack organisation. Indeed, last year the Queensland Parliament effectively outlawed the BUSS fund in Queensland and gave QUEST the monopoly. Incidentally, that legislation was enacted in the Queensland Parliament in a single afternoon. To the best of my knowledge, there were no complaints from Senator Messner or anybody else about any indecent haste in presenting a piece of legislation and rushing it through that parliament in one afternoon. Senator Boswell asserted that four members will be appointed by the ACTU. In fact, as Senator Coates has just explained, nobody will be appointed by the ACTU. The ACTU will nominate three of the five members of the Superannuation Fund Investment Trust but may nominate only people who have been submitted to it by the Public Service unions affiliated with the ACTU. Some 70 per cent of all contributors to the Commonwealth superannuation scheme are members of unions affiliated with the ACTU; the great majority of the remaining 30 per cent are not members of any organisation. So the ACTU is not some headless, disjointed or disconnected monster; it is in fact the peak council organisation of the Public Service unions which represent 70 per cent of the member contributors to the Fund. I will come to the Democrats' suggestion of an election in a moment. If one were looking for someone to consult about appointment of members to the Superannuation Trust, I cannot imagine any organisation more appropriate than the ACTU, particularly as, in accordance with one of the amendments accepted by the Government, the ACTU may nominate only those people who have in turn been nominated by the Public Service unions. It must be recognised, as a matter of common sense, that if the ACTU was to nominate people who were unacceptable to the Public Service unions it would have trouble maintaining the affiliation of those same Public Service unions. The Liberals however did have a different view. They believe in cutting out the ACTU altogether even though two of their members on the Committee found it quite acceptable only three months ago. The Liberal amendments suggest that the appointment should be made by the Minister on advice from the Securities Institute of Australia, the Life Insurance Federation of Australia, the Australian Merchant Bankers Association, the Actuaries Institute of Australia and one or two other organisations. Senator Coates-All great supporters and contributors. Senator WALSH —Yes, none of whom, of course, are contributors or represent contributors. I find it quite astounding that the Liberals could simultaneously assert that the ACTU, which has affiliated to it unions which cover 70 per cent of the contributors to the fund, may only propose to the Minister individuals who have been nominated by those unions. The Liberal Party says that that is not acceptable because the ACTU does not represent the contributors of the fund and then proposes that a raft of organisations, which have no connection whatsoever with the contributors of the fund, should be consulted by the Minister in regard to those appointments. Indeed, without wishing to cast any particular aspersions on any of the bodies mentioned, it is, I believe, a matter of common sense that circumstances could arise where there would be a conflict of interest between at least some of those organisations and the contributors' interests. The organisations which the Liberal Party suggested the Government should rely on for advice are not relevant to the interests of the contributors. In any case it is not really the Government's business to determine, as the Liberal Party would suggest-I do not regard it as my business-and make the decision as to who would represent the contributors on the fund bearing in mind that the only money in the fund and under the control of the fund is that which has been put up by the contributors themselves and not by the Government. Senator Messner and other speakers have asserted that the Government Bill would put investable funds of more than $2 billion under the control of the ACTU. There are two factual errors in that assertion: Firstly, the ACTU controls nothing. It is able to nominate people who, in turn, have been nominated by the Public Service unions. Secondly, and perhaps more importantly, as a point of law trustees are required to act in the interests of contributors, not the interests of those who nominate them. That is a matter of which Senator Peter Rae at least must be well aware, because it was pursued at some length by the Finance and Government Operations Committee at the time Senator Rae was a member. Given the long history of this piece of legislation and the unanimity of the Finance and Government Operations Committee which examined it in the autumn, it is difficult to avoid the conclusion that the Liberal Party's present posturing is no more than a cynical attempt to misuse the Senate in pursuit of its propaganda campaign against unions. Being bereft of a policy honourable senators of the Liberal Party hide their intellectual poverty behind a union-bashing smokescreen. The Australian Democrats have proposed other amendments. If I have not explicitly said so I should say now that the Government will not accept any amendments proposed by the official Opposition, nor will it accept the amendments proposed by the Democrats, though for somewhat different reasons. The latest amendments which have been circulated and which I saw only a few minutes ago contain some changes from the amendments circulated by the Democrats last month. One that I have noted is that they have changed the term for which trustees would hold office from two years, as proposed in the original amendments, to five years in the later version. There may be some other changes as well, but that is a significant one, which I have noted. However, it does not really change the Government's attitude to it. Essentially the Democrats are seeking that three members of the Superannuation Fund Investment Trust be elected by a ballot of the contributors. Superficially that sounds acceptable, even desirable perhaps because it seems to be democratic. But incorporated in that sort of evaluation is the false assumption that the voters will be informed or indeed, for that matter, that they will even vote under such circumstances. A national vote for a position like this is meaningful only if the candidates are known personally or are members identified with some group, the general attitudes of which are known, such as in the case of a parliamentary election, a political party. We have had experience with elections for members of the SFIT in the past. The last election was held in 1974. Of the 270,000 contributors only 35 per cent voted-only a 35 per cent poll. So the assumption that this is a meaningful, democratic procedure is seriously challenged for that reason alone. Senator Siddons —Thirty-five per cent is a very good turnout. Senator WALSH —I know that, but there are still 65 per cent who have not bothered to vote. But more importantly in that election the former contributors' representative, a person who had expert financial knowledge-which the Democrats say should also be stipulated on the ballot paper and required of any nominee-nominated. He received the greatest number of primary votes but drew second last on the ballot paper and was not elected because of the donkey vote and the fact that there were about 29 candidates. It sounds all right. It is superficially plausible, but in reality it did not work effectively in the past and there is no reason to believe it would work effectively in the future. The Democrats, unless they have changed this in their most recent amendments, also require to be circulated with the ballot paper a curriculum vitae which sets out such things as the nominee's financial expertise, investment expertise, pedigree, education and so on. The Democrats want this all to be printed on the ballot paper. If we were to get the number of candidates who were attracted by these elections in the past-that is of the order of 30-what we would finish up with is not really a ballot paper but something like a booklet which must only further add to the confusion of that minority of contributors who are likely to vote. Senator Siddons —Are you suggesting there should be 200 nominees? Senator WALSH —I acknowledge that interjection. I did have time in my brief examination of the latest version of the amendments to see that. I concede that that is likely to have some effect on the number of candidates who nominate. Nevertheless, there is no guarantee that they will be kept down to a reasonable number. For the reasons that I have just stated, the likely outcome of such an election is one which is actually less representative than the process of selection which the Government has proposed in the legislation. I received only today a telex from the ACTU from Mr Mansfield who, incidentalaly, was for a long time the secretary of a union which probably has the largest number of contributors to this fund. It reports on discussions which he and other members have had with the Democrats and explicitly rejects the Democrats' proposition that the cost of such an election be borne by the fund itself. I am informed by Mr Mansfield's telex that that is acceptable to the people he represents only if the cost of such an election is borne by the Government. The Government is not willing to bear the cost of such an election. Senator Siddons —A major expense would be postage. Senator WALSH —Postage is not costless. It does not go into the Government's accounting. It goes into Australia Post. As I said, the Government will not accept any of the proposed amendments other than three of the four amendments recommended by the Committee and which I will move on behalf of the Government in the Committee stage. I believe that the Government has been very patient in dealing with any reasonable or legitimate disagreement about the detail of this Bill. As far as the Government is concerned the Bill will either be passed by the Senate with the three Government amendments or it will not be proceeded with. Those Democrats-I think I can be justifiably somewhat kinder about the Democrats than I ought to be about the Liberal Party on this matter-who, in pursuit of some sort of ideal which is in practice unattainable, and the Liberal Party opportunists who have done a complete about-face on this matter for the most cynical political reasons can explain to the 300,000-odd contributors to the Commonwealth superannuation scheme why this reform has been blocked in the Senate, if that should happen. I have speech notes relevant to the three amendments which the Government has accepted and which I will read in the Committee stage. Question resolved in the affirmative. Bill read a second time. The Bill. Senator SIDDONS(Victoria)(4.32) —by leave-I move: Page 2, paragraph 4 (b), line 9, leave out `` `fortnightly rate of salary' '', insert `` `Trust' or `Investment Trust' ''. Page 2, paragraph 4 (b), line 11, leave out ``full-time''. Pages 4 and 5, paragraph 7 (1) (a), proposed new sub-section 30 (1), paragraphs (a), (b), (c) and (d), line 38 (page 4) to line 3 (page 5), leave out the paragraphs, insert the following paragraphs: ``(a) a full-time principal member nominated by the Minister; (b) a full-time member nominated, in accordance with sub-section (4), by the Australian Council of Trade Unions; and (c) 3 part-time members elected, in accordance with the regulations, by all eligible employees by secret ballot conducted by the Australian Electoral Commission.''. Page 5, paragraph 7 (1) (a), after proposed new sub-section 30 (1), add the following sub-section: `` `(1A) The regulations made for the purpose of paragraph (1) (c) shall prescribe for elections held under that paragraph a system of election which is, as near as is practicable, the same as the Hare-Clark proportional representation system set out in Schedule 4 of the Electrical Act 1907 of Tasmania.'.''. Page 5, paragraph 7 (1) (b), proposed new sub-section 30 (3), lines 6 to 8, leave out the sub-section, insert the following new sub-sections: ``(3) The members nominated under paragraphs (1) (a) and (b) shall be persons with knowledge and expertise in finance, industrial relations, superannuation and investment. ``(3A) The persons elected under paragraph (1) (c)- (a) shall be nominated by no less than 200 eligible employees; and (b) shall provide, at the time of their nomination, a written statement of their knowledge and expertise in the matters referred to in sub-section (3).''. Page 5, paragraphs 7 (1) (c) and 7 (1) (d), lines 13 to 17, leave out the paragraphs, insert the following new paragraph: ``(c) by omitting sub-section (6) and substituting the following sub-section: `(6) Each member of the Trust shall hold office for 5 years.';''. Page 5, paragraph 7 (1) (c) and 7 (1) (e), line 19, leave out ``full-time''. Page 5, sub-clause 7 (4), line 44, leave out ``the member of the Trust referred to in paragraph 30 (1) (d)'', insert ``a member of the Trust referred to in paragraph 30 (1) (c)''. Page 6, after sub-clause 7 (4), insert the following new sub-clause: ``(4A) Sub-section 30 (6) of the Principal Act is amended by this section shall have effect in respect of each member of the Trust appointed after the commencement of this Act.''. Page 6, clause 8, proposed new sub-section 30B (1), line 18, leave out ``full-time''. Page 7, clause 8, proposed new paragraph 30B (8) (b), line 10, leave out ``full-time''. Page 7, paragraph 9 (a), line 14, leave out ``full-time''. Page 7, clause 10, lines 19 and 21, leave out ``full-time'' (twice occurring). Page 9, paragraph 13 (d), line 20, leave out ``full-time''. Page 10, clause 14, proposed new sub-sections 36 (2) and (3), leave out ``full-time'' (wherever occurring). Page 10, clause 14, proposed new sub-section 36 (4), lines 20 to 23, leave out ``the full-time union-nominated member, or as a part-time member referred to in paragraph 30 (1) (c)'', insert ``the union-nominated member''. Page 10, clause 14, proposed new sub-section 36 (9), lines 39 and 42, leave out ``full-time'' (twice occurring). In spite of the Government's comments that the Australian Council of Trade Unions would not get de facto control of Commonwealth superannuation funds, we are not convinced. We are not suggesting that the present membership of the ACTU would move to nominate a mouthpiece as a trustee. That certainly could happen at some future time if this legislation were passed in its present form. It is just not on as far as the Australian Democrats are concerned to allow through legislation which provides the opportunity for any organisation to get control of funds amounting to $7m a week. We would be falling very seriously short of our responsibility in this place if we were to allow that to happen. In my speech on the Superannuation Legislation Amendment Bill 1985 I indicated that we have no objections to the legislation. We consider it to be vital legislation that should be passed as a matter of urgency. However, we cannot allow the passage of this Bill in its present form which would give an organisation-in this case the ACTU, but it would apply equally to any other body-the opportunity to get control, via the nomination of its own mouthpiece as a trustee, of these enormous amounts of money. Senator Coates —But only if those people were nominated by the Public Service unions. Senator SIDDONS —They can be nominated by whomever. That is not the point at issue. They are allowed to be nominated under this legislation. It is just not good enough. The legislation would allow an organisation to get de facto control of these funds at some time in the future. It could not be avoided. Senator Coates —Do you accept that the Public Service unions represent the contributors? Senator SIDDONS —My point remains that the legislation would allow an organisation to nominate representatives as trustees who would in turn control these funds. We are not prepared to allow that to happen. I spent some time suggesting who has the right to nominate the trustees. It is a bit like Plato's loaded question: `Who ought to govern?' Who ought to nominate the trustees? One can go right through the options as one likes. One could suggest that the Minister should have the power. One could suggest that a joint parliamentary committee should have the power. But thinking it through, one finds problems in all of those proposals. It is the contributors to the fund whose rights are paramount. Therefore, the question before us, as we see it, is how to make an election of the trustees by the contributors work effectively so that justice can be done and they can have a genuine say in the control of their own funds, their own money. I have spent considerable time discussing this matter with the ACTU and, in particular, with Mr Mansfield. I was under a certain impression regarding stipulations included in these amendments which cut down the number of nominees and reduced the cost of elections. We suggested originally that elections should be held every two years. We are now suggesting that five years is a more reasonable time span. We do not want the trustees to be appointed for too long because if a bad trustee were appointed it would be very difficult to remove him. We think five years is a reasonable frequency. Under our proposal each candidate would have to be nominated by no less than 200 employees. It would be impossible to get that sort of support for somebody who suddenly decided that he had the qualifications. The fact that the candidate has to specify his qualifications is very important. The Minister for Finance (Senator Walsh) related the problems that occurred in regard to elections in 1974. These sorts of stipulations were not in place then. Therefore, I believe that it is unfair and unreasonable to say that, because previous elections were not altogether satisfactory, they cannot be made to work. Senator Coates has indicated that the Senate Standing Committee on Finance and Government Operations looked at this matter very carefully and that our representative on the Committee was in favour of the ACTU nominating three of the five trustees. That is not the understanding that ex-Senator Jack Evans had of the recommendation. I have read the recommendations of the Committee and I do not believe that it is clear that the Committee believed that the ACTU was to be given control of these funds because three of the five trustees were to be nominated by the Council. We deny that we clearly understood that. Senator Coates —It could not be clearer. Senator SIDDONS —I do not believe that it is clear at all. In any case, our objection remains. There is no way that we can allow this legislation to pass while the ACTU can nominate the majority of the trustees to be appointed. I have moved the amendments as a whole. In the event that they are rejected by the Government, we will have no alternative but to vote against the legislation as a whole. Senator MASON(New South Wales)(4.40) —I support the amendments moved by the Australian Democrats because they are a basic matter of tremendous principle which we respect and everybody in the Committee should respect. Although I was not in the Senate, I listened to the reply to the second reading debate by the Minister for Finance (Senator Walsh), which I found to be a truly remarkable statement. On the logic of the Minister's speech, we should abolish both Houses of Parliament immediately and turn this country into a dictatorship. His argument was that electoral processes are difficult, therefore we should not have them. That is a completely outrageous proposition which I am most distressed and disappointed to hear put forward by any member of the Senate. We all know that electoral processes are difficult, but that is not an argument for us to abandon them completely, as did Hitler and Mussolini. It is an argument for us to try to work out a compromise, as I know that Senator Siddons has done patiently in his discussions with the Australian Council of Trade Unions. I am convinced, in spite of what the Minister said, that the ACTU basically sees the sense of what we are trying to do. The ACTU appreciates and respects these amendments and, given half a chance by the Government, we could get them through. As a result we would have something more valuable than what is proposed in the legislation. The second point I make in relation to what the Minister said is this distressing capability and predilection of the Government, whenever anything is put forward which is different from what it wants, to say, as the Minister said a few minutes ago: `We will take our bat and ball and go home. You will either pass this legislation or we will withdraw it'. I suggest that that is a totally irresponsible point of view, which no intelligent or respectable person in the Government, especially a Minister, should put forward. We are not in this place to do just what the Executive wants; we are here to consult reasonably with the organisations concerned. In an important matter like this, where millions of dollars a week change hands and hundreds of thousands of people are involved, we are here to see that there is a proper degree of control over those funds. I urge the Minister in the Committee stage to say to us that on reflection he will not take that view; that it is responsible and reasonable for the amendments to be moved. As far as the Democrats are concerned, we intend to persist with the amendments. If we agreed with a Minister every time he said `We will take our bat and ball and go home if you try to put something on', we might as well pack it in now. We do not earn our salaries by doing what the Minister wants; we earn them by doing what we think is right. Senator COATES(Tasmania)(4.43) —I defend the report of the Senate Standing Committee on Finance and Government Operations. Senator Siddons said that it was not clear what his predecessor, former Senator Jack Evans, the spokesperson on these issues, and Opposition and Government members of that Committee had agreed to. The report states: A complementary recommendation to the recommendation that the number of members be increased was that the second full-time member and two of the part-time members be nominated through the Australian Council of Trade Unions by those industrial organisations whose members make up the contributors to the Superannuation Fund, defined in Clause 4 of the Bill as `relevant industrial organisations'. The Bill appears not to limit the ACTU nominations to those suggested by the relevant industrial organisations, requiring merely consultation with those organisations in accordance with proposed sub-section (4). The Committee therefore recommends that sub-section (4) be altered to ensure that the ACTU cannot nominate a person not suggested by a relevant industrial organisation, and that words, such as those that follow, be added to the sub-section: . . . and unless that person was amongst those persons whose names were submitted to the Australian Council of Trade Unions by a relevant industrial organisation. The proposed Government amendment is similar but uses the words: The Australian Council of Trade Unions shall not nominate a person for appointment under sub-section (1) unless (a) the person is a person whose name is among the names of persons submitted to the Australian Council of Trade Unions by relevant industrial organisation as persons appropriate for the nomination; and (b) the Australian Council of Trade Unions has consulted the relevant industrial organisations in relation to the nomination. That could not be clearer. There is no way that any member of the Committee, including former Senator Jack Evans, could have misunderstood that. I recall our discussion about that and there was no doubt in his mind that that was what we were talking about. In any case, it is not as if the report were tabled after he left this place; it was tabled a good six weeks before he ceased to be a senator. If there was any doubt about it, he could have done something about it in that time. I cannot understand how Senator Siddons can say that Jack Evans did not know that that was what we were talking about, because it was always about the ACTU's nominations. Senator Short, who was a member of that Committee and is in the chamber at present, I am sure can vouch for that as well. Senator MESSNER(South Australia)(4.46) —On behalf of the Opposition I notify the Australian Democrats that we will not be supporting their amendments. I will outline the reason why we will not be supporting the amendments. The major objection by the Opposition to this legislation, as outlined in the second reading debate, is that fundamental point that the Superannuation Legislation Amendment Bill delivers the ultimate control for decision making of the Superannuation Fund Investment Trust into the hands of nominees of the Australian Council of Trade Unions. To that extent I believe that we are on common ground with the Democrats and we have the same view as they do about the ultimate effect of such behaviour on the Australian community. During the second reading debate I drew attention to the fact that trends in the community in recent times generally have been towards the expansion of union based and sponsored superannuation schemes, such as the builders unions superannuation scheme, the Australian scheme and so on. Senator Walsh —You dropped QUEST out. Senator MESSNER —No, I stand by that. It has been set up on much the same principles as the other schemes. Senator Walsh —Conspiracy theories don't have a smidgin of fact behind them, you know. Senator MESSNER —If Senator Walsh sat back and listened to the debate, he might see the light. The control over vast sums of money will be delivered, by the expansion of those schemes-unless the Government intervenes to control them and turn them into appropriate and properly run superannuation schemes-into the hands of a tight bunch of trade unionists. The principle that applies under those schemes, such as the BUS scheme and so on, will apply in exactly the same way to the Superannuation Fund Investment Trust, which has literally billions of dollars under its control and in many ways controls the ultimate direction of the Australian economy. Clearly the power to control that money, given to such people as would be nominated by the ACTU under this Bill, would mean that there would be an element of union control which certainly would not have the support of the majority of Australians. That is why we are so strongly opposed to the basic premise of the legislation. Turning to the Democrats' amendments, they have proposed a means by which the employees will have an opportunity to elect directly the members of the Trust who represent employees. While we say that that is a laudable objective-I believe they have striven hard to try to establish some kind of means by which that can happen-the problem with their suggestion is that it is simply impractical and will not work. I have pointed out that our major objection is that ultimately unions will have delivered to them the control over the Superannuation Fund Investment Trust and it is our belief that the proposals by the Australian Democrats, which are based on a membership elected by the employees, will ultimately produce the same result. A person who wished to gain election to the Trust would need to marshal a considerable amount of support, far beyond the amount that is mentioned by Senator Siddons as being a threshold, and obviously the only way in which that support could be marshalled would be by an effective team operation. Such a team operation is already clearly established to operate in such a way-that is, through the trade union representative of those employees. We say, therefore, that ultimately under the Democrats' proposals, control will fall back into the hands of the union itself. The practical result will be that the Democrats' amendment will achieve exactly the same result as the Government wants-that is, domination by the ACTU and by the unions. That is why the Opposition opposes the Democrats' amendment. We do not believe it is the answer and we return to the point that we have been making all along-that is, the criteria by which people are appointed to the Trust to make decisions on behalf of employees should include expertise in a wide range of investment techniques and interest in industrial relations and obviously skills in that area, so that they can make the proper decisions on behalf of the employees of the Commonwealth who are members of the Trust. Surely this is the basic issue. To what extent and in what way should we nominate people who will be involved in the day to day supervision of the Investment Trust? Senator Mason —What is your suggestion? Senator MESSNER —I will come to that when we put forward our amendments. Had Senator Mason been following the debate he would have known our attitude from the second reading discussions. The point is that we have a proposal which sets out the means by which that can be achieved. We believe that our approach is the most practical from the point of view of ensuring that the interests of the employees-that is, of the contributors to the Fund-are best served; and we believe that that will have the objective of ensuring that there are not ideologically based decisions imposed upon the managers of the Investment Trust by members of the Trust itself who have their ultimate direction from and loyalty to the ACTU. As a parting shot I think we should mention again the fact that the ACTU is not exactly renowned for its business success. We only have to remember the fiascos of the ACTU-Bourke's store in Melbourne which went broke, and ACTU-Solo Enterprises and so on. Senator Puplick —Who was running those at the time? Senator MESSNER —The ACTU was. I believe that it was during the time when the present Prime Minister was President of the Australian Council of Trade Unions. In fact, it was his great vision that these ACTU controlled business ventures should be extended across the whole community. But of course he could not even get the ACTU-Bourke's store off the ground. But now he has a grander vision; now he has a vision of using the funds of the contributors to the Superannuation Fund Investment Trust, who are of course employees of the Commonwealth of Australia, for business purposes and for the extension of the activities of trade unionists in the community. That is the fundamental philosophy which stems from the direct philosophic base of Prime Minister Hawke, previously failed President of the Australian Council of Trade Unions, who was responsible for the greatest period of inflation growth and job destruction in the 1970s when he occupied that position. The Opposition will not support the Democrats' amendments and we stand ready to move our own. Senator WALSH(Western Australia-Minister for Finance)(4.56) —I shall respond very briefly. On the Australian Democrats' amendment to have an election, I would have thought that the Democrats' own recent experience would have brought home to them some of the pitfalls of having sloppy pseudo-elections designed by amateurs. I do not think I need say any more about that. Real elections involving political parties, which are held at a local level where the candidates are actually known to the electorate as individuals are one thing, as are-in a similar mould but on a different scale-national and State-wide elections in which the candidates personally may not be well known but the parties to which they belong and therefore the broad drift of the policies that they would support and vote for in parliament are known. Such elections are meaningful. However, the proposition that individuals who are not tied to any organisation with an identifiable political philosophy or body of expertise can be meaningfully elected by a national electorate, even if there were to be compulsory voting, is rather absurd. As well as that, there are some technical defects in those amendments which have been brought to my attention. I do not intend to read them all out but I am advised that the first amendment relating to three part time elected members of the Trust needs to be considered more closely to ensure that it is not drafted in such a way as to impose a duty on the Australian Electoral Commission, with the results and costs of the election being borne by the Commission rather that the Trust. Amendment No. 2, relating to the provision by nominees of written statements of their knowledge and expertise in finance, industrial relations, superannuation and investment, as drafted does not specify what will happen to the statements. The amendment is silent on matters such as to whom the statements are to be provided, their purpose and their ultimate destiny. Senator Mason —That is very obvious. Senator WALSH —It might be pretty obvious but if it is not in the bloody legislation one cannot do anything with it. The provision in amendment No. 3 could mean that a person's appointment could not be terminated until the completion of five years, notwithstanding physical or mental incapacity, bankruptcy and so on. Similarly, the provision would mean that such persons may only serve one term of five years and not be eligible for reappointment under any circumstance. There are quite significant technical shortcomings in the amendments, but that is not the real reason that the Government is rejecting them. I must say again that I find the Opposition's attitude astounding and extraordinary. I suppose this is more excusable in the case of the Demcrats because the Democrat senator who sat on the Senate Standing Committee on Finance and Government Operations is no longer in the Senate. In moving these amendments the other Democrats are effectively moving a motion of no confidence in former Senator Jack Evans, and the Liberals, who plan to move their amendments, are effectively moving motions of no confidence in Senator Short and Senator Vanstone. All these people were parties to the unanimously agreed recommendations that came from the Finance and Government Operations Committee. I have been able to identify the real reason why the Opposition is bringing forward these phoney amendments. It has nothing to do with this Bill or any concern about contributors to the Trust or whatever; it is that it believes that it can further its phoney war- Senator Mason —I raise a point of order, Mr Chairman. I take strong exception to the Minister's comments about there being any lack of confidence in former Senator Jack Evans. My point of order is that the Minister is criticising in anticipation a vote of the Senate. We vote on these matters in this chamber; it is not up to what any committee does or says. It is up to the Senate to resolve these matters. I think the Minister should withdraw his comments on that basis. The CHAIRMAN —There is no point of order. If you wish to make a debating point, you are entitled to speak further in this debate. Senator WALSH —The point I am making is that if this Bill is as fundamentally, profoundly and massively flawed as members of the Liberal Party now assert, why did Senator Vanstone and Senator Short not detect that in their extended, leisurely examination of it. Given that it has been kicking around for at least six months, why did not Senator Messner or some of the other people in the Opposition who purport to take some interest in these matters realise earlier than about three weeks ago that it had that sort of profound or fatal flaw? The truth, of course, is that it has nothing to do with the Bill and nothing to do with the interests of contributors to the Fund. The Opposition cynically sees this as an opportunity to further its propaganda war, to further its scare campaigns and conspiracy theories about unions and to advance one step further down the road to the five-year industrial war, which its leader gleefully anticipates and predicts, and if in that process it has to pass a motion of no confidence in Senator Vanstone and Senator Short, I suppose it reckons that in every political struggle some pawns are sacrificed. Question put: That the amendments (Senator Siddons's) be agreed to. The Committee divided. (The Chairman-Senator D. J. Hamer) Ayes . . . . . . . . . . . 5 Noes . . . . . . . . . . . 54 —— Majority . . . . . . . . . 49 —— Chipp, D. L. Siddons, J. R. Haines, J. (Teller) Vigor, D. B. Mason, C. V. J. Aulich, T. Jones, G. N. Baume, Michael Lewis, A. W. R. Baume, Peter McClelland, DouglasBlack, J. R. MacGibbon, D. J. Bolkus, N. McIntosh, G. D. Brownhill, D. G. C. Maguire, G. R. Carrick, Sir John Messner, A. J. Chaney, F. M. Missen, A. J. Childs, B. K. Morris, J. Coates, J. Parer, W. R. Collard, S. J. Puplick, C. J. G. Colston, M. A. Rae, PeterCook, P. F. S. Reid, M. E. (Teller)Cooney, B. Robertson, E. A. Crichton-Browne, N. A. Ryan, S. M. Crowley, R. A. Sheil, G. Devlin, R. Short, J. R. Durack, P. D. Sibraa, K. W. Foreman, D. J. Tate, M. C. Georges, G. Teague, B. C. Gietzelt, A. T. Townley, M. Giles, P. J. Vanstone, A. E. Grimes, D. J. Walsh, P. A. Guilfoyle, Dame Margaret Walters, M. S. Hamer, D. J. Watson, J. O. W. Hill, R. Withers, R. G. Jessop, D. S. Zakharov, A. O. Question so resolved in the negative. Senator MESSNER(South Australia)(5.09) —by leave-I move: Page 2, clause 4, leave out paragraph (b). Page 2, clause 4, leave out paragraph (e). Pages 4 and 5, paragraph 7 (1) (a), proposed new sub-section 30 (1), paragraphs (a), (b), (c) and (d), line 38 (page 4) to line 3 (page 5), leave out the paragraphs, insert the following paragraphs: ``(a) a full-time principle member nominated by the Minister; (b) 1 part-time member nominated by the Minister after consultation with employees' associations representative of contributors of the Fund; and (c) 3 part-time members nominated by the Minister after consultation with the Securities Insitute of Australia, the Life Insurance Federation of Australia, the Australian Bankers' Association, the Australian Merchant Bankers' Association and the Actuaries Institute of Australia.''. Page 5, paragraph 7 (1) (b), leave out proposed new sub-sections (3) and (4), insert the following sub-section: ``(3) In making appointments of persons as members of the Trust, the Governor-General shall ensure that, so far as is practicable, a person is not appointed unless that person has experience and expertise in finance, industrial relations, superannuation and investment.''. Page 5, paragraph 7 (1) (c), lines 14 and 15, leave out ``and the full-time union-nominated member''. Page 5, paragraph 7 (1) (e), lines 19 and 20, leave out ``or as the full-time union-nominated member''. Page 5, sub-clause 7 (4), line 44, leave out ``the member of the Trust referred to in paragraph 30 (1) (d)'', insert ``a member of the Trust referred to in paragraph 30 (1) (c)''. Page 6, clause 8, proposed new sub-section 30B (1), line 18, leave out ``the full-time union-nominated member'', insert ``a part-time member''. Page 6, clause 8, proposed new sub-sections 30B (4) and (5), leave out the sub-sections. Page 7, clause 8, proposed new sub-section 30B (7), leave out the sub-section. Page 7, clause 8, proposed new paragraph 30B (8) (b), line 10, leave out ``the full-time union-nominated member'', insert ``a member''. Page 7, paragraph 9 (a), lines 13 and 14, leave out ``and the full-time union-nominated member''. Page 7, clause 10, lines 19 and 21, leave out ``, the full-time union-nominated member'' (twice occurring). Page 9, paragraph 13 (d), lines 19 and 20, leave out ``or the full-time union-nominated member''. Page 10, clause 14, proposed new sub-section 36 (2), leave out the proposed sub-section. Page 10, clause 14, proposed new sub-section 36 (3), lines 17 and 18, leave out ``or as the full-time union-nominated member''. Page 10, clause 14, proposed new sub-sections 36 (4) and (5), leave out the sub-sections. Page 10, clause 14, proposed new sub-section 36 (9), lines 39 and 40, leave out ``, as the full-time union-nominated member''. Page 10, clause 14, proposed new sub-section 36 (9), line 42, leave out ``, the full-time union-nominated member''. Page 18, clause 25, proposed new sub-section 161 (6), leave out the sub-section. The arguments have been well canvassed, both in the second reading debate and in the course of my remarks in regard to the amendments of the Australian Democrats which have just now been lost, but I would like to make one of two further points. The amendments that we are proposing to clause 7 of the Superannuation Legislation Amendment Bill, which is the clause establishing the new membership of the Superannuation Fund Investment Trust, are designed to put emphasis on the most important criterion-that three part time members of the Trust will in future be nominated by the Minister but only after consultation with the following organisations which are well known in the Australian community for their background, experience and expertise in the area of financial management, investment management and control, and administration of funds: 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. The point that we are getting at here is that the funds which will be invested by Commonwealth Government employees in the Superannuation Fund Investment Trust will be, as they should be, managed in such a way as to generate the highest possible growth rates, so that they get the best possible return on their money, and, of course, to maximise the benefits to the employees. That is the thrust of our amendment. It certainly takes away from the Government's proposal, which is that four of the five members of the Trust in future are to be nominated by the Minister after receiving a slate of instructions from the Australian Council of Trade Unions. I do not think we have to go over those arguments again. But of course, this is part and parcel of the Government's proposals to extend control over the administrative and investment procedures of the SFIT through the power of the trade union movement. I have referred earlier to the way in which these things have been undertaken in respect of such schemes as the Builders Unions superannuation scheme, the Australian scheme, the Queensland United Employers Superannuation Trust scheme and so on. What we need is to draw continually on the expertise of people who know the investment markets, who know how to take part in and to properly direct the Trust along the lines of maximising investment returns. This amendment only imposes upon the Minister the duty to consult those organisations. Those organisations will not have the power of nomination in the sense that automatical acceptance of their nominations would be forced upon the Minister; rather, a panel of people would be put forward to the Minister and the Minister would then make the appropriate appointment after judging individuals' capacities. That is the criterion to which we hold and we believe that the amendment fully takes account of that. The Leader of the Government in the Senate (Senator Button) has said that there may well be at times some conflict of interest on the part of individuals who are members of the Trust and appointed under the provision which we are proposing, who may be members of private firms or of various organisations which may be beneficiaries in some way of funds that are invested on behalf of the Trust. Of course, that is a possible consequence, but I believe that it would not be the kind of consequence that would necessarily stultify the operation of the Trust, and that all men of good will would, of course, where there was a conflict of interest, stand up and make sure that that interest was well known to all members of the Trust and, in particular, to the Minister. That is a normal code of behaviour. It is a normal pattern of events. Consequently, having the aegis of organisations such as those I have mentioned, which are well known, prestigious and well established institutions in the Australian community, and carrying that imprimatur, surely we can rely upon the integrity of the men who would be on such a panel to pay that kind of attention to the critical issues that might be involved if any conflict of interest arose. If such conflict occasionally arose, it would be nothing compared with the conflict of interest that would exist in employee organisations appointing people who would totally control the fund under the Government's proposals, having four of the five members of the Trust and continually acting in conflict of interest of their own position. As a result, that obviously would impose very severe limitations upon their ability to carry out independent judgments. That again demonstrates the reasons why we are so strongly behind these proposals to put the main thrust of the legislation upon the question of expertise. That is not to say that we ignore entirely the need to have representation from employee organisations and associations. In fact, part (b) of the amendment draws attention to that. It says: 1 part-time member nominated by the Minister after consultation with employees' associations representative of contributors of the Fund . . . Clearly, there ought to be that much representation upon the Investment Trust, and consequently we make the provision along those lines. But in no way do we subscribe to the view that the ultimate control of the Superannuation Fund Investment Trust ought to be in the hands-as it would be under the Government's proposals-of the Australian Council of Trade Unions. As we have discussed before, that is demonstrably of very great difficulty, considering the spectacular lack of success of the present Prime Minister (Mr Hawke), when he was President of the Australian Council of Trade Unions, in matters of business. We have only to instance the lack of success in the case of the ACTU Bourke's store in Melbourne as an example of that. Senator COATES(Tasmania)(5.17) —I suppose it has to be said again: The thickness of Senator Messner's arguments continually amazes me. Senator Button —The thickness of Senator Messner amazes me. Senator COATES —Well, he has slimmed down a bit. He continually shows his blind spot about the Australian Council of Trade Unions. He describes various organisations, the Securities Institute of Australia, the Bankers Association of Australia, the Life Insurance Federation of Australia and others as prestigious organisations. Presumably he knows some of the people involved with them and can therefore vouch for their prestige. But he damns an organisation such as the ACTU, because in his view it is not a prestigious organisation. He just has a blind spot about that organisation, presumably because it represents so many people in Australia; but in particular it represents the contributors to the Superannuation Fund Investment Trust. It is the means by which the Public Service unions have their peak representation, and they are the people who represent the contributors. It is just ridiculous for the Opposition to propose in the amendment that these organisations be consulted, because they are by no means representative of the contributors. In fact, one could say that in many ways they could be opposed to the interests of the contributors. Of course, they are the sorts of conservative organisations which Senator Messner would support, and that is indicated by the fact that he referred to the men that they would suggest to the Minister. I hope that the ACTU will include amongst its nominees a representative proportion of women as well. It would not even occur either to Senator Messner or the so-called prestigious organisations he mentioned to do that. Senator Messner keeps referring to the interests and the sorts of people that the ACTU might nominate and the sorts of individuals that he suggests were associated with ACTU enterprises, which is a completely separate idea from the appointment of trustees for the Superannuation Fund Investment Trust. The people suggested by the industrial organisations concerned, the Public Service unions, and nominated by the ACTU on their behalf, do not actually have to be members of those organisations. I would be surprised if the ACTU did not nominate experienced investment people from commerce and industry, perhaps even including people that Senator Messner might approve of. Of course, it is proposed in the Government's Bill that they be nominated by the ACTU. For Senator Messner to think that they would all therefore be union secretaries is just ridiculous. That deals with part (c) of Senator Messner's amendment No. 1. Moving back to part (b), he concedes that one of the five members could be nominated by the Minister after consultation with employees' associations representative of contributors of the fund. Even though he concedes that the contributors can have one member, he still cannot bring himself to mention the ACTU. He refers to `employees' associations representative of contributors of the Fund'. How that consultation would happen, I do not know. There are 30 or 40 organisations-perhaps 60-representative of Public Service contributors to the fund. How on earth is the Minister going to have reasonable and fair consultations with all those organisations? Of course, it should be done through their peak body which, whether or not he likes it, is the ACTU. Dealing with part (a) of Senator Messner's main proposed amendment, he suggests that there be only one full time member who would be nominated by the Minister. I should point out that it has been generally agreed by all those involved with this whole issue that there need to be two full time members of the Trust to ensure that broad expertise is available. One may be particularly involved with investment, and one may have been particularly involved with superannuation, and so forth; whereas to have only one full time principal member does not allow for that broad, full time expertise and would also lead to the sorts of problems which have occurred with having only one full time member on the existing Trust in that when that member was away on leave or otherwise unavailable there was no full time deputy to step into his shoes. Having two full time members allows for that full time deputy to be fully involved and to act as the principal member while the principal member is unavailable. For those reasons, and for all the reasons that we have been through before in this debate, I oppose the amendments proposed by the Opposition. Senator SHORT(Victoria)(5.23) —I want briefly to support the amendments moved by Senator Messner on behalf of the Opposition. The reasons for the amendment have already been put very clearly both in the second reading debate and in the comments that Senator Messner has made. There is one basic objective and reason for these amendments; that is, whatever we do in relation to the superannuation fund of the Commonwealth, particularly taking into account the size of that fund, which is far and away the largest superannuation fund in Australia in terms of funds and members, must be in the basic interests of the contributors. It is their money we are talking about. It is not anybody else's money. It is not even the Commonwealth's money. We are talking about huge sums of money. We are talking about a fund which has several billion dollars already invested, which accumulates additional funds at the rate of $7m a week, $1m a day, and which therefore not only is of vital importance to the contributors but also has a very big effect on the money markets and the whole investment structure of this country. They are the two things we have to bear in mind. The argument is not about the interests of the Public Service unions as such. It is not about anyone else's interests. It is about the interests of the contributors. Part of the Government's Bill we are objecting to relates to the membership of the Superannuation Fund Investment Trust. We object quite simply because the legislation proposes that the Australian Council of Trade Unions would have control over four of the five appointments to be made to the Trust. Our amendments are proposed to the Government's legislation because of our concern that that is not in the best interests of the contributors. It was put in the second reading debate-I think by Senator Walsh, who was trying to make cheap capital out of it, very unsuccessfully I might say-that this is some sort of exercise in union bashing. It is not an exercise in union bashing. It is an exercise in protecting the best interests of the 307,000 contributors to the fund. If the proposals which the Government has put forward and which involve very considerable ACTU involvement do not go to the heart of protecting the interests of the contributors, those changes being proposed are wrong. If the Government wants to make cheap political capital out of that in terms of the response by both the Australian Democrats and the Opposition, so be it. It will be unsuccessful. As I said in my speech in the second reading debate, we make no apology for the fact that our proposed amendments remove the ACTU from the central, pivotal role that has been given to it in this legislation. It is worth noting a couple of facts which to date have not been brought to light. The first is that in the negotiations for the changes to the superannuation Bill that we are now debating, as I understand it, the Public Service unions were not consulted. All the negotiations were done with the ACTU itself. Senator Coates —Who do you think represents them? Senator SHORT —Another point worth noting-and Senator Coates's comment relates to this-is that the Public Service unions affiliated to the ACTU represent far fewer than 50 per cent of the contributors to this superannuation fund. Senator Walsh —What is your source for that? Senator SHORT —The unions themselves. Senator Walsh —You have just made it up. Senator SHORT —I did not make it up. It is a far more accurate figure than the honourable senator's totally misleading 70 per cent figure. Fewer than 50 per cent of the contributors to the superannuation fund belong to Public Service unions affiliated with the ACTU. It simply does not make logical sense, regardless of any other consideration, to argue that therefore the ACTU can effectively represent the interests of those 307,000 people, some 160,000 or more of whom have no association whatsoever with the ACTU. The amendments that we have moved have one objective and one objective alone; that is, to protect the contributors' interests. The way in which that can best be done, and the only way in which it can be done, is for the trustees of the fund who have the confidence of the contributors and of the investing community-primarily the contributors-to be skilled in the tasks allotted to them, because they are the trustees of the contributors' money. The whole thrust of the Opposition's amendments is to ensure that those five trustees collectively have a range of skills in the area in which they need skills; basically, in investment and in the handling of money both on a secure and maximum return basis. Senator Walsh, in his earlier comments, made the remark that trustees are not investment managers. I agree with that, but if Senator Walsh is trying to draw the conclusion that trustees do not need to have expertise in investment or in the management of investments that would really be an extraordinary statement coming from someone who purports to be one of the two people responsible for the finances of this country. It was a very damaging comment, although it did not surprise too many honourable senators on this side of the chamber. I come back to the Opposition's amendments. Their purport is clear. We have explained the reasons for introducing those amendments, and I commend them to the Committee. Before I sit down, I wish to pick up Senator Walsh's comments that Senator Vanstone and I were members of the Senate Standing Committee on Finance and Government Operations, which reported on the Bill in May, and that the Opposition will not now support all the amendments that were proposed to that Bill. He suggested that this was a vote of no confidence by the Opposition parties in Senator Vanstone and me. I cannot speak for Senator Vanstone. If Senator Walsh is suggesting that a member of this Senate cannot sit on a Senate committee as an individual and do his or her best in the interests of that committee and that when a report is brought forward in the Senate and an opportunity is given to debate it in whatever party room we are talking about, that person or that person's party is bound by what that individual has said in that committee, that is an extraordinary interpretation of the role of Senate committees and their members. I say that regardless of which side of the chamber members of those committees come from. Senator Coates —Does that explain why you changed your mind? Senator SHORT —I say to Senator Coates, as I said in the second reading debate, that I did not change my mind. I do not wish to disclose the contents of private meetings of a Senate committee, but the honourable senator is as aware as other members of the Finance and Government Operations Committee and I are of the very real concerns that were expressed right from day one by the Opposition members on the Committee about the role of the ACTU in this exercise. We were all under a great deal of pressure as a committee to report on this Bill. The Government very graciously gave us sevendays to do so. Senator Walsh claimed that we had all looked at the question in an extended, leisurely fashion. Quite obviously, he has overlooked the fact that the whole exercise was carried out in seven days. The pressures were considerable because it was hoped that the Senate would deal with this legislation before it rose for the winter recess. That was the reason why we all, as members of the Committee, tried to co-operate to get this matter back to the Senate for full consideration. That was the reason for the rush. I believe that was the reason why people on all sides compromised their views to some extent in trying to reach an agreed conclusion. I find it absolutely extraordinary that Senator Walsh should draw the conclusion that people have gone back on anything agreed on in that Committee. It does not surprise me, coming from him. Senator Walsh —That is complete nonsense. Senator SHORT —It is about time that Senator Walsh learned something about Treasury and Finance matters. From my point of view, I completely rebut the assertion. Senator MASON(New South Wales)(5.35) —I support the final comments of Senator Short. He is perfectly right. It is a preposterous suggestion from the Minister for Finance (Senator Walsh) that a whole party or a whole area of the Senate should be influenced, controlled or dominated by a view expressed in a committee on a prior occasion by one member of that party. Quite apart from the fact that circumstances change over time, one has to have a situation where matters can be viewed, reviewed or even reconsidered by the same people. All of us must reserve our rights in that regard. That point aside, I have listened carefully to this debate. A meeting deprived me of the pleasure and privilege of hearing Senator Messner speak during the second reading debate, but now that he has explained what his amendments are, I agree that they are of shattering clarity. It is a bad day for democracy. On one side we have a Minister who says that democracy does not work and therefore we should abolish it. On the Opposition side we have a proposition that people do not know what they should do best with their own money. We are not talking about a few people; we are talking about over 300,000 people. By extension, I suppose that a Liberal government, of which Senator Messner would be a part, would say to all Australians that they are not competent to look after their affairs and that all their investments should be placed in some piggy bank organised for them by the Government. I think that is not a reasonable point of view or a reasonable suggestion. We oppose the Opposition's amendments on the basis that, as Senator Coates has said, the people who are concerned here are the contributors to the Superannuation Fund Investment Trust and not the Australian Council of Trade Unions or some group of investment consultants appointed by a government for all sorts of reasons which might emerge. After all, the opportunities for corruption are too great to be neglected or overlooked in this debate. I commend to Senator Messner that he give some thought to that point. I think that it would be very hard to find five people whom we would guarantee would stay honest over a long period, with such enormous sums of money-$1m a day-coming through the fund. That is one of the most significant arguments against such a proposition. As Senator Siddons said earlier, the basic point is that this ought to be a matter which the contributors decide. They should be responsible for seeing that people are elected to the Board of the Trust who will do the job best. Who are we to say that that right should be taken from them? Senator WALSH(Western Australia-Minister for Finance)(5.38) —The Opposition parties have neither their facts nor their logic straight. On the question of fact, they seem to believe, and some Opposition members have asserted, that all discussions which were conducted last year leading up to the introduction of the superannuation legislation were conducted with some faceless monster called the Australian Council of Trade Unions, which represented nobody except some anti-social group of conspirators. In fact, the joint working party set up to review the report of the Monaghan inquiry comprised members of a sub-committee of the ACTU, which was called the government employees section, which included the Administrative and Clerical Officers Association, the Australian Postal and Telecommunications Union, the Australian Public Service Association, the Australian Telecommunications Employees Association and the Commonwealth Scientific and Industrial Research Organisation officers association. In October of last year a conference was arranged by the then Minister for Finance, Mr Dawkins, which included the unions I have named plus the Federated Clerks Union, representatives from the Australian Taxation Office and the Professional Officers Association. Senator Messner —Did they all nominate the ACTU? Senator WALSH —Senator Messner ought to learn that for a conspiracy theory to have any real credibility, it has to have a modicum or at least the appearance of consistency and rationality. When Senator Messner spoke during the second reading debate on 16 September he said: . . . all they- `they' had previously been identified as the Minister for Employment and Industrial Relations (Mr Willis) and the Prime Minister (Mr Hawke)- are people who will do the bidding of the trade union movement. He cited, as evidence to support that assertion and to prop up his conspiracy theory, that superannuation funds like the builders unions superannuation scheme, the Australian scheme and the Queensland United Employers Superannuation Trust had been established. QUEST, as I mentioned earlier, is a fund of the Queensland Employers Federation, to which a monopoly was granted by the Premier of Queensland, Joh Bjelke-Petersen, in legislation that was pushed through the Queensland Parliament in half a day. So the Prime Minister and Mr Willis must be cleverer than even I thought they were because, in pursuit of this conspiracy, they persuaded the Premier of Queensland to rush legislation through in half a day to provide legislative backing for an employers' federation superannuation fund in order to further the policy of putting all superannuation in the hands of the ACTU. I do not know whether I really need to say anything else after that but there are a couple of matters I want to touch on. Senator Short, in the previous debate on this legislation, made much of the potential conflicts of interest that will be faced by Superannuation Fund Investment Trust members nominated by the ACTU and Senator Messner did something similar today. Members of the Trust must, in law, act in the interests of all the beneficiaries. Provisions which are included in the Bill will direct the Trust to make decisions and operate so as to achieve its objective, which in essence is the maximisation of the return to contributors, consistent of course with the security of investments. As well as that statutory duty, the Trust members will also be bound by the general law-a matter, as I said earlier, to which Senator Peter Rae paid some attention when he was Chairman of the Finance and Government Operations Committee. On the general law it is worth noting that a case was decided in England last year, over which Sir Robert Megarry presided, concerning the mine workers pension scheme, in which it was clearly established that trustees of superannuation funds are not open to external direction regarding investment activities but must always act in the pecuniary interests of the beneficiaries. I might add that that case was prompted when Arthur Scargill tried to stop overseas investment by the Trust and was overruled by the court. I quote from that judgment: . . . trustees must put on one side their own personal interests and views. Trustees may have strongly held social or political views . . . trustees must not refrain from making the investments by reason of the views that they hold. That is a decision of an English court but I understand that English court decisions of that nature are regarded as being very persuasive in Australian courts, establishing very strong precedents which are almost certain to be endorsed in Australia. So as well as the statutory obligation, in the general law there is an obligation for trustees to act in the interests of members of the fund, not of the bodies which nominate them. By the way, that fund was established by statute and had one-half of its trustees appointed by the union. It should also be noted that clause 12 of the Bill contains extensive provisions that require Trust members to disclose all their interests, whether pecuniary or otherwise, and whether direct or indirect, that could reasonably be expected to conflict with the performance of their duties. Finally, the Bill has the normal provision in clause 13 which, as it has been written in the Bill enables the Governor-General-in reality the government of the day-to remove any member from the Trust for inefficiency or incompetence. Senator Messner chooses to reject all that and he still wishes to proceed with his conspiracy theory that trustees will manipulate funds in the interests of some outside body to which they are beholden, but his alternative is to have appointments by the Minister upon consultations with or recommendations from a variety of life assurance officers, merchant bankers and so on. In the debate Senator Short contended that those organisations suggested as suitable by the Opposition are not in opposition to the Trust and Senator Messner has repeated that. That is true, but the organisations draw their membership from other organisations and persons who would be in competition with the Trust in its investment operations. If honourable senators opposite do not accept the proposition that the trustees are bound by law to act in the interests of the members of the Trust, I suggest that their alternative is worse than what they see as the unacceptable proposition of the Government. Their alternative is to have people appointed on the advice of an organisation which draws its membership from other funds which are in competition with SFIT. Corporations with affiliations to the Merchant Bankers Association, the Australian Bankers Association and the Life Insurance Federation of Australia have approached me and my predecessor expressing interest in managing all or some of the investments of the Superannuation Fund. I understand that other approaches have been made directly to the Trust itself. If I may just digress a little, I understand that a church in the Middle Ages showed Galileo the rack, or something like that, when he put some views which were unacceptable to it. I do not know what the Liberal Party of Australia showed Senator Short after he signed that Committee report but it must have been something equally effective. The proposition which the Opposition asks us to support is that this monster called the ACTU, which represents nobody except faceless and evil conspirators, will get control of $2 billion to which is added $1 billion a day. That ignores all the facts that I have detailed already. It also ignores, very importantly, that the trustees are bound by the general law, by the statute, and are subject to disciplinary removal at any time by the government of the day if they act improperly. If the Opposition does not accept all that, its alternative is that the same people performing the same function should be appointed on the advice of bodies, the membership of which is drawn substantially from other funds which are in competition with SFIT. Senator Mason —That is right. Senator WALSH —I am glad that the honourable senator agrees with that much. I did not even have to show him the rack. Senator Short —That wasn't me. Senator WALSH —I am sorry; I incorrectly identified the voice. Finally, and less importantly, I think, there are technical weaknesses in the drafting of the Opposition's amendments, so I am advised. In amendment (1) paragraph (b) the looseness of the phrase `employees' associations representative of contributors of the fund' is such that it could include associations that are in the nature of social clubs rather than bodies concerned with terms and conditions of employment. It could, for example, include the Attorney-General's Department social club, which is an association of employees who are contributors to the fund. Senator Peter Rae —I suppose we can expect that. Senator WALSH —I confess that I am a layman in these matters and, no doubt, the honourable senator has professional skills superior to those which I have. This is not my opinion; this is the opinion of people who, I think, are at least equally well qualified. Paragraph (c) necessitates precision in specifying the exact title of the bodies concerned and would result in the need for amendment of the Act in the event of name changes. Amendment (8) proposes that the deputy principal member's position be held by a part time member. The responsibilities and duties of the deputy are to include acting in the absence of the principal member, which could hardly be carried out effectively by a person whose part time involvement required attendance perhaps for only one day a month. As indicated, the Government will oppose all of the official Opposition's amendments. Senator PETER RAE(Tasmania)(5.49) —Having listened to the debate that has taken place and having heard Senator Mason making some statements, I would like briefly to put a point of view which appears to have escaped Senator Mason and a number of other honourable senators on the other side of the chamber who have spoken. He criticised the Opposition's amendments, saying that they meant that people did not know how to deal with their own money and that therefore the Australian Council of Trade Unions, representing the people whose money was involved in the Superannuation Fund Investment Trust, should have the control. Senator Mason —You did not hear me correctly, Senator Rae, with all respect to you. I did not make any such statement, as Hansard tomorrow will reveal. I have not sided with the ACTU in this matter at all; let me make that quite clear. Senator PETER RAE —The position that I found quite extraordinary was any suggestion that the taxpayer as such does not have a very clear and very firm interest in what happens to this Fund. The Commonwealth superannuation scheme involves an employee's contribution and a contribution made by the employers; that is, the taxpayers of Australia. The employee's contribution goes into the Superannuation Investment Trust Fund. Each time any money is paid into that there is a tax benefit to the person who makes the payment because it provides a rebate or deduction over the years for that person making the contribution. So immediately there is a tax benefit to the contributor. In other words, there is a tax debit to the taxpayers as a whole. The second point is that, so far as the total scheme is concerned, the employee's contribution is paid back when the employee leaves the Fund by one means or another. In other words, when an employee retires he gets back his own money and the taxpayer then takes up the responsibility for the payment of a pension for the rest of the life of that person. Again, it is the taxpayer, Consolidated Revenue, paying the other part of the Commonwealth superannuation scheme entitlement. Thus, throughout the whole scheme, a taxation benefit is being conferred on the employee and a taxation cost is being imposed on Consolidated Revenue. So far as the remainder of the scheme is concerned, it is totally payable by the taxpayers. In that event it is the taxpayers who determine how successfully or otherwise this scheme is operated. To suggest that their interests should not be given some substantial primacy surprises me. I wanted to point that out because it seemed to be overlooked in the debate. What this debate ought to be about is true accountability; about who looks after the funds, and to whom those looking after the funds are accountable. There ought to be accountability to the Parliament, through the Minister, on behalf of the people as well as a degree of accountability to the employees through their proper organisations, not just the limited ones which are affiliated with the ACTU. That was the final point that I wanted to make. Some speakers were entirely overlooking the fact that a significant number of people who are involved in the Commonwealth superannuation scheme are not members of ACTU affiliated unions. They have just as much right-- Senator Coates —Who are they? Senator Short —More than 50 per cent of the contributors. Senator PETER RAE —Senator Short, who has investigated these percentages, says it is more than 50 per cent. All I know is that I have a list of organisations; a percentage of people are members of the ACTU affiliated organisations. The percentage is even higher than my recollection had me believe. Over 50 per cent of the contributors are not affiliated with the ACTU and yet this Government wants them all-that is, four out of five; three directly, and one by veto-to be accountable to the ACTU, which does not represent even 50 per cent of the members. That seems to me to be a fairly persuasive argument in support of what the Opposition has put before this chamber and a very strong condemnation of the approach of the Government. One of the things it does is to enable a diminution of the degree of accountability of the Minister-of the government of the day and the Minister in particular-to the Parliament and through it to the people. I believe it is that responsibility which is being taken away by the Government and duckshoved over to the ACTU as a result of the way in which the Government has drafted the proposal before us and its refusal to accept either the Australian Democrats' proposals for change or those which have been put forward by the Opposition. Senator Mason —You didn't accept ours. Senator PETER RAE —We had some better ones; that is the difference between those of the Democrats and ours. I said that the Government did not accept the Democrats' change and apparently it does not propose to accept ours. But I would have thought that the Democrats would accept ours as better than the Government's proposal, and I will be very surprised if they do not. In fact, I would find it incredibly inconsistent for the Democrats, having put forward their proposals, not to vote for the proposals which the Opposition has put forward. I hope the Democrats will reconsider their position. It is extremely important, as has been recognised by everybody, that the best possible and best available degree of management, selection and accountability should take place. Quite obviously, selection and management by the representatives or the nominees of the ACTU, which is a minority interest, is not in the best interests of those taxpayers to whom I have referred, nor of all the eligible members of the Commonwealth superannuation scheme. Question put: That the amendments (Senator Messner's) be agreed to. The Committee divided. (The Chairman-Senator D. J. Hamer) Ayes . . . . . . . . . . . 26 Noes . . . . . . . . . . . 33 —— Majority . . . . . . . . . 7 —— Baume, Peter Missen, A. J. Brownhill, D. G. C. Parer, W. R. Carrick, Sir John Puplick, C. J. G. Chaney, F. M. Rae, PeterCollard, S. J. Reid, M. E. Durack, P. D. Sheil, G. (Teller)Guilfoyle, Dame Margaret Short, J. R. Hamer, D. J. Teague, B. C. Hill, R. Townley, M. Jessop, D. S. Vanstone, A. E. Lewis, A. W. R. Walters, M. S. MacGibbon, D. J. Watson, J. O. W. Messner, A. J. Withers, R. G. Aulich, T. Grimes, D. J. Black, J. R. Haines, J. Bolkus, N. Jones, G. N. Button, J. N. McClelland, DouglasChilds, B. K. McIntosh, G. D. Chipp, D. L. Maguire, G. R. Coates, J. Mason, C. V. J. Colston, M. A. Morris, J. Cook, P. F. S. Robertson, E. A. (Teller)Cooney, B. Ryan, S. M. Crowley, R. A. Sibraa, K. W. Devlin, R. Siddons, J. R. Evans, Gareth Tate, M. C. Foreman, D. J. Vigor, D. B. Georges, G. Walsh, P. A. Gietzelt, A. T. Zakharov, A. O. Giles, P. J. Archer, B. R. Coleman, R. N. Knowles, S. C. Richardson, G. F. Kilgariff, B. F. Ray, RobertBjelke-Petersen, F. I. Reynolds, M. Boswell, R. L. D. McKiernan, J. P. Crichton-Browne, N. A. Elstob, R. C. Baume, Michael Macklin, M. J. Question so resolved in the negative. Senator WALSH(Western Australia-Minister for Finance)(6.04) —by leave-I move: (1) Page 1, clause 2, lines 8 to 12, leave out the clause, insert the following clause: `2. This Act shall come into operation on the day on which it receives the Royal Assent.'. (2) Page 5, clause 7, lines 9 to 12, leave out proposed sub-section (4), insert the following sub-section: ` ``(4) The Australian Council of Trade Unions shall not nominate a person for appointment under sub-section (1) unless- (a) the person is a person whose name is among the names of persons submitted to the Australian Council of Trade Unions by relevant industrial organizations as persons for the nomination; and (b) the Australian Council of Trade Unions has consulted the relevant industrial organizations in relation to the nomination.'';'. (3) Page 14, clause 22, line 25, insert `and of the Merit Protection (Australian Government Employees) Act 1984' after `(other than sections 50E, 50EA and 52)'. (4) Page 16, clause 23, lines 1 to 5, leave out the clause. (5) Page 18, clause 25, lines 16 to 20, leave out proposed sub-section (6), insert the following sub-sections: ` ``(6) Where the Trust furnishes a report and financial statements to the Minister under sub-section (4), the Minister shall- (a) cause a copy of the report and a copy of the financial statements to be laid before each House of the Parliament within 15 sitting days of that House after their receipt by the Minister; and (b) furnish a copy of the report and a copy of the financial statements to the Australian Council of Trade Unions and, upon request made by a relevant industrial organization, to the relevant industrial organization. ` ``(7) A report furnished by the Trust under this section in relation to a year shall include particulars of any statement of policy furnished to the principal member of the Trust by the Minister during that year under sub-section 29A (6), the consideration given by the Trust to that policy and the action (if any) taken by the Trust as a result of that consideration.''.'. I seek leave to incorporate the explanation in Hansard. Leave granted. The document read as follows- Speech notes on amendments to the Superannuation Legislation Amendment Bill 1985. I intend to move, on behalf of the Government, amendments that have been circulated to honourable senators. I do so in order to accommodate most of the concerns expressed by the Senate Standing Committee on Finance and Government Operations in its report on the Superannuation Legislation Amendment Bill 1985, and also to effect a number of amendments of a minor technical nature. As honourable senators will know, on 8 May 1985, the Senate agreed to the motion of Senator Coates, the Chairman of the Standing Committee on Finance and Government Operations, that this Bill be referred to that committee for inquiry and report. The Committee had been conducting an inquiry into the operations of the Superannuation Fund Investment Trust. Senator Coates tabled the Standing Committee's report on the Bill on 15 May 1985. The Government was pleased to note that the Committee approved generally of the provisions of the Bill which are aimed primarily at both giving the trust the freedom and flexibiliy to operate in the best interests of contributors to the Commonwealth Superannuation Scheme and enhancing the accountability of the Trust. The Committee made five recommendations in its report. Four of these propose the insertion of additional provisions in the Bill. The fifth recommends that the Government obtain the advice of the Attorney-General on the matter of the legal liability of members of the trust and trust staff. I will return to this recommendation shortly. As Senator Coates remarked when tabling the Standing Committee's report, the matters recommended for inclusion in the Bill would undoubtedly happen in practice anyway. Nevertheless, the Government has agreed to accept the thrust of recommendations 1, 2 and 4, which in major part go to further enhancing the accountability of the trust to the Parliament and to contributors. The Government does not, however, accept the Committee's recommendation 3. Recommendation 3 of the Standing Committee seeks to provide that one or the other of the principal member of the trust or the part-time Government nominee member is to have special qualifications in investment matters. The proposed structure of the enlarged Trust, and the duties and responsibilities imposed upon it under the legislation, indicate the need for the trust to have members with broad qualifications, not necessarily related solely to investment. These duties and responsibilities involve not only the investment of the superannuation fund, but also the exercise of prudential controls, determination of policy and liaision with relevant industrial organisations as well as the staffing, control and oversight of the office of the Trust. In short, management of the superannuation fund goes well beyond investment of the fund. I have already drawn the attention of honourable senators to Senator Coates's remark that the matters recommended for inclusion in the Bill by the Standing Committee would undoubtedly happen in practice anyway. The process of selection of Trust members, whether conducted to meet the requirements of the Minister or relevant industrial organisations in concert with the ACTU, will certainly have due regard to financial and investment expertise among the many qualities required of members of the Trust. The legislative specification of a requirement for such expertise would not only be redundant but would focus concern on only one aspect of the necessary qualifications, whether required of the principal member or the part-time Government nominee, perhaps to the detriment of other, equally important concerns. The amendments accepted by the Government are intended to: Require the ACTU to nominate persons for appointment to the Trust only from those persons whose names have been submitted to the ACTU by relevant industrial organisations: Require a copy of any interim report made by the Trust, together with interim financial statements, to be tabled in the Parliament; and Ensure that the Trusts's Annual Report and any interim report will include particulars of any statement of Government policy provided by the Minister to the Trust (by way of the principal member) during the year, the consideration given by the trust to the policy and the action, if any, taken. While, for drafting reasons, the precise wording and positioning in the Bill of the additional provisions differ somewhat from the recommendations of the Standing Committee, the substance of the recommendations is retained. The fifth recommendation of the Standing Committee is to the effect that the Government immediately seek the current opinion of the Attorney-General on the matter of the legal liability of Trust members and Trust staff and introduce an appropriate amendment to the Act defining that liability. Contrary to the impression that might have been gained by the Standing Committee, the Government has not put aside the matter of legal liability which was first raised in the Monaghan Report and later canvassed in the joint working party report, both of which have been tabled in the Parliament. Liability, however raises a number of issues of considerable legal complexity. Resolution of these issues is being pursued as expeditiously as possible so that consideration can be given to the matter and, if necessary, appropriate provisions included in the Superannuation Act 1976 when next it is amended The opportunity is now being taken to also move amendments that are consequential on the proclamation on 21 July 1985 of the date of the commencment of certain sections of the Merit Protection (Australian Government Employees) Act 1984. Before moving the proposed amendments, however, I wish to refer briefly to the June 1985 report from the Standing Committee on Finance and Government Operations on the Superannuation Fund Investment Trust which was tabled by Senator Coates on 21 August 1985. This report is the culmination of the Standing Committee's exhaustive and thorough examination of the affairs, practices and administration of the Trust. The report deals with, among other things, various reports of the Auditor-General on the Trust's annual reports and financial statements, including the more recent annual report for 1983/84. While the Standing Committee is concerned with progress made in implementing remedial measures in respect of the Trust's accounting and financial management systems, it acknowledges that the new provisions proposed in the Bill should enable the Trust to employ adequate staff with the required skills to oversee properly the accounting and management systems. On 31 July 1985, before the Standing Committee's report became available, I wrote to the Trust asking that it provide to me, and to the Auditor-General, comprehensive details, including the proposed timetable, of plans for the rehabilitation of the systems and procedures. I asked also that quarterly progress reports be provided by the Trust until such time as the Auditor-General is satisfied that the procedures are adequate. The Standing Committee's report draws to attention a total of 28 findings and recommendations that either relate specifically to the Trust or have general application to statutory authorities. I propose, at a later date, to make a further response to the Senate on this report. For the present, I would draw honourable senators' attention to Senator Coates's statement when tabling the report, that the Standing Committee believes the Bill satisfactorily provides for much needed changes to the administration of the Trust. The Standing Committee has not recommended any further changes to the Bill. I therefore now ask that the amendments proposed by the Government be accepted by the committee. Senator SIDDONS(Victoria)(6.06) —The Australian Democrats raise no objection to these amendments. They are of a minor nature. We would be happy to vote for them. Amendments agreed to. Bill, as amended, agreed to. Bill reported with amendments; report-by leave-adopted. Motion (by Senator Walsh) proposed: That the Bill be now read a third time. Senator Siddons-I seek leave to move an amendment. The ACTING DEPUTY PRESIDENT(Senator MacGibbon) —Is leave granted? Senator Walsh-No. Leave not granted. Senator SIDDONS(Victoria)(6.07) —In accordance with standing order 217, I move: Leave out `now', add: `this day six months'. Senator Mason —That is on your head, Minister. Senator WALSH(Western Australia-Minister for Finance)(6.08) —I will be very brief. We have had the debate on this Bill. I just want to make it quite clear that I know what the effect of this amendment will be. If it is carried the Bill is dead. There was an interjection a while ago that that would be on my head. It will not be on my head. It will be on the heads of those who vote against the Bill, if they should get a majority. They can explain to the 300,000-odd contributors of the Commonwealth Superannuation Scheme why they have killed this reform in the Senate which is clearly wanted by the majority. Senator MASON(New South Wales)(6.08) —The comments made by the Minister for Finance (Senator Walsh) cannot be accepted with any degree of credibility at all. The Minister knows quite well that he had the means of saving the Superannuation Legislation Amendment Bill. If he had not refused Senator Siddons's leave to move an amendment, he would have moved that the Bill be withdrawn and redrafted so that the means of selecting the members of the Superannuation Fund Investment Trust could be further considered. The Minister was aware of that amendment when he refused leave. As a result of that the destruction of the Bill is directly in his own hands. Senator MESSNER(South Australia)(6.09) —The way in which this debate has proceeded is most unfortunate. The Opposition has made its position on this Bill absolutely clear, right from day one. We object to the proposed new sub-section to clause 7 for all the reasons that have been spelt out during the debate, which has been quite a lengthy one. The reasons why we oppose the Australian Democrats' amendments have been made clear by the Opposition. However, we are not prepared to see this Bill go forward while it includes an absolute rort in favour of the Australian Council of Trade Unions as is incorporated in section 7 of the Bill. For that reason we will be supporting the Democrats' motion. Question put: That the word proposed to be left out (Senator Siddons's motion) be left out. The Senate divided. (The President-Senator the Hon. Douglas McClelland) Ayes . . . . . . . . . . . 32 Noes . . . . . . . . . . . 27 —— Majority . . . . . . . . . 5 —— Baume, Michael Messner, A. J. Baume, Peter Missen, A. J. Brownhill Parer, W. R. Carrick, Sir John Puplick, C. J. G. Chaney, F. M. Rae, PeterChipp, D. L. Reid, M. E. (Teller)Collard, S. J. Sheil, G. Durack, P. D. Short, J. R. Guilfoyle, Dame Margaret Siddons, J. R. Haines, J. Teague, B. C. Hamer, D. J. Townley, M. Hill, R. Vanstone, A. E. Jessop, D. S. Vigor, D. B. Lewis, A. W. R. Walters, M. S. MacGibbon, D. J. Watson. J. O. W. Mason, C. V. J. Withers, R. G. Aulich, T. Gietzelt, A. T. Black, J. R. Giles, P. J. Bolkus, N. Grimes, D. J. Button, J. N. Jones, G. N. Childs, B. K. McClelland, DouglasCoates, J. McIntosh, G. D. (Teller)Colston, M. A. Maguire, G. R. Cook, P. F. S. Morris, J. Cooney, B. Robertson, E. A. Crowley, E. A. Ryan, S. M. Devlin, R. Sibraa, K. W. Evans, Gareth Tate, M. C. Foreman, D. J. Zakharov, A. O. Georges, G. Archer, B. R. Coleman, R. N. Knowles, S. C. Richardson, G. F. Kilgariff, B. F. Ray, RobertBjelke-Petersen, F. I. Reynolds, M. Boswell, R. L. D. McKiernan, J. P. Crichton-Browne, N. A. Elstob, R. C. Macklin, M. J. Walsh, P. A. Question so resolved in the affirmative. The PRESIDENT —I now put the question `That the words proposed to be added by Senator Siddons's motion be added'. Those of the opinion say aye, against say no. I think the ayes have it. Amendment agreed to. Debate resumed from 11 September, on motion by Senator Ryan: That the Bills be now read a second time. Senator PETER BAUME(New South Wales)(6.15) —The Senate is debating cognately the Student Assistance (Loans Guarantee and Subsidy) Repeal Bill 1985 and the Student Assistance Amendment Bill 1985. The Opposition does not oppose the Student Assistance Amendment Bill which seeks to make some minor changes to restructure certain student assistance review tribunals. To the extent that the Bill puts in place certain administrative arrangements of government, we do not question it and we accept what the Government is doing. The Opposition, however, has a strong opposition to and will oppose the Student Assistance (Loans Guarantee and Subsidy) Repeal Bill. It is to this Bill that I will address my remarks. This measure is a benefit deprivation measure. It seeks to remove from the tertiary students of Australia a benefit potentially available to them. It is a matter of regret-in fact, it is an indictment of the Hawke Labor Government-that during its time in office it has failed to implement a student loans scheme when legislation existed to put that scheme into place. It is an indictment of Mr Hawke, of his Minister for Education (Senator Ryan) and of his Government that the Government now seeks to repeal the enabling legislation which would make a loans scheme possible. If successful, this repeal will make it impossible for students to avail themselves of the benefits of student loans should any government, present or future, wish to use the existing legislation. Let us be quite clear that it is students from needy backgrounds, disadvantaged students, who would want to use loans but who will not now be able to use them and who will be disadvantaged. This is another example of the Hawke Government removing a potential benefit and seeking to make life more difficult for needy or disadvantaged students. The loans scheme, which I introduced as Minister for Education in 1982, would have provided an additional source of support for disadvantaged students. It would have provided extra money for students who needed it. It would not have been incumbent upon any student to avail himself or herself of this scheme. However, it would have been possible for any student who wanted so to do to seek a loan. These loans would have been available to students already in receipt of allowances or able to satisfy a means test. The loans were targeted to needy students. What could be wrong with that? The loans were to be made available at concessional rates. This is merely an extra benefit, which tertiary students could have used and to which they could have turned, which was put in place by the Fraser Government and which this Government has seen fit not to implement. In fact it has put aside the many applications received for loans in March 1983. The loans would have been taken out only by those who wanted them, but, thanks to the Labor Government, students will no longer have that option. As I say, the measure is a benefit deprivation measure, yet another betrayal of Australia's tertiary students by this Government with its miserable record in the areas of student support and tertiary education. The loans were to be provided at advantageous rates. The legislation which we are asked to repeal now sought only to make available to students loans at concessional interest rates, at better interest rates than they could get on the market. In this day, with this high interest Government and with the country facing the highest interest rates historically for generations, our tertiary students would have benefited from receiving subsidised interest rates for loans which they might have wanted to take out. The Bill which Labor now seeks to repeal provided for a two-year holiday on repayments by students receiving the loans. It provided for needy students to take out loans to improve their chances of completing, and succeeding in, their chosen field of study. The continued existence of the loans scheme would help students. It would not turn away any student from tertiary education, nor would it reduce the opportunities for any student. It is an extra benefit which Labor wants to remove. Labor must explain to us where the social advantage lies-the benefit to the country or to any student-by taking from students an existing benefit. Of course, Labor has been very big in the past few months about taking away benefits. Ask any large family what it has meant to them to lose the payment of the family allowance for their older student children. Ask them what it has meant to see the value of the tertiary education assistance scheme drop further behind the unemployment benefit. Here we have the removal of what would have been another option for disadvantaged students whose need is greatest and who face the greatest obstacles in making their way through tertiary education. It is worth while to examine the history of the passage of this legislation. When it was passed it was opposed by the Australian Democrats. They advanced their reasons for voting against it, which I think were incorrect, but that is all right. The Bill was passed in 1982 only because it had the support not only of the then Government, the Liberal and National parties, but also of the Australian Labor Party. What did Labor people say when we tried to put this extra benefit in place? In speaking for the then Opposition in this debate, Senator Button said: However, as I said, the Opposition-- that was the Labor Party-- does not oppose the legislation. We believe it will provide some benefit to some students and to that extent it is supported. If Senator Button had that view in 1982, why have Labor senators changed their view in 1985? Senator Button was absolutely correct; this loans scheme would have provided some benefit to some students. He was quite correct that for that reason Labor was right to support the measure. When in opposition, Labor admitted that some needy students would benefit from this legislation and no student would be disadvantaged. So why does it not continue this legislation to allow students the extra option? What ideological barrier has emerged since Labor came to government which has prevented it from providing this extra benefit which might help some students in need? Why repeal the Students Assistance (Loans Guarantee and Subsidy) Act now? No cogent or coherent reasons have been given. There is no coherent reason for repealing this legislation, except blind ideological prejudice. Not only did Labor vote for the scheme and speak in support of it when it was introduced but also as honourable senators may remember, the question of student loans did not pass straight through this chamber. It was referred to the Senate Standing Committee on Education and the Arts, chaired at that time by my colleague Senator Baden Teague. Senator Teague —A good committee. Senator PETER BAUME —A very good committee. The Committee comprised Senator Baden Teague as Chairman and some Labor senators, including former Senator Jean Hearn and Senators Giles and Robert Ray. I have looked at the report of that Committee and I can find nothing in it which raises any objection to the concept of loans. I can find nothing by way of minority report which seeks to have the Senate consider an alternative view. In fact, the recommendations of that Committee, when it reflected upon the provisions of this Bill, were that it was a good and adequate measure which should be supported. Not only did Senator Button support it on behalf of the Labor Party, but also Labor senators on the Committee, when asked to examine the legislation, reported favourably that it was good, benefit-conferring legislation. We cannot understand why the Labor Party now wants to remove it. I mentioned a few moments ago that Labor has a sorry record in terms of its support for tertiary students. It is worth looking at Senator Button's speech on the 1982 Bill to see some of the things for which he criticised the then Government. Senator Button complained about the gap between the TEAS benefit paid to students and the level of unemployment benefit. Senator Button said: Following the increases in TEAS in the recent Budget, the TEAS benefit is still at least $5 per week less than the unemployment benefit. What is the incentive in financial terms to embark upon tertiary education when there are very limited assurances about future employment as a result and when the unemployment benefit is pitched at a higher rate? A very interesting comment by Senator Button. Let us examine the situation since this Government took office in relation to the gap between the TEAS benefit and the unemployment benefit, which so concerned Senator Button in 1982. We know what this Government said about TEAS before it came to office, but what has it done? In its first Budget it increased the education disincentive gap between TEAS and the unemployment benefit from the $5 which I had bequeathed it as Minister, to which Senator Button had referred, to $11. In its first Budget it more than doubled the gap. In the Government's next Budget it increased the gap to $12.30; not for 16 or 17-year old students, but for students 18 years old or over. In its recent third Budget the gap was further increased to $14.72 for students aged between 18 and 20 years and $17.97 for students aged over 20 years. The Fraser Government in the 1982 Budget, when I was Minister for Education, increased the value of the TEAS benefit by 20 per cent. The first three Labor Budgets have seen an increase only marginally greater than that. The gap between TEAS and the unemployment benefit has widened considerably, in spite of Senator Button's rhetoric and the quite explicit promises by Labor to Australia's student population made before the election. So much for Labor's commitment to provide adequate student assistance. There is all the more reason, in view of this sorry history, to have available student loans as an extra option, with compulsion upon no one to use them, but available to those who might want to take advantage of such a loans scheme. Sitting suspended from 6.30 to 8 p.m. Senator PETER BAUME —Before the sitting was suspended I was setting out the reasons for our opposition to this Bill which seeks to repeal the Student Assistance (Loans Guarantee and Subsidy) Act 1982. I pointed out that that Act provides a benefit and that this Bill seeks to take that benefit away. I pointed out that the Labor Party in opposition had supported this Act. Senator Button, on behalf of the then Opposition, spoke in support of it. The legislation had been examined and scrutinised by a Senate standing committee which had approved it and reported favourably. I pointed out that the Act provided access to a benefit which would help needy students under advantageous conditions. I asked the question then: `What kind of social benefit, what kind of social goal, lies behind the desire of the Government to remove this benefit, to remove access to loans and to put forward this repeal Bill?' The Government has indicated no benefit to students and, as I pointed out before the sitting was suspended, the record of the Labor Party in government has been to make students worse off rather that better off. I remind the Senate again of one of the points made by Senator Button in 1982 when he was speaking for the Labor Party on the Bill to establish the loans scheme. He made it clear that he had a concern about the gap between TEAS and the unemployment benefit. I have been able to demonstrate that that gap is now worse. It has got much worse with Labor in government than it was when Senator Button made his concern known. So much for Labor's commitment, its solemn promise before the election to close the gap between TEAS and the unemployment benefit. Like so many other Labor promises, it was not worth a crumpet. It was not honoured and it shows no prospect of being honoured. It is one of the many promises that Labor made to students which has now gone by the board. That happened as soon as it was snouts in the trough and Labor was in power. So much for the commitment to provide adequate student assistance. It has not come to pass. That gives us all the more reason for wanting to keep in place this scheme which provides access to some supplementary form of benefits. The Labor Party has an appalling record of broken promises and downright negligence in its handling of student assistance. It was Labor that complained that the gap between TEAS and the unemployment benefit was a disincentive to people seeking further education. If it was a disincentive in 1982, why is it not equally a disincentive in 1985? Why are Labor's complaints of 1982 Labor's practice of 1985? Why has Labor tripled the size of the gap for some students? In its first three Budgets, Labor's increase in TEAS has not been sufficient to keep up with the increase in unemployment benefit and students are now worse off vis-a-vis unemployment beneficiaries than they were when Senator Button, on behalf of the Labor Party, made his quite telling criticism in 1982. The point at issue are the widening of the education disincentive gap, Labor's failure to increase TEAS adequately and Senator Button's admission that the loan scheme would do some good for some students. Surely that was the crux of it-the scheme would do some good for some students and it would certainly do no harm. Senator Button's own words are strong reasons for retaining and activating the student loans scheme. There is no coherent reason not to have it in place and operating except blind ideological prejudice. This scheme provides extra capacity for poor students; it puts more power in the hands of the consumers of education, compared with the providers and controllers. Perhaps that is one reason why the scheme is out of favour with the Labor Party, which is committed to planning, to holding power centrally and to not letting consumers near it. The Government must say why it wants to repeal with scheme and it must say what social goals it is pursuing. There is none except to take away benefits-to deny benefits which would otherwise be available-and there is no useful social goal that will be achieved by this repeal Bill. Fees abolition alone, introduced by Labor in 1974, has not been enough to change the social mix in higher education. The loans scheme, now the subject of a repeal Bill by Labor, could have been one measure which would have helped those of limited means to get access to higher education. Surely that would have been to the benefit of students and education generally. For the reasons I have set out, for the very reasons that Senator Button set out in 1982 when speaking to the legislation, the Opposition believes that this scheme should remain and we will oppose the abolition Bill because we think it serves no one's interests, least of all those of students and those of education. Senator HAINES(South Australia)(8.07) —We are debating cognately tonight two tertiary students' measures-the Student Assistance Amendment Bill 1985 and the Student Assistance (Loans Guarantee and Subsidy) Repeal Bill 1985. The Australian Democrats will support both those measures. We shall certainly support the Student Assistance (Loans Guarantee and Subsidy) Repeal Bill because, as Senator Peter Baume said in his speech, we opposed the establishment of the loans scheme in the first place. As everybody knows, this scheme was introduced by the Liberal Government in 1982 when Malcolm Fraser was Prime Minister and there was some suspicion at the time that the Bill was proposed as a way of phasing out the tertiary education assistance scheme or at least that it had that intention. In any event, the Act was passed to provide the structure for government guarantees to the banks which were to provide the loan moneys. We opposed that scheme for a number of reasons, the main one being that it would not help needy students to get a tertiary education because the sorts of people who would need to borrow money from a bank in order to pursue an academic career-that is, people on low incomes, female students and students from large and migrant families-were the least likely people to have been brought up in the sort of atmosphere where borrowing money for educational purposes was regarded as a valid reason for borrowing money at all. Most of the categories of people whom I have just mentioned are not those to whom borrowing comes naturally. It is far more useful to someone on a middle to high income who wants to get through a three, four or five-year course to borrow money than it is for someone on a low income or someone who is doing part time academic work, as many women must do. For a start, those people are not at all sure about their capacity to repay; many of them are doing studies in an area in which they are not assured of a job afterwards. They are simply doing a tertiary course because they have a belief in the value of tertiary education which, sadly, is not held by large numbers of Australians. Senator Peter Baume was quite right when he commented adversely on what he saw, and what I see, as the Australian Labor Party's poor commitment to tertiary education and, I would suggest, to education generally since it came to office. Senator Baume mentioned the fact that TEAS allowances are still lower than the unemployment benefit, albeit that the gap has narrowed somewhat-and not before time. Senator Peter Baume —It has widened, actually. Senator HAINES —All right, but TEAS has been increased. In real terms things are no better, but TEAS has been increased. We have always argued that it seems ludicrous that people should be paid so much to do nothing essentially or to look for some kind of not very academic work when those who are attempting to improve their education and use their talents to the full in order, presumably, to put them to use for the community's benefit are paid such a pittance. As Senator Baume mentioned, the Government has also made it much more difficult to get things such as the family allowance for full time students over the age of 18, and that in itself, especially for large families, is not conducive to encouraging people to go on to higher education. Technical and further education funding was cut in real terms in the last Budget. Research and development funding in Australia has never been good. Compared with other Organisation for Economic Co-operation and Development countries we have a particularly appalling commitment in the funds we provide for it. That extends to the private sector, which is equally as loth to put money into research and development areas, particularly in the pure academic sense, presumably because it still takes the school of hard knocks argument or hopes that it will acquire the necessary research and development expertise second hand from overseas. Notwithstanding that, I think it is important to note that in certain areas Australia does lead the world in technological advances, and solar heating is one example. Ironically, the Government is about to slap a 20 per cent sales tax on that area, which again does not indicate any commitment to the technological expertise and potential that our scientists have. There has been more talk of the need to introduce tertiary fees, something which the previous Government attempted but on which it was defeated. I hope that this also is not brought forward. It would be a total disincentive to a large part of our community in its attempt to get academic education. It may work in America, where the population is so large, but it is not going to help in a country the size of Australia with its population and geographical position. Unless we particularly want to be educationally and technologically isolated we will have to accept that education to tertiary level as well ought to be a right and not a privilege for a fairly wealthy elite. I am as concerned at what appears to be the Liberal Party's attitude to tertiary education as I am at the Australian Labor Party's. If Mr Peter Shack is to be believed, we are going to turn education into some kind of industry which will be expected to do things such as compete in the market place. He talks about the solution to our problems in education lying in exposing education to market forces in this area, whatever they may be. He refers to education as an industry. If he is to be believed, the Opposition is firmly committed to a user pays education system which must inevitably lead to limiting access, particularly to the longer degree courses such as dentistry, architecture, engineering, medicine and so on, to an elite- Senator Peter Baume —He hasn't said that. Senator HAINES —He was quoted in the Australian on 2 October this year as addressing the Melbourne branch of the Liberal Party recently on deregulating education. The newspaper states: . . . the Australian education system was one of the most highly protected and regulated systems, and indeed industries, in Australia. As such it exhibited all the worst features of monopoly controlled, protected and regulated industries. He went on to say: I am convinced that the solution lies with exposing the system to market forces by returning to the consumers of educational services some bargaining power. . . . . He said that academics would be told: `Wake up! You can't afford to behave like self-satisfied public servants anymore.' They would have to `lift their game and learn to compete in the market place for the scarce resource- namely, taxpayers' money- . . . which will be attached to the student patrons they manage to attract'. That overlooks entirely the fact that unless we have a free and readily accessible education system at the tertiary level, we are going to limit access to education to those who can pay. If Senator Baume is concerned about the fact that I may well be misinterpreting Liberal Party policy on tertiary education, I can ask him only to look at the Fraser Government's attempt to reintroduce tertiary fees. So we will certainly be happy to support the repeal of the student loans scheme. The second Bill we are debating tonight, the Student Assistance Amendment Bill, is relatively uncontroversial. It is almost entirely restricted to administrative reforms relating to the Student Assistance Review Tribunals. Under this amendment Bill the present tribunals are to be replaced by a single tribunal panel with any hearing consisting of two panel members plus a convener. It does what the second reading speech calls `clarifying'. It clarifies the fact that the contents of documents presented at tribunal hearings will not be disclosed to students if the documents are income tax documents or if they refer to the income of third parties, such as their parents. The second reading speech said: An amendment was also proposed in relation to the protection of Australian Taxation Office and other confidential documents made available to the SART. The amendment will insert a new provision, proposed section 29B, which will substantially repeal the existing provisions at present contained in section 25(2), with the following modifications: It will be clarified that documents are to be protected during a SART hearing as well as at the pre-hearing stage; oral disclosure of a document's contents will be prohibited where disclosure of the document itself is prohibited; the restriction on the disclosure of a document dealing with a person's affairs will not generally apply if the person agrees to the disclosure. I would like some clarification from the Minister on that to determine the extent to which this is likely to affect a student's ability or otherwise to present his or her case. I am not perfectly clear just what the amendment is likely to do as far as a student's ability to argue a case before the Tribunal is concerned. Senator Peter Baume —Is the Minister here to answer you? Senator HAINES —Senator Grimes is. I am sure he is perfectly competent to answer a question with a little help from some friends on the other side. Senator Grimes —No, I don't even need that. Senator HAINES —He does not even need that. That is fine. We accept what the Minister says in the second reading speech; namely, that there is a problem in balancing privacy with open access to documents. Nevertheless, students who are presenting an appeal before the Tribunal ought to be given access to as many documents as possible. I suggest that should also apply to things such as briefing notes, which are provided to the Tribunal by the Department of Education. Since apparently the Tribunal claims not to be bound by precedent, the briefing notes are used as guidelines for the decision that it makes in each case. I wonder whether any consideration has been given to making those briefing notes available to students appearing before the Tribunal. If it has not, perhaps that could be taken on board, since it would presumably give them some assistance. Fighting an appeal without knowing what the rules are and being aware that precedents are apparently not taken into account makes life a little more difficult than it need be. The legislation also provides for some fairly inoffensive delegation of ministerial powers to public servants. Whilst that is to be deplored if it goes too far, in this case it seems to be reasonably innocuous. The Bill also extends the time within which prosecutions for offences under the Crimes Act must be commenced-from within one year of the offence being committed to two. The amendment will not apply to offences committed before the legislation comes into force but it will obviously apply to students who subsequently run into difficulties. I would like the Minister to justify that increase. I have no objections to it. I think it is fair enough that people have that extra time. But can the Minister tell us whether it was caused by some inefficiency in the Department? Is the Department understaffed? Is it some gesture of good will to students? Why has the need been found to extend the time within which prosecutions for offences under the Act can be commenced? Is it just good will towards the Department? There are a couple of other comments that I would like to make with regard not to what the legislation does but to what it does not do. I have already mentioned the first of those, that is, access to briefing notes. The second relates to the time necessary to hear appeals. In Victoria, and some other States, I understand that it frequently takes up to eight months before some students appeals are heard by the Tribunal. This means that even if the appeals are successful, they have had to virtually finance themselves for the entire academic year while they wait for their appeals to be heard. That seems somewhat excessive, and I would like to know whether the Government is taking any steps at all, either through legislation or simply by increasing staffing, to cut that time back, particularly in Victoria, from eight months. It definitely does not work in the interests of students. It must be a strain on them and act as a disincentive to any academic progress they are likely to make that year. It is the sort of stress that a student does not need to have applied in addition to the usual stresses that apply when going for a degree. So the Democrats will be supporting both pieces of legislation. If the Minister can come up with some answers to the questions I have asked, I would appreciate it. Senator ZAKHAROV(Victoria)(8.23) —We are debating cognately the Student Assistance Amendment Bill and the Student Assistance (Loans Guarantee and Subsidy) Repeal Bill. I would like to deal briefly, first, with the one that is perhaps less controversial, and that is the Student Assistance Amendment Bill. This Bill affects the tertiary education assistance scheme and the post-graduate award scheme. I hope that the question of appeals for secondary students can also be addressed soon, rather than waiting until the schemes have merged in a couple of years time. These amendments refer to appeal procedures and structures to implement the results of a review which was undertaken last year. They provide for simplication of the appeal structure, based on the structure of the Administrative Appeals Tribunal. Some of the important provisions are that the Bill will enable ministerial responsibility to be delegated to senior people, thereby saving valuable time when the Minister is unavailable. For example, I believe in times of heavy work load, sometimes junior officers, and even at times temporary officers, have to be appointed as assessors, particularly for the tertiary education assistance scheme. The Bill extends the time limit for prosecution to two years from what is in effect one year at present. It has proved very difficult to complete the whole process leading to a prosecution in one year, and I believe it is important that people who are deliberately abusing the scheme-and we all know that that happens-for example, by falsifying tax figures, should be prosecuted, thus ensuring that the money available goes to those in greatest need. On the other hand, it is important to point out in this context-knowing how the rumour mills grind-that any decision to prosecute takes into account such circumstances as the student's age and the gravity of the offence. Another important provision of the Bill clarifies the situation if a student fails to receive notice of a hearing by allowing the hearing to be reheard. I come now to the more controversial Bill, which I understand the Opposition is opposing-understandably, I guess, because it repeals its own legislation. The legislation which the Student Assistance (Loans Guarantee and Subsidy) Repeal Bill repeals was passed by the Fraser Government late in 1982. Since that Government lost office early in 1983, it was never implemented. The present Government made a commitment to repeal the Act during the election campaign in 1983, and the intention to repeal was announced in the very early days of the present Government. Indeed, its repeal was foreshadowed by Senator Button during debate on the Bill in 1982, when he said: I want to make it quite clear that, in the context of more adequate and better directed student assistance, an ALP government would abandon this scheme and repeal the legislation. That is exactly what is happening now. The only reason that this repeal has taken so long was that it had low priority since the Act was actually inoperative. The scheme was never fully implemented and, indeed, the regulations necessary for implementation had not been made. Agreements with banks had not been finalised; I will return later to the attitude of the banks. It is interesting to note that although leaflets and forms had been circulated before Parliament was dissolved for the election, there was no loud protest when the scheme did not proceed. The 1982 Bill was not finally opposed by the then Opposition because-and I think this is important-in the context of the time, following the razor gang cuts to education funds, it was seen to be of benefit to some students. Senator Teague —It still is. Senator ZAKHAROV —I do not think the honourable senator would find that the students agree with him. As Senator Button said in debate: The Opposition concedes that it may be of benefit to some students at the margin . . . to some students in middle-income groups from relatively well-off socio-economic backgrounds. The legislation we are now repealing was vigorously opposed by the majority of students and student organisations in a campaign which had very strong and broad support at the grass roots. It was also widely opposed by other groups, such as the Australian Council of Trade Unions and many tertiary academic staff and administrators. Senator Peter Baume —A group of vested interests, eh? Senator ZAKHAROV —The honourable senator is imputing evil motives where none may lie. Senator Peter Baume —Just stating fact. Senator ZAKHAROV —It may be the honourable senator's idea of fact. The opposition to the Bill was on a number of grounds: Grounds of equity and also fear of possible further action-I will return to that-but also on its viability; the banks, on which the success of the scheme depended, were less than enthusiastic; overseas experience in the United States and in Europe, where similar schemes had taught the banks to be cautious; and experience of difficulty in tracing students after graduation who did not want to be traced, for example. So the Australian banks wanted to reserve the right to give loans only to those they considered credit worthy, which might well have been on much tougher criteria than those in the legislation. I think it is likely that if this stance had finally prevailed, if commercial considerations had won out, there would have been a repetition of the United States experience, where students studying for the well-paid professions, male students mainly who might be expected to have an uninterrupted earning capacity and students young enough to be able to pay back the loans over a period, would be the preferred loan recipients. What then would be the chances for the mature age student, the woman of child bearing age, the student embarking on a course such as humanities, where employment is less certain? The overseas experience was that poorer students did not take out loans, fearing they could not pay them back and having no well-heeled relatives as a back-up. This leads me further into the equity question. Loans as a basic means of financing study, as distinct from the emergency loans to which I will refer later, are intrinsically inequitable and can have a deleterious social effect. They are inequitable, because, as I referred to before, they give an advantage to those who are already advantaged-those who have reason to believe that they are assured of well-paid work after graduation, and those who feel they can take out a loan because if they cannot pay it back, they have families who could help. But the social effects of financing study in this way can also be harmful. A graduate who completes his or her course with a large debt, even given a breathing space after graduation, which was allowed for in the legislation, is likely to feel constrained to seek, fairly immediately an income sufficient to pay back the loan. They might otherwise benefit, and the community might also benefit, from seeking overseas experience, perhaps low paid or voluntary work on an aid project, or they may prefer to work for a low wage in a job of high community value, such as a project worker with a self-help group, or the co-ordinator of, say a volunteer scheme for the homeless. In addition, many new graduates do not automatically find immediate jobs. This is true in a number of career areas and is not always predictable. When students start out on a course, there may be lots of job opportunities, but by the time they finish those courses, between three and five years later, those opportunities may have disappeared. They may not be able to find any sort of work for some time. It is not always an advantage to be a graduate, especially if one is over 21, if one is applying for semi-skilled or unskilled work. To be in debt, even if the debt is deferred, as well as being unemployed is not a good start to independent adulthood. But the main fear in the minds of students, then as now, was that any loan scheme which provided long term income support could be the precursor to an attack on TEAS or even a precursor to the reintroduction of tertiary fees. Since loans were already available to many students on some campuses and through some credit unions, and at least one bank that I know of, a further loan scheme on the scale anticipated was thus seen as being very likely to be the thin end of such a wedge. To quote Senator Button again, in 1982 he said: Maybe this Budget represents the last increase in TEAS by this- that is, the Fraser- Government if this loans scheme is, in fact, a sort of foot-in-the-door job. If a substantial loan scheme is put in place it is easier, at least in the perception of the general public, to downgrade other financial assistance. Few people outside students and their families have a real understanding of the costs of study on top of the costs of basic living expenses. Unfortunatley, as a spectator sport student bashing is even easier than union bashing. To return to the question of emergency loans which I referred to earlier, the present Government has provided funds to all tertiary institutions to enable them to give emergency loans or, in some cases, grants to students in need. These funds are in the hands of the institution, with student representation on the committees which allocate the money. Senator Teague —How much and when? Senator ZAKHAROV —I have not the details with me. It is already operating. Senator Teague —It is not true; only 10 years ago, 1973 was the date. Senator ZAKHAROV —No, it is operating now. It is in the hands of those best able to assess needs. In addition, of course, in each of the last three Budgets TEAS allowances have been increased, as has the marginal adjusted family income limit, which is the threshold. Senator Peter Baume —Then you add the second half. Senator ZAKHAROV —I will be coming to the second half in a moment. In the 1985 Budget the increase in TEAS kept pace with inflation and the increase in the threshold exceeded the rise in average weekly earnings. Senator Baume earlier complained that the disincentive, that is, the gap between TEAS and unemployment benefit, had not disappeared. I am sure he knows that it will progressively disappear under the new youth income arrangements. What he failed to mention, of course, is that the reason that that gap has not disappeared is that this Government has greatly increased unemployment benefits. That is why the gap has not gone. Senator Peter Baume —You promised you would close it. Senator ZAKHAROV —It will be closed. Senator Peter Baume —Some time in the future; in the never-never. Senator ZAKHAROV —No, it is laid down in the youth income scheme. Read the kit readily available from Senator Ryan's office. Senator Grimes —Senator Baume believes we should have kept unemployment benefits down. Senator ZAKHAROV —I think that is probably what it is, and remove the gap in that way. Senator Grimes —That is his policy. Senator ZAKHAROV —I agree. As one who was a student counsellor before entering the Parliament, I am very pleased to see the demise of this legislation. Even though it was never implemented, while it remained on the statute book it was a threat and fear in the minds of students. I wish it a very thankful goodbye. Senator TEAGUE(South Australia)(8.33) —Of the two Bills before us I am happy to support the first, the Student Assistance Amendment Bill, because it gives flexibility to the Student Assistance Review Tribunals as well as to the Minister, and allows flexibility in respect of the period for following of any necessary prosecutions where a student may have breached the Act. So this Bill has gained support from all parts of the Senate. I used to act for the University of Adelaide students and others before such tribunals when they were first set up in 1974. I saw the first meeting, in fact, in South Australia of the tribunals. In those days-I think it is still the case-lawyers were unable to represent students so that a more informal and, if you like, a more commonsense and straightforward approach could be kept. It was in that guise that I was giving assistance to students. I believe these tribunals play an important and essential part in the administration of student allowances. I would only make the request of the Government that a standard be accepted by the Minister so that the period from the date of application to a tribunal to the time of the concluded finding being communicated to the student does not exceed three months. Given the informal and resourceful approach of these tribunals, I believe that is a very reasonable standard to meet. Even one or two months would, of course, be preferable. Students who believe that they should receive money under the tertiary education assistance scheme but whose application may be held up on a disputed technicality can suffer a delay that brings hardship and detracts from the success of their studies. I ask the Government to consider declaring itself to such a three-month standard. I come to the second Bill that is currently before the Senate, that is, the Government's proposal to repeal the Student Assistance (Loans Guarantee and Subsidy) Act 1982. The Opposition is opposed to this measure; it does not seek the repeal of this legislation, which we initiated in 1982. Whatever the arguments put, for example, by Senator Zakharov just now or by the Minister for Education (Senator Ryan) in the second reading speech, there will always be fears, doubts and concerns in an area where there are grants and loans administered by the Commonwealth. I have not found anyone to deny that this scheme does provide the way to an extra benefit for students, and by repealing this legislation we are taking away one of the alternatives to give real assistance to students. What did the original Bill seek to achieve? Its basis was that there would be no less support for TEAS; that all of the definitions of an individual allowance under the tertiary education assistance scheme would be undiminished; that there would be the same number or more of allowances; that there would be the same real value in the allowances; and there would be the same real value in the total Commonwealth commitment to the financing of the TEAS scheme. In addition to that, there would be a loans scheme that would then extend the financial resources available to students in our universities, colleges and institutes of technology, and indeed to technical and further education bodies. The Bill, as it was envisaged in 1982, made $50m available each and every year from then on. All full time students who were in financial need, subject to a means test, would be eligible to gain such a loan up to a maximum of $1,000 in any one year and up to an accrued maximum of $8,000 altogether. This loan would be administered on an objective eligibility basis. Students would not be denied on the basis of their future earning capacity, the type of course they would be doing, their sex, their age or anything to do with family background. It would be administered objectively and, above all, there would be a 5 per cent interest subsidy. If, as at that time, interest rates were prevailing at about 12 per cent, the interest payable on such loans would be only 7 per cent. There was an extended period of 15 years after graduation in which to repay those contracted loans. In addition to there being the interest subsidy, the Commonwealth Government directly guaranteed to the Australian banks the outlay of moneys for such loans so that the banks were not in any way liable except to administer the scheme on the guidelines which the legislation provided. The Commonwealth would pick up any bad debts. Hence the Act was called the Student Assistance (Loans Guarantee and Subsidy) Act. There was an element of guarantee from the Commonwealth Government and an element of subsidy of the rate of interest pay- able. That $50m a year benefit by now would have accrued $200m extra to students in Australia at a 5 per cent subsidised interest rate. I know that such a scheme would have enabled hundreds and thousands of students to take on their studies more satisfactorily. Indeed, it would have enabled many to conclude their tertiary education rather than have it foreshortened, suspended or compromised for lack of financial support. All students were seen to be eligible. At the time the loans scheme was first proposed what seemed to be a major drawback was that the then Opposition and some students saw it-to use Senator Zakharov's words-as a possible thin end of the wedge to allow a loans scheme significantly to replace or even to replace any part of the tertiary education assistance scheme. That was why it was so fundamental for the Commonwealth Government at that time to make a cast iron commitment that there would be no diminishing of the tertiary education assistance scheme. I happened to be the Chairman of the Senate Standing Committee on Education and the Arts that investigated the Student Assistance (Loans Guarantee and Subsidy) Bill. Debate on this Bill in the Senate was interrupted when this Bill was referred to the Senate Committee. Three Labor members and three Liberal members-four of whom are still in the Senate-investigated this Bill in very real detail. Banks, students and other interested bodies put views to us. As a result of that inquiry on the due date in November 1982 we came back to the Senate with a unanimous report. It was agreed to by both Labor and Liberal members of the Committee because the loans scheme was seen to be a genuine additional financial assistance resource for students. I, for one, had said months before in the Senate and in my own party room that I would go along only with a loans scheme that was supplementary to the grants schemes such as TEAS, post-graduate awards, Aboriginal study grants and other forms of direct financial assistance. Another aspect, which was spelt out in the findings of the Senate Committee, was that there would be no compromising of the objective basis for eligibility for such loans. I quote directly from the second conclusion in the report, which states: Apart from the eligibility provisions set out in the Bill which are to be administered by the Commonwealth Department of Education, the Agreement between the Government and the banks will restrict the banks to take into account only one criterion on which an eligible student's application for a loan can be denied: that is, a prior unsatisfactory repayment record already established by the applicant. Other factors such as future earning capacity, course of study, age, sex, academic record and socio-economic background will not be taken into account when banks are considering applications for loans. This was the only other major area of wariness towards this scheme that had been expressed by the then Opposition. But it was spelt out categorically that there would be just one reason for denying any such loan to a full time student. Having given those two guarantees, the report went on to talk about assessing more carefully the total needs of students and matching the proposed $50m not to the capacity of the banks to provide money but to the needs of students. The report dealt with other matters that related to appeals, publicity, the eventual extension of the scheme to part time students and it recommended a periodic review. With those matters being so clearly spelt out, the unanimous report of that Senate Committee led to the Students (Loans Guarantee and Subsidy) Bill being passed, despite the antagonism that had been expressed earlier by the then Opposition and the Australian Democrats. I have given a brief recall of the substance of the loans scheme proposal. I believe that it is still a sound proposal, that it would provide an additional financial resource and that this Bill ought to be on the statute books. I put to the Minister that it still ought to be possible to increase TEAS, as we did by increasing it by 20 per cent in our last Budget. The Government, in its three Budgets, increased it by 5 per cent, 10 per cent and 6.7 per cent. TEAS can be increased, as it has been in all of the last four years, but in addition there can be a more flexible financial resource for students through the provision of such a major loans scheme. It is therefore a sad day in the Senate when the Government proposes to deny one of the avenues that would make available a resource that students would use and would welcome. I mention one matter which Senator Zakharov raised, I think, a little too optimistically. But, along the same lines, I support the concept she mentioned, and I always have supported it for years, even before the Bill was introduced in 1982. In addition to TEAS and the loan facility which is at risk with the withdrawal of the Act, I support the provision of an emergency campus-based loan fund for students in need. The Minister for Education, Senator Ryan, will recall my raising this proposal a number of times even in the last couple of years. I have urged that there be a provision of a reasonably small amount of money and that by giving it to the various institutions-universities, colleges of advanced education and institutes of technology-there would be a flexible facility, much more flexible than is presently the case, for helping students in need. Senator Zakharov said that such schemes exist at the moment and that the present Government has made some provision for them. In 1973 a commitment was made by a Labor government. It was connected with the introduction of the tertiary education allowance scheme and the abolition of fees. The granting of that so-called maundy money in 1973 achieved successful results. I will not bore the Senate by repeating the success achieved. It is true that some of that money is still being recirculated, going from one student, back into the fund and then to another student, but in only a few institutions. Whilst small amounts may have been added, I wish to make a concrete proposal which I hope the Minister will receive in good faith, explore and implement. If $14m were to be given to universities, colleges of advanced education, and institutes of technology, it could be distributed on a pro rata basis to equivalent full time students. It is estimated that there will be 280,000 equivalent full time students next year in our universities and CAEs. If that $14m were spread amongst these 64 institutions-the 19 universities and the 45 CAEs-5 per cent of all of those students could have available to them an average of $500 for an average loan period of two years. There could be various other combinations. One could vary the length of time for repayment or the amount of the loan. Even small loans of $500 can make the difference between a student succeeding in a year of study, failing to pass half of his subjects, or, indeed, pulling out altogether. By providing $500 or $1,000 a very real facility could be given to students to help them complete such courses satisfactorily. Such a campus-based loan scheme should be given some guidelines. These guidelines can be spelt out in very brief terms, providing that the loans be reasonably short-term-less than three years-that they be administered entirely by persons within each campus and that the campus be responsible only for its own fund. I do not believe that there is even a need for subsequent accountability to the Commonwealth, as long as the loan scheme is administered on each campus to provide for those students most in need. The essential element that would make for the success of such a scheme would be that these funds should not then be seen as being owned by the Government or by any establishment off campus. If they were seen to be given entirely to meet the needs of students, those students would have a very real incentive to repay such moneys so that they would help other students. Senator Zakharov referred to a fear experienced in the United States of America, the United Kingdom and some other countries. Particularly in the United States an attitude has developed amongst tertiary students that the loans ought not to be repaid or that there is no pressure or moral imperative to repay them because it is only money going back to the Government. I found, in administering a student loan fund, as part of my duties at the university of Adelaide, that repayment levels were extremely high-as high as 90 per cent. Loans were repaid punctually from moneys earned during vacation or in the course of the next calendar year. So loans can be undertaken over a 12-month or 24-month period with enormous benefit to students and they can be repaid because the students know that it is their money going back to them and that it will enable other students to be helped in the same way as they have been helped. I think such campus-based loans need not attract interest, except perhaps some fixed interest if there is a period of default. But, generally speaking, such loans should be interest free. I put that summary view again to the Government and I ask: In all the millions of dollars that the Government is committing to education-even the increased $39m in this Budget under TEAS-could the Government not find $14m? We found $50m for a proposal that emerged from some of us when we were in government to make such a facility available to students. Can the Government not find even $14m to distribute amongst all the institutions? A few universities have reasonably well established loan funds but that is not the case in the majority of CAEs and the universities. The reason for my raising this matter in relation to this Bill is that at the time this legislation was debated in 1982, Senator Button, who was then as Leader of the Opposition the major Opposition speaker on this matter, said: We would give much greater attention to loan schemes already administered by existing institutions, which could be vastly improved. That was said by Senator Button in the Senate in his speech in the second reading debate on 13 October 1982. After the Bill had been referred to the Senate Standing Committee on Education and the Arts, of which I was a member, it came back to the Senate and was passed at the Government's initiative, with the support of the Australian Labor Party. Only the Australian Democrats were opposed to it. On 1 December 1982, as recorded at page 3002 of the Senate Hansard, Senator Button said: In the second reading debate we also indicated that we should perhaps give further attention to existing loans schemes at tertiary institutions, particularly universities. I do not concur with the rider at the end. I think that universities, CAEs, institutes of technology and tertiary and further education colleges should all be regarded alike and equitably. But this was the let-out, this was the rider that the then Labor Party senators added in their debate of this measure. Their reluctance to support it wholeheartedly-although they did with their vote-was as good as saying: `If we had the opportunity we would extend the loan schemes on the campuses'. I put it to Senator Zakharov, who has influence as a back bench member of the Government Party in the Senate, and I put it to the Minister that this is still a commitment which has not been met and which ought to be considered. I have outlined my suggestion in a concrete way. When this Bill was introduced in the Senate the Minister concluded her second reading speech in this way: Furthermore, the Government has made a commitment not to proceed with the student loans scheme proposed by the Fraser Government. The present Bill fulfils that commitment. I say to the Minister that when that commitment was made there was a second commitment. That second commitment was in the terms that I have read from Senator Button. That commitment was to establish campus-based emergency loan schemes so that they could operate as they were operating at that time in a few places very much to the benefit of students. I know that in principle the Minister supports such a scheme. Senator Button has never denied that commitment. I remind Government members that the Minister was referring not just to one commitment in her second reading speech but also to a second commitment. In the months ahead the Government has a chance to live up to that commitment as well. I conclude by noting the progress that has been made with the tertiary education allowance scheme. As I indicated at the beginning of my speech, there have been some increases every year for the last four years. There was a massive increase of 20 per cent in the TEAS allowance in the last Liberal Budget in 1982. That 20 per cent increase was achieved in August 1982, immediately preceding the initiative for a loan scheme. So the 20 per cent increase was already in place when this legislation was originally debated in the Senate and when that loan initiative was seen to be supplementary to the TEAS scheme, including the 20 per cent increase. I want honourable senators to recognise that, in the last three years of the Labor Government, there was an increase of 5 per cent in the TEAS allowance in the first Labor Budget which was to operate for 1984, a 10 per cent increase in the second Labor Budget which was to operate for 1985 and a 6.7 per cent increase in the recent August Budget which is to operate for 1986. That nearly keeps pace with inflation. It is a reasonably commendable effort but it is an effort which does not live up to the Government's profession. It promised students that it would vastly increase support for student assistance and that is why so many students have been let down and are disappointed by these increases in the TEAS allowance. From December 1981 to December 1982 the inflation rate in Australia was 10.9 per cent. Having regard to that, the former Liberal Government gave TEAS a 20 per cent increase. In the August 1983 Budget this Government gave a 5 per cent increase, which is relative to the December 1982 to December 1983 inflation rate of 8.7 per cent. The family income on which the maximum TEAS allowance is determined was also increased in that year by 6 per cent. For the 1985 year, the August 1984 Budget gave the 10 per cent increase not only to TEAS but also to the family income means test, when the inflation rate was about only half of that figure. So, whilst there has been no particular rhyme or reason to the increase in the TEAS allowance relative to the inflation rate, it has roughly or nearly kept pace with inflation. In this last year the inflation rate was 6.7 per cent and the increase in the TEAS allowance was 6.7 per cent, so in those terms we have had some commendable achievements by both Liberal and Labor governments. However, as my colleague Senator Peter Baume has already outlined, relative to the unemployment benefit the full TEAS allowance for 1986 is to be $73.28 whereas the unemployment benefit for 18- to 20-year-olds is $88.20-a gap of about $1.15-or $91.45 for 21-year-olds and above without dependants, which is approximately an $18 gap. That gap of $15 or $18 between the TEAS allowance and the unemployment benefit has grown during the period of the Labour Government by some $10 or $12. Whilst Government members will be quick to say that the reason for that gap has been the increase in the unemployment benefit and a lesser increase in the TEAS allowance, the gap is nevertheless there. It is a real gap and the Government has not lived up to its earlier commitment to see that gap bridged. I remind the Senate that the Liberal Party, prior to the last Federal election, gave the commitment that we would close the gap between the TEAS allowance and the unemployment benefit as the first step in eliminating the perverse incentives which currently exist for unemployment rather than tertiary education. While maintaining the unemployment benefit, we will progressively increase the TEAS allowance. It goes without saying that we urge the Government in implementing that policy to make further progress towards bridging the gap in any opportunities the Government has in the months ahead. In conclusion, the Opposition is opposed to this legislation because it wishes to see the widest possible range of resources for student assistance. The ACTING DEPUTY PRESIDENT —(Senator MacGibbon)-Order! The honourable senator's time has expired. Senator RYAN(Australian Capital Territory-Minister for Education)(9.03) —in reply-In closing the second reading debate I will confine my remarks to those made on the two Bills under consideration by the Senate. The debate has ranged far and wide and honourable senators from the other side have taken the opportunity to give their views on a number of matters related to youth income support and student income support generally but not specifically to the Bills in question. The two Bills that the Senate has been debating are the Student Assistance (Loans Guarantee and Subsidy) Repeal Bill and the Student Assistance Amendment Bill. Our Government announced very early upon its election in 1983 that it would repeal the first Bill, that it would not proceed with that scheme. I do not think it is necessary to rehearse yet again the reasons for that decision. Senator Peter Baume —There aren't any. Senator RYAN —The reasons are on record. That scheme of student assistance would assist those students whose families were able to guarantee them for a loan-students who were able to be assured because of their family circumstances or because of the kind of course they were undertaking that they would be able to repay that loan. Such students would be advantaged whereas students from poor families or students who intended to pursue a career in a not very remunerative area would be discriminated against by the scheme. I do not think there is any reason to proceed to explain why this discriminatory and inequitable proposal for student assistance was rejected by our Government from the very earliest days. It has taken some time, because of the proceedings of the Senate, for us actually to repeal formally this Bill but we were quite clear on coming to office that we would not proceed with this discriminatory form of student assistance, and we have not done so. There is no need to say any more about it except that Senator Teague did speak at some length about the need for a special student assistance loans scheme. It is unfortunate that Senator Teague has not acquainted himself with the initiatives that the Government has taken in that direction. We have in fact built upon the existing Beazley emergency loans schemes which, as Senator Teague is aware, operated in only some universities and not in colleges of advanced education. We have now instituted a new loans scheme which is funded by the redistribution of funds away from the non-needs based per capita funding of student residences in those institutions which are fortunate enough to have them and which benefited only those students who were fortunate enough to be in them, giving no benefit whatsoever to students whose institutions had no such accommodation or who could never afford or get a place in such accommodation. That scheme was inequitable and discriminatory. We have changed it; we have redistributed the funds available under that scheme on a phased basis. Senator Teague will be interested to know that $10m has been allocated over the triennium for emergency loans schemes, which will operate on every higher education campus in Australia, which will operate under guidelines which require student participation in their management, and the management of which, I believe, will be as democratic and successful as was the management of the Beazley emergency loans funds. Of course, we would like to supplement the amounts in those schemes but certainly the kinds of schemes that Senator Teague was suggesting in his proposal are already under way; the reports that I have had from various campuses and from students are that they are operating quite well. As in all such cases, they could do with some extra money but certainly there is a fairer and better targeted use of funds than there was under the previous scheme of per capita assistance to students in residences and nothing for anybody else. If Senator Teague were to address himself to that he would find that some of the suggestions he has made this evening are really being met and will be successively met as funds become available. We never intended to proceed with the loans scheme. We made that clear from our days in opposition. On coming to government we made it quite clear that that scheme would not operate and it has not done so. As Senator Teague very frankly and generously has acknowledged, there have been increases in the tertiary education assistance scheme allowance. Again, we would all wish to see those increases continue and be greater but that is a matter for budgetary consideration. I also point out to Senator Teague that the objective of reducing the gap between the unemployment benefit and education allowances is being pursued. In the Priority One youth assistance scheme announced by the Government at Budget time there is a period during which the gap between the unemployment benefit and the relevant education allowance will be closed. They will not all be closed immediately but over a period. That gap, which Senator Teague, Senator Zakharov, Senator McIntosh and I all agree is a disincentive for students from poorer families to continue their education, will be addressed-not as speedily as we would all wish in an ideal world, but that process has started. I am pleased to say that the fact that we have started this and have a long term plan to reduce those disincentives for poorer students to continue their studies has been generally welcomed throughout the education community. We are really making four amendments to the Student Assistance Amendment Bill. We are restructuring the present system of the Student Assistance Review Tribunals. We are taking steps to protect confidential documents during hearings and not provide protection at the pre-hearing stage only. We are enabling some ministerial responsibilities to be delegated to senior departmental officers, which Senator Peter Baume knows is a method of streamlining the processing of applications. We are also extending the time limit for bringing prosecutions from one to two years. Senator Haines asked a number of questions in relation to those matters. As she is not in the chamber now and may not be present at the Committee stage, I will take this opportunity to answer her questions and I am sure that all honourable senators will be interested in the answers. Senator Haines asked why students should not have access to departmental briefing notes in an appeal situation. The response to this question is that such notes are not departmental documents, they are internal working documents produced by the Tribunal secretary for the Tribunal. They are not made available to the students nor to the departmental officers, so it would be inappropriate for a student to have access to them. Senator Haines also wanted to know why we have extended the prosecution period from one to two years. The reason for this is a practical one. It has proven difficult to detect, investigate and commence legal action within the existing time limit of one year particularly when enrolment checks and so on are conducted sometimes months after the offence is committed. Further, the mobile nature of the student population makes these kinds of investigations difficult. However, I would point out to honourable senators that the two year period proposed compares favourably with the three years under the Social Security Act. Senator Haines also requested a clarification of what the intention is in the protection of documents in clause 29B. The existing provision covers only documents at the pre-hearing stage. The new provision extends the protection from the pre-hearing stage to the hearing stage and also extends protection to oral disclosure of documents and contents. Finally, it allows disclosure of a person's personal affairs with their consent. The proposed amendment would in no way reduce a student's ability to pursue effectively his or her appeal. I think that that is a very important principle and one that I think Senator Haines will be very pleased to have confirmed. We were further asked why there are delays in appeal hearings. Extended delays are unusual and quite an exception. Most appeals are heard within three months. It is worth reminding honourable senators here this evening that some delays are experienced in arranging suitable times for Tribunal members. The delays in SART hearings compare favourably with other external tribunals, for example the Administrative Appeals Tribunal. I am pleased to report to the Senate that the number of outstanding appeals at the moment is half what it was at this time last year. So certainly in terms of streamlining and speeding up the appeals procedure I think we are making progress and I expect that the provisions in the Bill we are currently debating will enable further progress to be made which I am sure will be made to the satisfaction of all honourable senators. I commend both Bills to the Senate. Senator PETER BAUME(New South Wales)(9.14) —This had been a cognate debate. The Opposition wishes to support one Bill and oppose the other. Would it be convenient for the Senate to put the two second reading questions separately? The ACTING DEPUTY PRESIDENT(Senator MacGibbon) —Is it the wish of the Senate that the questions for the second reading of these Bills be put separately? There being no objection, it is so ordered. Question put: That the Student Assistance (Loans Guarantee and Subsidy) Repeal Bill 1985 be read a second time. The Senate divided. (The President-Senator the Hon. Douglas McClelland) Ayes . . . . . . . . . . . 33 Noes . . . . . . . . . . . 26 —— Majority . . . . . . . . . 7 —— Aulich, T. Grimes, D. J. Black, J. R. Haines, J. Bolkus, N. Jones, G. N. Button, J. N. McClelland, DouglasChilds, B. K, McIntosh, G. D. Chipp, D. L. Maguire, G. R. Coates, J. Mason, C. V. J. Colston, M. A. Morris, J. Cook, P. F. S. Robertson, E. A. (Teller)Cooney, B. Ryan, S. M. Crowley, R. A. Sibraa, K. W. Devlin, R. Siddons, J. R. Evans, Gareth Tate, M. C. Foreman, D. J. Vigor, D. B. Georges, G. Walsh, P. A. Gietzelt, A. T. Zakharov, A. O. Giles, P. J. Baume, Michael MacGibbon, D. J. Baume, Peter Messner, A. J. Brownhill, D. G. C. Missen, A. J. Carrick, Sir John Parer, W. R. Chaney, F. M. 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. Lewis, A. W. R. Withers, R. G. Coleman, R. N. Archer, B. R. Richardson, G. F. Knowles, S. C. Ray, Robert Kilgariff, B. F. Reynolds, M. Bjelke-Petersen, F. I. McKiernan, J. P. Boswell, R. L. D. Elstob, R. C. Sheil, G. Macklin, M. J. Puplick, C. J. G. Question so resolved in the affirmative. The PRESIDENT —Order! I now put the question that the Student Assistance Amendment Bill 1985 be now read a second time. Question resolved in the affirmative. Bills read a second time. The Bills. Senator TEAGUE(South Australia)(9.20) —I put to the Minister for Education (Senator Ryan) the proposal which I made in my speech during the second reading debate, that is, that the Government adopt a standard three months as the maximum period which may elapse between the lodgment of an appeal to a student assistance review tribunal and its being fully completed. Senator RYAN(Australian Capital Territory-Minister for Education)(9.20) —As much as I sympathise with the sentiments of what Senator Teague has put forward, it is just not possible, as I am sure Senator Peter Baume would understand, to give guarantees of that kind. We have now achieved the situation whereby the average length of time between an appeal being lodged and its being dealt with is three months. We are streamlining the process as well as we can to make it universal and perhaps even reduce it. However, given that we cannot say how many appeals there are going to be or what the load on the processes will be it is impossible to give a guarantee of that kind. Certainly I accept Senator Teague's suggestion in the sympathetic and constructive way in which it was put forward. It is our hope that no appeals will have to take longer than that, but we cannot offer guarantees at that stage. Bills reported without amendment; report adopted. Bills (on motion by Senator Ryan) read a third time. Debate resumed from 11 September, on motion by Senator Button: That the Bills be now read a second time. Senator CHANEY(Western Australia-Leader of the Opposition)(9.23) —The Bounty (Metal Working Machines and Robots) Bill 1985 and the Bounty (Agricultural Tractors and Equipment) Bill 1985 currently before the Senate provide for substantial outlays of government money on two quite different manufacturing operations. The Bounty (Agricultural Tractors and Equipment) Bill is for the provision of bounty to the producers of an end product. The other Bill is for bounty payments to the producers of machines to make end products, including tractors. The Bounty (Agricultural Tractors and Equipment) Bill provides for bounty assistance to the industry to the end of 1992. The elements of the package provide for bounty at a rate of 45 per cent of value added to be paid for the first year, 35 per cent for the second year and 25 per cent thereafter. Twenty five per cent was the level recommended by the Industries Assistance Commission. So the proposal being put forward by the Government is for substantial additional assistance to be provided in the first two years of the period which is covered by the legislation. In addition, the bounty period is to run for two years longer than that recommended by the Commission, which suggested that the assistance should be fixed to 1990. The Government has put forward legislation which provides assistance through to 1992. The Opposition is concerned about the timeframe as well as the level of assistance during those first two years. The industry, which principally means Chamberlain John Deere Pty Ltd of Western Australia, received temporary assistance for a two-year period from June 1983 to June 1985 when the then bounty rates were doubled after a Temporary Assistance Authority report. The effect of the standard assistance package prior to that special assistance meant that since 1979-80 effective rates of assistance had fallen from about 32 per cent with the basic bounty to 15 per cent in 1983-84. However, the actual assistance received as a result of temporary assistance and the imputed interest on advances, which arose from the fact that bounty payments were being made in advance, has resulted in effective assistance increasing from 32 per cent in 1979-80 to 48 per cent in 1983-84. It would appear that the Government's two-year additional assistance to be provided by this Bill is a continuance of the special temporary assistance received by the industry since June 1983. On behalf of the Opposition I will, at the Committee stage, move three amendments to the Bill to reduce the bounty payment to the 25 per cent recommended by the IAC and to reduce the period of the payment of that bounty to that recommended by the IAC, namely, to 31 December 1990. The IAC's recommended assistance package was based on the belief that under the previous arrangements the industry received effective assistance of less than 15 per cent. Because similar manufacturing processes are accorded assistance generally in the range of about 20 per cent, the IAC believed that assistance to the tractor industry should be increased to this average level. It is important to note, however, that in the past the IAC has recommended that, where assistance rates are higher and there are disparities between similar manufacturing processes, those processes with the higher rates of duty should be reduced to the lower rates, that is, assistance should be gradually reduced over time. Unusually, the IAC has recommended an a increase in the assistance levels to bring about uniformity in this case. This industry has been receiving assistance by way of bounties since 1922. The principal recipients of that assistance over time have been Chamberlain John Deere and International Harvester Australia Ltd. The latter ceased operation as a manufacturer in 1982. Despite the dominance in the local industry of Chamberlain John Deere and International Harvester until that date, a number of new entrants have come into the industry. These entrants have been mainly producers of very large tractors, although the production runs are relatively small. The companies involved are companies such as Waltana and Acremaster. These producers of very large tractors have received little, if any, bounty assistance under the previous arrangements. Under the proposed new arrangements all manufacturers in the industry, other than those manufacturing tractors of less than 15 kilowatts power, will receive assistance by way of bounty provided they meet the necessary local content requirements. Producers of very small tractors will continue to be assisted by way of tariff. The main producer in the local industry, Chamberlain John Deere, has had a number of years of loss making on its tractor operations. This information can be gleaned from successive IAC reports on the industry. In some years since the mid 1970s Chamberlain John Deere has made profits only as a result of the provision of government bounties. The Opposition is concerned that, despite increased levels of assistance for this industry, the major local producer may not have a viable tractor manufacturing operation at the end of the period of increased bounty. I would like to explain the Opposition's position and refer to report No. 348 of the Industries Assistance Commission, entitled `Agricultural Wheeled Tractors and Certain Parts'. The Opposition accepts the views which I shall quote from that report. The early part of the report under the heading `Summary and Conclusion' states: In deciding on an appropriate level of support for the longer term, the Commission notes that broadly similar activities in the industry presently receive effective assistance slightly higher than the present basic bounty assistance. In addition, manufacturers of large tractors with a power rating in excess of 150kW have received less support than manufacturers of medium size tractors and it is considered there is a case for achieving a greater degree of uniformity in levels of assistance. Further, the prospective level of assistance under the present bounty scheme is relatively low, which could affect the retention of resources in the industry. While there is no compelling reason for a substantial increase in assistance, on the basis of the above considerations, the Commission judges that stabilisation of the level of long term assistance accorded tractor production in the range of 15 to 20 per cent, in effective rate terms, would reduce assistance disparities and thus production distortions, thereby contributing to improved economic efficiency. I quote from page 29 of the report, which states: . . . the Commission is concerned that the rate of assistance for tractor production should be set with a view to rates applying to closely related substitute activities in production. This is because disparities in assistance afforded closely related activities can lead to losses in economic efficiency. The scope for substitution of resources employed in tractor production and related activities is demonstrated by the rationalisation undertaken by CJD in recent years, with the result that a greater proportion of its resources are now engaging in activities other than tractor production. Mobility of resources is also indicated by the recent entry of manufacturers of large tractors whose total anticipated sales, if achieved, would represent a significant change in the structure of the Australian industry. These considerations suggest that the level of assistance for tractor production should be examined against the afforded related activities. The Commission has taken the primary functions involved in manufacturing tractors and has examined what assistance in general is available to broadly comparable activities in the economy. The four main processes in tractor production are: foundry and castings work, machining, metal fabrication and assembly. CJD undertakes all these activities, while the other manufacturers undertake some of them. CJD and some other tractor manufacturers also use some of these processes in other activities they undertake. CJD and, to a varying extent, the other manufacturers also use resources associated with production design and engineering, marketing, general administration and management. I quote from another section of the report, which is in part repetitive of the summary I gave previously. It states: The main activities which the Commission considers are broadly comparable to tractor production processes are those associated with the industries producing basic iron and steel, fabricated metal products and industrial machinery and equipment. The effective rate of assistance for these activities ranges from 16 to 24 per cent but, overall, is of the order of 20 per cent compared with the prospective rate of about 13 per cent for tractor production. The Opposition is prepared to support the maintenance of assistance to this industry in the form of a bounty which would effectively provide assistance in the order of 20 per cent, but it does not believe, given the history of manufacturing in this sector and the history of the remaining company which is fundamentally affected by this legislation, that the continuation of a special high level of assistance is justified. Before raising a number of general industry policy issues which affect the operations of both industries, I wish to make some comments about the Bounty (Metal Working Machines and Robots) Bill. This Bill also provides for a bounty to manufacturers for what has been termed low technology and high technology metal working machine tools. These tools are those involved with the working of metal into some shape for inclusion in the manufacturing process. It includes tools which grind, saw and mill metal. The metal working machine tools industry has seen a number of remarkable advances in recent years, with the the inclusion of numerically controlled and computer numerically controlled equipment. The addition of computer technology to these machines has resulted in higher quality and more rapid throughput and hence lower production costs. The current Bill provides for a bounty to be paid on low technology or standard metal working machines at a lower rate than that to be applied to high technology metal working machines. The Minister for Industry, Technology and Commerce (Senator Button) outlined in his second reading speech what machines would be included in the high technology category, including numerical and computer numerical controlled machines, flexible manufacturing cells and flexible manufacturing systems and robots. The provisions in this Bill differ in a number of aspects from the recommendations of the Industries Assistance Commission, which did not propose that exports of these goods be bountiable. It also did not propose that there should be a differential level of bounty provided in the way the Government proposes. The Government has decided to extend the bounty to the export of these goods. In the same way as the Opposition supported the extension of the shipbuilding bounty to exports, we believe that if a bounty is to be provided for domestic production and if the Government's approach, which we support, is that Australian industry is to be encouraged to be outward looking, it is appropriate that the bounty be paid on goods exported as well as those produced for local production. I will return to some of the factors I want to touch on in relation to the need for Australian industry to be outward looking. Of importance to this industry is the defence capability it provides. This was highlighted by the submission of the Department of Defence to the IAC which stated, in brief, that it was imperative to the defence capabilities of the nation that at least a nucleus of a metal working machine tools industry be provided in Australia. In supporting this Bill the Opposition has paid particular regard to the views of the Department of Defence. Australian industry has substantial capacity to provide more of the defence requirements of this nation. Already about 70 per cent of the repair and maintenance work is done in Australia. We produce only about 30 per cent of the captial equipment needs of the Department of Defence. The report commissioned by the Minister for Defence (Mr Beazley) on the various aspects of the defence industry in Australia will be of particular interest when it is released in the next few months. The Opposition awaits Mr Cooksey's report and his recommendations on how Australian industry can better export the defence products it has developed. This Bill contains a number of novel requirements, in particular the discretion granted to the Minister to vary the bounty rates on the products covered by those rates and also the provision to bypass the Industries Assistance Commission in relation to the variation of those bounty rates. The Industries Assistance Commission Act states in section 23 (4) that before duty or bounty rates can be varied a reference must be sent to the Commission and a report forwarded from the Commission to the Government. The Government's desire to see Australian industry develop and utilise its technological bases more thoroughly has resulted in the Minister wishing to be able to vary the bounty rates, particularly for high technology component goods, without having to go through the time-consuming process of an IAC inquiry. The Opposition has reservations about this mechanism. We would not like to see it become a standard provision in these types of Bills. I am pleased to note that any variations made by the Minister are subject to parliamentary disallowance. I give the Minister notice that we will watch closely his use of these provisions. We suggest that he should give an adequate public explanation for any changes he makes pursuant to the provision to which I have just referred. If Australian industry is to succeed and survive it must become more internationally competitive and more outward looking. That form of words seems to have become blessed by common usage on both sides of the political fence. The Opposition believes that there is a very real need for Government to reduce the inflexibility of much of the Australian economy and to provide an environment free of the barriers to change which impose substantial costs on industry and the direct, often government-imposed costs which constitute an increased burden on industry. Neither of the two Bills before the Senate removes any of the barriers to change or increase industry's flexibility, which is becoming an urgent requirement for industry generally in Australia. For a long period Australian industry has been encouraged to develop to meet the needs of the small domestic market under the cover of tariff or bounty protection. Understandably, industry which has developed under these arrangements tends to be inward looking; concentrating solely on supplying the needs of a small domestic market; relying heavily on imported technology; and doing very little in the way of private sector research and development. This attitude and the concentration on the local market were well publicised recently with the announced intention by Rank Industries Australia Pty Ltd to close its white goods manufacturing establishment in Sydney. The announced closure by Rank received very wide media coverage. The closure of the Rank factory is indicative of a much wider malaise current in Australian industry. This malaise relates to the dumping of products on the Australian market, in some part to the imposition by the government of substantial cost burdens; the rigidity of much government regulation; and, most importantly in the Opposition's view, the rigidities of the labour market. In relation to the dumping issue, a number of manufacturers to whom I have spoken have indicated that they regard the current provisions and practices in relation to anti-dumping procedures to be far too slow and as a result as being ineffective. This is not a universal view but it is a common view. I have asked a number of manufacturers to provide me with details of where they believe that the dumping provisions are inadequate. I would ask that Government also undertake its own review of the adequacy or not of the provisions and procedures in relation to dumping activities. The Minister in August 1983 promised that as part of the steel industry package, fast track anti-dumping procedures would be put in place. The Opposition supported the Government on that and we now ask whether the new arrangements in fact are working effectively. The imposition of additional costs by government are starkly illustrated in the Rank Industries case, where it was claimed that the cost of goods produced had risen by little over 10 per cent, electricity costs had risen by over 100 per cent in the same period. Another white goods manufacturer in New South Wales put the view to me that over five years its product costs had increased by about 5.3 per cent-that is, the cost that it could charge to consumers-whereas the cost of one of its substantial inputs, electricity, had risen by an average of 14.9 per cent per annum. I might add that when Premier Wran leapt out of his box and suggested, much to the chagrin of the present Government, that the solution to the problem of Rank Industries was to increase the protection provided to the industry, he notably failed to look to the cost loadings that his Government had imposed on industry, with respect to both the cost of electricity and the cost of such things as workers compensation. I am sure that any member of this chamber who has talked to any employer in New South Wales in the last 12 months will be aware of the enormous cost increases in that area in the last year alone. The problem is very wide and it is consistent with a general situation where public sector costs are rising much faster than private sector costs. All these public sector costs add to the burdens placed upon industry. Costs imposed by government owned transport operations have also reduced industry's competitiveness and there are many other examples. The Government has over regulated at both State and Federal levels and this has been conceded by Senator Button personally and by his Department. The Government has said that it is addressing itself to the problem of business deregulation, but a great deal remains to be done. The entrenched inflexibility of the labour market also adds substantial costs to industry. Calls by the trade union movement for the Government to save jobs and to increase protection are starkly at odds with the trade unions' demands for increases in wages on-costs through productivity and superannuation claims. Such demands highlight an absolute ignorance of the need for labour rates to be adjusted to the capacity of an industry or a company to pay. Unless the labour market adjusts to the capacity of industry to pay there will only be further job losses, further unemployment and further proverty for the unemployed and their families. It is increasingly recognised that the attitudes that have been prevalent in the post-war period are no longer applicable to the changing needs of the economy in the 1980s and beyond. More must be spent on research and development of new products and new processes. It is imperative that employees realise that many of the labour market practices of the past are no longer applicable to today's manufacturing environment and it is imperative to recognise that unless more flexibility is introduced into Australian manufacturing industries we will see a further deterioration of their fortunes. The news is not all gloomy. It is possible as one moves around Australia to find people who are behaving in the way that the Minister has asked them to behave and in the way that the Opposition believes they must behave-namely, to show a great deal of entrepreneurial spirit and talent and be outward looking. In my last week in Perth I visited a number of manufacturers at different levels of operation who were showing that spirit. I visited a one-man firm which is exporting goods to Asia and the United States. I visited a tractor manufacturer, one of those who will be affected by this bounty extension, Acremaster, and saw an operation which has been growing without bounty assistance and which is pursuing overseas markets with great enthusiasm. There must be a great series of changes if Australian manufacturing industry is to prosper and many of those changes lie within the province of government; many lie within the province of employees and of course many others lie within the province of management. The bounty on metal working machine tools and robots is an indication of the Government's desire to provide industry with access to metal working machines and advanced technology at competitive world parity prices. The Opposition supports the Government in this action although the Opposition has some doubts about the ability of the Minister and the Department to pick and choose which elements of this segment of manufacturing warrant the higher bounty. As I said before, we will watch with interest the Minister's administration of this legislation. It is the view of the Opposition that as far as possible we should try to achieve a bipartisan approach to industry policy in this place. It is obviously in the interests of Australian manufacturers that they can proceed to invest in a stable policy environment which they would expect not to be disturbed by changes of government. In the same way as Minister Button reaffirmed the textile, clothing and footwear arrangements when Labor went into government, we have indicated in advance that we would expect to support the framework which was put in place for the motor industry by the present Government and which is scheduled to run through to 1992. This is not an area where we should be looking for difference for the sake of difference. There is, in fact, a very substantial reason why we should seek to get as much common ground as possible so that people can invest and create new jobs, new processes and new products with confidence. Having said that and having indicated our bona fides in the last week in the general support which we have given to the Government's position that was adopted following the announcement of the closure of Rank Industries, let me say that the Opposition is totally impatient with the attempt by the Government, and by the Prime Minister in particular, to do no more than to say that Australian industry must be told to be outward looking and competitive and to suggest that tariffs and other forms of assistance are not the answer for Australian industry. That standing by itself is an attitude which much of industry is entitled to greet with great scepticism. As I tried to point out in my earlier comments, there are many difficulties faced by manufacturing industry which are produced either by this Government or by its sister governments in the States. When one looks at the question of overregulation, at the costs of services provided by government, at the failure of the Government to come to grips with the need for more efficient transport in Australia and at a whole series of things which impact on industry, one can see a gross level of underperformance by the Government. The Government softens industry's attitude to some of these areas by acknowledging that the problems exist. For example, Senator Button frequently makes speeches which acknowledge the considerable problem of on-costs for Australian industry. Yet this Government has entered into the accord mark 2 with the trade union movement and it has trumpeted that as a success and as a promise of stability for industry; but it has not trumpeted the fact that it has added to on-costs further with the so-called productivity increase which has been promised and the additional superannuation costs which have been promised. These costs will be imposed without regard to the capacity of individual industries to pay. We face a very significant series of further difficulties for manufacturing industry in Australia which are substantially the product of the actions of this Government. I believe that all senators in this place, whether they be Labor, Liberal or National Party, would find a common response when they visit manufacturing industry establishments in this country. Some of the elements of that common response would touch on some of the issues that I have just raised. Certainly, many manufacturing operations would deny that they have the capacity to absorb further on-costs in the immediate future; yet that is precisely what this Government has imposed on them in respect of the accord mark 2. The Opposition believes that Australian industry can be competitive and that it can be export oriented. There are very good examples here in Australia of industries which have achieved those qualities. We believe that industry can develop new products and processes and again there are many examples of that having been achieved. All these desirable goals will be achieved provided the entrepreneurial flair of Australian business is allowed to flourish in an environment which really does give it a chance to compete with the rest of the world. As I indicated earlier, the Opposition will move three amendments to the Bounty (Agricultural Tractors and Equipment) Bill in Committee but we will support the passage of both Bills through the Senate. We express the hope that they will add to and aid the successful promotion of a more competitive Australian manufacturing industry in the areas which they touch and we say again that we are happy to get behind the Government in areas where we believe that the problems of manufacturing industry are being genuinely tackled. However, we say to the Government that in too many areas it is failing to tackle the fundamental problems which are faced by Australian industry and which deny many sectors of that industry a genuine chance be competitive. Senator PUPLICK(New South Wales)(9.49) —The Senate has before it two bounty Bills-the Bounty (Metal Working Machines and Robots) Bill 1985 and the Bounty (Agricultural Tractors and Equipment) Bill 1985. I propose to confine my remarks to the Bounty (Metal Working Machines and Robots) Bill and within the parameters of that legislation I shall confine my remarks almost exclusively to the question of bounties paid on robots and robotic machines. This legislation follows the report of the Industries Assistance Commission which was presented on 7 February 1984 and by and large it follows the recommendations of that Commission. There was a substantial difference, however. It was decided to strike a differential rate of bounty for producers of high and low technology machines, which the Minister for Industry, Technology and Commerce (Senator Button) in his second reading speech claimed was aimed at encouraging Australia's machine builders to move into the production of the higher technology machines in line with the world trends and the Government's overall objective of encouraging the modernisation of Australian manufacturing industry. Similarly, within the Minister's second reading speech he drew attention to the fact that within the Australian metal working machine tool industry the majority of producers were producers of low technology machines and machines with standard rather than computer controls and that of the 120 bounty recipients in 1983-84 only about 20 could be described as producing advanced technology machines. At the conclusion of my remarks I shall talk about the industrial strategy of picking winners upon which this piece of legislation is based, to the extent that it has struck this differential rate and that that differential rate is based upon attempting to move Australian industry in a particular direction. As I said, I want to confine my remarks essentially to the role that robots are playing and are likely to play in the development of Australian manufacturing industry. I think it is therefore instructive to look briefly at the situation which pertains both in Japan and, to a lesser extent, in the United States of America in terms of the way in which industry policy and what has become known as reindustrialisation have been assisted by the rapid deployment of robots in the work place in the last few years. In an article in the Business Review Weekly of 28 June this year, under the heading `Robots leave the world behind', the following appeared: One of the reasons Japan has beaten the pants off the rest of the world in the manufacture of electrical goods and cars is the fact that the Japanese are the unrivalled kings of the robot world. It went on to say: According to figures provided by Toshiba, one of Japan's biggest robot designers and makers, the country had 31,900 industrial robots in use at the end of 1982, 56 percent of those in use around the world, and more than five times the number in use in the USA. One of the other interesting points which that article made was that this has been achieved in Japan while at the same time maintaining an unemployment rate in that country of somewhere between 2 and 2 1/2 per cent. One has often heard that an inevitable consequence of the introduction of robots and computer controlled equipment, the whole Computer Aided Design/Computer Aided Manufacturing-CAD/CAM- project, the way in which new machines are being introduced to displace labour, is that there will be an increasing level of unemployment. I think it has been demonstrated in Japan that that is not necessarily the case. In fact, it is not just a matter of it being confined to Japan. In May 1983 a report appeared in one of the newspapers of a paper given at the annual meeting of the American Academy for the Advancement of Science, which that year was held in Detroit. Professor Frank Stafford of the University of Michigan economics department, who was a member of a panel, presented a paper to the meeting in which he claimed that robots and factory modernisation based upon robots would in fact save more jobs than they would destroy. I believe that is something that can be achieved and can be achieved in Australia, although I think it requires a degree of sensitivity on the part of government, manufacturers and trade unions to ensure that that comes about. Again, looking at the experience of Japan and its use of robots, an article in the Australian Financial Review of 24 June 1985 stated: Robots are being increasingly introduced into Japanese manufacturing as a response to economic realities and the needs of the market-place rather than any nationalistic goal to arrive at a high-tech nirvana. Significantly, in the forefront of Japanese robotics are companies such as Kobe Steel Ltd, one of the world's top 20 iron and steel producers, and Osaka Transformer Co. Ltd, a leading international manufacturer of electronic welding equipment and transformers. If one looks within Japan at the reasons for which robots have been introduced in Japanese industry we find that in a survey of major users of robotics, when asked why robots had been introduced into their factories, the answers given were, in the following order: To improve productivity, 52.4 per cent; to save labour, 50 per cent; to relieve workers of hazardous, heavy and monotonous duties, 29.3 per cent; and to rationalise work processes, 23.2 per cent. So indeed it is not simply a matter of seeking to use the robot as a labour displacing device but rather that it can, in fact, improve the conditions of workers in industry, it can rationalise work procedures and it can improve productivity. One of the very important things about that is the extent to which-I shall be making reference to this shortly-the actual physical working environment of people in heavy engineering and, indeed, in sophisticated production operations can be markedly improved without any loss of actual employment by the use of robots in the most-hazardous, dangerous, dirty and difficult processes which need to be undertaken. One of the things about Japan and its response to the opportunities presented by robotics has been the significant role played by the Ministry of International Trade and Industry in setting aside funds to encourage the development of the robotics industry in Japan and the wholehearted support which the industry has received from union leaders in Japan. The increasing use of high technology and of robots in particular in Australian industry is inevitable. I believe its consequences will be higher productivity, better product quality and better worker safety, but no program will be effective or successful unless the trade union movement, the manufacturers and the Government have a co-operative, tripartite approach to the way in which this industrial development is to take place. To the extent that this legislation represents one part of that-namely, the Government's determination to provide some assistance by way of bounty to the local robotics industry-that is one of the three steps that needs to be taken. I sincerely hope that the other steps will equally be taken and similarly that manufacturers will recognise the advances which can accrue to them and the trade union movement will recognise the advantages which can accrue to it and its workers. It is perhaps surprising, given the success of Japan, that to a large extent the use of industrial robots in the United States has not taken off with the degree of enthusiasm that has been the case in Japan. It is interesting to speculate on the reasons for this. I do not think it would be particularly productive to do so within tonight's debate; I simply say that many people have indicated that one of the areas in which the United States has been progressively losing out to Japan in terms of productivity and product quality has been the extent to which it has failed to keep abreast of robot technology and failed to deliver on the promises which were made in the early 1980s. Although the United States has an enormous capacity and has robot sales in the order of $325m a year in the United States, it does not appear to have been as successful as Japan in adopting robot technology in areas of key productivity, such as the steel and electronics industries. In fact robots have been introduced in the United States largely in order to produce more custom-made products. In other words, the flexibility which is available through the use of industrial robots has been used in the United States not so much to concentrate upon basic heavy industry areas but rather upon more consumer oriented items being custom made to a greater degree. Only one notable exception has been drawn to my attention in recent years and that was the decision announced by General Motors in October 1984 to spend $52m on the establishment of a robot factory of the future which it hoped would produce its motor cars on a highly flexible manufacturing plant that could operate an eight-hour shift without any production workers at all taking part in the operation. I am not sure the extent to which General Motors is likely to be successful with that undertaking. The future for the robotic industry in Australia can be a very bright one. We need, for instance, to engage in a little bit of lateral thinking about this. Robots which are modelled too much after human beings share all the inherent weaknesses of that particular design. I believe it is necessary to look at the development and production of robots which, in fact, more accurately reflect their machine qualities than their human replacement qualities. In terms of the design of robots in Australia, this will be something of great challenge to the Australian industry. But given the extent to which people have been extraordinarily innovative and inventive in Australia in this particular area in the past I see no reason for it not to be a very successful undertaking. In Australia we have had two significant reports on robots: One prepared by the Australian Science and Technology Council in August 1982 and one drawing on certain aspects of robotics entitled `Computer-related Technologies in the Metal Trades Industry' which was also prepared by a sub-committee of ASTEC and presented in January 1985. The future uses of robots seem to be almost limitless. Just looking through my own file of recent developments on this, I see a report about a robotic arm which has been developed to assist with surgery on the human brain. I see that robots are being used in hospitals and nursing homes to undertake many of the tasks which would otherwise have to be undertaken by skilled health professionals. I see a report about mining on the deep sea bed by robots and the possibilities inherent in that. I see a development at Oxford University of arc welding seam robots for use in the motor vehicle industry. Most interestingly of all, perhaps-I am sure that both the Minister for Industry, Technology and Commerce, Senator Button, and undoubtedly his colleague Mr Barry Jones, who probably has an enormous file on this subject, have looked at this question-is the development of self-replicating robots; that is to say, robots which have the capacity to reproduce themselves in order to undertake such exciting tasks as the conversion of solar energy from the moon and beaming it down to earth thereby relieving us of all the tedious necessity of the nuclear debate, not to mention what it is going to do about Bass Strait oil prices and the future of black coal in Australia. The ASTEC report to which I previously referred listed, for instance, the proposed novel application of robots in a number of areas. In terms of agriculture, fishing and forestry, it mentioned that there were projects for sheep shearing by robots in Australia, and for grading and packing eggs. In terms of mining, there were material handling robots. There is the automated mining of brown coal and deep sea mining. In terms of manufacturing, there were possibilities of unmanned factories and possibilities for the welding of ships. In terms of electricity, gas and water, there were robots available for the maintenance of nuclear power plants. In terms of construction, there were robots for concrete cuting and bricklaying in furnaces. In terms of transport and storage, there were automated warehouses. In terms of finance, property and business services, there were security robots. There were defence applications for underwater naval work. There were applications in community services such as fire fighting, garbage handling, medical services, assistance to handicapped people and a whole number of things, which even went on to the use of robots in domestic settings. I think we tend to sell Australian industry a little short in believing that we ourselves do not have the capacity to participate in this. In a report in the Australian Financial Review of September 1984 headed `Australia holding its own in robotics', Dr A. J. Holzer of the Royal Melbourne Institute of Technology indicated that Australia is doing especially well in the international robotics stakes. The article went on to say that in December 1982 Australia held sixth place in the world with 1.5 robots per 10,000 production workers, placing Australia ahead of France, the United Kingdom and Italy, and behind only Sweden, Japan, West Germany, the United States and Belgium. I think that those figures are very encouraging, although I note that the Industries Assistance Commission, at page 206 of its report, put some caveats on that particular series of statistics and indicated that they should be treated with a degree of caution because of the difficulty of transnational comparisons of reliability of data on robot numbers. One looks, for instance, at the report that a small Melbourne firm by the name of Cybernetics Control Pty Ltd is about to release an Australian manufactured continuous path robot, which, in fact, unlike the simple pick and place robots, can be programmed to move along a particular line or curve and is particularly useful for applications such as spray painting and arc welding. One looks at the fact that P.A. Management Consultants have advised the New South Wales Department of Industrial Development and Decentralisation that there are possible applications for and Australian development of robotics in areas such as abattoirs in the meat industry, clothing and footwear, steel and concrete heavy fabrication, educational and consumer areas, primary industries including picking, handling and forestry, and mining and related industries. P.A. estimated the present market at between $9m and $13m and predicted that by 1990 it would have grown to $30m or, indeed, in the most optimistic scenario, up to $104m, and that the possibility of developing an indigenous robotics industry should be regarded as a very high one. Finally, in terms of Australian manufacturers one would have to make special reference to the Melbourne-based company Machine Dynamics Pty Ltd. Machine Dynamics is referred to in the IAC report, at page 209, as the only company designing, producing and selling robots in Australia on a commercial basis. If one looks at the details of Machine Dynamics, and in particular a very lengthy article which appeared on this company in Business Review Weekly in August 1983, one will see the particular growth of that company. One will find that it has sold more than 50 of its first generation robots and some of these have been at the more sophisticated edge of the market competing against the big United States, Japanese and European robot manufacturers for sales in Australia. The only point I want to make about that is that the Chief Executive of Machine Dynamics made a very significant point that in terms of his belief about what would be best to encourage the robotics industry in Australia, the most important thing, as far as he was concerned, was for an accelerated investment allowance for the buyers of robots. Indeed, if one refers to the ASTEC report `Computer-related Technologies in the Metal Trades Industry', one will see that the ASTEC recommendation which is contained in paragraph 1.5.19 is that the investment allowance should be continued for at least three years after 1985 and that the investment allowance impact on the development of the robot industry in Australia is of considerable significance. It is a pity that the Government has seen fit not to pursue that line of development. The last point I make about the unique nature of Australian-based robots, of course, is the project which has been undertaken largely by the University of Western Australia and by the Commonwealth Scientific and Industrial Research Organisation-the robot shearer. Those who have seen pictures of this machine in operation will be staggered to see its ability to shear sheep. Exactly how much this is going to take on in Australia I do not know. It is a machine called Oracle. Undoubtedly it is one of the areas where negotiations with the relevant trade unions would be clearly the key point at issue. I said that I would conclude by returning to the extent to which this legislation is predicated on the basis of picking winners. The ASTEC report of August 1982 made the point that the market for robots in Australia at present is not sufficient to support any substantial manufacturing capability, and went on to say: While there may well be export opportunities for Australian-made robots, it is unlikely that any manufacturer will attempt to exploit those opportunities without first securing an adequate base in the local market. This legislation will certainly help along that way. Hopefuly it will help in terms of future export developments. If one looks at the IAC's overview, which appears on page 1 of its report, one sees it put quite clearly that this report has been predicated on the assumption that the Government wishes to see the development of an industrial strategy of picking winners. It cautions as follows: Many industries have at some time or other appeared to be prime candidates for rapid growth-only to have turned out to be disappointing perhaps because growth was slow and frequently because with time even just the maintenance of the industry had required large and continuing public support. Indeed it is now widely accepted that past policies which sought to encourage industries with the particular characteristics that they produce substitutes for imports, however desirable this seemed at the time, has left us with a number of activities that can now only exist with provision of continuing high assistance. Indeed, the report of the Industry Assistance Commission was a two to one majority report of two commissioners. The dissenting commissioner, Commissioner Sheaffer, in a very lengthy and I think cogently argued dissent, makes the point about picking winners in the industrial sector. I think it needs to be understood and appreciated that this is a course of action upon which we have embarked in this legislation and which the Opposition is indeed prepared to support, with the reservations and the caveats that my Leader, Senator Chaney, expressed in his speech at the second reading stage a few minutes ago. I think it important to understand that we are not necessarily going to see a great and sudden surge of development. The IAC report, at page 211, says: Machine Dynamics- you will recall, Mr Acting Deputy President, that it is the sole manufacturer in Australia at the moment- stated that it did not envisage any increasae in the current rate of growth over the next two or three years and possibly longer and did not see the market ever being large by world standards. I do not believe it will be large by world standards but I believe it can be significant within the context and the requirements of Australia's ongoing industrial development. I am pleased to see that in clause 4(1) of the Bill the definition of `robotic machine' has been made sufficiently large to cover not only pick and place but also point to point playback and continuous path playback systems and that indeed a very neat out is in sub-clause (d) (iv) of the definition of `robotic machine' where it says `a prescribed system'. In other words, the three types of robots that we know about at the moment plus any other type of robot that comes along at some stage in the future will be eligible to be prescribed by the Minister under the regulations and to benefit from the bounty which this legislation will provide. I am pleased to be able to give support to this Bill. I think it is a move in the right direction. I re-express my views about picking winners in the industrial sector in particular, but I believe- Senator Button —I am not quite clear what your views on picking winners are. Senator PUPLICK —Basically that if it is left to the processes of this Government, it will basically get them wrong. In terms of general policy, I do not believe that it is possible, in an area where industrial change and development and technological change and development are taking place at such a rapid pace, to clearly and precisely identify those areas of industrial development which are likely to be big time winners. I think it is possible to try to encourage particular industries, particular parts of industries, which one believes will make a significant contribution to the overall industrial development which we are set upon achieving but, in terms of locking ourselves into a long term commitment to a particular industry, a particular sector of industry, or indeed a particular product, I do not believe that is is necessarily the correct way to go. Indeed, when we look at the other Bill, the Bounty (Agricultural Tractors and Equipment) Bill 1985, and consider that bounties have been paid in this area since, I think, 1922, and that in those 60 years they have manifestly failed to achieve the object which one believes a bounty is supposed to achieve, namely, the development of an effective Australian manufacturing capacity for the item concerned, we can see the failure of this strategy. Nevertheless, the Government has come forward with a package which, with the reservations which Senator Chaney and I have expressed and which Senator Short will amplify, the Opposition is happy to support at this stage. Senator SIDDONS(Victoria)(10.17) —I am indebted to Senator Button's interjection in Senator Puplick's comments because until the last two or three minutes I was not sure, when Senator Puplick referred to picking winners, whether he was in favour of that or whether he was against it. In the last few minutes he seemed to make it clear that he was against picking winners-that is, against some sort of co- operative approach by governments to decide which industries needed assistance and which industries could do without. This whole debate raises very basic issues. One could speak at great length on the whole question of what should be government's attitude to industry. I am saddened to some degree to have heard the remarks of the Leader of the Opposition (Senator Chaney) who seems to have adopted, on behalf of his Party, slavish support of the Industries Assistance Commission's recommendations. The facts of the matter are that the IAC has a very long history of applying maximum pressure to industry. One would have thought, in view of our unemployment and in view of all sorts of reasons why it is necessary right now to save our hard-earned foreign currency and to develop international competitiveness in our industries, that the Opposition would have had something more constructive to say about this very important area. In fact, the Opposition did have one constructive thing to say, and I want to take it up. Before I do so I should make it clear that the Australian Democrats will be supporting the Government on both these pieces of legislation, the Bounty (Metal Working Machines and Robots) Bill 1985 and the Bounty (Agricultural Tractors and Equipment) Bill 1985. It has at least been brave enough to up the ante, so to speak, on what the IAC recommended-and that we applaud. The constructive thing that the Opposition had to say was that there should be a bipartisan-I would suggest a tripartisan-approach to industry. I understand that this is one of the most divisive subjects as far as the Government is concerned and certainly as far as the Opposition is concerned. As soon as the question of how we should help our struggling Australian industries is raised in either party room, whether it be the Labor Party or the Liberal Party, the caucuses immediately divide in two. This is essentially a non-party political issue. The issues are: Are we to create employment? Are we to earn export dollars? Are we to be an industrial force in this part of the world or are we to be an industrial backwater? We can become an industrial force and our industries can become internationally competitive, as is the catch cry at the moment, only if we do two things. We have to have government co-operation on a non-party political basis and we have to have worker participation. I shall talk first about government co-operation. The whole history of the relationship between government and industry in this country is one of confrontation. Industry has survived, very largely, in spite of governments. I speak essentially of the attitude of the IAC. I remember, back in 1969, when I first appeared before the IAC as an industrialist. I was chairman of a company that produced hand tools in this country. The Commission asked: `Mr Siddons, what right do you have to produce hand tools in Australia?' The scene was set immediately. If one received some tariff protection one was asked to justify whether it was right or not. It was not a case of the Government trying to find out what one's problems were and whether it could co-operate. No, one had to justify one's right to manufacture in Australia. That has been the attitude of the IAC throught its whole history. It has been one of confrontation. It has put industry in the dock and asked it to justify its right to exist. I ask honourable senators to contrast the IAC's attitude with that of the Japanese. How do they go about getting co-operation between the Government and industry? They do it through a government instrumentality, the Japanese Ministry of International Trade and Industry. It has the responsibility to go around the world and collect the necessary data on potential markets in every country. That organisation has representatives on the ground. They collect information on markets in particular countries and on the potential market in five or 10 years hence. Data is collected all around the world by on the spot representatives of the Japanese Government. This is the essential process. That information is then collated in the Government's computers and the Government estimates the potential of a market and the growth of that market with regard to a particular industry. The Government then gets that industry's leaders to come together at a round table meeting. It tables the basic data and the projections for the industry in question. It asks the industry leaders: `What do you think of those projections? Are they right or are they wrong'? The matter is discussed. They finally come to an argreement as to the potential growth of that industry and what could be the Japanese industry's hope of gaining a certain percentage of that potential market. Once the Government and the industry reach agreement on the potential for Japanese industry in that segment of that market, the Government turns to the industry leaders and say: `Obviously, the capacity of your industry is in excess of what we have just agreed to be the potential'. That is agreed. The Government tells the industry leaders there to go away and rationalise the industry and to reduce their output because there is no way that the industry can be sustained. On the other hand, the Government and industry may agree, say, in the case of motor car manufacture, shipbuilding or steel production, that growth is good, that the Japanese potential for gathering a large percentage of that industry is such and such that it would therefore be necessary to double the size of the industry in question. So government and industry have agreed on where they will head. They have jointly picked winners. They have decided that there will be growth and the Government has said to the industry that it will encourage growth. The industry gets the blessing of MITI and that in turn is sufficient for the industry leaders to go to the financial institutions to get whatever finance is necessary, in much the same way as General Motors-Holden's Pty Ltd got started in this country back in 1948. It had the blessing of the Government. It went to the bank and the bank said: `Right, how much money do you need?'. That is exactly the way that Japanese industry operates today. I cannot see any reason why this sort of approach could not apply in Australia. We have to break down the barriers. We have to gain the confidence of industry in what the Government says. Essentially, we have to be prepared to accept the fact that any plan agreed to between industry and government is not a cast iron plan. Consultation between industry and government is an ongoing process which has to occur every six months or so. We cannot have a plan that is set for all time. Mr President, I seek leave to continue my remarks later. Leave granted; debate 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 Gareth Evans) read a first time. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(10.27) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows-- This Bill provides for an amendment to the Wheat Tax Act 1957 to increase the maximum tax rate to $1.10 per tonne. The operative rate within this maximum is set by regulation on the recommendation of the Australian Wheatgrowers Federation. The tax is collected at industry's request and held in trust to fund research projects. In February this year the Minister for Primary Industry (Mr Kerin) announced the Government's intention to encourage rural industries to raise the level of their research contributions to 0.5 per cent of their gross value of product (GVP) within five years, and reaffirmed the Government's commitment to match expenditure of the levy-tax contributions from industry dollar for dollar to that level. This followed a thorough review during 1984 of rural research and the contribution of the rural industry research fund scheme to this effort. The Minister for Primary Industry made further comment on the need for Government action on rural research in the second reading speeches on the Australian Meat and Live-stock Research and Development Bill 1985 on 20 March and the Rural Industry Research Bill 1985 on 17 April. In taking this position, the Government recognises that rural industries have made a significant contribution to the Australian research effort. The benefits of rural research accrue not only to the farm sector but also to the community generally through the impact of rural production exported on the balance of payments, employment in secondary industries processing primary products, transport and service industries, and as an input to research in the medical and other sectors. Individual rural producers are generally unable to conduct their own research nor are they able to reap all the benefits of research findings to the exclusion of other producers. From a community point of view the level of research effort would be well below optimum were it not for the intervention of Government in the research funding process. The Rural Industry Research Fund program of which this wheat research tax is a component provides a means for rural industry to contribute to its research effort and for that effort to be supplemented by Government. The proposed amendment would establish a maximum rate of contribution to wheat industry research at about 0.6 per cent of the industry's GVP, at current prices. This will give the industry considerable flexibility to increase its research contributions over some years consistent with the Government's policy, but will avoid the need for frequent amendments to the legislation. The Wheatgrowers Federation asked that the maximum be abolished, but the Minister for Primary Industry has set a specific rate, above the maximum level to which the Commonwealth will match industry contributions. In doing so the Minister had regard to the industry's desire for minimal restriction, while at the same time being mindful of views within the Parliament that any form of tax should be subject to a reasonable legislated maximum. The Wheatgrowers Federation in a submission to the Minister for Primary Industry has requested that the operative rate of tax be increased to 35c per tonne, equivalent to 0.2 per cent of GVP. The present operative rate 30c per tonne has applied since October 1983 and is at the current legislated maximum. The Wheatgrowers Federation considers that an increase is now necessary to maintain the real value of monies available for research. Futhermore, an increase would allow a build up of adequate reserve funds to maintain ongoing research programs despite variations in annual production. The process of amending regulations to increase the operative rate from 30c to 35c is underway so that there will be minimal delay in completing the action should this Bill be passed. An increase in the research effort to improve the efficiency of production and aspects of transport, storage and shipping matters will help the industry to maintain international competitiveness in a changing market environment which is characterised by depressed prices, increased costs and predatory credit and marketing practices. Wheat is one of Australia's leading export income earners. The Australian Bureau of Statistics preliminary data for 1984-85 show that wheat brought in 9 per cent of Australia's export income. The industry is facing a crisis in the international market brought about by rapid and significant gains in wheat production in many countries which used to provide export markets and, significantly, policies in the major developed countries which continue to produce large structural surpluses because their producers are protected from market realities. We are currently witnessing what can only be called a subsidy trade war born largely out of frustration with European Economic Community export subsidy practices. Market prices will inevitably be driven down and it is difficult to foresee their early recovery. Australia cannot afford to indulge in export subsidies on our major export commodities. We must therefore increase our efficiency in order that we can continue to trade profitably in these more difficult circumstances. We must keep our technology up to the mark. Our research effort is a significant investment towards achieving that goal. I congratulate the wheat industry for its realistic, businesslike attitude in requesting that the operative rate of monies it contributes to research be raised, and that the legislated maximum not be an impediment to future increases. At the proposed operative tax rate of 35c per tonne, the industry's contribution in 1985-86 is estimated to be $5.2m. The new tax rate would be applicable only to a portion of 1985-86 season's wheat because deliveries made from about mid-August until the new rate comes into effect are taxed at the current rate. The Commonwealth's matching commitment in respect of the increased tax will not arise until 1986-87 and later years. In addition to wheat delivered to the Australian Wheat Board the amended tax ceiling and the proposed new operative rate will also apply to wheat sold by the Board under grower to buyer arrangements and to stockfeed wheat traded under a permit issued by the Board. I commend the Bill the 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 Gareth Evans) read a first time. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(10.28) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- This Bill proposes to amend the States Grants (Petroleum Products) Act 1965 to implement the legislative changes to the petroleum products freight subsidy scheme announced by the Government on 7 September and 26 October 1984. The petroleum products freight subsidy scheme provides for the payment of a subsidy on the cost of transporting certain petroleum products from coastal refineries to consumers in country areas and to fishing vessels which are fuelled at sea. At present the scheme provides that country consumers and fishing vessel operators should pay no more than 5.2c per litre of the cost of transporting eligible petroleum products to their country location or ship refuelling zone. This Bill proposes to strengthen the administration of the freight subsidy scheme, especially in its application to claimants for subsidy at safe anchorage locations, and to provide for payments of the freight subsidy on petroleum products produced at inland mini-refineries. The administrative reforms to the scheme are the result of a review of the administration of the scheme at the safe anchorage locations for the fishing industry, which was initiated by the Government in November 1983. On 7 September 1984, the Government announced the introduction of a number of changes resulting from that review, designed to strengthen the administration of the scheme as it applies to the fishing industry, and to control the potential for abuse by claimants under the scheme. Clause 3 of the Bill provides the legislative authority for the imposition of conditions in a scheme formulated under the Act, relating to the various matters that must be complied with by persons applying for registration as distributors of eligible products, and the declarations and supporting documentation that might be required for submission with claims for subsidy. Clause 4 of the Bill provides the legal sanction for the imposition of penalties for the making of false declarations in relation to subsidy claims for deliveries to safe anchorage locations. These amendments are directed at ensuring that petroleum products for which subsidy is claimed have been actually delivered, and that the persons claiming subsidy are indeed legitimate claimants. The second major matter dealt with in the Bill, this extension of the freight subsidy to petroleum products produced at inland mini-refineries, was announced by the Government on 26 October 1984. The amendments are intended to place inland refineries on the same footing as coastal installations, by enabling subsidy to be paid on sales of eligible products produced at such refineries at the same rate as the rate paid on products produced at coastal installations. Owners and operators of mini-refineries will not be eligible to claim subsidy under a scheme as the subsidy will be paid in the normal manner to registered distributors on condition that the benefits of the subsidy are passed on to consumers. Extension of the scheme to include inland mini-refineries will place inland mini-refineries which utilise readily available crude oil deposits on an equal footing with coastal installations. Financial Impact Statement The measures contained in this Bill have no direct financial implications. The provisions relating to the payment of the subsidy on products produced at inland mini-refineries, which are deemed to have come into operation on 1 January 1984, have the effect of validating subsidy payments already made on production at the only current inland installation at Roma in Queensland since 1 January 1984. Since the Government's decision to increase the consumer paid margin for the freight subsidy scheme from 1.2c to 5.2c per litre, announced by the Treasurer (Mr Keating) on 14 May 1985, no subsidy has been paid on products produced at that refinery, as the new consumer paid margin is in excess of the freight differential applying to the location of that mini-refinery. I commend the Bill to the Senate. 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 Gareth Evans) read a first time. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(10.29) —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 is necessary to rectify a discrepancy in the boundaries of an area of Aboriginal land described in Schedule 1 of the Aboriginal Land Rights (Northern Territory) Act as `Petermann'. The discrepancy, which was only recently drawn to this Government's attention, ccerns a small area of land on the eastern boundary of the Petermann land. The area involved is a narrow strip of land about 9 kilometres long by some 220 metres wide with a total area of about 2 square kilometres. In summary, the problem arose in this way. The Aboriginal Land Rights (Northern Territory) Act 1976 included in Schedule 1 a description of the Petermann Aboriginal Reserve. In accordance with that Act, title to the land was granted to the Petermann Aboriginal Land Trust in 1978. The deed of grant described the land by reference to a Compiled Plan prepared on the basis of the description in Schedule 1 to the Act. A later deed of grant to that land, containing the same description, was registered by the Registrar-General of the Northern Territory and was deemed to have taken effect from September 1978. Land adjoining and to the east of the Petermann land was vested in the Director of National Parks and Wildlife in 1977. The Proclamation of the Uluru (Ayers Rock-Mount Olga) National Park contained a description of the boundaries of the land in the park. The recent amendment to the Aboriginal Land Rights Act, which added a description of Uluru to Schedule 1 of the Act, followed the 1977 Proclamation description. That Proclamation encroached upon the Petermann land as described in Schedule 1 of the Act and the deeds of grant. The misdescription can be traced back to 1958 when land which became the National Park was excised from the Petermann Aboriginal Reserve, and the revised reserve boundaries were separately described. As I have indicated, parts of the common boundaries were inconsistently described. Mr President, this Bill will rectify the discrepancy and remove any possible confusion in respect of the description of the Petermann land. The Bill will effect the change in two ways. First, it will make a minor variation to the description of the boundaries of land granted to the Petermann Aboriginal Land Trust, ensuring that the description of the land does not overlap with any part of the Uluru land. Second, it will confirm the validity of the 1977 proclamation of the Uluru (Ayers Rock-Mount Olga) National Park, notwithstanding that the Proclamation included a description of land which included a small area of land described in the deed of grant to the Petermann Aboriginal Land Trust. Mr President, there is Aboriginal support for this action. I understand that on 17 September this year the Director of Legal Services with the Central Land Council met with the relevant Aboriginals in Central Australia. Those people agreed to the action being taken in respect of the Petermann land. The nett result of this legislation will not be to deprive Aboriginals of land. This Bill will merely ensure that the common boundaries of two adjacent blocks of Aboriginal land are correctly described and it is clear from what I have said that this is no more than a means of rectifying a minor technical irregularity in the description of the area of the Petermann Aboriginal Land Trust. I commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. The PRESIDENT —Order! It being 10.30 p.m., pursuant to sessional order, I put the question: That the Senate do now adjourn. Senator BOLKUS(South Australia)(10.30) —Mr President, as you know, I do not often speak on the adjournment but in this case I think there is one matter that needs to be raised and aired and followed up by the Government. I think it is the responsibility of members of parliament to pursue matters with a degree of responsibility and with recognition of what is true and what is rumour. In this case I wish to do that. The matter I wish to raise tonight relates to the candidate for the Australian Democrats in the forthcoming South Australian election. In fact, this is a matter concerning a person who I gather has been preselected to be the No. 1 candidate for that election. I have been provoked in this matter for a number of reasons. The first is the involvement that this person had in an organisation called Adelaide Community and Educational Television. In my mind, ACE Television was instrumental, approximately 12 to 15 months ago, in trying to subvert the introduction of the Special Broadcasting Service-the multicultural television station-to South Australia. Some of the machinations and the games it was playing at that time led me to question the intention of that organisation. I believe that its intention was to take control of the SBS from the ethnic community and to claim it for the interests of a group that had absolutely no connection with that community. The second reason I raise this matter is that information has been given to me by people concerned in South Australia as well through the media. The third reason I pursue this matter is a personal explanation in this place on 10 September 1985 by Senator Vigor. That personal explanation further provoked my interest in the matter. I must make it clear at the outset that, despite the factional brawling by the Australian Democrats in South Australia, I am not a part of that. I do not think that needs to be spelt out too strongly. In fact, what I am doing is expressing the concern of many people in that State about the quality of their candidate. I asked a question in this place on- Senator Chipp —I am also concerned about senators who leak matters from select committees. South Australia had two. Senator BOLKUS —I believe that Senator Chipp would be an expert witness in that respect. Senator Chipp —Yes, I am. The PRESIDENT —Order! I ask Senator Bolkus to direct his remarks to the Chair. Senator Chipp —I am an expert witness in that matter; you are quite right. I would like that recorded in Hansard. Senator BOLKUS —Let me say, despite Senator Chipp's mutterings, that this matter has its genesis in a three-part question I asked in this place on 20 August about Mr Chisholm. Some parts of that question related to the circumstances surrounding a community employment program grant to Mr Chisholm and also- Senator Chipp —Mr President, I take a point of order. Senator Bolkus has just said that he has a question upon notice, No. 412, involving the very matters which he is now canvassing. Is it in order for an honourable senator, having put a question on notice, to canvass the arguments concerning that question before a Minister has answered? Secondly, is it in order for an honourable senator to engage in calumny against an endorsed candidate of another Party for political office without making that part of a substantive motion? The PRESIDENT —Order! The advice tendered to me on the point of order taken by Senator Chipp is that it has never been ruled that debate should not take place merely because a question which has been placed on the Notice Paper has not been answered by a Minister. Senator Chipp —It has in the House of Representatives. The PRESIDENT —It has not in the Senate. In regard to the second part of the point of order taken by Senator Chipp relating to restrictions being placed on senators making comments about particular candidates at elections, I understand that there has never been any such restriction in force under Standing Orders. I therefore do not uphold the point of order but I suggest that Senator Bolkus keep in mind the matters upon which he is embarking and that he keep his remarks within the ambit of the Standing Orders. Senator Chipp —Let him remember the evidence at the Foord trial. Senator BOLKUS —Mr President, I would like that inference by Senator Chipp withdrawn. I do not know what he is trying to suggest. If he is suggesting that I was responsible for evidence at the Foord trial I think that is a scurrilous accusation. The PRESIDENT —Order! The Chair does not see any inference in Senator Chipp's interjection. I ask Senator Bolkus to address his remarks to the Chair, to ignore interjections and to confine his remarks to the subject he has raised on the adjournment. Senator BOLKUS —Mr President, I will take your advice and I will not comment on any of the interjections that I have had so far. As a follow-up to the question that I asked, it is quite apparent that the person involved, Mr Chisholm, has more than shot himself in the foot by his response to journalists regarding the situation that was raised in the Senate on 20 August. It now appears that this person not only received a community employment program grant and was involved in the decision to give himself that grant but also received unemployment benefit at a time when he was receiving income from a business that he was operating. It is my conviction that there needs to be a follow-up of this situation. There needs to be an inquiry and recognition needs to be given to whether a prosecution should take place. I mentioned earlier Senator Vigor's response to my question. Senator Vigor, in his response, attempted to clarify his position and he attempted to quote his words, `to acquaint the Senate of the facts'. In the next few minutes I will prove that what Senator Vigor did, in a tightly written statement, was to skirt around the facts. In this case his motive was to protect his ally in a very bitter factional battle. Senator Vigor claimed in his statement that he was one of the people responsible for ACE television. That we know. He acknowledged that Mr Chisholm was employed for a year under a CEP grant under the auspices of ACE television. He also let us know that Mr Chisholm was registered for the prescribed period before he obtained the grant moneys. Let me turn briefly to the CEP guidelines for project sponsors. At the outset it should be noted that the program is aimed to create additional short term employment opportunities for those persons who are most disadvantaged in the labour market. The most disadvantaged persons are determined to be long term unemployed, migrants with English language difficulties, Aboriginals, disabled and others assessed as in immediate need of employment. They do not include what Mr Chisholm calls himself-that is, a successful businessman. In this instance he somehow obtained a grant. It is quite apparent that there is provision for other persons to be employed when those who are most disadvantaged and in need cannot be found. Having had a very close involvement with the campaign for public television, access television and multicultural television in South Australia, my knowledge of the situation is that there are people involved in that movement who would more suitably fit the qualifications appropriate under CEP. Senator Vigor claimed: The information suggesting that Mr Chisholm received remuneration from any other source during his employment with ACE Television is, to the best of my knowledge, false. That may be to be best of Senator Vigor's knowledge. All I wish to do, in rebuttal of that, is to quote from the South Australian Advertiser. Referring to what Mr Chisholm himself said, it states: . . . the income from the business-he acknowledges having two businesses-was paid into a trust fund and while he was on a CEP grant `any distribution of income went to a family trust and was distributed to members of my family-that didn't include me.' What is apparent here is that there has been an adoption of a mechanism to avoid the law-a dishonest adoption of the mechanism of trusts to avoid the applicable provisions of the CEP guidelines and restrictions. Senator Vigor went on to say: Mr Chisholm . . . resigned before taking up the 12 months employment with that association. That is, ACE Television. He went on to say that Mr Chisholm has since worked voluntarily for ACE Television. I believe that the information the Government has is that in fact Mr Chisholm was still on the board when the decision was made to give himself the project under the CEP grant. In essence, what this person has done has been to be party to a decision making process which gave himself a grant. I think that that dispenses for the moment with the CEP problems. The third point to which I wish to refer is the question of unemployment benefit, which is as serious as the CEP provisions. Don Chisholm by public acknowledgment is on the unemployment benefit. He is not sure how long he will be on that benefit. He has had some change of mind about whether he wants to stay on it or not. But he has made it clear that he will continue to claim the unemployment benefit while he is campaigning. If one looks at the requirements and provisions for persons to be eligible for the unemployment benefit, two stick out very starkly-that a person has to be available for work and has to be actively seeking work. I do not see how a candidate in a marginal area such as that in which Mr Chisholm will be can be in a position both to fulfil his obligations to the Australian Democrats and his obligations for qualification for the unemployment benefit under the provisions of the Social Security Act. He has to be taking on either the Government or the Australian Democrats. In this case I believe his intention is not to make himself available for work or actively to seek work. In this instance his intention has been shown by his intention under the CEP grant; that he will not conform but will mislead the Government as to his actual activities. That is one problem. We also have a problem in that once again, by public acknowledgment, Mr Chisholm makes it very clear that he is living with a person in a de facto relationship and that that person has a job. It is outside the provisions of the Social Security Act for a person with a family income to qualify for the unemployment benefit. Therefore, the situation is one in which, by manoeuvres with trusts and by giving misleading information to government departments, this person does not qualify for unemployment benefit on three grounds. The first, as I have mentioned, is the de facto income. He will not be able to qualify, secondly, because of his campaigning and, thirdly, because of the self-admitted trust arrangement by a successful businessman who diverts his income so that he can qualify for the dole. I will not talk much longer on this. I believe we have a situation in which the Australian Democrats are putting up for candidature a person who is not suited for public office. I believe he has misled the Government and the public with misleading information which amounts to nothing less than fraud on the Commonwealth. I am concerned that Senator Vigor, in his statement to the Senate on 10 September, in an attempt to save a mate in trouble, attempted to skirt around the truth. In closing, I believe that this is a matter that should be taken up by the Government. A number of actions should take place, the first of which should be the withdrawal of the unemployment benefit until this matter is clarified fully to the satisfaction of the Government in the interests of honesty. There should be an investigation surrounding the circumstances of the CEP grant because I do not accept that a person can be involved in a decision making process which gives himself government money, as has happened in this case. Thirdly, there should be an investigation of the payment of unemployment benefit to this person with a view, firstly, to the retrieval of the payments paid fraudulently and, secondly, to the possibility of a prosecution. Senator VIGOR(South Australia)(10.45) —I believe that some of the matters that have been raised by Senator Bolkus can be described only as calumny. In terms of my current knowledge of the situation, on three occasions tonight he has, without substantiation, made claims about statements which I made and about Don Chis- holm which I can substantiate as being false. He stated that Donald Chisholm was on the Board of Adelaide Community and Educational Television at the time when the decision was made to employ him on a community employment program grant. I was not part of the decision making process but I know from the board meetings which I attended that Don Chisholm removed himself from the Board and made himself available for the position. A number of other people were interviewed. In fact there were two CEP positions available and one of them was given to an Anne Tsoulis. Don Chisholm was not involved in any way in the decision which granted him the position. As I believe it, he is available for work and has been registered with the Commonwealth Employment Service over the recent period, and was registered from the moment his employment stopped with ACE TV. I understand also that he was registered with the CES prior to taking up the position with ACE, although I personally was not involved in checking that matter; it was done by the treasurer through the normal administrative procedures of ACT TV. As I understand it, Donald Chisholm is divorced and his ex-wife lives currently in Queensland. He has several children. As I understand it, the so-called businesses which have been mentioned are in fact operated by a trust which goes to his ex-wife and he has no benefits from those businesses. However, I was not expecting this evening to have to speak on this matter and I will check these facts and come back to the Senate tomorrow evening with answers. I am appalled at Senator Bolkus using the privilege of the Senate in trying to attack a person who is of the highest integrity. Senator Bolkus has presented a number of innuendoes and there have also been a number of innuendoes in the Press about Don Chisholm. In fact, these have been investigated fully-over-investigated-and all have been found to be false. Donald Chisholm was an effective employee of ACE. I have no reason to believe that he in any way deceived either the Government or the ACE board, or is currently deceiving the Government. If Senator Bolkus wishes to have an inquiry, we would welcome it. However, I believe that the Senate has enough much more important things to do. We do not wish to waste our time on matters without substance. Tomorrow night I will be speaking on this matter again, having checked on all the material that Senator Bolkus has brought up. I hope that Senator Bolkus will be here to apologise. Senator MICHAEL BAUME(New South Wales)(10.50) —I want to raise two matters of major concern emerging from the Government's new tax proposals. These matters of concern emerged particularly from statements made in the Senate today at Question Time. One relates to the Government's clear misunderstanding of the nature of goodwill. It might be because the Treasurer (Mr Keating) clearly does not understand goodwill, never having had any. The other matter relates to the increasing discretion of the Commissioner of Taxation which in fact is being granted apparently under what we understand of the new tax arrangements. The general principle in tax law is that the less discretion given the better because the one vital element of tax law must be uncertainty before that law. The more uncertainty there is, the worse that tax law and of course the greater discretion given to a tax commissioner by definition the more uncertainty will abound. I would like to raise, first of all, this question of goodwill because it is this lack of understanding of goodwill which demonstrates, I think, one of the Government's enormous failures in its approach to what it calls tax reform. I must say I object to the words `tax reform' when in fact it is change in this instance for the worse. To call everything that is changed `reform' is a gross misuse of that word. The question of goodwill and the impact of the Government's measures on it can readily be seen from the simple reality that when a small business is started from scratch, particularly in a country town-which is where I have come across most elements of it-the volume of assets in that business can well be minimal. That business can be built up by hard work, not necessarily by the agglomeration of funds returned into that business, which Senator Walsh mentioned apparently was the only way a business could be built up. So ultimately, many years later, when that business is sold it will hopefully be sold for far more than the net assets value of the business. In other words, the price to be received will be greater than the value of the specific and identifiable assets there. The reason I go to the trouble of making this point is that the difference between the value of the assets and the price received is goodwill. That is simple definition of goodwill. It is an accepted, well known and recognised proposition which I regret to say the Minister for Finance (Senator Walsh) has apparently never heard of. I mention that because- Senator Grimes —You heard of it when you left Patrick Partners. Tell me about the goodwill you left in Patrick Partners. Senator MICHAEL BAUME —Mr President, I am not surprised by interjections such as that. I had hoped that I would, in this instance, be able to encourage the Labor members of the Senate to lift the nature of the tax debate in this House by dealing with the issues rather than relying on personal abuse of participants in debate in this place. I do not mind Senator Grimes finding he has no other answer than to be involved- Senator Grimes —I raise a point of order. I point out that I in fact conducted a small business myself which involved goodwill. The only thing was that the goodwill went up and did not go down as did the goodwill which was concerned with the practice the present speaker was involved in. If my practice can be compared to Patrick Partners I will quite happily have that debated here any time, any place. The PRESIDENT —Order! There is no point of order. Senator MICHAEL BAUME —Thank you, Mr President. I accept the kind challenge by the honourable senator and remind him of the fact that at no stage did I ever own any goodwill in Patrick Partners or any other partnership because I was never an owner. Senator Grimes —You were a partner and you knew it. Senator MICHAEL BAUME —Perhaps the honourable senator would like to be quiet for just a minute and allow some facts to impose themselves on his mind. It would be very nice if he would listen and hear that my status was clearly stated to be a non-owner partner. I was described as a staff partner; I was not entitled to any of the assets of the firm, nor was I responsible for any of the liabilities of the firm. Now I know facts do not rest well with Senator Grimes and as a result I take up his offer and I will debate with him the facts of any matter in this area that he wishes to debate, but it would be nice if he stuck to the facts. I presume he has access to them. If he does not, I will facilitate that matter and provide him with facts. They are available, for example, in the Masterman report which cleared me. But if the honourable senator has any special access to `facts' I am only too willing to lead him into the ways of righteousness and truth. I know that he will find that an unusual territory, but I will lead him with righteousness and truth. Senator Grimes —Pontius Pilate said the same thing: `I wash my hands'. The PRESIDENT —Order! There are far too many interjections. Senator MICHAEL BAUME —Thank you, Mr President. I was endeavouring to lift the nature of the tax debate. Senator Grimes —Pontius Pilate. Senator Peter Baume —I raise a point of order. In the last interjection Senator Grimes said `Pontius Pilate' referring to Senator Michael Baume. I suggest that that is now transgressing standing order 418. If he is referring to the honourable senator in any way by the phrase `Pontius Pilate' I ask him to withdraw that. The PRESIDENT —Order! If Senator Michael Baume took exception, I would ask the Minister to withdraw, but at this stage Senator Michael Baume has not sought a withdrawal. If he does seek a withdrawal I would ask the Minister to withdraw. Senator MICHAEL BAUME —Mr President, I think it would be better if the honourable senator could elevate the level of discussion. As a result, I suggest that it would be pleasant of him to withdraw. The PRESIDENT —I ask the Minister to withdraw that remark. Senator Grimes —I have never asked anyone to withdraw any remark made about me in this place. With respect to the Senate I will withdraw as you, Mr President, have requested me to do so. But I think it is incredible that someone should be asked to withdraw such a statement. The PRESIDENT —Order! Senator Grimes has withdrawn that remark. Senator Grimes —I will hand Senator Michael Baume a towel to wash his hands at a later stage. Senator MICHAEL BAUME —Thank you, Mr President. At least when I wash my hands they will be clean. The PRESIDENT —Order! Can we get back to the adjournment debate and stop the chit chat across the table. Senator MICHAEL BAUME —Yes, Mr President, I would much prefer to do so because there are major matters which obviously the Government does not wish to discuss here in terms of fact. This latest little diversion of Senator Grimes is a clear indication of a reluctance to deal with the consequences of these tax matters which have, unfortunately, imposed themselves upon a surprised community. The community has been surprised because in dribs and drabs things are now coming up. We find that, with a little business in a country town, which for example, started with nothing and which ends up being sold with its major asset as goodwill, on that sale the goodwill will be totally taxable. In other words, under the scheme which allegedly indexes the asset for inflation-the major asset in small business is goodwill which makes up the bulk of the sale price-goodwill will be totally taxed unindexed because one recognises that if at the beginning of the business there is no goodwill one can hardly index nothing for inflation. This seems to have escaped the geniuses opposite who have developed this incredible tax legislation. That is why it was so important this afternoon when Senator Messner asked his question that the Minister responding did not know what good will meant and said that there was no way of measuring it. It seems to me that Senator Messner's question required a coherent answer just as so many of the problems facing the community require a coherent answer. But in Question Time this afternoon Senator Walsh said: `I do not know how anybody objectively measures what is good will'. He said that at the heart of most tax avoidance schemes is the conversion of what was notionally income and should have been taxed as income into some form of capital gain. There is no question of income in the goodwill element. Goodwill is the value of the business that has been built up as a result of the hard work of the participants in the business. Senator Crichton-Browne —And its real assets. Senator MICHAEL BAUME —Goodwill is added to the assets when sold. As I mentioned, it is the difference between the value of the net assets of the firm and the price received for the firm. For a Minister as senior as the Minister for Finance totally to misunderstand this proposition is incredible. It explains why this Government is going to tax at 100 per cent the good-will built up in small businesses whereas if the asset were a boiler, a desk of any such fixed asset it would be taxed only at the net amount after indexing for inflation. This discriminatory attack on small business by this Government in its proposals, particularly on small business because that is where the good will element is, the attack on small partnerships in country towns, on people who have the work ethic, if you like, and who seek to improve themselves-I must say I hope these proposals never become legislation-is appalling, as revealed today at Question Time. For the Government to have revealed today at Question Time that it did not understand what it was doing, that it did not know the gun was loaded, is absolutely disgraceful after so much discussion of the problems relating to the new tax package. I now deal with another matter, which relates to the increasing discretion apparently to be given to the Commissioner of Taxation by these new proposals. I was astounded to hear the Minister for Finance respond to my question at Question Time today. I asked where one draws the line in deciding which functions involving meals are deductible and which are not. I outlined, as you remember, Mr President, perhaps too many alternative ways where this question would be raised. I asked, for example, whether if someone took the Special Minister of State (Mr Young) to lunch he would really be having entertainment or would it perhaps be more of a seminar. Senator Peter Baume —It would be purgatory. Senator MICHAEL BAUME —One could describe it as purgatory although I think long lunches are now out. I wonder whether one of the reasons long lunches are out is what happened to Mick Young. There are so many of these situations. I mentioned in my question a seminar to be addressed by the Treasurer (Mr Keating) which was advertised as being tax deductible, although lunch and refreshments were to be served. Eventually, after the usual amount of personal insult, the Minister for Finance replied: . . . such matters as Senator Baume has referred to, as is customary for many provisions of the taxation Act, will I expect be left to the discretion of the Commissioner of Taxation to determine. That backed up a statement made in the latest issue of Inside Canberra which quotes the Treasurer as saying that there will be a different handling by the Taxation Commissioner of seminars depending on the individual set of conditions on each occasion. In other words, there will be a clear discretion available to the Commissioner to decide which is which. There will be uncertainty. What I really want to say tonight in the first place is that the planned law is apparently based on a total misunderstanding of what is goodwill. The law in respect of entertainment, seminars and so on is based on a total misunderstanding of what is good tax law; in other words, it is a question of certainty. We have a situation where a bribe will be tax deductible but a lunch will not. I do not know to what extent the Government really intends to encourage businesses to go into bribes. Certainly bribes are customary in some South East Asian countries. If this Government is trying to encourage a new level of business morality in Australia by discouraging people from doing business over lunch and encouraging them to bribe people to do business with them, I suppose that can be claimed as another great tax reform. I put it to the Government that in both of these areas it really should have a serious look at what it has done. I conclude by mentioning that Inside Canberra quite rightly points out that those in the business of running seminars will be able to deduct fully charges imposed by hotels, including meals, but, unfortunately for non-profit organisations, we understand they will still be liable for the 49 per cent tax for meals. Inside Canberra states: Thus when a MTIA or CAI holds its annual meeting and dinner, the cost of the dinner will be subjected to a 49 percent fringe benefits tax. It seems ludricrous that a W.D. Scott business organisation can fully deduct the cost of meals and refreshments associated with its seminars run commercially, yet non-profit industry organisations will be hit with a 49 percent fringe benefit tax. It concludes by saying: Treasury officials admit the Tax Office is going to have a big problem in policing the new policy. I simply ask the Government at this point to recognise that the uncertainty created is causing problems not only for the Tax Office but also for business, and in the area of goodwill a far more disastrous problem is being created. That is a problem that I believe will lead to the destruction of many small firms, to the discouraging of many people from being energetic and pursuing their right to have individual firms and, by building up the goodwill in their business, to prepare themselves for their retirement rather than having to rely on the State. It seems to me that the legislation that the Government appears to have in mind is destructive both of our society, in the sense of seeking to destroy the small businessman, and of good tax law in creating unnecessary uncertainty. Senator PETER RAE(Tasmania)(11.09) — Briefly, I wish to talk about a matter which involves the destruction of the scallop industry of Tasmania. Today I was concerned to hear the answer given by Senator Walsh to a question asked of him by Senator Tate in relation to the Tasmanian scallop industry in which it was confirmed that it has now been agreed that an area of new beds found off north-eastern Tasmania will be opened from 8 October-that is, today-until 28 October, by which time most of the large scallops could have been taken, given the large number of boats expected to be fishing the beds. That is a direct quote from the information provided by Senator Walsh. The scallop industry has had a very chequered history. It involves a very heavy investment by the individual fisherman concerned. It involves a high degree of management of the scallop beds to ensure that there is not destruction of the scallop beds and therefore the scallop industry. That result has substantially been the result in the D'Entrecasteaux Channel and other areas off Tasmania. A plea has come from the scallop branch of the Professional Fishermen's Association of Tasmania that the ratification of the agreement between the Commonwealth and the States of Tasmania and Victoria be expedited. The association feels very strongly that if the closed area is reopened before the offshore constitutional settlement becomes law, with no size or bag limits imposed, the beds will be completely decimated, perhaps beyond recovery, as has happened in the D'Entrecasteaux Channel. The answer given today by Senator Walsh was surprising. The offshore constitutional settlement is likely to take some months to conclude. Everybody hopes that if the beds are to be opened for this period of 20 days, as has been agreed, there will be very strict policing to ensure that none of the undersized beds are fished by any boats operating in that area. At the same time, every possible step should be taken to expedite the discussions between Victoria and Tasmania in which all of the elements of the offshore contitutional settlement can be concluded so that the fears for the destruction of the scallop beds can be removed and proper management plans can be introduced. The fear of warfare breaking out between the Victorian and Tasmanian scallop fishermen has been receiving quite a lot of publicity, but I will not comment on the degree to which that was extreme. Very strong feelings were engendered, particularly so far as the Tasmanian fishermen were concerned, who saw it as their waters, not far from St Helen's. The idea of the larger boats from Lakes Entrance in Victoria coming in and cleaning out the new scallop beds in a matter of days was something which raised the fears and concerns of any normal person. I first mentioned this matter when it blew up on the weekend of 17 August. I contacted Dr Bain of the Commonwealth Department of Primary Industry. He assured me that steps would be taken and advice would be given to the Minister for Primary Industry (Mr Kerin) which would protect these beds. He discussed the matter at that time with Mr Wilson of the Tasmanian Fisheries Development Authority and said he believed that they would be protected. The beds are open now and I trust that every step will be taken to protect the small beds and to finalise the matter without any further delay or raising of hackles between the fishermen of the two States. I hope that the Government can organise the finalisation of this matter as soon as possible. I thank the Senate for the opportunity to make those remarks and I hope that they will be passed on to the Minister. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(11.14) —In relation to the contributions of Senators Bolkus and Vigor to the debate tonight, I do not think it would be useful or helpful to add further to that preliminary bout for what seems likely to be a main contest tomorrow night. As for Senator Michael Baume's contribution, I will bring it to the attention of Senator Walsh, representing the Treasurer (Mr Keating), although I anticipate that he will reject it as half-baked alarmist nonsense of one kind or another. I do not know the force of the point the honourable senator made about goodwill. I am sure that the Treasurer will have views on that subject. I reiterate, in the context of meal benefits, the sorts of points Senator Walsh made at some length in Question Time today; that the Government makes no apology whatsoever for tackling that rort head on. It is not an industry which we are prepared to see continuing to be subsidised by the taxpayer, even if it is the case that many people opposite would regard the only appropriate clause to put in a Bill of Rights as being the right to a free lunch. The contribution of Senator Rae ought to be drawn to the attention of the Minister for Primary Industry (Mr Kerin) and I will ensure that it is. Question resolved in the affirmative. Senate adjourned at 11.16 p.m. The following papers were tabled: Australian National Railways Commission Act-Regulations-Statutory Rules 1985 No. 231. Commonwealth Employees (Redeployment and Retirement) Act-Regulations-Statutory Rules 1985 No. 232. Commonwealth Teaching Service Act-Determination 1985 No. 3. Defence Act- Defence Force Remuneration Tribunal- Determinations 1985 Nos 1, 2, 3. Reasons for Determinations, dated 2 September 1985. Determinations 1985- No. 59-Travelling Allowance and others. No. 60-Recreation Leave. No. 61-Travelling Allowance and others. No. 62-Service with a Foreign Defence Force (Allowances Not Payable) No. 63-Travelling Allowance and others. Fisheries Act-Fisheries Notices- No. 146-Prohibition relating to the taking of southern rock lobsters from south-eastern Australian waters, dated 22 August 1985. No. 148A-Variation of Fisheries Notice No. 148-Prohibition relating to the taking of scallops from proclaimed waters in Bass Strait, dated 18 September 1985. Health Insurance Act-Regulations-Statutory Rules 1985 No. 229. Industrial Research and Development Incentives Act-Regulation-Statutory Rules 1985 No. 230. Lands Acquisition Act-Statement of Land, etc., acquired for Defence purposes-Jennings, New South Wales. Liquefied Petroleum Gas (Grants) Act-Price Determination, dated 27 September 1985. National Health Act-Determination (3) under sub-section 4 (1), dated 26 August 1985. Navigation Act-Marine Order 1985 No. 3-Part 19 (Tonnage Measurement-1969 Convention). Public Service Act- Appointments- Department of Primary Industry-R. J. Hassett. Department of Social Security-A. P. Calgaret, D. J. Creighton. Department of Sport, Recreation and Tourism-L. W. Tighe. Determinations 1985 Nos 74, 75, 76, 78, 79, 81. Seat of Government (Administration) Act- Declaration made under the Rates Ordinance, dated 11 September 1985. Determinations made under the following Ordinances- Adoption of Children, dated 18 September 1985. Betting (Totalizator Agency), dated 13 September 1985. Bookmakers, dated 13 September 1985. Building and Services, dated 18 September 1985. Credit, dated 2 September 1985. Dangerous Goods, dated 18 September 1985. Lakes, dated 18 September 1985. Machinery, dated 18 September 1985. Motor Traffic, dated 18 September 1985. Real Property, dated 18 September 1985. Registration of Births, Deaths and Marriages, dated 18 September 1985. Sewerage Rates, dated 11 September 1985. Water Rates, dated 11 September 1985. Ordinances 1985- No. 46-World Cup Athletics (Security Arrangements). No. 47-Seat of Government (Administration) (Amendment). No. 48-Statistics (Repeal). No. 49-Motor Traffic (Amendment) (No. 5). No. 50-Motor Traffic (Amendment) (No. 6). No. 51-Motor Traffic (Alcohol and Drugs) (Amendment). Regulation 1985-No. 24-(Bookmakers Ordinance). Trade Commissioners Act-Determination 1985 No. 1. ADMINISTRATOR'S PROCLAMATIONS- COMMENCEMENT OF ACTS: Proclamations by His Excellency the Administrator of the Government of the Commonwealth of Australia were tabled, notifying that His Excellency had proclaimed the following Acts and Sections of Acts to come into operation on the dates specified: Shipping Registration Amendment Act 1985-Sections 3 to 7 and 9 to 29-1 October 1985 (Gazette No. S 394, 26 September 1985). Statute Law (Miscellaneous Provisions) Act (No. 1) 1985- Amendment of the Defence Act 1903 to section 120B, made by the Act-1 October 1985 (Gazette No. S 400, 30 September 1985). Amendments of the Trade Commissioners Act 1933, made by the Act-1 October 1985 (Gazette No. S 383, 20 September 1985).