Wednesday, 9 October 1985 The PRESIDENT (Senator the Honourable Douglas McClelland) took the chair at 10 a.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled, the humble petition of the undersigned citizens of Australia respectfully showeth: That we deplore the discriminatory tax proposals as outlined in the Government's ``White Paper'' and the Government's preferred option on proposed new and widened tax proposals as so outlined, namely: Capital Gains Tax, Hidden Death Tax described as ``Capital Gains Tax after death'', Gift Tax, Increased Company Tax, Employer taxes on employees' employment benefits. All such taxes will discriminate against and inhibit progress, growth and employment throughout the nation. They will attack hardworking people who have built up their assets; they will discourage thrift; they will inhibit development; they will treat unfairly all who plan for the future; they will cause trouble and expense in arriving at the value of their assets; they will discourage industry and punish achievement. Your petitioners therefore humbly pray that the Senate in Parliament assembled should reject these tax proposals. And your petitioners as in duty bound will ever pray. by Senators Brownhill (from 50 citizens), MacGibbon (from 16 citizens) and Sheil (from 917 citizens). To the Honourable the President and members of the Senate in Parliament assembled, the humble petition of the undersigned citizens of Australia respectfully showeth: That we deplore the discriminatory tax proposals as outlined in the Government's ``White Paper'' and the Government's preferred option on proposed new and widened tax proposals as outlined, namely: 1. Consumption tax on hairdressing services etc. 2. Any other new taxes on business and their proprietors. Such taxes will discriminate against certain businesses and inhibit progress growth and employment throughout the nation. They will severely inhibit the growth of employment opportunities for young people in the hairdressing industry. They will attack hardworking people who have built up their own small businesses. They will inhibit development and will treat unfairly all who plan for the future expansion of their businesses. Your petitioners therefore humbly pray that the Senate in Parliament assembled should reject these tax proposals. And your petitioners as in duty bound will ever pray. by Senator MacGibbon (from 1,054 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That we the undersigned who have great concern for the protection of the unborn child, call upon the Government to reject the Vinson Enquiry recommendation that an Abortion Clinic be established in Canberra. And your petitioners most humbly pray that the Senate in Parliament assembled will reject this recommendation. by Senator Reid (from 69 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. And your petitioners as in duty bound will ever pray. by Senator Jessop (from 47 citizens). To the Honourable the President and members of the Senate assembled. The petition of the undersigned respectfully showeth that: 1. The Watsonia Army Barracks contains electronic communication facilities, operated by Australian and American personnel, that gives the United States the ability to pin-point Soviet nuclear submarines, hidden in the Oceans. 2. This would make it possible for U.S. killer-submarines to destroy all Soviet nuclear submarines, while the U.S. nuclear submarines launch their missiles in a `first strike' attack. This makes Watsonia a potential nuclear target. A nuclear attack on Watsonia would have a disastrous effect on Melbourne. 3. The `joint U.S.-Australian' bases in Australia endanger rather than protect us. They also add a new menace to the nuclear arms race, that must be stopped. Your petitioners most humbly pray that the Senate in parliament assembled should close the `Joint Australian-U.S.' electronic communication facilities in the Watsonia Army Barracks. by Senators Chipp (from 90 citizens) and Zakharov (from 90 citizens). 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 Federal 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 Crowley (from 150 citizens), Foreman (from 221 citizens), Haines (from 104 citizens), Maguire (from 116 citizens) and Vigor (from 80 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 adverse 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 30 citizens). To the Honourable the President and members of the Senate in the Parliament assembled. The petition of the undersigned shows: That human embryos deserve legal protection to enable the development of their full human potential. Your petitioners request that the Senate, in Parliament assembled, should: Pass Senator Harradine's Bill to prohibit experiments involving the use of human embryos created by in vitro fertilisation. And your petitioners as in duty bound will ever pray. by Senator Peter Baume (from 3,391 citizens). To the Honourable the President of the Senate in Parliament assembled. The petition of the undersigned shows: That the proposed introduction of compulsory identification (ID) cards should be considered and rejected because the system: (a) is not a cost-effective method of reducing tax evasion and social security fraud and, to the contrary, in the form proposed will faciliate such evasion and fraud; (b) will constitute an unwarranted infringement of individual privacy by the aggregation of a wide variety of personal information of a private nature; (c) will cause a further large and costly growth in the bureaucracy and burden on the taxpayer; and (d) cannot be guaranteed against misuse for purposes other than that for which their introduction is stated to be intended and in fact provide the opportunity for blackmail and other forms of misuse. And your petitioners humbly pray that the problems which identification cards are intended to reduce should be attacked by other, more effective and less obnoxious methods. And your petitioners, as in duty bound, will ever pray. by Senator Peter Rae (from 29 citizens). To the Honourable President and the members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: 1. That the proposed new Customs House Building in Fremantle will accomodate 630 Commonwealth Government Employees from seven Departments and will service many Fremantle residents; and that both staff and clients of the Departments housed in the new building will have need of childcare facilities. 2. That the non inclusion of childcare facilities in the plans for the new building is contrary to the spirit of the Government's own Affirmative Action policy which recognises that the absence of adequate childcare facilities prevents many women from realising their full potential in the workplace, and makes a mockery of the Government's policy of urging private employers to provide workbased childcare for their employees. 3. Your petitioners humbly pray that the Government should act promptly to ensure that childcare facilities are included in the plans for the proposed new Customs House Building And your petitioners as duty bound will ever pray. by Senator Giles (from 400 citizens). To the Honourable the President and members of the Senate in Parliament House assembled. The petition of the undersigned citizens of Australia respectfully showeth that we support the following Bills introduced by Senator Chipp: Australian Airspace (Nuclear Weapons Prohibitions) Bill 1985 Australian Waters (Nuclear-Powered Ships Prohibition) Bill 1985 Australian Waters (Nuclear Weapons Prohibitions) Bill 1985 Nuclear Weapons Prohibition Bill 1985 The passage of which would prohibit the entry of aircraft carrying nuclear weapons into Australian airspace, the entry of nuclear powered and/or armed ships into Australian waters, and the development, testing, manufacturing, transportation or storage of nuclear weapons in Australia. Your petitioners therefore humbly pray that all Senators, regardless of political affiliations, support these Bills-not just for our sake but for our children. And your petitioners as in duty bound will ever pray. by Senator Chipp (from 89 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully shows: That we urge that the Australian Government express its concern to Indonesia over consistent reports of widespread human rights violations in East Timor, as detailed by Amnesty International, and that the Indonesian Government be urged to take steps to prevent killings, torture and arbitrary arrest and imprisonment, as has been recently reported. We would further humbly request that the Australian Government use its voice at the United Nations to lobby strongly for the reinsertion of East Timor to the Human Rights Commission Agenda; that the above human rights concerns be raised at the General Assembly when the Decolonization Committee makes its report; and that steps be taken to initiate UN conducted negotiations between Indonesia, Portugal and representatives of the East Timorese people, including Fretilin. And your petitioners as in duty bound will ever pray. by Senator Chipp (from 53 citizens). To the Honourable the President and members of the Senate in Parliament Assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That the Veterans' Entitlement Bill dated May 1985 is taking a fair `earned service' from the men and women of Australia who kept this country free so that Governments today could have the freedom to be able to govern fairly. Your petitioners therefore pray that the Senate in the Parliament assembled ensure that the previous legislation in respect of Servicemen and Women and their dependants' entitlements be restored. And your petitioners as in duty bound will ever pray. by Senator Michael Baume (from 555 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth: That the Government did not honour its promise to consult with veterans before introducing the Repatriation Legislation Amendment Bill. Your petitioners most humbly pray that the Senate in Parliament assembled, should- Oppose any sections of the Veterans' Entitlements Bill which would have the effect of reducing veterans' benefits and particularly that section which seeks to change the onus of proof. And your petitioners, as in duty bound, will ever pray. by Senator MacGibbon (from 130 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth: That we are greatly concerned with the Government's failure to expedite the release of Rob and Jenny Williamson from Pakistani tribesmen who took them captive early in May 1985. And your petitioners humbly pray that the Senate, in Parliament assembled urges the Australian Government to request the Pakistani Government to negotiate further with the Pakistani tribesmen to procure the immediate release of the Williamsons, and to take whatever steps are necessary to successfully achieve this end. And your petitioners as in duty bound will ever pray. by Senator Short (from 287 citizens). Petitions received. Senator BOSWELL(Queensland) —I give notice that, on the next day of sitting, I shall move: That the Senate- (1) notes with concern the increasing attacks on the independent self-employed business operators through: (a) continued changes to the tax Act, forcing independent contractors and workers into the inappropriate PAYE system, (b) the recommendation of the Hancock report that the Australian Conciliation and Arbitration Commission be given jurisdiction over independent contractors, (c) repeated union intimidation in the transport and associated industries to force the self-employed into union-controlled superannuation schemes, (d) the Labor Government's capital gains tax; and (2) condemns the Federal Government and its senior partner, the Australian Council of Trade Unions, for the continued strangling of the most productive sector of the community. Senator JONES(Queensland) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) deplores the fact that 3 Australian rugby union international players, Glen Ella, David Campese and Roger Gould have arrived in South Africa to play in a seven-a-side tournament in Durban on Saturday, 12 October 1985; (b) notes that there are persistent reports that 3 other Australian players are poised to join them; (c) deplores the decision by these individual players, which can only give the oppressive white minority regime considerable comfort in its continued promotion of the internationally discredited apartheid regime; (d) notes that the rugby union and cricket sporting visits have hurt the cause of black South Africans, and are against the spirit of the Gleneagles agreement; and (e) urges the Australian rugby union and cricket authorities to impose the heaviest possible penalties on the players on their return. Senator BUTTON(Victoria-Leader of the Government in the Senate) —Papers are tabled in accordance with the list circulated to honourable senators. With the concurrence of the Senate, I incorporate the list in Hansard. Leave granted. The list read as follows- 1. Primary Industry Bank-annual report 1984-85-pursuant to section 10 (1) of the Primary Industry Bank Act 1977. 2. Australian Industry Development Corporation-annual report 1984-85-pursuant to section 37 of the Australian Industry Development Corporation Act 1970. 3. In the matter of the Australian Bicentennial Authority-opinion by the Solicitor-General. Motion (by Senator Zakharov) agreed to: 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. The PRESIDENT —I inform the Senate that I have received a letter from the Leader of the Government in the Senate advising that Senator Sibraa wishes to be discharged from further attendance on Estimates Committee A and nominating Senator Cooney to be a member of that Committee. Motion (by Senator Button)-by leave-agreed to: That Senator Sibraa be discharged from further attendance on Estimates Committee A and that Senator Cooney, having been duly nominated in accordance with Standing Order 26AB, be appointed a member of the Committee. Senator MASON(New South Wales)(10.08) —I 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 co-location 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. I am raising this matter because it has become one of great importance and urgency in its own right. But more than that, it is important also because it is symptomatic of several wider disorders of government. That is the motivation behind the third part of the motion. The Japanese have a classical saying, going back to their centuries of autocratic government by the shoguns, who, of course, were a military government backed by the samurai. That saying is kanson mimpi, which means `official exalted, people despised'. I shall repeat that, Mr President, because I think it is of some significance: Official exalted, people despised. If there was ever a clear example of an advancing case of kanson mimpi in Australia, it must be that of the proposed Army land grab, because over the last few years there has been such an extraordinary amount of evasiveness, double talk and official shiftiness as to make an inquiry by the Senate into the whole background of events and their motivation absolutely necessary. I raise the matter with the Senate in that light. I am pleased indeed that the Opposition supports this matter. In all fairness, I must say quite plainly that the Opposition suggested definite improvements to my original motion, which I have used in their totality in the present motion. That has been done following consultation and agreement with the interest groups involved. Those interest groups, as honourable senators may know, have for some time been greatly upset and agitated by the whole question of the Army's manoeuvres in these directions, and particularly over the indecisiveness on this issue over a period of slightly over a decade, as I shall shortly outline. It is evident, on that basis, since the National Party and the Liberal Party support the motion, that the reference of this whole scandalous matter to a standing committee of the Senate, the Foreign Affairs and Defence Committee, will pass. There is, as I have said, a broader issue: The whole question of why and how land is acquired by government, and how and why compensation is arrived at and finally paid to people. I would hope that in this reference in that third paragraph `the adequacy and appropriateness of current procedures in protecting the rights of individual landholders and communities' and `providing for fair and prompt compensation' will have due weight in the Committee's considerations. The Australian Democrats have taken a previous initiative in this direction, through my colleague Senator Janine Haines, who introduced the Property Rights Protection Bill, as a private member's Bill, in May last year. This Bill was designed to deal with the problems of New South Wales coal rights owners who had these rights resumed in 1981. I quote the case from Senator Haines's speech in this way: Recent events in New South Wales, following the enactment of the Wran Government's Coal Acquisition Act of 1981 are a case in point. In a simple and savage move, that Government declared that the historical rights of thousands of New South Wales freehold landowners to whatever coal might be found on or under their property, no longer existed. No compensation was paid in this matter until four years afterwards. This has proved unsatisfactory to those affected. Obviously, some mechanism for the provision of fair and adequate compensation for this type of land acquisition must be found, and a preliminary investigation of this set up in my motion. Paragraph (c) is designed to restore to Australians some rights and some forms of defence against the depredations of exalted officials, who, indeed, despise the people to the extent that they are prepared, over long periods, indeed many years, to delay decisions over land acquisition, to change their minds after keeping property owners in suspense through those years and, in the end, to deny them proper compensation promptly paid. It is high time that that stopped, and it is a major part of my motivation in bringing forward this matter. The Army land grab saga itself could make several excellent episodes of Yes Minister. For years the Army has been flitting uneasily from locality to locality, producing environmental impact statements and doing other portentious preliminary work-all of which, needless to say, has cost the taxpayer plenty. Everywhere that the Army has favoured a locality with its doubtful intentions, that has had catastrophic effects on the people of that region. Land values have plummeted; persons facing the need to sell for urgent personal reasons have not been able to do so; and farmers have seen little point in developing their properties by making constructive improvements. All these things are not good for the economy and are not good for Australia. I suggest that an investigation might show that the Army's requirements do not balance adequately against those other equity considerations. Briefly, the chronicle of events in this regard goes back to 1974, now 11 years ago, when the Army decided to acquire 200,000 hectares at Colo-Putty for relocation of the artillery and infantry schools and for a manoeuvres area. The matter dragged on until 1977 when the Army chose Dubbo as a favoured site for the new training facilities and Cobar as a favoured site for manoeuvres areas. There was a further hiatus, a very leisurely one-only five years this time-until February 1982 when the then Minister for Defence, Mr Killen, and the New South Wales Premier, Mr Wran, ordered further studies of the Dubbo and Cobar areas. But then New South Wales Government departments suggested other areas, including Parkes, Forbes, Wellington, Broken Hill and for the first time, Orange-Bathurst as possible schools areas. The manoeuvres area requirement at that stage was two million hectares-rather more than the 200,000 hectares suggested in 1974 and considerably larger than some major European countries. Yet that was a serious proposition put forward by the Army and the Government at that stage. At that stage naturally landholders in all those areas became agitated and their position became insecure. The value of their property was immediately affected. In April 1982 the Federal-State steering committee for army training facilities decided that land south of Cobar would be suitable for the manoeuvres area. Environmental consultants for the Army, Dames and Moore, announced that sites near Dubbo, Bathurst- Orange and Tamworth-Armidale were being assessed for training areas, thereby cutting a wide swathe across three separate New South Wales areas of productive farming land. In August four new manoeuvres sites near Cobar and Broken Hill were suggested by the New South Wales Government and in September an area near Bathurst-Orange comprising part of the area rejected in July was added to the New South Wales Government's proposals for schools area sites. In March 1985 the New South Wales Premier released recommendations on sites in order of preference: Singleton, Dubbo and Orange-Bathurst-Mudgee. A site north-west of Cobar was accepted by the Federal Government as a site for manoeuvres areas. In May 1985 Singleton and Dubbo were rejected by the Federal Government. Bathurst-Orange again became subjected to detailed environmental study as a site for the schools area. Consultants Dames and Moore were again engaged to study Orange-Bathurst and to make a preliminary study at Singleton. As honourable senators know, we had an election in 1984. During that campaign the Prime Minister (Mr Hawke) was in the Orange-Bathurst area and, according to statutory declarations I have seen, he gave frequent assurances to people in that area that, whatever happened, there would not be an Army land grab in the Orange-Bathurst area. Senator Durack —He doesn't know what goes on at all, does he? Senator MASON —I do not know. Either he knew or he did not know. The effect is the same. In spite of what the Prime Minister said at that stage, in spite of those clear assurances, we now find intentions again clearly centred on the Orange-Bathurst region where the Army, in spite of clear statements by the Government that it does not intend to use productive land, indeed now has its eyes on a very large area of highly productive area. The plan now is to take over 70,000 hectares of farm land which consists of some 99 properties. I am advised that the proceeds of production from 54 of them was worth some $5m in exports to this country last year in the form of fine and super fine wool for which there is a ready demand that exceeds supply. Thus is the Government's and the Army's idea of not taking over productive land. It seems to me and the Australian Democrats quite crazy that we should even contemplate eliminating this whole productive area in a nation which is struggling with an appalling growth in our foreign debt and which needs every dollar of export income we can get. If one could see an urgent strategic imperative for this acquisition, if the world was going to come to an end if the Army did not get those 70,000 hectares of land at Orange-Bathurst and destroy those farms and the livelihoods of 99 families, one might be able to consider it. But is that the case? The next question to be asked is: Does the Army really need this land? I am advised that the Army already owns more than 1 1/2 million hectares of land in Australia and, through a variety of agreements with various State authorities, can get access to a further 2 1/2 million hectares of Crown land should that be required. According to the latest defence statistics, there are 32,000 men in uniform in the Army. Compare this with another country. West Germany, for instance, has approximately 320,000 men in uniform. That is approximately 10 times the number of Australians in uniform. Of course, that is a situation that we would expect. West Germany is a major world power. In addition, under North Atlantic Treaty Organisation agreements, a substantial number of American soldiers are stationed in West Germany. I am advised that the total land area for all of the military training establishments in West Germany is less than 150,000 hectares, which is approximately one-tenth of the land over which the Australian Army has exclusive occupancy and approximately one-twenty-fifth of the land to which it can obtain access. I wonder whether anybody could tell me or, more importantly, whether anybody will be able to tell the Standing Committee, why an army one-tenth the size of the West German army needs 10 times as much land for it to be able to train itself adequately. No one can suggest that the West German army is not one of the most efficient and best trained armies in the world. There is no suggestion that it cannot carry out its manoeuvres properly. Why then does Australia need 100 times the amount of land for each soldier that the West German army needs for each soldier that it trains? The military has a firm obligation to justify publicly and to the Parliament not only its request for this additional land but also the continuing saga of hesitation and delay and the constant spending of money over and over again on environmental studies which, apparently, lead to no result. That would be the proper role of the Senate Committee. The Committee reference I propose would certainly provide the opportunity for the Army to justify its actions. Through you, Mr Deputy President, I suggest to honourable senators that that fact alone would be a clear reason for supporting the motion for the reference. If this land were not required as military land but for some other purpose such as a major project requiring public expenditure, the outlays of public moneys would need to be justified before either the Public Accounts Committee or the Public Works Committee. That is a sound practice, and it is one that the Parliament has insisted on. It should insist on a similar procedure in respect of the proposed acquisition of land by the Army. I have looked to some extent at the statements being made by the Minister for Defence, Mr Beazley, in regard to the acquisition of this land and the costs that would be involved. All I can say charitably is that the Minister appears to have been very badly advised. He keeps floating a figure of $120m, which in spite of inflation has remained unchanged over the years, as the cost of establishing this combined complex in the Bathurst-Orange area. On any realistic view, it is obvious that a figure nearer $500m would be closer to the mark. I am not saying that I am competent to give an accurate cost; plainly I am not, but I think I am competent enough to say that there is something wrong with the Minister's original figure. Again, if the Committee reference is agreed to, it will behove the Army to let the community and the Parliament know just what is involved and tell us how much money it wants to spend, and how it wants to spend it and not just give us a figure of $120m grabbed out of the air. As we know from various recent tax discussions, the Government is very fond of grabbing figures out of the air for which no justification can subsequently be provided. For instance, I refer to the figure which it claimed would be saved in social service costs by introducing identity cards. That figure really comes from fairyland. I suggest that the figure of $120m also comes from fairyland. There are a number of other matters that I ought to mention. According to information obtained under the Freedom of Information Act from military records, the land at Orange is the least preferred area of the three areas in New South Wales which were originally considered for acquisition. That is a very mysterious situation which requires some investigation. The Army, in its preliminary assessments, inspected the Orange area and considered it to be unsuitable for its purposes. It said that further studies should be concentrated on the remaining two areas under investigation namely, Tamworth and Cobar. If the Army considered the land at Orange to be unsuitable for its purposes, that is another good reason why the Parliament should be able to examine the proposed acquisition and satisfy itself that the additional land acquisition is necessary and, if it is necessary, that it is land that can best meet the purposes that the military. There is an important strategic consideration in this matter. It is simply whether or not the best thing to do is to train our Army in south eastern Australia. I cannot see any real perceived threat to Australia from either New Zealand or Antarctica. I would have thought that any perceived threat to this country-which is probably unlikely-would be more likely to come from the north and west of the country. I put that thought in the minds of our strategic planners when they come to consider where people should be trained and where it would be appropriate for them to gain experience in areas where they may have to operate. It might be considered that, as in other countries, a highly mobile, strong air capability, parachute-trained army which exercises regularly in the north and west of the country would be more appropriate. I just throw that thought in for what it is worth. It is again a matter of public record that the Premier of New South Wales favours an extension of the present Army base at Singleton. I would like to deal briefly with that matter because I think it is vitally important. I have been told that one of the reasons why the Army does not like the new land it might get at Singleton is that some areas of the land are too steep. I have not heard any other reason. I suppose that it is worth observing that wars are not usually fought in terrain designed to provide maximum comfort and convenience to the defending forces. Instead of the steep terrain being a ground for rejecting that as a proposed base it might count in its favour. Again, I think there is a thought that it would be nice if this training area could be very close to convenient public transport. That is a matter that has a certain financial backing. Obviously we do not want an area which is too remote. I do not think that is a primary consideration; the strategic background against which our forces should be trained is a more important one. There is already a large area at Singleton which is quite capable of expansion to do most of the additional work for a co-located infantry and artillery school. Whether co-location is necessary is another matter at which the Committee might look. It is certainly not the case at the moment. We have the infantry school at Singleton and we have a very small artillery training school-I gather a sort of officers' club-at North Head in Sydney where the only opportunity to fire off guns is substantially out to sea, and that is done from time to time. If 4,000 hectares of land were added to the present area-they are available for sale at Singleton-it would be possible for most, if not all, of our necessary artillery practice to be carried out. It appears to me on the face of it that the Army probably does not need the additional land at all, that the proposed site is one which the Army itself regards as unsuitable and that the land at Singleton could be made available with very little disruption and disturbance to or opposition from the local residents, and that is very important. I do not think we can tolerate a situation in which the Army feels it has an open right simply to go into areas, bulldoze across whole areas, remove 90 farmers from their land and destroy $5m worth of export income for this country. If the Army wants to do that it will take a lot to convince me, for one, on that point. It is not necessary to take over those vast areas. The whole matter can be handled by an extension of the area at Singleton. I have had representations from a large number of people, including local government, in that area. Those gentlemen and ladies who have come to me have pointed out that Singleton traditionally now is an army town and there is a good reason for its remaining so. It takes some time for the Army to identify itself with the community and to become a part of it, as it has done in Singleton, and that is a very valuable part of continuity in this matter. In other words, it is much better to locate the Army in an area where the people accept it, where it is part of the community, rather than to destroy all that and try to start off somewhere else. Apparently, the only difficulty at the moment is that we have 36 recently acquired North Atlantic Treaty Organisation weapons, M198 howitzers, only 15 of which are based in New South Wales, according to my information. I gather that the rest are to be based in Victoria, South Australia and Queensland. These are quite esoteric weapons. Apparently we feel we should have such state of the art capability, although I would have thought that longer range and higher capability missiles would replace them within a few years. But for the time being we have them. Senator Sheil —They will probably replace them now. Senator MASON —As the honourable senator has said, they will probably replace them now. The point is that Victoria, South Australia and Queensland do not appear to be moving towards acquiring large tracts of land on which to test these weapons. This is probably because the range of these weapons becomes massive only if they are equipped with rocket-assisted projectiles. We know already from tests in other countries that these guns work. Apparently they do. It is not really necessary to test them by firing off rounds oneself. The Army has a range where this can be done regularly. The bottom line on that is to inform honourable senators who do not already know, but I am sure many of them do, that every time a person fires off one of those rounds it costs $70,000. We are being told that the Army wants to take over land in Bathurst-Orange which is worth $5m a year in export income so that occasionally it can fire off missiles, which we already know work, at a cost of $70,000 a round. I do not think that is a very acceptable proposition either to this Parliament or to the Australian public, but that is basically, as I understand it, the situation. There is room for the infantry school to be relocated at Singleton. Landholders in the area are prepared to sell up to 4,000 hectares of land, which would provide an area which was large enough to test fire the new, larger weapons extensively, but perhaps not to their full rocket-assisted range. But this is not done, in fact, in the NATO countries which already have this weapon. They rely on the fact that the gun has been tested and that it works. They do not want to play with it to its full extent themselves and I suggest that we should not have to either. It could not be expected to be tested at that range too extensively in this country either. I think that is a reasonable and sensible proposition the Army ought to accept. Having accepted that, the whole question of the artillery range being anywhere except at Singleton becomes a dead issue. I think that once that is established by the Committee or by any investigation, this whole disgraceful matter will resolve itself quite quickly. I would hope so. I have to consider also the present infrastructure at Singleton. I think we cannot go along with the idea that we are going to destroy everything and build new things at a vast cost. I am informed that the infrastructure already located at the Singleton Army base is worth some $56m, a not inconsiderable sum of money. It is a fact that much of that building is very old and in need of replacement. I suggest if we have $500m to spend we might use a very small amount of that, perhaps $10m, a much more modest sum, in extensive upgrading of facilities at Singleton. In that way we would have a single, rational artillery school with reasonable expectations and an infantry school which are co-located. I think if we work basically along those lines we ought to get somewhere. I know there are other speakers on this matter. I am glad that there will be because I think it is one of those matters which has been a public scandal, certainly in my State of New South Wales, for so long that it is time it was ventilated. The Army must not regard itself, as I feel the defence forces so often have done in the past, as a sort of organisation which is immune from any kind of public scrutiny or any kind of supervision. Because it is a defence force it does not have the right to go along and take over anything at whatever cost and spend money like water without any kind of supervision. That, I believe, even in the interests of efficient defence in this country, has to stop. I think the Army ought to answer some of the questions which I have raised in this speech. It probably can. If it can, so much the better. I am quite willing to be educated. I would have thought that at least what I have said might be a starting point from which we can operate. I commend the motion to the Senate. Senator DURACK(Western Australia)(10.34) —Apparently the Government does not intend to take part in this debate, which is rather strange. On behalf of the Opposition, I rise to support the motion that has just been moved by Senator Mason. This subject has been a problem for quite some time now. There have been growing fears over quite a large area of New South Wales, particularly in the central tablelands area, about what the Army and the Government is really up to, to use a colloquialism. The facts and the background have been fairly well canvassed by Senator Mason. I do not need to go over that ground again. I simply say that the Opposition has been aware of the issue for some time. Certainly in recent weeks there has been a revival of the issue by the Government with the reappointment of environmental consultants. The issue has become very alarming to a large number of people. Therefore, we certainly support very strongly the principle of an examination of this whole subject by a Senate committee because we believe that the Government has not been handling it in a proper way. It has unnecessarily alarmed large numbers of people. It does not seem to be able to make up its mind about exactly what it is going to do. It has been making a number of quite contradictory statements and has also taken contradictory actions. On 11 September Senator Mason gave notice of a motion that the Senate should set up a select committee to study this matter. We were immediately attracted to that proposal in principle for the reasons which I have given. However, we believed that Senator Mason's notice of motion was too narrow in its terms of reference, in the scope that the committee should have and the matters it should investigate. We also thought that it was inappropriate to set up a special committee of the Senate to consider the matter. In our Standing Committee on Foreign Affairs and Defence we already have a perfectly good instrument to investigate the matter. The Foreign Affairs and Defence Committee comprises senators who have some special knowledge and interest in defence matters. It seems to be the appropriate body to investigate this question on behalf of the Senate. As Senator Mason has said, we have had negotiations since then with his Party, the Australian Democrats. The terms of reference that are now proposed resulted from those negotiations. Senator Mason has now moved his motion in terms which have been agreed upon. It incorporates some very major amendments which were suggested by the Opposition. The present motion refers the matter to the Standing Committee on Foreign Affairs and Defence. The terms of reference are very considerably broadened so that they do not have the narrow focus that Senator Mason's original terms of reference had. Going through the various limbs of this motion, the first concerns the reference to the Standing Committee of the need for an area of land for the purposes of relocation and co-location of the Army's School of Infantry and Infantry Centre, for artillery training and Army manoeuvres. So there are three separate requirements for the Army, some of which may be suitably accommodated in existing facilities. Others may need new facilities. That is what this issue has been about. But as I have said, the Government seems to have been unable to come to grips with it and to make firm decisions. It has now been floundering around for the last two or three years. The problem has come to a head with the need to vacate the artillery training area at North Head. We clearly accept that. However, whether a completely separate area has to be established for that purpose or whether it can be combined with other facilities the Army has or which it may be able to acquire without creating the major problems associated with resuming productive land is another matter. We want a Senate committee to do the job which the Government has failed to do. We want a proper investigation of these needs. Secondly, we do not want this investigation to be confined simply to New South Wales, to which the Army has confined its investigations to date. There may be sound reasons for confining it to New South Wales but the question of whether or not it should be confined to New South Wales needs to be fully and publicly investigated and a Senate committee is the appropriate body to do that. The second limb of this motion is the availability of sites, whether in New South Wales or elsewhere. The search should not be confined, as it seems to have been by the Government over the past year or so, to productive privately held land but should have regard to the availability of Crown land, not only in New South Wales but throughout Australia. Senator Mason has mentioned already that vast areas of land in other parts of Australia could be available if necessary. This whole search also raises the question of how much land is required, whether it be privately owned or Crown land. Again we have seen utter confusion on the part of the Government as to how much land is required. Shortly after the election of the Hawke Government the then Minister for Defence, Mr Scholes, announced that there would be an environmental impact study into the acquisition of 2.2 million hectares of land at Cobar for a manoeuvres area and also announced the study of the suitability of land in three different areas-Tamworth, Bathurst-Orange and Dubbo-for the schools complex. The areas around Dubbo and the central tablelands, including Bathurst- Orange, originally embraced the study of some 350,000 hectares, so that vast areas of land were included in this environmental impact study. That led to widespread outcries such that the then Minister for Defence, Mr Scholes, on 23 July 1984 announced that the Government had abandoned these proposals and was seeking new recommendations from New South Wales. In March of this year the New South Wales Premier, Mr Wran, announced that his Government had recommended a reduced area for manoeuvres at Cobar and suggested an area incorporating the existing infantry centre at Singleton in the Hunter Valley for the schools complex. In May this year the Minister for Defence, Mr Beazley, announced that a draft environmental impact study would be prepared for the Bathurst-Orange site for the schools complex. The New South Wales Premier spoke about Singleton and a couple of months later the Minister for Defence swung the concentration to Bathurst-Orange and announced that the Singleton and Dubbo areas had been abandoned. That is the position we are in now. There have been considerable reductions in the area being looked at in the central tablelands; from the original 350,000 hectares to approximately 70,000 hectares. The area being looked at in the Cobar region has been considerably reduced as well. One has only to give a brief outline of what has been done by the Government over the past year or so to have great sympathy for the great concerns that have been expressed by so many landholders in New South Wales about the activities of the Army and the inability of this Government to come to grips with the problem. There has been great and active opposition, in both the Cobar and Central Highlands areas and there has also been great concern in the Singleton area because the infantry school complex is already there. That area has a great infrastructure and Senator Mason has already referred to this. I agree that millions of dollars have been invested there. The Army recently expressed the view to a Senate Estimates committee that most of these complexes would have to be rebuilt; nevertheless the valuable sites are there and probably many of the present facilities could be retained. That seems to be a matter for debate and that again is another subject which needs to be properly investigated. There is also great concern among members of the business community in Singleton itself about the effect on the town if the Army moved out of the area completely. These are major issues which cry out for proper and public investigation. That is what Senator Mason's proposal, which I am supporting, on behalf of the Opposition, is all about. If further proof were needed, there was quite a detailed examination of these questions at the recent Senate Estimates committee, particularly in questions from Senator Sir John Carrick, who, no doubt, will have something more to say in this debate this morning. Senator Sir John Carrick extensively questioned Army officers at those committee hearings and I must say that I was left with a greater unease about the situation as a result of that. Senator Michael Baume —An inadequate response. Senator DURACK —As Senator Michael Baume says, there were inadequate responses and we were left with the feeling that there was total confusion and uncertainty on the part of the Army, even after all the investigations. The Army seemed to be relying on this enviromental study and the enviromental experts to make its decisions. That is quite an incredible conclusion. The Opposition has already put its attitude on the record. The former Minister for Defence and present shadow Minister for Defence, Mr Ian Sinclair, has made a number of public statements on behalf of the Opposition in relation to this matter. I wish to restate the principles which animate the Opposition's attitude to this whole question. Clearly we believe that the Army must have adequate training areas and that some of its existing facilities will have to be replaced. Clearly the North Head facility must be replaced and there may be some need to replace others. This is a matter which must be fully considered. Secondly, we feel that the Commonwealth and New South Wales Governments-and, indeed, interests that are wider than those in New South Wales-must look at the existing facilities and holdings of land and other areas of Crown land. Thirdly, we believe that productive farming land should be examined only as a last resort and that there should be the closest consultation with affected land owners in the matter, even before any environmental studies are embarked upon. The third point of this motion is that there should be a study of the adequacy and appropriateness of current procedurers in protecting the rights of individuals and communities where acquisition is being contemplated. Fair and prompt compensation and appeal procedures should be provided. Under existing land acquisition rules I guess there are procedures for providing fair compensation. Whether it is prompt or not may be another matter, but if it is not prompt that is probably the Government's failing. There are appeal procedures, but clearly there are not at present adequate procedures for protecting the rights of individuals in areas where acquisition is contemplated. That is why all the people in this area have appealed to the Senate. They feel that they have not have been given proper hearings by either the Government of New South Wales or the Commonwealth Government. Clearly there is a need for proper avenues of consideration for these people who have been put in this plight by the needs of the Government. However, the way in which both the Government and the Army have gone about satisfying those needs leaves a great deal to be desired. For those reasons we support the motion. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(10.52) —Senator Mason's motion proposes to refer to the Standing Committee on Foreign Affairs and Defence the proposed new Army training facilities in New South Wales. This is not a course which the Government will resist to the point of division, but I want to make it absolutely clear at the outset, as I will in the course of my remarks, that there is no justification for this inquiry and it will simply be a waste of time, money and energy for all those involved. The only imperative requiring an inquiry is the perceived political imperative of the Australian Democrats and the Opposition. An inquiry would simply serve to reopen in a highly politicised and not especially expert context very complex issues which have already been given very thorough and comprehensive examination on a technically informed basis, including issues which are the subject of a current environmental impact study. I think the political orientation of the proposed inquiry was made very obvious by Senator Mason in statements that he made early in September, reported in the Sydney Morning Herald of 4 September, a good many of which he has repeated here today. Senator Mason has expressed concern about three matters. First, he alleged that there were contradictions between statements by the Prime Minister (Mr Hawke) on the selection of an area near Orange for the Army schools complex. Secondly, he indicated that he was concerned about the size of the proposed Army training facilities in relation to the size of such facilities overseas. I shall return to both those matters later. The third issue that Senator Mason raised in his statement last month can be dismissed out of hand in that it demonstrates very clearly the political character of this enterprise. In one of the more preposterous statements that ever emanated from him-and that is a very large claim as there have been many competitors for that honour over the years-he suggested that one of the reasons for the establishment of the Army training facilities in New South Wales is to provide an alternative base for the United States in the event that the United States is required to withdraw from its bases in the Philippines. Senator Mason —What I said was that there were people in the Orange-Bathurst area who felt that way. Senator GARETH EVANS —The honourable senator wants to nurture those delusions because he is coming into this chamber and behaving in a way that is crude, vulgar, political and not deserving of serious minded attention by rational senators or anybody else. The land areas in question may well be used for joint exercises from time to time, but they are simply not capable of performing the roles of the United States bases in the Philippines. It is uninformed and ludicrous speculation. It is transparently, self-evidently politically motivated when put in the terms that it was by Senator Mason, both then and now. Senator Mason's motion is clearly couched in terms that are intended to attract the support of the coalition parties, support which it has received, not surprisingly, committed as those parties are to the hypocritical position which has been outlined by Mr Sinclair, the coalition spokesman on defence and Leader of the National Party of Australia. I shall come back to that. The issue of the new Army training facilities in New South Wales exhibits once again the yawning chasm between coalition rhetoric and the reality of its commitment to the defence of Australia in practice. Coalition members never cease to wrap themselves in the flag and to portray themselves as dedicated devotees of the defence of Australia, but their substantial performance is, and always has been, quite another matter. Their shortcomings are evident in the quality of their strategic analysis and in the level of budgetary outlays that they actually provided for defence in real terms under Fraser, compared with those levels provided by the Hawke Government. Once again, the issue that is presently before the Senate tests their commitment to the provision of adequate facilities for the Australian Defence Force in the face of localised pork-barrel politics. Once again the contrast between the Opposition's rhetoric on defence and its actual performance is starkly evident. The coalition parties, when in government, knew about the need for new Army training facilities in New South Wales at least as early as 1977. Nevertheless, as they did in so many other defence related areas, they dithered about for six years until they were voted out of office, mercifully for us all, in 1983. Both the dithering of the coalition in government and its political hypocrisy now will be evident as I proceed to go through the history of the examination of the proposals for Army training facilities in New South Wales. That same account will establish the irrelevance and redundancy of the reference proposed by Senator Mason. Furthermore, I think it will become evident that those who seek to manipulate and exploit the concerns of those directly affected by the establishment of these new Army training facilities are engaging in political hypocrisy of the highest order. That hypocrisy is personified by the attitude of Mr Sinclair who, as the then Minister for Defence, approved a Press release in 1982 proposing the investigation of areas larger and richer than those that are presently the subject of the environmental impact statement. He then sat on that Press release when it became evident that an election was in the offing. Now in opposition he has adopted an unctuous and sanctimonious posture of opposition to proposals which are more limited than those which he proposed for investigation when he was the Minister. Seeing the political opportunity, Senator Mason has now darted into the fray and proposes what I have already described as an expensive and redundant inquiry into whether the Army really needs the land, whether it needs it in New South Wales and all the other complex technical issues associated with balancing the training requirements of the Australian Defence Force with other public interests. Such an inquiry might have been appropriate some years ago. It is now quite properly to be regarded as an expensive waste of time. However, what it is likely to do-encouraged by the way in which Senator Mason feeds assiduously rumours, however lunatic, that circulate about some of these things-is arouse quite unwarranted public concern in the variety of areas in which this inquiry might choose to wander. So it cannot even be regarded with benign indifference as a kind of harmless diversion to keep the Democrats in their own playpen and away from the more serious preoccupations of state. Senator Siddons —What about a few facts? Senator GARETH EVANS —I am getting to that. I have all this rhetoric here so I might as well. If it has any redeeming virtue it would be the possibility that the third aspect of Senator Mason's proposed terms of reference might yield something of desirable value, but in the highly political context in which this proposed inquiry would proceed even that must be regarded as highly unlikely. The proposed new Army training facilities in New South Wales have been the subject of an exhaustive process of investigation, including the current environmental impact statement which is to be completed next January. That exhaustive process began in the mid 1970s. Considerations of new arrangements for Army training facilities were motivated by pressures on three existing defence training facilities. First, under the Sydney Harbour foreshores agreement, it is necessary to transfer the School of Artillery from North Head in order to make that site available to the State of New South Wales, as was agreed in December 1978. Secondly, the training area at Holsworthy is under sustained pressure from urban development and its utility to the Army is under severe restrictions in order to control noise nuisance, bushfire damage and to reduce the risk to aircraft overflying from Mascot. Thirdly, Army facilities at Singleton were also subject to growing community concerns associated with increasing noise level as artillery training was transferred from Holsworthy to Singleton. Senator Michael Baume —Is that why the locals want Singleton expanded? Senator GARETH EVANS —The honourable senator is now representing Singleton too, is he? Senator Michael Baume —I am just concerned with the facts, which obviously you have no concern for. Senator GARETH EVANS —He is a busy little chap, isn't he? These three major trends in the availability and utility of existing Army training facilities in New South Wales led to an examination of alternative possibilities in New South Wales in 1977. The examination focused on New South Wales for two simple reasons: Firstly, the existing facilities which needed to be replaced or supplemented were located in New South Wales; and secondly, both regular and reserve units which required the relevant forms of training were particularly concentrated in New South Wales. There was obviously no doubt in the mind of the Fraser Government that the need for training facilities was in New South Wales. After four years of examination of alternative locations, in 1981 the Fraser Government endorsed a formal consultative mechanism with New South Wales to develop the Army training facilities project. The extra costs and inefficiencies of going outside New South Wales have been obvious for eight years, but Senator Mason proposes that the Standing Committee investigate the availability of sites, including existing Army training areas suitable for these purposes, whether in New South Wales or elsewhere. Senator Mason's motion also proposes a re-examination by the same Committee of the question of the area of land required for Army manoeuvres and infantry and artillery training, as he said: `. . . having regard to strategic and training requirements appropriate to the Australian Defence Force, existing defence facilities and training practices in comparable countries'. This is a matter which has already been given thorough, extensive and very careful consideration. In February 1982 the then Minister for Defence, Mr Killen, and the Premier of New South Wales, Mr Wran, announced that investigations would proceed into new training areas at Cobar and Dubbo to, as they said, `enable the transfer of existing Army facilities from North Head and Singleton and reduce demands on the training area at Holsworthy'. Later that same year Tamworth and Bathurst-Orange were added to Dubbo as areas to be considered for possible location of the schools. At that stage the areas being sought were about two million hectares for manoeuvres and 160,000 hectares for the schools. However, the location which was to be studied near Bathurst-Orange as a possible location for the schools involved some 350,000 hectares. The Press release prepared for and cleared by the then Minister for Defence, Mr Sinclair, announcing, as I have already said, the investigation of these large and rich areas, was held up by him until after the March 1983 election when it was released jointly by the incoming Minister for Defence, Mr Scholes, and the Premier of New South Wales, Mr Wran. What Mr Sinclair had approved as Minister for Defence-I do not think this can be forgotten and it bears repetition-he proceeded then to attack as Leader of the National Party in opposition. On 23 July 1984, after considering a consultant's report, the Labor Government rejected the proposed areas near Tamworth, Bathurst-Orange and Dubbo as sites for Army training facilities. Cabinet also agreed that negotiations should be initiated with the New South Wales Government to identify an area in that State which would meet the following criteria: The area should be one which is sparsely populated, has low economic potential, does not include prime agricultural land, contains no or few places of ecological or historical importance, avoids major disruption to the local population and satisfies Defence needs for suitable location, terrain and vegetation and would, with proper land management, be able to sustain continuous training activities. Federal Cabinet then directed the Army to review its requirements, particularly as regards the size of the area of land required. It also requested the New South Wales Government to identify suitable locations. As a result of that further review and investigation in March 1985 Mr Wran offered a one million hectare area near Cobar for manoeuvre training and three options for schools at Singleton, Dubbo and Bathurst-Orange, each of the order of 70,000 hectares. On 28 March 1985 Mr Kim Beazley, the Minister, announced that detailed studies would begin on an area north-west of Cobar to determine its suitability as a site for Army manoeuvres. The area to be studied was slightly smaller than that suggested by the New South Wales Government and excluded the natural gas pipeline to the south of the proposed area. Mr Beazley noted that the proposed manoeuvre area would include a 182,000 hectare firing range and was large and varied enough to allow large military exercises with live firing in certain areas in a wide variety of tactical situations. The manoeuvre area involved the acquisition of six properties for the live firing range and limited access to less than 50 other properties when required to carry out large scale manoeuvres. In the case of areas where only access was required it was determined that property holders would be able to retain and live on their properties. On 9 May 1985 the Minister for Defence announced that detailed studies would begin on the suitability of an area between Bathurst and Orange as a proposed site for the Army School of Artillery and Infantry Centre. Senator Mason professes to be concerned about a possible contradiction between statements by the Prime Minister and other Government spokesmen to the effect that the original Bathurst-Orange site had been rejected as unsuitable for Army training purposes by the Federal Government; but there is, of course, no contradiction. The original 350,000 hectare proposal at Bathurst-Orange, investigation of which had been approved by Mr Sinclair as Minister for Defence, was rejected by the Labor Government because if its productivity and environmental significance. The site which has been selected for further consideration at Bathurst-Orange consists of 70,000 hectares of poor agricultural land west of Hill End which involves the acquisition of less than 100 properties. It is one fifth the size of the original Bathurst-Orange proposal and involves the acquisition of one tenth as many properties. The New South Wales State Government's preferred option of an expansion of the existing Army facilities at Singleton was ruled out because of the precipitous and heavily timbered terrain which would mostly be inaccessible to vehicles and artillery. Furthermore, it was evident that useful expansion of the Army's existing base at Singleton would be in conflict with economic and social development of the area and much more costly than the Bathurst-Orange option. Furthermore, it would directly affect several hundred landholders and involve a substantial increase in artillery training which would exacerbate existing noise problems from artillery firing already developing in the area. The other alternative proposed by the New South Wales Government near Dubbo was rejected because it is relatively flat and heavily timbered and does not provide sufficient variety of terrain for worthwhile military training. Both the Cobar and Bathurst-Orange proposals are now the subject of environmental impact studies which have been under way for several months. These environmental impact studies are being undertaken by professional consultants in full consultation with State and local authorities, community groups and, as far as is practicable, with all of the landowners involved. The environmental impact studies are being undertaken in conformity with the Environmental Protection (Impact of Proposals) Act. The resulting environmental impact statement for Cobar is intended to be issued in December 1985 and the environmental impact study for Bathurst- Orange is intended to be released in February 1986. After public consideration and comment for three months final environmental impact statements will be prepared and submitted to the Minister for Arts, Heritage and Environment for his consideration under the Act. Recommendations will then be made to the Government and decisions on both proposals will be taken. These two proposals have been developed on the basis of a careful examination of `training requirements appropriate to the Australian Defence Force' and `existing defence facilities'-in the terms of Senator Mason's motion-and further examination in the manner proposed by Senator Mason would be utterly redundant. The proposed terms of reference of Senator Mason's inquiry also refer to `training practices in comparable countries'. This element of his proposal is intended to draw attention, as he did today, to smaller training facilities in Europe and elsewhere. In this context it should be noted that the size of the training areas proposed in Australia is related to the ability of the land to regenerate after exercises. Land near Cobar is more fragile than that in Europe, which has a completely different ecology and hence its use is rotated. Furthermore, the Australian Army does not fire artillery over populated areas, which is a practice required by some of the smaller training facilities which Senator Mason appears to find so attractive. While a major consideration in the selection of the land which is involved in the current environmental impact studies was the requirements of the Army for areas large enough and varied enough to provide adequate training, careful consideration was also given to countervailing public interests. The areas selected have been chosen, as I think I have indicated in sufficient detail to make the point, in order to have a minimum impact on landholders, prime agricultural lands, important mineral deposits and areas of environmental or cultural interests. The areas selected were chosen after very lengthy consultation with community groups, conservationists, local councils and the State Government. After eight years of investigation and consideration of the needs of the Army for new training facilities in New South Wales, Senator Mason now seeks to reopen the entire issue to re-examine whether the training facilities are needed and whether they are required in New South Wales. No doubt, as I have said, he expects to derive some political advantage from this enterprise, but from any public policy vantage point or public interest vantage point it can be regarded only as a monumental waste of time. The final aspect of Senator Mason's proposal addresses the question of safeguarding the rights of landholders, including adequacy of compensation and provision of appeal procedures. In terms of the protection of the rights of landholders, the Premier of New South Wales made it clear in March 1985 that the State Government would insist upon the development of a proper land management plan for areas in which access was required for Army manoeuvres. This land management plan will require adequate advanced warning to landholders, no undue disturbance of the land, fair and reasonable compensation for any damage and proper arrangements for bushfire prevention. In so far as compensation for any land which is acquired is concerned, this is both a firm government policy commitment and, or course, a constitutional requirement. There is no question of fair and adequate compensation not being provided. I repeat that there is no evident justification for this inquiry. It comes at the end of a protracted period of investigation of the need and of the alternative means of meeting that need, and the interests it seeks to safeguard are already adequately protected and will be adequately protected. It is totally unnecessary, and its lack of necessity will, the Government is confident, be amply demonstrated after all the effort and expense of the new inquiry has been incurred. If the Australian Democrats, the Liberal Party and the National Party, for crude political reasons of their own, want to combine their resources and force a reference upon the Committee, this is not a course which the Government can usefully resist. We have made our position, I think, amply and abundantly clear. We do not believe that there is any justification for the inquiry. We believe it will prove to be a complete and utter waste of time and taxpayers' money. But lest it be thought that we are seeking somehow to avoid scrutiny, and lest it be thought that we have anything to hide-which we do not-the Government will not, as I indicated at the outset, pursue that opposition to the point of division. Senator Sir JOHN CARRICK(New South Wales)(11.18) —The Senate has before it a proposal to make a reference to the Senate Standing Committee on Foreign Affairs and Defence regarding the proposed acquisition of land by the Department of Defence for an Army base. The reference seeks to discover the facts on three particular lines of inquiry. The first is the need for an area of land for the purposes of relocation and co-location of three matters: First, the Army School of Infantry; secondly, the Artillery Training Centre; and thirdly, a manoeuvre area. Secondly, the reference seeks to inquire as to the availability of sites existing as Army training areas throughout Australia, and in particular whether Crown land is available which could be of use. Finally, it looks to the adequacy and appropriateness of procedures for protecting individual rights. Senator Gareth Evans has said that there is no justification for such an inquiry. If one were looking for justification, one would have taken his speech and compared it with the very many statements which have been made by the Government, and governments of other States, and promises made to the people of Australia. The very need for this is based upon the confusion of information that has been presented to the people. I propose to demonstrate that very clearly. Fundamentally, we are looking at three matters. We are looking at the need, or otherwise, for a relocation of the Infantry Training Centre. That centre is presently at Singleton. What is needed to be asked is: Is it inadequate? Is it geographically the wrong place? Are the nature and the contours of the ground around it wrong for infantry training? Senator Evans says that the evidence is clear. However, there are on record statements by senior Army officers, who have been engaged in this very training, that the Singleton area is an ideal area for infantry training. That seems to suggest that there might be a need for an inquiry and some disputation of facts on this matter. Secondly, it has been said that the infrastructure that exists in Singleton is of such a massive nature and is such a massive investment that one would have to have very good reason indeed to want to move to a completely virginal area and set up a new infantry training area. Where have I heard the Minister refer to the fact that there in Singleton exists the whole infrastructure, the whole area of sewerage, drainage, electricity supply, plumbing to the area, and some 200 houses for the Army? Is it suggested that it is a light thing that one should put those all aside and go and seek somewhere else? Where is there evidence to prove that it is wrong to look to the capital value of all the access roads and bridges that are in Singleton? These would have to be built, in their tens of millions of dollars, elsewhere. I include also protection of the flood plain which separates the civilian community from the Army and gives a desirable environment. I did not hear Senator Evans refer to some very significant things. He was the Minister who was present at the recent hearings of Senate Estimates Committee E. He will recall that he supplied evidence that the estimates for the Defence Department this year would contain between $350m and $400m-they are his figures-for devaluation and, therefore, the overall money for defence this year showed not a 10 per cent nominal increase but only a 3 per cent increase and, taking inflation into account, a decrease. He will recall that there was a very elaborate and lengthy discussion on why the Army could not afford to bring about the Waler project to provide new armoured personnel carriers for the protection of the soldiers of this country and that we have to look to the dilapidated and, indeed, dangerous carriers that the Auditor- General spent a great deal of time discussing. It seems to be a matter of no importance at all that we are willing to spend enormous sums of money relocating at the whim of some politician whilst we have not enough money to do the essential things to protect our soldiers and to give our soldiers mobility. If ever there were justification for testing how much this new proposal will cost, it is that it has been said that we cannot afford the Waler project-we cannot afford to equip our soldiers with mobility which is, first of all, safe and weapon-proof and, secondly, much better than the deficient APCs that the Auditor-General has seen fit to criticise and that he says may well be of no use. No justification has been given for picking up the huge infrastructure at Singleton. The integration of the community and the Army has been described in sociological terms as very important not just for commercial purposes but for the whole social structure of the area. Indeed, lest anyone has any doubts about this matter, in the Estimates Committee I asked the Defence Department whether there had been an estimate of the cost of rebuilding Singleton. The response, which is not in Hansard yet, was: A detailed estimate has not been made of the cost of rehabilitating facilities at Singleton for the infantry centre. However, a broad assessment had put the cost in the order of $30m. That is not hundreds of millions of dollars, but $30m-not even the value of building those 200 houses elsewhere, because they would cost more than $30m to relocate. Now we know a very important thing indeed, and Senator Evans has the gall here today to say that there is no justification at all for an inquiry into this matter to try to save money that perhaps we could use to build better armoured personnel carriers for our soldiers. It will be recalled that in the Estimates Committee one of the defences made was that Singleton had to go because there was a coal seam under it. I found that very fascinating indeed when I read Premier Wran's Press statement of 12 March this year. Premier Wran is, of course, the Federal President of the Australian Labor Party, the Party in government. What did Mr Wran say? Knowing of coal seams, he said: The State Government strongly believes that the schools complex should go to an enlarged Army base at Singleton. There was no question of coal seams. Yet that was raised here in the Senate as a reason for shifting. The Premier of the State, negating that, went on to say: This is because the Singleton site already has an Army base. It would involve mainly Crown land and conditional use of 19 properties to the south-west of the base. No properties in the vineyard, agriculturally productive or coal areas would be affected. It is said that there is no justification for an inquiry. Yet the evidence given here by the Defence Department was that one of the reasons was the coal areas. If there were a need for justification, we found it in Senator Evans's speech. I happen to have had some little experience of the Singleton camp. I know of the nature of its geography. Having crawled over a fair bit of it, I know that it is ideally suitable as an infantry training area. I am aware that its barracks and living quarters need upgrading. That in itself is a minor thing. Bear in mind what the Defence Department said after we put it under pressure: We could upgrade Singleton to a modern infantry training area for $30m, whereas to relocate elsewhere would cost at least $200m, $300m or $400m, quite apart from the disruption caused. Again it is said that there is no justification. Senator Evans cannot have escaped the fact that there have been widely circulated some 10 or 12 copies of statutory declarations made by people of the central west of New South Wales, the Bathurst-Orange-Dubbo area, saying that the Prime Minister (Mr Hawke) had given them an unequivocal promise that there would be no Army base in the Bathurst-Orange area. Yet is there no justification for an inquiry? The facts are there. After all, Senator Evans says that we have already got the expert details on this situation. Senator Peter Baume —Who promised? Senator Sir JOHN CARRICK —The Prime Minister of this country is documented in some 10 or 12 statutory declarations-I take it that nobody is doubting their veracity; if so, why does he not challenge them?-as saying emphatically that there would be no base in Bathurst-Orange. Everybody knows the reason for this sudden change. Senator Evans said: `All the technical details were there. It was to have been 120,000 hectares but we chopped it down to 70,000 because it fitted the bill'. What nonsense. The only reason Bathurst-Orange is now put forward, it being the least desirable area according to the impact studies and the one that was rejected previously, is that in the 1970s the Whitlam Government, under one more of its misconceived and misbegotten plans, set up a Bathurst-Orange development corporation that now has around its neck a debt of $90m. What is happening is very simple. This Government is using the Army base to bail out the debts of the Whitlam Government. No decision has been made in terms of what Senator Evans says are precise military means. When I asked the Army whether it was a fact that this proposed site was under a regular flight path and whether there would therefore be any danger from an artillery range, the Army said: `We must ask the environmental study people about that'-not the technical experts, not the artillerymen and not the defence people, because of course they know that it could not be more wrongly sited. Is there no reason, no justification, for an inquiry into this matter? When I asked the Defence Department where its land was around Australia, I got a list. The Minister, having seen it, has agreed to its incorporation in Hansard. It shows that in Australia there is 1,082,700 hectares of Army land in 23 major locations. For example, in Shoalwater Bay in Queensland, there are 274,000 hectares. In Yampi in Western Australia there are 556,000 hectares. I seek leave to have the list incorporated in Hansard. Leave granted. The list read as follows- MAJOR ARMY LAND HOLDINGS Location Size Nature Use (Ha) Queensland Canungra... 6,000 Training Area... Continuous Greenbank... 4,700 Range and Training Area... Frequent Shoalwater Bay... 274,000 Training Area... Frequent Townsville, (High Range)... 49,000 Field Firing Area... Frequent Townsville (Mt Stuart)... 7,700 Military Camp and Close Training Area... Continuous Tully... 1,700 Tropical Trials Area... Frequent Wide Bay... 20,000 Training Area... Frequent New South Wales Bogan Gate... 1,000 Ammunition Depot... Continuous Holsworthy, Sydney... 20,000 Military Camp and Range... Continuous Kapooka... 1,300 Military Camp... Continuous Marrangaroo... 1,200 Ammunition Depot... Continuous Myambat, Denman... 1,000 Ammunition Depot... Continuous Singleton... 13,200 Military Camp and Range... Continuous Victoria Graytown... 2,700 Proof and Experimental Establishment... Continuous Puckapunyal... 40,000 Military Camp and Range... Continuous South Australia Cultana... 38,000 Range Area... Less frequent, mainly Reserve Lincoln Park... 12,000 Range Area... Less frequent, mainly Reserve Murray Bridge... 4,200 Range Area... Frequent Port Wakefield... 1,000 Proof and Experimental Establishment... Continuous Western Australia Bindoon... 20,000 Training Area... Frequent Yampi... 556,000 Training Area... Less frequent Tasmania Buckland... 3,000 Training Area... Less frequent, mainly Reserve Northern Territory Kangaroo Flats... 5,000 Training Area... Less frequent, mainly Reserve Senator Sir JOHN CARRICK —I thank the Senate. The point has been made abundantly clear that the volume of land involved, by comparison with land available in every other nation, is enormous. I was told-I did not need to be told-that the Army needed a variety of land on which to train its men and that was why Bathurst-Orange was selected. Having had something to do with warfare in the tropics and having experienced living in encampments in such delightful places as Sunny Corner and Dark Corner, I was old fashioned enough to wonder, with the chilblains one gets in Bathurst-Orange in winter, how one could experience a sub- tropical or tropical environment there. There is no joy in the nonsense that is being given to us as a justification for this proposal. We have not been told why there is a need for a co-location of the artillery and the infantry. Over the decades, they got on pretty well when separated from each other. As one who trained as a gunner, I did not see any great disability in that separation. It did not appear that the artillery needed multi-thousand hectares of tracts of land when it was poised at the end of North Head, with only the waves to seduce it. So what is this nonsense? Anybody who has been trained in artillery knows that it is a highly technical science, with ordnance and contour maps being used as the basics to establish co-ordinates to hit a target. More than one million hectares of land is already in the Army's possession. Has anyone said that none of this land is suitable for relocation or co-location? Senator Evans said: `We have all the information before us'. Where is this information? Has it been stated that such relocation is not possible? We were told by the Army that it needed all sorts of land. Where should it train for tropical and sub-tropical situations? Should it be in Bathurst-Orange? The proposal becomes more preposterous as we put things together. I rely on Senator Evans because his streaker's defence remains immaculate. He always thinks things are a good idea at the time. This time he thought it was a good idea to say that we do not need an inquiry because all the facts are before us. Let me simply say that like all the facts that have come before us in the past from him, all the confusion of facts and all the conflict are now before us. The Army is suggesting that it has to leave Singleton because of the presence of a coal seam. The Premier of New South Wales is saying: `Come to Singleton and no coal seam will be affected'. We have been told there is no justification for any inquiry. The Department of Defence is saying: `We are pathetically short of money. We cannot pay our fellows more money. We cannot build new armoured personnel carriers. The Auditor-General is wrong and we will have to modify our plans to the year 2000. We cannot do those things, but we propose to spend hundreds of millions of dollars on the Bathurst-Orange proposal, compared with the $30m that we would need to spend on the modernisation of Singleton'. We now know that is what it would cost, but how did we get to know that fact? Senator Evans did not tell us but it became known through a sort of dental extraction-pulling the teeth bit by bit to try to find out the real situation. What we are saying is this: The Senate should objectively inquire into the matter and say what is needed for an infantry training camp and centre which a modernised Singleton could not provide. That is of tremendous importance. If something else is needed the Senate must ask what is the alternative and how much it would cost compared with modernising Singleton. It must ask what is needed for an artillery training centre and what are the needs in terms of length of firing range. Do we really need an area of countryside, in association with an infantry training centre, which is large enough for shooting the new long range howitzers? Why do we need it? Where in the world are such centres combined? Where in the world is a long range for howitzers combined with an infantry training centre? Why do we need it? I come to the question of productive land. I noticed that Senator Evans said that the Government justified technically the acquisition of 70,000 hectares of land in Bathurst-Orange because it was poor agricultural land. Did honourable senators hear those words? Senator Evans was a poor Attorney-General, but he is a poorer argiculturist because that land produces some of the finest quality wool in the world. He said that it was okay to take this land out of production because it was poor quality agricultural land. Honourable senators heard the Minister for Resources and Energy say that. He wishes the land to become non-productive. He told us not to worry that it is in the flight path of aircraft. We should not worry about those kinds of things. We have only to keep in mind that the Hawke Government has an albatross around its neck of a $90m debt for the Bathurst-Orange Development Corporation and it has to do something about it. Why choose New South Wales? We know why it was chosen, because an Army officer said that it was the most convenient area to pull together. Is not Puckapunyal convenient, for example? Would not parts of Queensland be convenient? If we combined the two there will be a need for a wide range of terrain, including sub-tropical and tropical and the last place on earth one would choose would be Bathurst-Orange. What are the needs of an infantry training centre? What is wrong with bringing up to date the existing facilities at Singleton to create an infantry training centre? What costs would be involved in taking a new area, building on it barracks and houses for Army families to live in, connecting electricity and water and building drains on the site? Heavy access roads would have to be built. It must be borne in mind that those roads would have to carry Army vehicles. New bridges would have to be built and millions and millions of dollars would be spent on this kind of structure. No doubt new schools would have to be built. Children from the Singleton area would be uprooted to go to new schools. What would that cost? Senator Evans says: `Ah! We have all the expert knowledge'. Where is the expert knowledge? Where is this precise knowledge to be found? Where is the plan which shows us where the access roads, water, sewerage, drainage and power lines will go? Where are they? We hear echoing from the Minister: `There is no need for an inquiry'. I refer to the third paragraph of Senator Mason's motion, which refers to: (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. That statement ought to have been written as a post mortem for the Federal President of the Australian Labor Party, Mr Wran. If one great crime has been committed against democracy, it is the grossly unfair approach by the Wran Government to the acquisition of land in New South Wales, particularly land with coal seams. There is no justification for that Government's action. I do not doubt that there is a need to defend the Federal President of the Australian Labor Party, but people have rights. I refer to the rights of families, who, for three, four or five generations, have worked productive land and have produced fine wool. Those people have given to Australia an immense benefit in their contribution to the export industries. What nonsense that at this moment Australia is in dire circumstances because of its huge deficit, largely because of over-borrowing. What a nonsense situation it is that the devaluation of the Australian dollar is reflecting the danger of this huge deficit and the need for Australia to go out and seek every export dollar that it can. The proposal is that we should destroy areas that are producing export dollar earnings. What information do we have on this? None at all, except that this is poor agricultural country. Honourable senators should remember that-it is poor agricultural country in a fine wool growing area. There is no mention of dollar losses. When we pull it together we see that the Government is asking the people of Australia to go into a venture that will cost hundreds of millions of dollars. There is no argument about that. Even accepting the lowest government base on this it will cost several hundred million dollars and probably much more. The Government is asking us to go into such a venture and it is not suggesting that there will be a special appropriation in the Budget on top of everything that there is now to finance this. Therefore, there is some robbery in the Budget; some reduction in other services in order to compensate for this. The military reserve has made its value judgment of the Government. Numbers have reduced from 30,000-odd to a bare 20,000-odd and the Government is now scrambling to try to get back to 26,000. The Government cannot maintain reserve soldiers in the field; it does not have the money to apply to it, except for an advertisement showing the Prime Minister hopping out of a helicopter and urging Australians into bigger and better defence. What a joke. What an abject insult to the people of Australia that a Prime Minister who has brought in a policy to tax the earnings of reservists and the militia soldiers, and therefore showed them contempt, should see himself as a public relations exhibit hopping out of a helicopter urging people to join the Reserve. What has happened? The number of people in the Reserve has fallen by almost one-third and the Government cannot get it up again. Against this background the Minister, Senator Gareth Evans, comes into this chamber and says that there is no need for an inquiry. He is not concerned that the Waler project has been put on the shelf and scrapped. He is not concerned about the evidence that, if our soldiers have to go into action, they will use at the most, dangerously inefficient carriers that will not provide the armoured protection that the Waler project would. These carriers have had troubles with their guns. In fact, there has been trouble with the whole system of armoured personnel carriers. The Government says that it does not have money for the Waler project but presumably we have $200m or $300m for a relocated Army base. My goodness! The very purpose of the Senate is to look into these matters and inquire into them to find out what is right. What are the needs of the Army for infantry, artillery and manoeuvre? This Government cannot tell us. In any case, why is this one million-odd hectares not sufficient to meet the needs? Where would the existing facilities be capable of use? Is there any evidence that anybody, including the Minister, has said to us that these facilities are of no use at all? How do we protect people? Let me come back to my main point. We have a defence budget with $350m to $400m worth of devaluation cut right out of it because of the poor economic performance of the Government. The defence budget for this year is a negative budget and it is now to be overloaded as it was with such misbegotten things as frigates and other inventions of the Whitlam Government in the past. It is to be overloaded with this misbegotten idea of spending hundreds of millions of dollars instead of spending them wisely on protecting Australian soldiers in the field. I support the motion. Senator BROWNHILL(New South Wales)(11.40) —I support the motion to establish a reference to the Standing Committee on Foreign Affairs and Defence on land acquisition because I believe that the whole issue of land acquisition for the Army has been a bungle from the beginning to the end. It has been dragging on now for years. Specifically, over the last couple of years, literally thousands of people have been living with the threat of having their land, their homes and their livelihood taken from them. Even now the Federal Government is unable to give any definitive answers on where the Army is to be and, probably just as importantly, why. If we take any notice of what the Minister for Resources and Energy (Senator Gareth Evans) had to say earlier in the debate-obviously he is a great land valuer and an expert at looking after livestock-we will have a lot of problems. My recent questions to a Senate Estimates committee indicated very clearly that at least some officers in the Department of Defence do not have a clue why the land is being acquired, when it will be acquired and how much it will cost. That sort of lack of economic discipline would be bad enough if it did not involve people but the question of the Army land base issue in New South Wales involves hundreds of families, their heritage, their livelihoods and their lives. We in the Senate must ask ourselves why. That is the reason for this inquiry. Why is the Government wanting this land? As Senator Sir John Carrick said, the Government has so much land now, why is it wanting so much more? Why is there no other appropriate Crown land available? Why can the training facility not stay where it is wanted at Singleton? Is it because the State Government wants the coal under the base? Conflicting reports tell us that this coal is low grade and uneconomic. Why is there so much cover-up and so much confusion over the acquisitions? Why has the Government taken so long to come to a decision? Why did the Prime Minister (Mr Hawke) say to the people living in the Bathurst-Orange area in December 1984 that their land would not be used for Army base purposes, only to turn around six months later and say that it would? Senator Peter Baume —The election was over then. Senator BROWNHILL —That is correct. Why has there been more than one environmental impact study with different terms of reference? Every honourable senator should note that, on 9 May 1985, the Minister for Defence (Mr Beazley) announced that an area of land at Bathurst-Orange was to be studied for the purposes of acquisition as an infantry and artillery co-located school. A little earlier he had also announced that an area of land north of Cobar was to be similarly examined for the purpose of a manoeuvre area. The area of land now under study at Bathurst-Orange was rejected on all possible criteria applicable to assess land meeting the Army's requirements. It was rejected by consultants to the Department of Defence, Dames and Moore, on environmental grounds. It was rejected by the training commands on tactical grounds. The cost of acquisition of the area, together with the development of infrastructure, was prohibitive on financial grounds; yet this is the area most likely to be acquired by the Army. There are other disturbing features concerning this matter. The first is the consequence of Cabinet's decision in 1984 to order the Army to review its user requirements for this project. The Army had contended that it required at least 160,000 hectares for co-located schools. However, in a few months in 1984, the Army suddenly reversed its long-held view and advised the Government that its essential requirement was only 73,000 hectares. Why the change? Does it mean that what is desirable today will be essential in 10 or 15 years time? If it does the Government is betraying the trust of those landholders whose land lies adjacent to whatever essential area of land the Army may acquire, because those landholders will soon discover that further acquisitions will have to be made to accommodate needs such as fresh weaponry, heavier artillery or more modern tactical doctrines of land warfare. The second disturbing feature is the apparent breach of the promise by the Minister, which I have already alluded to. Very obviously the question of political motivation must be raised. If there has not been political involvement between the State and Federal governments, why have the requirements for the Army bases changed so dramatically and so often? These are all good questions which can be answered by the Committee. With the real estate already owned by the Army, I cannot understand why it needs more. Why does it need more when it has some 1 1/2 million hectares of land? It is starting to look more like competition for L. J. Hooker's than a threat to a foreign force. The Australian Army now owns more land than it does rifles. One must ask whether it is the Australian Army, through the Department of Defence, that is doing the asking or whether it is government, both State and Federal, that is making all the play in this matter. I find it absolutely extraordinary that we have in Canberra at present two groups of people-one group is desperately trying to prevent the Army base being put in their area, forcing them off their farms; the other group is just as desperate that the Army stay in their district at Singleton because without the base their livelihood and social infrastructure are equally threatened. In the face of so much opposition to the current proposals I cannot believe the Federal Government is still prepared to go ahead with its plans. The other absolutely disgusting aspect of this whole fiasco-that is the only word I can use to describe this-is the time it has taken thus far, the time that people have had the guillotine hanging over their heads. For over two years we have had hundreds of families living on death row. For two years they have wondered whether to make farm improvements, buy more stock, increase their herds, join their ewes-a whole range of decisions that should have been made but have not. What concerns me is, if in the final decision the Army base is not put in the Bathurst-Orange area, what compensation will be offered to those people who have suffered for so long, living on reduced incomes and reduced expectations? What will the Federal Government do for them? It is not just the people in the Bathurst-Orange area who have suffered; people in Cobar, Dubbo, the New England area, Singleton-in fact half the State-have lived under the threat of the Army's plans. The emotional upheaval to these people cannot be measured in dollars. The Federal Government's role in all this has been disgraceful. Less than 12 months ago our Prime Minister told not one but a whole group of people in repeated conversations, which have since been attested to in sworn statements, that their land would not be taken. If the Prime Minister has trouble keeping an agreement how else can anyone else keep an agreement with a group of people? The Government has said the decision to move the Army base from its present location at Singleton was an economic one, yet it is unable to give any financial details of how the economic decision was arrived at. It is ludicrous that areas of land have been rejected absolutely out of hand and reinstated immediately afterwards. Just what is going on between the New South Wales and Federal governments and has not yet been discovered? I hope the Senate Committee will bring all these unanswered questions to light. I also hope that the Committee meets expeditiously, takes the fullest opportunity to examine and review all matters relating to the acquisition of land, particularly as it relates to the Army bases in New South Wales, and that it brings down recommendations that will not only bring about a just result of this present mess, but will also be a blueprint for future government acquisitions for defence purposes. I support the move for the inquiry and trust that it produces a very efficient and expeditious result of what has been a shoddy mess by the Government and the Army up to this state. Senator PETER BAUME(New South Wales)(11.49) —The Senate is considering the reference to the Senate Standing Committee on Foreign Affairs and Defence of matters relating to the needs of the Army and particularly matters arising out of threats to land holders in various parts of New South Wales. My colleagues Senator Durack and Senator Sir John Carrick, and particularly my colleague Senator Brownhill, have set out the concerns which we on this side have and the reasons why we support this reference. It is not possible for this debate to conclude without particular reference being drawn to the arrogance which the Government has displayed throughout this whole affair not only in the speech made by the Minister for Resources and Energy (Senator Gareth Evans) but also in the way in which the Minister for Defence (Mr Beazley) has responded to quite proper representations made by senators for the State of New South Wales on behalf of their constituents. I will come back to that. The attitude from the Government has been: `We know best. Do not ask any questions. Accept our word that everything is for the best'-the real Dr Pangloss view: `We know what is best for you in this best of all possible worlds'. As one of the senators for New South Wales I have received my share of representations and expressions of concern from citizens in a large number of parts of New South Wales-correspondence, telephone calls, deputations and visits. They all want to know where they stand and what is going to happen. The Minister has told us that an inquiry is pointless-those are his words-that it is a political exercise and that it will add nothing. That is what he might think, but we know that Senate inquiries have a history of uncovering facts, revealing analyses which were not previously public and showing that the advice which is given by the Public Service is self-serving advice on a number of occasions, and we have no reason to suspect that that is not the case here. What Senator Gareth Evans read out today was just too pat. The only trouble was we could not get to the facts on which it was based. This inquiry will lead to facts. I remember the representations that came from the Cobar district and the rather bemused revelation to me that part of the area which was down for acquisition was an area through which the natural gas pipeline went. I had occasion to ask a question in this place about the kind of artillery practice that might take place above the gas pipeline. The Government had not thought that one through, but it was prepared to acquire an area for military manoeuvring purposes through which the natural gas pipeline ran-a large area of country which had been in the hands of people for generations and which was being used productively. We will have none of this nonsense from Senator Gareth Evans that it is poor land. I have had representations from the people in the Wollombi area who told me that plans to extend the Singleton base threatened the acquisition of their farms and their areas in the Wollombi valley. That threat has now passed. I have received other representations from people representing the Singleton base. They say that they like having the base in the area. As Senator Sir John Carrick said, it is a welcome and necessary part of the community. As a voter in the electorate of Hunter I would want to know why the Government intends to move the Singleton base out of my electorate. I have had no good answer to that. We have had a whole series of conflicting views on the Bathurst-Orange-Dubbo area and Senator Brownhill referred to those matters. We have had passionate views on both sides. The mayors have told me they want a base for economic reasons, and the land holders have told me, quite reasonably, they do not wish to be dispossessed of their livelihood and of the assets which they have built up over generations. The land holders put to me their desire to see the Minister for Defence, Mr Beazley, to put a view to him. Is that such an unreasonable thing to want, to wait upon him to tell him what their concerns were? They went to some of their elected representatives and they came to me and asked: `Can you help us get to see the Minister, Mr Beazley?' On 26 July, not the first action I had taken but one action, I wrote to Mr Beazley on behalf of the No Base Central Tablelands Committee. I advised the Minister of the desire of that Committee to put a view to him on behalf of the landholders in a large area of my State. I asked Mr Beazley whether he would expedite this meeting. As an elected senator I was responding to representations from my constituents. I mention arrogance. The arrogance of the Minister for Defence was revealed in the response which he sent to me on 13 August. I will read it. It is a short response. It reads: Dear Senator Baume I refer to your letter of 26 July 1985 regarding the No Base Central Tablelands Committee. Since the Committee claims to represent electors within the seat of Calare I am of the view that they should approach me through their Member, Mr Simmons. Yours sincerely KIM C. BEAZLEY That response says that the Minister refuses even to process my representations on behalf of constituents in New South Wales on this serious matter. Arrogance? This is the height of arrogance! Senator Michael Baume —Contemptuous of the Senate. Senator PETER BAUME —It is contemptuous of the whole process of democratic practice. It is contemptuous of the bicameral system under which we operate. It is contemptuous of the Senate. But most of all, it is contemptuous of the electors or central New South Wales. By what right does the Minister for Defence say that he will receive representations only through a Labor member of parliament? That is what he is saying. He is saying that he will receive representations only through his mates. This has been the whole approach: `Do not try to have the facts brought out. Just let us do it in the closed shop and, by the way, we will not accept representations that do not come through the Labor side'. We know that Mr Simmons, the honourable member for Calare, is a partisan in this argument. He is not an honest broker. He is quite open about the fact that he wants the Army base moved to his electorate. He has taken one side of the argument. What chance would the No Base Central Tablelands Committee have of getting active pursuit of its desire to meet the Minister if it had to go through a partisan of the other side of the argument? The Minister for Defence has shown contempt for democratic procedure and for the people of the central west. I believe that Mr Beazley has to explain why he says that he will receive representations only through Labor members of parliament on this matter. He has acted in a partisan fashion in refusing to agree to see my constituents. He has acted in a partisan manner by indicating that he would act only on representations from a local Labor member. As my colleague Senator Michael Baume has said, this is a snub to the central west residents who wanted to see the Minister and who chose to use an elected senator for New South Wales as the vehicle through which to proceed. Senator Durack —A very good choice, was it not? Senator PETER BAUME —I am grateful to my colleague for his confidence, but it was a snub to the Parliament and a snub to the Senate. Mr Beazley may care to explain the way in which he practises these partisan politics and make it clear that he does not have the interests of the landholders as his prime concern, but rather the interests of the Australian Labor Party and the Australian Labor Party member. I put it to you, Mr Acting Deputy President, that our system of democracy requires that Ministers treat all members of parliament in the same way and respond to their representations. This kind of thing is quite inappropriate. Mr Beazley's response has not hurt me. It has caused me no distress. The people it has hurt have been the landholders- Senator Button —You could have fooled me, Senator. Senator PETER BAUME —I am sure that it could have fooled you, Senator Button. But you share the arrogance of this Government and you would not understand the point we are making. The ACTING DEPUTY PRESIDENT(Senator Tate) —Senator Baume should address the Chair and not respond to interjections. Senator PETER BAUME —I will certainly address the Chair, Mr Acting Deputy President. Mr Beazley's response has not hurt me. It has hurt the constituents who have sought to get some redress to their rights. In the face of this uncaring arrogance the reference to a Senate committee is not only appropriate, but it is also necessary. I say to Senator Mason that it is good that this reference has come up. It is a pleasure for those of us in the Opposition who have an interest in this matter to be able to support it. I conclude by drawing to the attention of the Senate the fact that this matter affects New South Wales and that not one Labor senator for New South Wales has seen fit to take part in this debate or express a view. Senator MICHAEL BAUME(New South Wales)(12.01) —I support the motion moved by Senator Mason in two specific ways. First I deal with the quite incorrect assertion by the Minister for Resources and Energy, Senator Gareth Evans, that there was growing local concern in the Singleton area about the location of the Army camp there. That is simply untrue. The facts of this matter must be presented properly to the Senate. I quote from some publications that have been circulated to honourable senators, which I think the Minister should be aware of, but which apparently he chose to ignore in making his totally false assertion to the Senate. I quote first from a publication by the Army for Singleton Group which describes itself as follows: The Army for Singleton Group has been formed to express community support for the Army in Singleton, and to reinforce the Singleton Shire Council's submission for retention of the Infantry Centre at Singleton . . The Group fully supports the establishment of the Senate Select Committee now proposed, and will use every endeavour to ensure that Australia's National Defence needs are best met by recognising and financing the Army's real needs for upgrading of mobility, equipment, ammunition and vital supplies, rather than spending hundreds of millions of dollars on unjustified `land grabs'. This publication demonstrates community support for the Army in Singleton which the Minister curiously chose to ignore or to pretend did not exist. I also quote from a submission by the Singleton Shire Council which underlines its desire for the retention and expansion of the Singleton Army base rather than the move to Bathurst-Orange. It claims that the co-location of the Schools of Infantry and Artillery are quite possible in the Singleton area. The Council's submission in a letter dated 8 October 1985 states: Council has continually drawn attention to the obvious economic and strategic advantages of expanding the existing Singleton Army Base to accommodate the Schools-- that is, both the Infantry and Artillery Schools- However, to date the Government has failed to carry out a thorough and objective assessment of this alternative . . . The economic and social dislocation this move-- that is, away from Singleton- would cause has to be evaluated and appropriate alternative industries established in Singleton, if the community is to be adequately compensated for the loss of the Infantry Centre . . . Council believes that the Singleton site offers the most attractive solution in terms of cost effective use of resources, suitability for infantry training needs and community acceptance of the Army. The Council's views and submission were not formed in isolation. The Council sought the views of organisations, individuals, semi-government bodies and community groups throughout the region. As a result of collecting those views the Council annexed a table to its submission. I seek leave to incorporate in Hansard a condensed version of a table outlining community responses to the question of retaining or expanding the Singleton Army base. Leave granted. The table read as follows- SINGLETON SHIRE COUNCIL Summary of letters or submissions received In favour or not opposing the retention and expansion of the Singleton Army Base For/ Organisation/Group Date Comment Opposing Government &Semi-Government Bodies 1. Department of Mineral Resources 10.9.84 No objection to expansion providing no sterilization of mineral resources and should be able to see mining and the army coexist. . . 2. Hunter Development Board... 12.7.84 Expressing concern at economic impact of army relocation and supports retention of army at Singleton. F 3. Forestry Commission of N.S.W.... 2.10.84 Advocates continued army passive use of Forest without need to acquire. Opposes acquisition of commercially viable timbered land under the Crown. . . 4. Hunter Valley Conservation Trust 12.10.84 Would not unnecessarily create an impact on resources, however studies of impact necessary. . . 5. Natural Trust of Australia... 3.10.84 Supports addition of reclaimed army sites west of Army Camp. No objection to continued use of Pokolbin State Forest. No objection to land south of Broke for non-firing exercises. Raised objections to other sites in N.S.W. under consideration. F 6. Maitland City Council... 19.9.84 Value of Army Base at Singleton and offering full support to Singleton Shire Council for Camp retention. F 7. Rylstone Shire... 14.9.84 Offering support for continued expansion of army and drawing attention to areas at Rylstone which could be used for Army exercises. F 8. National Parks Association... 6.9.84 May be some agreement on the Army expansion between the Association &Singelton Shire Council. F 9. State Emergency Services Upper Hunter Division 24.10.84 Stressing retention &expansion of Base important to whole Region. F Community Groups 1. Hunter Valley Vineyard Association... 2.10.84 No objection to extension of range... F 2. Singleton &District Chamber of Commerce... 9.5.84 Strongly supports retention &expansion based on economic, social and sporting ties between army &community. F 3. No Base Central Tablelands Committee... Opposes location of army base being located in Central Tablelands and supports retention of Singleton. F 4. Harvey Ranges No Base Committee... 23.8.84 Offers total support to keep army in Singleton F 5. Mendooran Branch, No Base Committee... 6.9.84 Offering support for retention of Camp F 6. No Base Committee, Central West... 10.10.84 Advising on telex to P.M. on opposition of base N.E. of Dubbo. F 7. Congregation of Sisters of Mercy... 15.10.84 Supporting retention of army camp and lists of charities army has supported. F 8. Singleton Neighbourhood &Community Information Centre... 8.10.84 List of many benefits and any transfer would create a drain on community resources. F 9. Apex Club of Singleton... 8.10.84 Pointing out social, economic and charitable benefits of army. F 10. Broke Public School... 4.10.84 General support of Army expansion, clarifying noise levels and divorcing himself from Wollemi V. Landholders Association. F 11. Broke Parents &Citizens... 4.10.84 Fully supports retention and expansion to include school of artillery. Indicates how the army supports the community e.g. bush fires, emergencies. Noise created by Army is minimal. F 12. Singleton Senior Citizen's Centre... 5.10.84 Supports continued presence of army in Singleton stating community and economic benefits. F 13. Singleton Heights Parents &Citizens... 3.10.84 Supports retention and expansion for economic and social reasons. Army contributed greatly to economy region. Camp expansion would not destroy environment. F 14. Singleton Rugby Club Ltd... 4.10.84 Supporting expansion of Army Camp. Loss of Army would affect sporting teams and club operations F 15. Milbrodale Parents &Citizens... 2.10.84 Support for retention of Camp pointing out community benefits. F 16. Singleton Child Care Centre... 2.10.84 Army provides support as users of Centre and volunteer support in fund raising activities and providing outdoor equipment. F 17. Singleton Public School... 4.10.84 General support for expansion pointing out economic benefits, support for schools, tourist attraction of Army Museum, promotion of sport, manpower to support fetes. F 18. Singleton District Vegetable Growers... 25.9.84 Supports retention and expansion of Camp. Primary producers rely on the army for business support. F 19. Singleton High School... 20.9.84 Support for retention and expansion of Camp for education and economic reasons. F 20. Singleton Youth Services Centre... 19.9.84 Support for expansion pointing out sporting and social benefits to community. F 21. R.S.L.... 14.9.84 States that Singleton Shire Council submission contains valuable reasons for the army retention, however could not adopt a policy to support a particular group. F 22. Australian Democrats... 6.9.84 Supporting expansion of Army Camp with back-up area at Wagga Wagga. F 23. National Party, Singleton Branch 5.9.84 Supporting retention of Camp &encourages location of artillery school at Singleton. F 24. Quota Club of Singleton... 27.8.84 Support moves to retain Camp given economic and community benefits, e.g. fire control. F 25. Lions Club of Singleton... 17.8.84 Support to Council's submission indicating Army's support to Singleton community. F 26. Singleton Town Band... 15.8.84 Support for Army retention as Army benefits musical aspects of Singleton community. F 27. Brokenback Motor Lodge... 24.10.84 As nearest commercial development to Army Base, fully supporting expansion-no problems with noise. F 28. Singleton Pre-School Kinder- garten Stressing involvement and impact of Army families on pre-school operation. F 29. King Street Public School Parents &Citizens' Association Offering full support for retention. F Note: No Community Groups opposed the retention and expansion of the Singleton Army Base. Senator MICHAEL BAUME —I thank the Senate. The table demonstrates the overwhelming support of community groups and semi-government bodies for the retention or expansion of the base. It notes that no government or semi-government bodies oppose the retention and expansion of the Singleton Army base. As Senator Sir John Carrick pointed out, that is in total conflict with the evidence presented by the Army. It also notes that no community groups oppose the retention and expansion of the Singleton Army base. Something like 29 submissions are listed in the table. Only four submissions from individuals-not groups-represented any level of opposition. As a result, I think that this table clearly demonstrates the inaccuracy of the claim made by Senator Gareth Evans that there was growing community concern in Singleton about the presence of the Army. The second point I make relates to clause (c) of Senator Mason's motion, dealing with the adequacy and appropriateness of current procedures in protecting the rights of individual landholders and communities in areas where acquisition is contemplated by providing for fair compensation and appeal procedures. There is no doubt that recent events in various other areas have demonstrated the need for some inquiry into the adequacy and appropriateness of current procedures. I draw attention, for example, to the present disagreement going on in the Shoalhaven area about the manner in which the council was used as a front for acquiring land that may well be for the benefit of the Navy. I have no objection to the Navy moving to Jervis Bay. On the contrary, providing the road and rail infrastructure can be improved-it must be improved before the move takes place-I am in favour of the Navy moving there. It is curious that the Department of Defence and the local member of parliament for the area just to the north should have used the device of getting the council to buy the land, apparently on some verbal assurance from both the Labor member of parliament involved and/or the Department of Defence that the council would not run any risk-despite the fact that the cost was approximately $1.3m and the interest charges on that would be substantial-without anything in writing to guarantee the role of that council. So obviously the appropriateness of current procedures needs to be examined in respect of the Shoalhaven matter. I also raise the question of the Woolwich housing proposal. The Army has said that it has a pressing need to build accommodation on multi-million dollar waterfront land at Woolwich, which until recently had been available for use by the residents there, but which the Army recently fenced off as if to establish some immediate right to develop it. Why on earth the Army would feel any great need to build housing on that waterfront land is beyond me, apart from the fact that it happens to be adjacent to their small boats operation. Senator Mason —You would have a house there if you could, wouldn't you, Senator? Senator MICHAEL BAUME —I would love to be able to afford a house on such outstanding waterfront land. Why on earth the Army feels it should use some of the remaining vacant waterfront land in Sydney for such a purpose is beyond me. The word `arrogance', used earlier by Senator Peter Baume, also seems to encompass this activity. When this matter was raised by me in the Senate Estimates Committee, the Army responded that no money was allocated in the current Estimates for the building of such housing and it was still only a possible project. However, I notice that a large barbed wire topped fence has been erected around this land to prevent the local people from using it. That certainly seems to me to dramatise the need for improved procedures, particularly as I am concerned that from a compendium amount of $47m available to the Defence forces for capital expenditure during the coming year there seems to be no prohibition on the Army using some of that money for the purpose of housing. It seems to me that clause (c) is a vital element in this notice of motion as there is a clear need-quite apart from the need evident in the no base problem relating to Bathurst-Orange-for the adequacy and appropriateness of current procedures in protecting the rights of individual landholders to be inquired into by this Committee. I have great pleasure in supporting Senator Mason's motion. Senator MASON(New South Wales)(12.10) —in reply-We have been discussing my motion on behalf of the Australian Democrats for a reference to the Senate Standing Committee on Foreign Affairs and Defence on what has come to be known as the Army land grab issue. That title has been associated with this problem by the community, with great justification, because we have had a decade or more of prevarication, shilly-shallying, deception and changes of mind by two governments and the Army. This has led to no useful result other than the spending of huge amounts of public money on environmental impact statements-sometimes two in one area-and the general dislocation of agricultural communities in a number of New South Wales regions. Whenever the Army has gone to those regions it has created much the same effect as a swarm of locusts. It has created a fall in rural values and the situation where people, who for the best of reasons might want to sell their land, cannot sell it, and it has dissuaded people from making constructive improvements to their properties. All of these are matters of equity and great importance to the community at large. The key point to this, to which the Minister for Resources and Energy (Senator Gareth Evans) did not reply in his speech, which was singularly lacking in facts, is that the Army proposal now is to investigate yet again an area of 70,000 hectares in the Bathurst-Orange area which produced last year $5m in export income for this country in the form of fine and superfine wool. The Government appears to take the view that in spite of our enormous foreign debt and the need for every foreign dollar the country can get it is perfectly prepared to sacrifice $5m of export income so that the Army can shoot off its new Howitzer big guns at maximum range-which is not done anywhere else in the world-at a cost of $70,000 a round. Those are the sorts of points that I had hoped the Minister might have replied to, but he did not. I think that the Minister's heart was not in his reply. Senator Michael Baume —His head was not in it, either. Senator MASON —No, it was not. The Minister struggled faintly to try to give the idea that somehow or other it would be a waste of money to have a Senate inquiry. There is an argument that any kind of governmental activity is a waste of money; we all cost money. Perhaps it would be better to have a dictatorship run by Senator Gareth Evans so that we would avoid all those costs and would not have to have any inquiries. The Government and the Army could go ahead and do everything they wanted. Senator Siddons —Senator Walsh would be even better. Senator MASON —Senator Walsh might fit that role very well; he has shown remarkable predilections in that direction. Yesterday he wanted no democratic processes in the superannuation fund. I think that he believes in dictatorship too. I thank all Opposition senators who have thoroughly and honestly ventilated this matter, which needed ventilating seriously. The debate has covered most areas we would want to cover. Those members of the public who have heard the debate-some would be members of the farming community in New South Wales and elsewhere in Australia-would realise how important this is. It raises the question not only of what is to happen now with the Army land grab but also the takeover of land by the Government on a bureaucratic basis with no explanation, no proper compensation and long delays, as has often been the case, in people getting their money. Those are some of the things we would ask the Committee to look at. The Minister raised two points which I found interesting. I was not going to raise the question of whether or not the land might be used by a foreign power at some stage. Senator Gareth Evans raised it and misquoted me from the Sydney Morning Herald when he said that I had raised the issue that maybe with the Philippines situation the way it was, if the United States lost its bases in the Philippines, it might want to come here. In the first place, it is a respectable enough point of view that if the United States lost its bases in the Philippines it might well want to come here. On present undertakings by the sycophantic Labor Government, which assists the nuclear policies of the Reagan Government in every way it can, I would not be surprised if it got agreement. The point is that I did not say that and did not raise it in the debate because I did not know whether that was a proper basis. But I had said to the Sydney Morning Herald, which quoted me correctly, that some of my constituents affected by this Army land grab were so concerned and puzzled by the enormous overkill that the Army is proposing-it wants such vast areas of land for so few people-that there must be another explanation. The only explanation they could see that made any sense whatsoever was that the land was not intended just for the relatively small and modest number of soldiers whom we would ever want to train in this country but must be required for some foreign power which had many more people to train. Naturally, the question of the United States suggested itself at that stage. However, I wish to make the point that I was expressing the views of constituents who are reasonably puzzled and disturbed by the Army's enormous requirements for land. Let us remember that at one stage the Army wanted two million hectares of land-more than some completely sovereign countries in Europe. Is there any rational explanation for that in terms of training Australian soldiers? I cannot see that there is. That is a matter which requires a reply. Interestingly enough, the Minister said that the suggestions by my constituents which I quoted that there might be some United States involvement were preposterous. He just said that, he did not actually deny the suggestion. At some stage I would like the Minister or the Minister for Defence to give an undertaking that the Government does not have that in mind and that it has not had any inquiries or discussions relating to the use of the land in that way. I do not think that that is very likely, but after all it is land and it can be used for any purpose. I would like some statement or undertaking from the Government that that is not what it has in mind because that would reassure my constituents and, I must confess, it would reassure me too. I would like to see that reassurance brought forward by the Government soon because it will remain an open question until that reassurance is given. The second matter that was raised by the Minister was the question of what the Prime Minister (Mr Hawke) told people in the Orange-Bathurst area during the election campaign. The Minister tried to sell the story that what the Prime Minister really meant was that a previous amount of land in Orange-Bathurst would not be taken for Army purposes. Although I do not have copies of the statutory declarations involved-I think Senator Brownhill may have dealt with them, probably better than I can-it is certainly my recollection from reading them carefully that these people were perpared to sign such statutory declarations saying that the Prime Minister had said that there would not be any Army land grab in the Orange-Bathurst area. That was an excellent campaigning point in the election. The only point I am making is that now, after the election, it is being suggested again that there will be a takeover of large areas of productive land in the Orange-Bathurst area and that is not satisfactory. The Minister summed up by saying in a vague, fuzzy, factless way that the inquiry was not justified, that it was a waste of money and various other buzz words which Ministers use on these occasions. I am not convinced by that. The whole conduct of this debate must convince every reasonable person who heard it that there is a crying need for an inquiry into this matter. Probably there are very few matters in Australia which could cry out more for a Senate investigation than this issue with its history of prevarication, double talk and shilly-shallying. In particular, there has been the singularly bungling ineptness by the Army in expressing its intentions and the Army's complete indifference to the plight of the people in the areas into which it has blundered. The Army does not seem to have cared at any stage what damage it did to individual people and landholders and even now it seems to accept with equanimity the idea that it should take over vast quantities of productive land producing fine and superfine wool for which there is a demand that far exceeds supply. The Army has not given any really good reason why it wants that land. I commend the motion to the Senate. Question resolved in the affirmative. Senator McINTOSH(Western Australia) —On behalf of the Standing Committee for the Scrutiny of Bills I present the Committee's Alert Digest No. 10 of 1985. Debate resumed from 11 September, on motion by Senator Button: That the Bills be now read a second time. Senator SIDDONS(Victoria)(12.20) —I was commenting on the two Bills that we are debating-the Bounty (Metal Working Machines and Robots) Bill 1985 and the Bounty (Agricultural Tractors and Equipment) Bill 1985-and in relation to the second Bill particularly I noted that the Opposition proposes to move an amendment reducing the bounty from 40 per cent to 25 per cent. I pointed out that this was particularly sad because Senator Chaney had slavishly adopted a recommendation by the Industries Assistance Commission and was attempting to get the Senate to agree to that recommendation as well. I made the point that the IAC had a long history of putting maximum pressure on industry and that the whole approach of the Commission was unsatisfactory in that it was based on confrontation with industry and not on a co-operative approach. I was pleading the case for the Government-and we will hear from the Minister for Industry, Technology and Commerce, Senator Button, later-to take the opportunity to establish an environment or co-operation between industry and government, which is second to none. I was using the Japanese example as one that the Australian Democrats would recommend to the Government as being worthy of careful consideration. This is the sort of approach which the Japanese have applied through their Ministry of International Trade and Industry which gathers market information from around the world, brings it back to Japan and then asks industry to discuss with the government instrumentality the potential market for Japan in the various categories. Once there is agreement on the projections of the market potential by categories with the industry leaders concerned, MITI assesses the capacity of Japanese industry to meet that projection five or 10 years hence. If the capacity of industry in Japan is too high the MITI organisation says to industrial leaders: `Go away, rationalise your industry and reduce your output'. If the capacity in Japan is not capable of meeting the projection, MITI says: `Right, we must expand that industry'. That is exactly what it did some years ago with the automotive industry. There is a clear understanding of government attitudes. Senator Chaney —I believe that MITI has tried to squeeze out Mazda. Senator SIDDONS —The fact is that the Japanese now produce more motor cars than the mighty United States auto industry and that has been achieved in a comparatively short time. Therefore, the Japanese must be doing something right. I believe their co-operative approach between industry and government is one of the factors. I would be very interested to hear any comments that Senator Button cares to make on this basic approach. I believe that there would be a lot of support in industry for getting away from confrontation and being able to understand and discuss clearly with the Government its long term projections and hopes for industry by product. This requires a lot of work and a basic new approach. I believe that the Department of Trade would have to do what the MITI organisation does in Japan-gather in the information on market potential around the world by product. The Department of Trade could be expanded to do that, and that information could then be collated and discussed on a continuing basis with industry leaders in this country. That would mean having a co-operative approach as opposed to the confrontationist approach of the IAC which says to industry repeatedly: `You are in the dock, you tell us why you should exist as a manufacturer in this country'. Senator Chaney pointed to the need for a bipartisan or tripartisan approach to the development of industry in this country, and I could not agree more. Industry is too fragile to be at the beck and whim of party politics, to be a political plaything. If we are to develop industries that, as we all hope, will be internationally competitive, industries that can look on the world as their potential market, we have to do some pretty basic thinking. The Government has to be in a position to pick winners. It has to be able to say, in consultation with industry: `This is the area, this is the thrust we are prepared to encourage'. Industry would know what was expected of it. The Government would know what industry was going to try to do and the funds with which to do it would be readily available. The organisation of our industries has to be improved. Some weeks ago I introduced into the Senate an employee participation Bill. In my second reading speech I made the point that the secret of the Japanese success, apart from government co-operation, is the fact that Japanese industries have developed organisational structures which respect the individual as a thinking person. Japanese industry does not adopt the attitude that so many Australian industrialists adopt; that is, that the workers are there to do what they are told. Japanese industry looks on the workers to make a positive contribution to improve the efficiency of the industry in which they work. Unless we can get that co-operative attitude between management and workers in industry we will never be really efficient. In the employee participation Bill I set out four criteria that would establish an environment in which the ideas and suggestions of workers could be gathered in co-operation with the management. The most important criterion is what is called small group activity. For instance, the small groups in the Toyota organisation in Japan last year processed no fewer than 1.9 million suggestions from workers. Of those, 90 per cent were acted on by management. We could have the greatest industrialists of all time, someone such as Henry Ford I, but no one man could come up with 1.9 million suggestions to improve the efficiency of an organisation. But if the whole organisation thinks that way and if there is a process which allows the suggestions of people in it to be assessed, to be put into a concrete form which management can either act on or not, we will get efficiency. Just how dramatically successful has Japanese industry been? Starting in 1945 from a heap of rubble with a reputation for producing shoddy imitations, by 1980 Japan was producing more motor cars than the United States of America, 56 per cent of the steel used in US industry and 90 per cent of the motorbikes in the world, and it was world leader in the manufacture of machine tools, computer design and so forth. That all happened in 40 years. A very careful assessment of how the Japanese have done it comes back again and again to the fact that they use the expertise and abilities of the entire work force. The Japanese workers do not go to work and say: `What shall I do? Tell me what to do'. They discuss what they are doing in small groups and they look at ways of improving the efficiency of the industry in which they work. If Australian industry is to be internationally competitive it has to have a very close and careful look at how the Japanese have done it. Until we do that we cannot hope to beat them. We have to assess our competition, find out what is good about it and try to improve on it. The two fundamental ways of doing that-I take the opportunity in this debate to stress this-are, firstly, to have a co-operative attitude between governments and industry and, secondly, to have a co-operative attitude between management and the work force. That is all there is to it-two very simple concepts that have been shown in Japan to have dramatic results. Chamberlain John Deere Pty Ltd is essentially the only manufacturer of large tractors in Australia. The company has a long history. It has been going since 1932 and it has been able to remain viable in spite of intense import competition from the rest of the world. We import tractors from manufacturers in Russia or any other country in the world-name it-in competition with Chamberlain John Deere in Western Australia. The fact that it has been able to compete against the world, with all the problems and all the on-costs that are associated with Australian industry today, is a great achievement. The Opposition says: `Why should we subsidise Chamberlains? It has had a bounty for some considerable time and it is about time it either stood on its own feet or disappeared'. I make a plea for time. I commend the Government for upping the ante, as recommended by the Industries Assistance Commission. It has told Chamberlain John Deere quite clearly that it wants the company to continue. I think that is the right decision. We have the basis of a very important industry here. Surely it is important that we have the capability to manufacture our own heavy tractors. So let us keep going the industries that have survived over a long time, that do have potential. Let us help them in the short term with a bounty and in the long term let us see whether we can do something better. Let us see whether we can get these industries to be as efficient as the Japanese industries. I once visited the Komatsu factory in Japan, which makes crawler tractors. For a while that company was a licensee of Caterpillar. It had a massive manufacturing enterprise and produced crawler tractors and bulldozers at the rate of one a minute. It had acres and acres of paddock where tractors stood after rolling off the assembly line. I asked how on earth it could sell that output and where the tractors were going. They were going to China and all around the world and a lot were being used in Japan. That massive industry, based on the technology of Caterpillar, had been developed in a very short time. Why was Komatsu prepared to invest the massive funds that were necessary to develop its enterprise? It was prepared to do so because it knew that it was developing a plan which had the absolute backing of the Japanese Government, the stamp of approval of MITI, and away it went. As we now know, it makes crawler tractors and bulldozers as efficienly and cheaply, if not more so than Caterpillar itself. I think it is important to take time out to look at where we are heading as an industrial nation. What do we intend to do about our industries? How can they become internationally competitive? We will not achieve that by slavishly following the recomendations of the IAC, which simply puts the maximum pressure it possibly can on industry and which looks on industry as something to attack on whoever's behalf. The Australian Democrats will support both of these Bills. We commend the Government for its action in relation to the bounty both on metal working machinery and robots and on agricultural tractors and equipment. As we see it, it is a short term approach. We hope that the Government will comment and give us some insight into its longer term plans for industry so that it can become internationally competitive and so that the best of our industries can look on the world as their market. I close by reiterating the two fundamental principles that must be embraced. The first is co-operation between government and industry. The Government has to bring industry into its confidence and tell industry what it wants. The Government has to be prepared to pick winners. It is as simple as that. We heard from Senator Puplick last night about picking winners. I was not clear as to whether he was for it or agin it. But the fact is that there is no other way. We cannot spread government assistance broadly. The Government must use rifle shot accuracy to decide where to encourage development. When it has decided precisely where to encourage development, it has to do so in co-operation with industry. The second fundamental principle is co-operation between management and workers-participative management. I implore the Government to look carefully at the Bill that is now in its second reading stage which embraces the principles that have been so brilliantly adopted in Japanese industry and which could readily be adopted in Australian industry if we were prepared to drop our entrenched ideas-ideas that workers are there to do what they are told and the attitude of workers that they are not going to help the boss make money. We must drop these entrenched attitudes and accept the fact that workers and management, and investors for that matter, are all in the same canoe, and recognise that unless the efficiency of the enterprise can be expanded and increased, there will be no cake to divide up between the component parts of that enterprise. Senator SHORT(Victoria)(12.38) —The Bounty (Metal Working Machines and Robots) Bill and the Bounty (Agricultural Tractors and Equipment) Bill are important Bills because the industries to which they relate are significant industries, and they also service other very significant industries, although they differ markedly one from the other. They are also important in that from them we can obtain, I believe, some indication of the Government's approach to Australian industry and to industry restructuring, about which we have heard much from the Government-with much of which I agree-but with words largely unmatched by action. A comparison of the two Bills before the Senate also indicates an apparent confusion in the Government's attitude towards manufacturing industry in Australia. I will come back to that later. Before getting into the substance of what I had proposed to say, there are a couple of points that Senator Siddons, in particular, made that I should pick up. Senator Siddons said, in essence, that by proposing amendments to the Bounty (Agricultural Tractors and Equipment) Bill, the Opposition was anti-Chamberlain-the one remaining major Australian producer-and he made a plea for more time for Chamberlain. We will develop that matter later. However, I must stress at the outset that there is no way in which the amendment that the Opposition is proposing in relation to the bounty proposals for Chamberlain are anti-Chamberlain. The amendments of the Opposition, if adopted, would in fact continue the assistance to Chamberlain which has been there for many years with the exception of the very high level of temporary protection or assistance that has been given in the last 2 1/2 years, and which in any case the Government proposes to phase out over a two-year period. So I completely refute Senator Siddons's comments that our amendments are in any way anti-Chamberlain. The other point made by Senator Siddons which I rebut was his suggestion that our amendments, which are in line with the Industries Assistance Commission's report-more in line than the Government's final proposals-ignore the need for a co-operative approach and that they reflect a confrontationist approach. I believe that such an attitude towards the amendments proposed by the Opposition does not bear any close scrutiny at all. We fully support the proposition by the Government and by Senator Siddons that in terms of the development of Australian industry along a viable and growth path, which surely all Australians want, the maximum degree of co-operation between all parties, be they industry, government, unions, employers or employees, is the ultimate aim that we should be striving for. Whether it is achievable or not is sometimes another matter; but if we do not aim for that, we start behind the eight ball compared with what we otherwise would have. The Bounty (Metal Working Machines and Robots) Bill proposes new bounty assistance for the metal working machine tools industry in Australia for a period of six years, from 1 July 1985 to 30 June 1991. It changes the existing basis of bounty calculation and it extends the bounty to certain high technology machines not previously bountiable. It also changes the method of assistance for robots from tariff duties to bounty. Perhaps most significant of all is the fact that the Government has introduced a new concept into bounty assistance for the industry by differentiating between producers of high technology and of low technology machines, and as a result producers of high technology machines and robots are to receive a higher level of bounty than producers of low technology machines. As Senator Chaney said in the debate yesterday, the Opposition supports the thrust of the Government's proposals in this Bill. The Opposition believes very strongly in the continued development of a modern and viable manufacturing sector, and we support economically viable and rational measures to achieve this end. If we are going to develop a modern and viable robot and metal working machine tool industry, Australia will be all the better for that. Over many years we have seen a progressive decline in the relative importance and size of our manufacturing sector. It is a decline about which we have all had many regrets. We have a common objective of trying to arrest that trend within the overall requirements and developments of a rapidly changing world and region. So I do not think there is any dispute at all between any of the parties to this debate in terms of the desirability of a viable and growth path for the machine tool industry. In saying that, however, I also say that we must recognise that the tools and robots are just that-they are tools for use in the total manufacturing process and their cost structure is, therefore, of critical importance to the total cost structure of the manufacturing sector. It is for that reason that for many years now the assistance accorded the industry has been by way of bounty rather than by tariff; but regardless of the method of assistance, the point is still one that we would all recognise. Whilst supporting the Bounty (Metal Working Machines and Robots) Bill, I want to comment on the Government's proposal, which is over and above the IAC's recommendations, to pay a higher level of bounty to producers of high technology machine tools than to producers of low technology tools. Debate interrupted. Sitting suspended from 1.45 to 2 p.m. Senator CHANEY —I refer the Minister for Industry, Technology and Commerce to the estimate by the Australian Automotive Dealers Association that the Government's fringe benefit tax will cost 12,000 jobs in the car industry by permanently reducing sales by 50,000 cars a year. Also, is he aware of the claim by the Managing Director of GWA Motors Ltd that the tax will reduce industry volume by between 2.5 per cent and 5 per cent in 1986-87? Does the Minister agree that the fringe benefits proposal will have a serious effect of the order suggested on the vehicle industry? If not, what is the Government's estimate of the impact of the new tax? Was an estimate of reduction in motor vehicle sales available to the Cabinet when it considered the tax changes? If so, what was it? Senator BUTTON —I have not seen the Automobile Chamber of Commerce's estimate of reduction in the volume of jobs as a result of the fringe benefit tax in respect of the use of motor cars for private purposes. I did see that a Mr Ray Baxter from Mazda made a speech in Melbourne about the impact of the fringe benefit tax on the industry generally. Senator Chipp —He used to play centre half-forward for Footscray. Senator BUTTON —That is a very important thing to intrude into my answer! No doubt Senator Chipp is very proud of his interjection. I did see the report of Ray Baxter's speech about this and his estimate. I do not quite know how people arrive at these estimates. They vary considerably. Mr Graham Spurling from Mitsubishi in fact welcomed the tax as having a beneficial effect. Senator Chaney —On Mitsubishi. Senator BUTTON —Of course. Mr Ray Baxter, of course, would be largely motivated by the fact that he is Managing Director of Mazda, which is a company already suffering some disbenefits from the devaluation of the Australian dollar. I am saying that I think all these estimates have some sort of subjective element in them. There were estimates done at the time of the original White Paper which contained a different proposition in respect of the fringe benefit tax on motor vehicles. My recollection is that it was suggested that the impact would be of the order of the figures mentioned by Mr Baxter. I speak from recollection. As I recall, the White Paper proposal was that the value of all the vehicles should be assessed on the basis that 24 per cent of the value of the vehicle was the estimated running cost of a particular car. In the proposal now announced there are variable rates proposed in respect of various mileage uses and the bulk of Australian manufactured cars fall within the middle range, which is at the 16 per cent rate. I think there must be substantial variations from the assessment of the original figures following publication of the tax White Paper. Senator CHANEY —I have a supplementary question, seeking to avoid any misunderstanding. I understand the answer to mean that the Government had some figures for a proposal which was not adopted. Are we to take it from the Minister's answer that the Government had no actual estimates before it of the impact of the fringe benefit tax at the rate actually proposed before it made the decision to adopt that tax? Senator BUTTON —That is correct. I just make the point-perhaps I did not make it clear before and I should make it clear-that the impact as assessed of a more severe fringe benefit tax on the motor vehicle industry would inevitably be reduced by a less severe package and that in any event it is impossible to make accurate estimates in respect of these things, or even accurate guesses, because what will happen depends on a great variety of factors and, most particularly, on the behaviour- Senator Messner —Do you suggest that these are ideologically based moves? Senator BUTTON —Yes. In order to provide some neutrality, fairness and equity in the tax system, that is right. I know that the honourable senator will spend the next few months gathering together the carpetbaggers from various sections of the community and will fix them all up with some special, concessional treatment, as his side did over 20 years in government, thus getting the taxation system into the mess it is in now. Senator Peter Baume —Who are the carpetbaggers? Senator BUTTON —The honourable senator will know. He is able to identify them. There is no point in asking me who his carpetbaggers are. He knows-not me. Senator Messner —In the car industry? Senator BUTTON —No, I do not mean the car industry. The PRESIDENT —Order! There are far too many interjections. Senator BUTTON —If I might complete the answer, it is very hard to make an accurate estimate, and of course that is implicit in Senator Chaney's question, when he asked: `This body says this, that body says that, somebody else says something else-what is your guess?' The question is as simple as that. Senator DEVLIN —My question is addressed to the Minister for Veterans' Affairs. Is the Minister aware of allegations that certain Australian prisoners of war were interned in nazi concentration camps during World War II? Do these prisoners have entitlements to compensation from either the Australian or West German governments? If so, what action is being taken to secure those entitlements? Senator GIETZELT —Yes, I am aware that for the last three or four years some Australian ex-servicemen who were prisoners of war have been attempting to establish claims with the West German Government in respect of their incarceration in concentration camps in Theresienstadt in Czechoslovakia and Buchenwald in Germany. The West German Government has claimed that the prisoners of war are not covered by the West German indemnification law although we on our side claim that under the Geneva Convention ill-treatment was meted out to this particular group of Australian prisoners of war who were incarcerated because of their repeated attempts to escape, which is part of the obligation of servicemen in a wartime situation. I understand that the previous Government made representations to the West German Government in 1982 and no progress was made. As a result of representations by the veterans themselves, both on an individual basis and through my Department, the Minister for Foreign Affairs has agreed to establish an interdepartmental committee made up of the Department of Finance, the Attorney-General's Department, the Department of Defence, the Department of Foreign Affairs and the Department of Veterans' Affairs with a view to pursuing the matter with the West German Government because we believe that a breach of the Geneva Convention did take place and in that sense it comes within the ambit of the indemnification law of West Germany. Of the 26 veterans I am advised that 16 received a disability pension from my Department. All of them get free medical treatment as ex-prisoners of war. However, as they did suffer unduly as a result of their internment in concentration camps, there is a view that they are clearly entitled to some form of compensation by the West German Government and we are actively canvassing options for settling their claims. Senator SHEIL —My question is directed to the Minister representing the Treasurer. Is it a fact that the Government expects wage increases of approximately 8 per cent per annum over the next two years? If so, what measures will the Federal Government take to ensure that the 1.6 million taxpayer as earning less than average weekly earnings will not move from the 29 per cent marginal tax bracket into the 40 per cent marginal tax bracket by July 1987? Senator WALSH —I cannot recall off the top of my head, but the anticipated rate of wage increases this year is in the Budget Papers. It is of the order of 8 per cent, although I thought it was somewhat lower. As to what will happen beyond that, it is much more uncertain. The real point of Senator Sheil's question is what steps the Government intends to take to ensure that 1.6 million taxpayers do not move from paying the 30 per cent marginal tax rate to the 46 per cent marginal tax rate. The measure that the Government intends to take to ensure that that does not happen is to legislate for its tax reform package. The greatest threat to that package comes from those carpetbaggers on the other side of the chamber who have stated their intention to sabotage it. If they are allowed to have their way, ultimately, everybody will be paying a 60 per cent marginal tax rate. Senator COATES —Has the Minister representing the Minister for Health seen reports stating that the Tasmanian Minister for Health, Mr Cleary, admitted that he could be accused of being slow? Mr Cleary was referring to the Tasmanian Government's failure to allocate the $720,000 provided by the Federal Government as long ago as last April after the national drug summit. Can the Minister explain how the money is meant to be allocated and how Tasmanian drug education and counselling programs have suffered as a result of Mr Cleary's incompetence? Senator GRIMES —Yes, I have seen the reports to which Senator Coates refers. It is surprising that our Tasmanian colleague Mr Cleary has admitted that he could have been accused of being slow. Indeed he could. This matter was first brought up in April of this year at the drug summit chaired by the Prime Minister. A committee of officials of the Ministerial Committee on Drug Strategy met in August to allocate amongst the States the additional $60m which the Federal Government had generously agreed to make available over the next three years for education, treatment, rehabilitation and research programs as part of the national campaign against drug abuse. The $8m per annum which has been allocated for a national project is funded solely by the Commonwealth, and the remaining $12m per annum is available to the States and Territories on a matching dollar for dollar basis. Following the officials meeting of 14 August, Mr Cleary and Dr Blewett jointly announced the 1985-86 allocation of $720,000 to Tasmania as part of the national campaign against drug abuse. Senator Walters —Tell us a little about the- Senator GRIMES —I am telling the honourable senator specifically what was announced on 14 August. Perhaps we will come to the rest later. Half of that money was to be contributed by the Commonwealth and half by Tasmania. Dr Blewett very quickly made the Commonwealth's intentions clear. It is now up to the Tasmanian government, as Senator Coates said, to indicate its requirements and, in particular, to let us know the specific programs to which it wishes to allocate the funds. We have received a general shopping list from Tasmania, but we do not have any detailed advice as to its priorities. It was this advice that Mr Cleary admitted was pretty slow in coming from Tasmania. We are concerned that bureaucratic in-fighting, either at the State or Federal level or between those at State and Federal level, does not interfere with the fight against drug abuse. This was the whole point of the Prime Minister's initiative. It was for that reason that we got cracking so quickly on getting Commonwealth-State agreement. At the end of next week, the Ministerial Committee on Drug Strategy, comprising State and Federal Ministers, will meet to review the progress made since the drug summit. We wait with interest to hear what Mr Cleary will have to say. Dr Blewett has telexed all the Ministers, requesting that they agree that that part of the meeting in which the Ministers report on their progress be held in a full public session open to the media. I will be interested to know whether Mr Cleary is willing to co-operate in this regard. We believe it is vital that the States and the Commonwealth put forward their progress in front of the public and the media so that judgments can be made on how each jurisdiction is operated. I know that there is great disappointment in Tasmania that because of the tardiness of Mr Cleary and his colleagues not much has been done. As Senator Coates said, counselling systems which could have been set up and could be well and truly operating have not been set up. I believe that if at the meeting at the end of next week there is a willingness among the States, in particular Tasmania, to be open about what they have done in this area, there will be a stimulus for them to achieve much more, and in Tasmania much more needs to be achieved. Senator HAINES —Is the Minister representing the Attorney-General aware of reports that the United States of America has decided to cease to recognise the authority of the International Court of Justice, except in non-political cases? Does the Minister consider that this partial withdrawal by the United States will weaken the authority of this important international judicial panel? Does the Minister think that the timing of the United States of America's withdrawal is particularly regrettable in terms of resolving international disputes, given the current suit in that court brought against the United States by Nicaragua. Senator GARETH EVANS —I can answer the question in my capacity as Minister representing the Attorney-General and as Acting Minister for Foreign Affairs, because it does have those dimensions. The United States Government announced on 7 October that it had decided to withdraw its declaration accepting the compulsory jurisdiction of the International Court of Justice. This decision was apparently taken as a direct consequence of the case brought against it by Nicaragua last year alleging a breach of international law in the United States assisting the `Contra' rebels to lay mines in Nicaraguan waters. The United States had claimed from the outset that the dispute was one which should have been raised in an appropriate international political forum and that it was not one capable of judicial resolution. It was no great surprise, then, when in January this year the United States Administration announced that it was withdrawing from that case entirely. The latest step, however, is less expected and very disappointing. It reflects both a disillusionment in the United States Government with the International Court of Justice and a wish to ensure that it is not again taken to the Court on what it regards as essentially a political matter. The United States withdrawal from ICJ jurisdiction is a matter of real regret to the Australian Government. The ICJ is of central importance to the international regime of law and justice, playing a role not only as an arbiter of disputes between states but also as a body widely recognised as competent to clarify and develop the principles of international law. Although the US decision to withdraw is more understandable in light of the fact that fewer than one third of the nations in the world have accepted the Court's jurisdiction, for example, with neither the Soviet Union nor any of its Eastern Bloc allies accepting the Court's jurisdiction, it is nonetheless a move which can only undermine the authority of the Court and adversely affect its capacity to influence developments in international law. Senator JONES —Is the Minister representing the Minister for Transport aware of concern being expressed by the Australian Railways Union regarding an allegation that at least one Australian rail authority has imported railway equipment from South Africa? Have any railway systems such as wagon axles, wheels, bogies or any other components been so imported? If so, could the Minister name the railway authority? What action will the Federal Government take, if such transactions are continuing, to put an end to them in view of the growing public realisation of the horrors taking place in South Africa as a result of that country's abhorrent apartheid policy that has resulted in hundreds if not thousands of black South Africans being cruelly murdered by the white minority regime? Senator GIETZELT —I am not aware of the circumstances to which Senator Jones has referred. Senator Chaney —Thank God for that! The PRESIDENT —Order! The Minister is answering the question. Senator GIETZELT —I represent the Minister for Transport in this chamber. In this circumstance I think it is appropriate that he should make a detailed reply to the very important question that has been raised by Senator Jones. Senator CHANEY —My question, which is addressed to the Minister for Finance, follows the question asked by Senator Sheil, which the Minister either failed to understand or chose not to understand. I preface my question by saying to Senator Walsh that the question asked by Senator Sheil was predicated on the Government's tax package being enacted and the marginal tax rates being applicable at the rates shown in the Treasurer's announcement. The Minister answered the question with respect to the 8 per cent per annum rise in wages, but I again ask the Minister: What measures will the Government take to ensure that the 1.6 million taxpayers earning less than the average weekly earnings will not move from the 29 per cent marginal tax bracket, which is the adjusted tax bracket that will apply in 1987, into the 40 per cent marginal tax bracket, which is the second adjusted rate? On the figures available to the Opposition there will be a tax creep affecting 1.6 million taxpayers and the question relates to what the Government will do, if anything, to prevent that. Senator WALSH —I did mishear Senator Sheil's question. I thought that he referrred to a 46 per cent marginal tax rate, but it was a 40 per cent marginal tax rate. Those are the Government's projections of income which will be available. Some people will move from a 29 per cent to a 40 per cent marginal tax rate. If it were not for the tax reform package they would be moving to a 46 per cent marginal tax rate even without any further erosion of the income tax base. In other words, if the Opposition gets its way and it sabotages the tax reform package and knocks off fringe benefits, tax shelters, the non-allowability of entertainment expenses, the capital gains tax and all those things, instead of moving into a 40 per cent tax bracket the same people and a number of others as well will be moving into a 46 per cent tax bracket. If members of the Opposition are asserting that a 40 per cent marginal tax rate is too high in a particular level of income I do not know how they can defend their policy which would put the same people into a 46 per cent marginal tax bracket. The effect of the Opposition's policies, if it was allowed to get away with them, would be to ensure that ultimately-since it refused to reform the taxation system and since it refused to support the measures which put a safety net under the income tax base-virtually all honest pay as you earn taxpayers were paying a 60 per cent marginal tax rate. Of all the humbug and hypocrisy I have ever heard, what effrontery it is for members of the Opposition who stand here representing the carpetbaggers and the tax cheats, as they have always done, to say that the 40 per cent marginal tax rate is too high for people on a particular income level when the effect of the policies which they advocate would be to ensure that the same people were on at least a 46 per cent marginal tax rate. Senator COOK —Is the Minister for Resources and Energy aware of a perception being promoted in the Australian community that petrol and diesel prices are higher in Australia than in other comparable countries and that government taxation is thought to be the main reason for these prices? Can the Minister advise how prices and taxes for petrol and diesel in Australia compare with those of other like countries? Senator GARETH EVANS —If there is such a perception it is one that has been encouraged by those with commercial and political axes to grind and is not one that has any foundation in fact. So far as prices are concerned, the situation is this: Australia's retail petrol prices have been consistently, over a number of years, among the lowest of the Organisation for Economic Co-operation and Development countries. Generally, only Canada and the United States of America have been cheaper. With the movement in the Australian dollar over the last few months, however, Australia's petrol prices have now fallen below Canada's and remain above only those of the United States. In Australian currency, for example, the most recent August estimates of average prices are: The United States, 51c per litre, Australia 55c, and Canada 56c. Prices in other countries include New Zealand 77c, West Germany 77c, Japan 89c, the United Kingdom 90c, France 96c and Italy 103c. The average price of automotive diesel oil in Australia was estimated to be 52c per litre in August, which is in the lower half of the OECD countries surveyed. The principal reason why petrol prices are higher in countries other than Australia, the United States and Canada is that petrol in those countries is generally taxed at a substantially higher rate, whereas in Australia, the United States and Canada the rates of tax on petrol and diesel are about the same. Senator Chaney —Is this your portfolio? Senator GARETH EVANS —Yes. In Australia, petroleum product taxes include a Commonwealth excise of about 10c per litre and State government franchise fees in the range of zero to 5c per litre. Most other countries, in addition to excise, include a value added tax. Some countries, such as Australia, include regional taxes and others include a tax specifically allocated to an aspect of oil management, such as emergency stocks or pollution compensation. Actual figures from the most recent comparable data available from the International Energy Agency show that, in the first quarter of 1985, the proportional level of taxation on Australian automotive gasolene was the second lowest among the OECD countries. Only New Zealand had a lower rate of taxation. The average level of taxation throughout the OECD is 45 per cent while Australia's rate was only just over half-24 per cent. I will again give the examples: New Zealand 22 per cent, Australia 24 per cent, the United States 25 per cent, Canada 25 per cent, Japan 36 per cent, West Germany 49 per cent, the United Kingdom 54 per cent, France 60 per cent and Italy 66 per cent. The level of taxes on automotive diesel oil in Australia of 27 per cent was close to the average of the OECD, which is around 28 per cent. I appreciate that facts and figures of that kind- Senator Chipp —What is all that for? Are you going to increase the excise? Senator GARETH EVANS —Facts and figures of that kind amply demonstrate, in a way that it needs to be demonstrated on occasion, the reality of the proposition that petrol tax in Australia simply is not higher than anywhere else in the world. On the contrary, Australia is among the lowest tax regimes in the world and that is reflected in the price that Australian consumers pay. Senator DURACK —My question, which is directed to the Minister representing the Treasurer, also refers to the Minister's responsibilities in his own right. Does the Minister agree with the statement in the taxation White Paper with reference to the tax status of gold mining? I quote from the White Paper: There is little justification for continuation of the exemption. Does the Minister further agree that, since the Government has now abolished or modified other so-called tax shelters identified in the White Paper, it is only a matter of time before this Government taxes gold as well? Why does the Government not come clean and admit that the inquiry into gold tax is nothing more than a charade-a device aimed at preventing the inevitable taxing of gold from becoming an issue at the next Western Australian election? Senator WALSH —I am glad that Senator Durack put that last line in because that saves me the trouble of identifying the reason that he asked this question. Senator Durack is trying to rescue his hopeless mates in the Western Australian Branch of the Liberal Party, particularly the hopeless Western Australian Leader of the Liberal Party, from the debacle which is looming up for them at the next State election. The people who run the Liberal Party in Western Australia are the people who were up to their eyeballs in tax evasion and tax avoidance, with the agreement of the Fraser Government, for a number of years. Senator Durack personally facilitated this when he decided to put that tax dodger file in the bottom drawer and leave it there for five years. Whether that had anything to do with him preserving his preselection in the Western Australian Branch of the Liberal Party I do not know or whether he is asking this question in order to preserve-- Senator Crichton-Browne —Does Gael work for Brian Burke? Senator WALSH —Go and sell some more Poseidon shares. The PRESIDENT —Order! I ask the Minister to ignore interjections. Senator WALSH —The honourable senator's wife, who worked in Burrill and Jones, made some very judicious purchases of Poseidon shares. The PRESIDENT —Order! I have asked the Minister to ignore interjections. If he does not do so I will ask him to resume his seat. Senator WALSH —The fact, as Senator Durack knows very well, is that the Government has set up a study regarding the taxing of gold or the future taxation status of gold mining. Senator DURACK —I ask a supplementary question. Senator Walsh did not answer my first and most important question: Does the Minister agree with the statement in the tax White Paper referring to the tax exempt status of gold? It states: There is little justification for continuation of the exemption. Senator WALSH —Whether I agree or disagree is a matter of no consequence. The fact is that the Government has decided to establish the study. Senator VALLENTINE —I direct my question to the Minister representing the Minister for Defence. In the light of plans to upgrade the naval facilities at Jervis Bay and at Stirling in Western Australia and the report by the Australian Labor Party working group on visits by foreign naval ships that recommends a dispersal of United States of America ship visits from that State, I ask: Firstly, how many United States nuclear-capable ship visits to Australia are scheduled in 1986? Secondly, is there to be a significant shift to east coast visits? If so, what will be the extent of this shift? Senator GARETH EVANS —I will take the question on notice. Senator MESSNER —My question is addressed to the Minister representing the Treasurer. I remind the Minister that in the Treasurer's tax package speech he justified the abolition of tax deductibility for entertainment expenses by saying that it was almost impossible for the Australian Taxation Office to separate genuine commercial activities from social activities. Does he recall telling Senator Michael Baume yesterday of the quite severe administrative difficulties in separating lunches given as part of seminars from other sorts of lunches and that drawing the line would be left to the discretion of the Commissioner of Taxation? If the Government is prepared to leave these decisions to the Commissioner's discretion, why does it persist with the blanket abolition of the many genuinely incurred entertainment expenses, expenses incurred by taxpayers in earning their income? Senator WALSH —I find it rather amazing that the Opposition apparently believes in a free lunch-led economic recovery. Indeed, I think Senator Messner can well afford to pay for his free lunches; he can probably afford to do without them altogether. What I said yesterday was that I expected that when it was very difficult to draw the line-that is, when there was a small add on associated with a genuine education convention; I use the term `education convention' in the broad sense-the Commissioner would be given discretion to determine what was a genuine seminar and what was in fact just a disguised free lunch. That is a very different situation from that which confronted the Government when making a choice about entertainment expenses in general, when it was patently clear that the overwhelming majority of the expenditure being claimed as entertainment expenses incurred in the earning of income was in fact Senator Messner and people like him indulging themselves in free lunches at the taxpayers' expense. Senator MESSNER —I ask a supplementary question. Senator Walsh might be prepared to join me in a dry lunch occasionally. I ask the question again: How can the Commissioner discrimate against the kind of problem that we have just identified while the Government is not so able to discriminate? Senator Walsh —What was that? Senator MESSNER —How is it that the Minister considers the Commissioner of Taxation is able to discriminate between the two different situations while the Government has admitted that it cannot? Senator WALSH —Senator Messner has missed the point. There are marginal areas where I believe and the Government believes it is impossible to write into legislation all the detailed rules and considerations which will be required when making those very difficult marginal choices. For that reason I said I expected that the matter to which Senator Michael Baume referred would be determined by the Commissioner, just as there has been a Commissioner's discretion under very many sections of the Income Tax Assessment Act to make such discretionary decisions. Senator CROWLEY —Has the Minister representing the Minister for Health seen the letter circulated to all doctors in South Australia from the Leader of the Opposition in South Australia attacking the Federal Government's policies in health, education and tax reform, claiming the Liberals will `smash Labor's hold on your profession', meaning medicine and seeking money for his Party? The letter further claims `that the Liberal Government in South Australia will stop uniformity being imposed on your profession, so that you can again serve your patients and stop being a servant of big government'. Can the Minister comment on these claims and the implication within them of dismantling Medicare and, in the light of the co-operation of the Australian Medical Association with the Labor Government, set the Liberal Opposition right about this Government's health policies and practices? Senator GRIMES —I have seen the letter which was circulated to members of the medical profession in South Australia. I understand that Senator Crowley actually received one, as did other members of the medical profession who are in the Labor Party in South Australia, which indicates that the South Australian Branch of the Liberal Party, like the Federal Branch of the Liberal Party and the Tasmanian Branch of the Liberal Party, has great difficulty with its mailing lists. Although I have not been in practice in the 11 years I have been in Parliament, I still get missives from the Tasmanian Branch of the Liberal Party asking for money to assist it to smash Medicare and kill the Federal Government, et cetera. It regularly does this. I leave myself on the list because at other times I get very interesting letters, not necessarily asking for money, which give me an insight into the operations of the Liberal Party in that State. Senator Peter Rae —Is that why you send them a donation? Senator GRIMES —Senator Peter Rae is always asking me why I do not send in the donation. I understand he also asked that my name be taken off the list, but that has not been done. The letter from the Liberal Party leader, Mr Olsen-not many of us can remember it very often-indicates that if people donate $25, $50, $100 or more to the Liberal Party fighting fund he will maintain the campaign which will defeat the Labor Party and destroy Medicare. I think the first thing we had better let Mr Olsen know is that Medicare is in fact a Federal Government scheme and that even in the most unlikely case of Mr Olsen, I think his name is, and his colleagues, coming into government in South Australia, they would not defeat Medicare from that State. Secondly, they will not succeed in convincing the community of this country that the best way to have a health scheme is to introduce the free market system completely for health services, which is also what Mr Olsen is apparently trying to introduce or would like to introduce. As we have pointed out and as most sensible people point out, we cannot have a free market in a system in which the buyer-in this case the patient-usually does not have the knowledge about what is necessary and certainly frequently does not have the choice as to whether or not to buy the services. Every country in the world, including the United States of America, realises that there cannot be a free market in the delivery of health services. I think Mr Olsen ought to agree on that. I just think that the letter, going as it did to Dr Crowley and the other Labor Party medical practitioners in South Australia, by the fact that it is distributed to those people, by the fact that it has so many inaccuracies, as Senator Crowley pointed out, and by the fact that it really is a lot of rhetoric and nothing specific-and the only thing specific in it does not refer to the capabilities of a State government at all-indicates why it is generally, in fact universally, predicted around this country that Mr Bannon and his colleagues will win the next election in South Australia and will continue to win government in South Australia in future. Senator REID —My question is directed to the Minister representing the Treasurer. How many new staff will be put on in the compliance area of the Australian Taxation Office to check whether expenses claimed under other categories are in fact for entertainment? In light of the difficulties admitted by the Minister in answer to Senator Michael Baume yesterday and his answer to Senator Messner today, will there be a Taxation Office official at seminars and conventions to see literally what people eat and drink and under what circumstances they do so? Senator WALSH —As I recall, there is provision for about 700 additional average operating staff level positions in the Australian Taxation Office this financial year compared with last year. I do not know whether in that 700 there was an identified sub-component or number, or, indeed, any additional number at all, for the enforcement task to which Senator Reid has referred. But I will make some inquiries of the Treasurer. Senator FOREMAN —Did the Acting Minister for Foreign Affairs see the report of an interview with South African businessman, Mr Gavin Relly, in the Australian on 3 October this year? If so, does the Minister agree with the sentiment expressed in the interview that sanctions will kill the road to reform in South Africa? Senator GARETH EVANS —I am aware of the report of an interview with the Chairman of the Anglo-American Corporation, Mr Gavin Relly, in the Australian on 3 October to which Senator Foreman refers. I met Mr Relly yesterday to discuss with him the sanctions issue and the circumstances of his leadership of the delegation of South African businessmen to talk recently with the representatives of the African National Congress. On the question at issue, the Government does not accept that sanctions will kill the road to reform in South Africa. On the contrary, international pressure has brought about much recent reform to the apartheid system in South Africa. In the same interview Mr Relly admits that international pressure may have speeded up a process of commitment to reform that might have been slower in itself. The call for economic sanctions has also been supported by prominent black leaders in South Africa. The need for increased international pressure on South Africa is brought about by the South African Government's unwillingness to be further influenced by internal pressure for reform. After the Minister for Foreign Affairs, Mr Hayden, announced the series of economic measures in respect of South Africa on 19 August he made it clear that it was not Australia's intention, acting unilaterally, to employ all possible measures at our disposal. Rather, the Government preferred to keep some measures up our sleeve, as it were, so that we would be in a position to apply further pressure in a graduated series of responses to the situation in South Africa as it evolves. As part of that approach the Government has also made it clear on a number of occasions that we support the imposition of mandatory economic sanctions by the United Nations Security Council-the only body really capable of imposing such mandatory sanctions-and that we are prepared to work towards such world-wide action. I conclude by saying that what we have made repeatedly clear, and what I made clear speaking directly to Mr Relly, is that the Australian Government does not regard the imposition of sanctions as any kind of end in itself. We see sanctions as properly applied to constructive ends in South Africa rather than destructive ends. Senator WATSON —Is the Minister representing the Treasurer aware of a scheme launched by a Perth company-`Luncheon Vouchers of Australia'-to combat the Government's assault on the catering and restaurant industry through its fringe benefits tax proposal? Does the Minister believe that such a scheme may have some merit in that it could offer some hope for the thousands of people whose jobs are now in jeopardy across Australia? Or will the Government support the Minister's callous disregard for workers in this industry, as expressed in his answer to Senator Peter Rae yesterday, and act to block such schemes in its tax legislation? Finally, does the Minister acknowledge some greyness in this area? Will he request the Commissioner of Taxation to issue a public information bulletin to clarify the issues? Senator WALSH —We have just seen yet another manifestation of the free lunch mentality of the Liberal Party of Australia, which apparently believes in a free lunch led economic recovery. The decadent Roman Empire used to put on circuses to divert attention from its corruption and incompetence. The decadant Liberal Party puts on free lunches for the same purpose. Senator Watson referred to the Perth company-I saw a transcript of a radio interview on this matter-which proposes to sell luncheon vouchers as a way of getting around the new tax law. My only knowledge of the matter comes from that transcript. However, prima facie I find it very difficult to see how, although certainly a firm could sell luncheon vourchers, a firm which purchased the luncheon vouchers could successfully claim the cost of those vouchers as a deduction against the firm's taxable income, which is presumably the purpose of the exercise. I will draw this matter to the Treasurer's attention. It would be surprising if that scheme were not being organised by a couple of members of the Western Australian Liberal Party finance committee, given its previous record. It would not be at all surprising if the most enthusiastic would-be tax avoiders and evaders in Australia were still located in Perth. It would be amazing if they were not to be found in the Liberal Party, particularly in its finance committee. I will ask the Treasurer to investigate the matter and take appropriate action if he or the Taxation Office thinks there is any possibility of the new law being successfully evaded. Senator Watson also referred to the thousands of jobs which are going to be lost, and so on. I find it quite astonishing that the Liberal Party is so hooked on the free lunch mentality when it says from time to time that the Australian economy has been weakened by self-indulgent consumption and the consequential neglect of the sort of basic investment which is required for continuing economic growth. The Liberal Party's answer is to stick to the free lunch and, presumably, to pursue the free lunch led recovery. There is no reason to believe that there will be a net loss of employment, because the taxpayers' money previously spent by the self-indulgent on free lunches will be spent somewhere else. There is no a prior; reason to believe that that expenditure will sustain fewer jobs than did the free lunch industry. As an example of the degree to which the facts of this matter can be distorted, I mention that I was listening to a local wireless station this morning and heard a local restaurateur asserting implicitly that because free lunches are to come to an end people will stop eating. He said that not only the employment generated in the restaurant industry itself but also the inputs to the restaurant industry, such as vegetables, milk, fish and all that sort of thing, would be affected. He said: `People will lose their jobs in the vegetable supply industry, the milk supply industry, and so on. It is logically inescapable that because of the abolition of the free lunch people will stop eating'. That demonstrates the absurdity of the claims which are being made by some people and mindlesslly endorsed by assorted members of the Liberal Party, for whatever reason. Senator WATSON —Mr President, I ask a supplementary question. In the light of the confusion arising from the variance in answers given both in this chamber and in the other House, will the Government direct the Commissioner of Taxation to issue a public information bulletin to indicate how he will exercise his discretion in this area? Senator WALSH —In good time I would expect the Commissioner to issue guidelines on a number of matters associated with the present tax reform package, as he has done on a number of tax law items in the past. Senator CHILDS —Will the Minister representing the Minister for Health indicate the present level of Federal funds allocated to each State for the control, prevention, research into and treatment of acquired immune deficiency syndrome? Further, does the Minister for Health receive information concerning the proportions of funding allocated to AIDS in New South Wales under the headings: Prevention, control, research and treatment? What are those proportions? Senator GRIMES —In the 1985-86 Budget the Commonwealth provided $8.6m in funding for AIDS, compared with $5.35m in 1984-85. Of that money, $4.3m is allocated to the States, which will match it on a dollar for dollar basis. I can give Senator Childs a breakdown of that allocation. Approximately $0.95m is for education programs; $0.75m for counselling and contact tracing; $0.8m for laboratory screening; $0.8m for diagnostic and treatment programs, which does not include the hospitals; about $0.22m for community care and domiciliary services; $0.6m for support services such as social work; and $0.13m for assistance to reduce secondary health problems. Therefore, in 1985-86 the combined Australian effort will be more than double the amount provided by the Commonwealth, because in some States, such as New South Wales, extra money has been provided by the State Government and in another case $1m was donated anonymously. Thanks to the good co-operative efforts of the Commonwealth and the States Australia is now recognised internationally for the excellence of the preventive measures that have been taken. We were the first country in the world to have blood testing kits to safeguard the integrity of blood banks and other measures that we have taken have been praised by, for instance, the head of the AIDS task force at the Centre for Disease Control in Atlanta, Dr James Curran. He came here and was impressed particularly by the co-operation between the Commonwealth and the States in dealing with high risk groups in this area, most notably the gay community. There is no vaccine available as yet for AIDS, but it is imperative for that reason that we keep up that good level of co-operation, keep the program going the way it is. It is important also to maintain the level-headed approach whereby AIDS is treated very much as the public health problem it is, not as some visitation from on high or punishment to the community for its evil ways, which I notice a couple of members of the House of Assembly in Canberra would like us to believe. The Commonwealth Department of Health has established an AIDS unit which maintains close contact with the States, including New South Wales, on all matters dealing with AIDS, including the distribution of AIDS funding. The unit also serves as the secretariat to the National Advisory Committee on AIDS, chaired by Ita Buttrose, which has made an invaluable contribution to the public health effort in this area. Under the federal system, in the final analysis it is the responsibility of the States to deal with this problem and to allocate the funds sensibly. In the event, the Federal Minister for Health, Dr Blewett monitors closely developments in relation to AIDS. I can assure the Senate and Parliament generally that the Federal Government will maintain increased AIDS funding in co-operation with the States as long as it is necessary, to ensure that information and prevention are continued at the level they have been to all members of the Australian community. It is vital to realise that AIDS is of concern not only to the high risk groups but to the whole community. I think that the community in this country can be proud of the way governments in general and the community itself have handled, and I believe will continue to handle, a very difficult problem. Senator MacGIBBON —My question is addressed to Senator Ryan and relates to today's full page newspaper advertisements featuring Senator Ryan and Mr Keating. Did Senator Ryan give her approval for the use of her photograph and name in this advertisement? Does Senator Ryan agree with the message in the advertisement about the inequities of the Labor Government's current sales tax policies? If she does agree with the message, how does she reconcile that position with the Cabinet decision and the principles of Cabinet solidarity and collective responsibility? Will she resign as a matter of new-found principle? Secondly, if she does not agree with the advertisement, is she not showing gross hypocrisy, in the face of her repeated cries for equal rights for women, by supporting a system which discriminates against products used by-indeed, arguably essential for-women? Senator RYAN —I think that the answer to all parts of Senator MacGibbon's question is no. I have seen the advertisement. Certainly I was not consulted about the use of my photograph and I presume that the Treasurer was not either. There are a number of very confusing implications in the way the advertisement is set out. For example, the implication is that all of the items on the left hand column under Mr Keating were used only by men. They were items such as soap- Senator Puplick —Dog shampoo. Senator RYAN —I must take advantage of Senator MacGibbon's question to assure the Senate and anyone else listening that the Treasurer does not use dog shampoo. It is the case that soap, which is used presumably by both sexes, is taxed at 20 per cent. Personal deodorant, which I hope is used by both sexes, is taxed at 30 per cent. I think that I was accused by implication of using, on a gender segregated basis, baby oil and baby lotion, but I presume that some men occasionally use baby oil after a day at the beach. An important error in the advertisement, which I will take advantage of Senator MacGibbon's question to correct, is that sunscreens were included in the advertisement as a 20 per cent tax item. In fact, sunscreens are exempt from tax, which is very important, especially for those of us from Celtic backgrounds. The whole thing was a dreadfully confused attack on the Government's tax package. I point out that in the rationalisation exercise, which I am the first to admit was not carried out to perfection, the wholesale tax on cosmetics was reduced so that it is now 30 per cent instead of 32 1/2 per cent. There were many benefits for women in the overall tax package. For example, the attack on poverty traps will be of great assistance to supporting mothers, who will now be able to earn more money without losing their pension. The reduction of taxation on middle income earners will be of benefit to women in that group. Those who have lost out from the tax package-the exploiters of the business lunch and so on, to whom Senator Walsh has devoted some attention in today's Question Time and other Question Times-are not members of a group in which women feature prominently. So overall the taxation package was a very good one for women. The reduction of taxation on all items used by women, even though it is not as low as some of us might have liked to see, means that it is a very good package for women. Senator MacGIBBON —I have a supplementary question. The Minister has given some confusing replies, but I will ignore the one where she said no to two conflicting questions of mine. What were the imperfections in the tax package brought down by the Government to which the Minister alluded in her answer? Senator RYAN —I think that Senator MacGibbon must have misheard me. What I said was that we have rationalised the chaotic wholesale tax regime which we inherited, but we have not rationalised it entirely. We have made reductions in the 32 1/2 per cent items. We changed some items, put some items into the 20 per cent category that were previously in the 32 1/2 per cent category and so on. We have rationalised the system considerably but there are still different rates and people can still ask questions about why some items are in one category rather than another. We could not completely rationalise the system because we still need to raise revenue from wholesale taxation. We had to balance the need to raise revenue with the desire to rationalise. The need to raise revenue meant we could not take some items out of the 32 1/2 per cent category and put them in a lower category. We need the revenue to do very important things like attacking poverty traps. Senator McINTOSH —Is the Minister representing the Treasurer aware of recent criticisms in the media about the Government's tax reform decision on quarantining farm losses? Is it true, as the critics suggest, that the Government's decision will hit genuine farmers? Senator WALSH —The answer to the second part of Senator McIntosh's question is no. I went back to the country in Western Australia last weekend and I read the agricultural Press for the last few weeks-I do not read the agricultural Press as much as I used to-but I found that nothing much had changed. If people of a particular political persuasion want their prejudices reinforced and their preconceptions confirmed they could hardly do better than read the agricultural Press. If, however, they want information, they should go elsewhere. The facts about the quarantining of farm losses are that a maximum of $15,000 of off-farm income will be allowed to be offset against a farm operating loss, plus-and this was the important fact which the agricultural Press, at least in Western Australia, failed to report-any net taxable farm income which had accrued in the previous five years. Clearly, that wipes right off the agenda the false assertions that have been made by various people that farmers who are hit by drought and are therefore forced to earn off-farm income will be adversely affected by this measure. Indeed, even without that additional concession of the accumulated taxable income over the previous five years, $15,000 is a good deal for someone to earn off the farm in a part time working capacity. It is quite a lot of money for a part time shearer or truck driver or a part time anything else. Senator Ryan —Or a part time school teacher. Senator WALSH —Or a part time school teacher, as Senator Ryan says. Those measures will, of course, affect some other people. Obviously if they did not affect somebody they would not raise additional revenue. One type of person who will be affected was pinpointed by the Countrywide program on 25 September. That program acknowledged the generosity of the $15,000 limit, but again failed to point out the add-on of the accumulated taxable farm income of the previous five years. The program also pointed out that the measures might affect high flyers, though unlikely to hurt the battlers. One such high flyer, literally, is a Qantas pilot who flies 747s in his spare time. He was interviewed on the same program. The interviewer pointed out that Captain Simpson, an international airline pilot, was earning more than Mr Keating-and probably more than the Prime Minister for that matter. This pilot shelters from tax on that income by using his farm. The interviewer asked whether the hobby pilot, who probably flies about only 10 hours a week incidentally, should deserve special treatment. Unashamedly the hobby pilot announced, and I quote: I don't get the money, I conduit that money. It is an oxygen conduit to the local areas. Sometimes I become cynical in this job, but my faith in human nature is restored every time I hear examples of such philanthropy-of a high income earner who actually could have put the after tax proceeds of his salary into his own bank account but who, for purely philanthropic reasons provides an oxygen conduit to the local area in which his tax shelter farm is located! On the question of drought, I think it is also worth noting some facts for those ill-informed journalists and others-and the particular journalist I have in mind has always been noted for the strength of his ideological prejudices rather than his logic or his command of the facts. I refer to David Barnett, who referred recently to 1982-83 as being the end of a four-year drought. I must point out that within those four years the second and third largest wheat crops ever produced in Australia were harvested. The size of the wheat crop, or the wheat average, is about as good an indicator of drought as one can get, at least in southern and south-eastern Australia, from which areas the overwhelming majority of agricultural production comes. In closing, I have noted that the Leader of the Opposition in an interview on that same Countrywide program on 25 September said: You've got to understand that in order to encourage people to invest in something, if it has a low return or may involve a high risk, you often have to offer some kind of tax inducement. That was a comment made in defence of the present tax shelter status of agricultural investment. I note two points. The first is that if any industry yields a low return on investment, why would any responsible government want to encourage additional capital investment in that industry? Secondly, if the industry has a high risk it must have the potential to yield above average returns on capital in order to attract capital. It is the potential of above average earnings that ought to be used to attract investment in particularly risky industries rather than governments making judgments about the industries in which capital should be invested. The logical conclusion of that argument is that if people believe that governments are better able than private investors to pick the industries in which capital should be invested all industries should be nationalised. I do not know whether that is what Mr Howard is advocating, but that is the clear implication of his comment. Senator GARETH EVANS —Yesterday Senator Chipp asked me a series of questions about the Rainbow Warrior affair which I shall now reply to on behalf of the Attorney-General and as Acting Minister for Foreign Affairs. As to his first and second questions, the Norfolk Island authorities were in touch with the Attorney-General's Department in connection with the possible extradition of the crew of the Ouvea from Norfolk Island to New Zealand. It was at that stage that the Department became aware that officers of the New Zealand Police were in Norfolk Island. No request for extradition has been made by New Zealand authorities to Australia, through either diplomatic or Interpol channels. Three persons from the Ouvea were held in custody under section 9 of the Norfolk Island Police Offences Ordinance on suspicion of being in possession of explosives on 15 and 16 July 1985. The yacht was searched for explosives and none were found. The Attorney-General's Department advised the Norfolk Island authorities that the New Zealand authorities would have to comply with proper extradition practice under Part III of the Extradition (Commonwealth Countries) Act 1966. The Department was advised that the New Zealand Police did not regard themselves as being in a position to obtain warrants of arrest. Accordingly, the men were released and at the time their passports were returned, there being no justification for their retention. Neither the Department of Territories nor the Department of Foreign Affairs gave advice to the Norfolk Island authorities on these matters. As to Senator Chipp's third question, the Government is aware of media reports alleging that persons involved in the sinking of the Rainbow Warrior operated out of Sydney. Our Ambassador in Paris has sought answers from the French Government as to the reliability of these reports. We are confident that his inquiries have been sufficient at least to make the French Government aware of our interest in establishing whether there is any substance to the report. The final question related to Australian Security Intelligence Organisation and Australian Federal Police investigations. ASIO operations are governed by its legislation, and Senator Chipp will appreciate that the policy of this and previous governments is not to comment on matters that concern the activities of the security services. The Australian Federal Police have extended, and will continue to extend, every co-operation to the New Zealand authorities in their investigation of the Rainbow Warrior sinking and it will comply with any request for assistance. Any information which pointed to the commission of a Commonwealth offence within Australia would be investigated. Senator WALSH —Yesterday Senator Hill asked me a straight question about the tax treatment of sporting boxes purchased by firms. I am advised by the Treasurer that the cost of sporting boxes or tickets is not deductible even where they have some advertising trappings but the direct cost of the trappings-for example, billboards and the like-may be deductible. Senator CHIPP(Victoria-Leader of the Australian Democrats) —by leave-I thank the Senate for giving leave. During the last sitting of the Senate on 11 September I placed a series of five questions on notice relating to Dr Geoffrey Edelsten. The allegations to which the questions referred had already been made public in a magazine article. It was put to me at the time that it was in the general public interest and in the interest of everyone concerned, particularly Dr Edelsten, that the matters raised in the allegations be resolved as quickly as possible. I asked the questions on the basis of that argument. As part of my wish to reach a speedy resolution of the matter, I specially wrote to the Ministers concerned seeking an urgent response to the questions. I want to thank the Ministers for their expeditious responses to my request and I now ask leave to incorporate the Minister's answers in Hansard. Leave granted. The documents read as follows- Question No. 535 Senator Chipp asked me as Minister representing the Special Minister of State upon notice, on 12 September 1985: (1) Has the Attorney-General seen what has been described as a scurrilous article in the Journal ``Matilda'' which alleges that Dr. Geoff Edelsten is under investigation by the National Crime Authority. (2) Can the Government confirm whether Dr. Edelsten is under investigation by that Authority. (3) Was Dr. Edelsten the subject of an inquiry of the Costigan Royal Commission. (4) Does the Government know of Federal Police records which purport to link Dr. Edelsten with the import and trafficking of narcotics, pornography, and vice activities and the exportation of fauna; if so,are these documents accurate. (5) Will the Government carefully scrutinise any application by Dr. Edelsten to establish any medical practice in the A.C.T. in the light of Dr. Edelsten being named as being Mr. X in the Medicare Fraud and Overservicing Joint Committee of Public Accounts Report. Mr Young, the Special Minister of State, has provided the following answer to the honourable senator's question: (1) Yes. (2), (3) and (4) As a general rule, in order not to prejudice the operations of law enforcement agencies or the fair trial of any person, I propose to adopt the practice of neither confirming or denying allegations such as those raised in the question. I emphasise that no inference should be drawn from this practice in any particular case. The Minister for Health has provided the following answer to part 5 of the honourable senator's question: (5) The Government does not acknowledge that the Dr X referred to in the Joint Committee of Public Accounts report is Dr Edelsten, and the inference drawn elsewhere has been denied by Dr Edelsen. The responsibility for the registration of medical practitioners to practise medicine in any State or Territory lies with the relevant medical Registration Board in that State or Territory. Any application by Dr Edelsten to practise in the A.C.T. will be considered in accordance with the criteria applied to any application from a medical practitioner seeking registration in the Territory. Senator CHIPP —I again thank the Senate. I say in passing that, no matter how well intentioned any senator's reasons are for asking any question about any outside individual or individual, once that question is reported in the media, it can, regrettably, have the effect of leaving a question mark against the character of the person or persons named. In this event, Ministers could not or would not give specific answers to the questions raised by the magazine article. After a close examination of the ministerial answers, it must be said that there is no evidence that Dr Edelsten was ever the target of an inquiry by the Costigan Royal Commission of Inquiry into the Federated Ship Painters and Dockers Union or that he is or has ever been under investigation by the National Crime Authority. A fair study of the answers would lead to the conclusion that none of the allegations in the article have been given any credence by any of the Ministers. Some commentators have criticised the morality or, to use perhaps a more apt word, propriety, of asking questions under the parliamentary umbrella concerning the reported activities of persons in the public domain. However, in fairness to myself and others who ask such questions on a genuine basis, I must point out that recent events with regard to the parliamentary disclosure of the infamous `Age tapes', illegal phone taps and similar activities have resulted in a full, frank and healthy public discussion of matters of enormous public importance. My only concern here was to clarify the matter and I have sought to do so in the shortest possible time. I thank the Senate for giving me the indulgence to make this statement. Senator GEORGES(Queensland) —by leave-My statement is in the form of a personal explanation. I am pleased that Senator Chipp has made his statement because the nature and timing of the questions he placed on notice further complicated a matter that arose in the Senate. That matter was my response to a question by Senator Siddons naming Dr Edelsten as Dr X. I do not intend to apologise for that; I will merely give the reasons for my naming him at the time, having received the question. Every member of parliament has the right to serve and defend the public interest and individuals who come under pressure within the community. The knowledge I received after putting down the statement in the House and prior to the question being asked by Senator Siddons was that the first of a number of writs had been issued by Dr Edelsten's legal advisers in some way to prevent information from coming forward. We in this place have a powerful privilege and we have to use it wisely. If we do not we will have to answer to the Senate Privileges Committee. There is also an obligation on those who are powerful and wealthy and who have that great privilege also to use it wisely. We were to discover that that was not the case, so I do not apologise for the naming. I did not take any action in any way to restrain Dr Edelsten or any media reporter from making comments about me. I have already made a statement about that before the Public Accounts Committee. The comment that hurt most was an editorial in the Australian which accused me of McCarthyism. That was fairly savage comment in the circumstances. The newspaper did not investigate the situation in which the question was asked and the answer was given, but subsequently an article in the Australian Financial Review exposed the real nature of the manner in which the question was asked and the answer was given. Further, a letter was published in the Australian which said that `parliamentary privilege makes cowards like George Georges'. I still insist, Mr President and honourable senators, that we have a privilege which must be used to counter the powerful. Here was an example of an exceptionally powerful individual who, through his legal advisers, was in the process of intimidating. I am not certain whether Dr Edelsten was aware of what was going on, but when a young reporter in Canberra faces a $500,000 writ for making a comment concerning the entry of the Edelsten style of medical practice into Canberra there is an obligation on every senator knowing that to take a countermeasure. I do not resile from the fact that I identified Dr Edelsten as Dr X, he having previously been almost identified in the Senate. Nevertheless, I am grateful that Senator Chipp has put down this statement and explained and perhaps in some way corrected an injustice by making his comments. Senator PETER RAE(Tasmania) —by leave-Mr Cleary, the Tasmanian Minister for Health, at the Ministerial Committee on Drug Strategy earlier this year, was able to demonstrate that Tasmania has in fact led the way with what it has already done legislatively in providing a framework to combat the problem to which reference was made. I refer to the problem of drugs and drug users in Australia, the need for counselling and the Commonwealth's offer to provide some funds, to be matched by the States, for that work. Tasmania is already in front of all the other States in taking this action. Tasmania does not suffer from the same type and nature of drug pushing that the other States do. There are no relatively simple, straightforward or most obvious areas of concern in Tasmania such as those which exist particularly in Melbourne and Sydney and in certain parts of Queensland. So it was necessary to try to get maximum benefit from any money which would come from the Commonwealth and what had to be provided by the State; to get value for money, not to have it spent on a bureaucracy but, rather, to ensure that voluntary organisations would provide the type of service which was necessary. When Mr Cleary admitted recently that he had been slow, what he was saying was that he was slow because he had been thorough in ensuring that the action taken to spend the money, to combat the problem, would fit in with what was already Tasmania's leading position in relation to the legislation and would ensure that there was a co-operative approach through all of the voluntary organisations rather than simply a spending of money through creating a greater bureaucracy. The criticism that has been made comes from the Government which has been cutting funds to Tasmania and from a party in Tasmania which wants to decriminalise marihuana. I leave those thoughts with people. I conclude by saying that Tasmania has done an excellent, thorough job, and the Minister will have his submission ready for the ministerial conference which is due to take place later this month. The PRESIDENT —I have received a letter from Senator Chaney proposing that a matter of public importance be submitted to the Senate for discussion, namely: The destructive effects on enterprise and employment of the Government's tax package. I call upon those senators who approve of the proposed discussion to rise in their places. More than the number of senators required by the Standing Orders having risen in their places- Senator CHANEY(Western Australia-Leader of the Opposition)(3.22) —The Opposition has brought forward for discussion a matter of public importance, namely, the destructive effects on enterprise and employment of the Government's tax package. I use the expression `tax package' with a bit of reluctance, because I think it glamorises what is in fact the shredded remnants of the Government's preferred approach to tax reform. I will touch on that a little later. It is certainly glamorising what we have before us to talk of it in terms of a package. It is, after all, the remnants of what the Treasurer (Mr Keating) so proudly put forward, most of which was rejected by the Australian Council of Trade Unions and rejected by the National Taxation Summit. The bringing forward of this tax package has, however, been of great value in one respect, and that is that it has exposed both the prejudices and the ignorance of this Government. Really, nothing has been demonstrated better over the last two Question Times than the depth of prejudice which exists in the Government against certain sections of the community, and the ignorance which exists even among senior Ministers who are in part responsible for this package on some fairly fundamental points which are of vital importance to business in Australia, and small business in particular. Most of the questions over the last few days have been addressed to Senator Walsh. I suppose most of us were caused some amusement when he accused a journalist of ideological prejudice just a few minutes ago. We have all had to put up with a great deal of the prejudices of Senator Walsh over the years that he has been here. But during Question Time we have heard Senator Walsh refer to those opposed to capital gains tax as the Opposition's rag-bag clientele-a nice description of those very many people in the business community and elsewhere who believe that a capital gains tax is damaging to Australia. He is, of course, simply following the example of his Leader, Senator Button, who went a little further on 17 September when he was being questioned by Senator Archer on the same subject, and referred to a ratbag constituency of people who are opposed to capital gains tax, although he corrected it the next day and said that what he really meant was a grab bag. He said: . . . but it does not matter . . . It is a sort of ratbag constituency'. So what we have is a situation where the Government sees those who are opposed to elements of its tax package as a rag bag, or ratbag, or grab bag group of Australians, whereas we would say that they are people who have a very valid point of view and a point of view which should have been heeded by this Government. Senator Walsh, in the course of the last day or so, has referred to how phoney the business lunch was. He referred to the restaurant industry as a tax shelter, enjoying that status to indulge bludgers at the expense of those who took their lunches to work in brown paper bags. So all of those people who are going to be affected by the ban on business lunches because of the change in the tax status of these things are being referred to by the Minister as bludgers. He referred to lunches for the self-indulgent when he was talking about it yesterday and today-an accusation which again, it seems, is not particularly apt for him to make. After all, we have to put up with his self-indulgence in this chamber rather more than that of any other Minister that we have to deal with. More important than the prejudice which was displayed, particularly by Senator Walsh over the last few days, was the ignorance of basic facts which affect business. I would particularly like to refer to comments that he made in response to a question asked by Senator Messner yesterday. Senator Messner was asking about the question of taxation of the goodwill which is built up by the founder of a business, when that business is sold. Senator Walsh's response to that very properly and carefully worded question was: I do not know how anybody objectively measures what is goodwill'. When he was questioned again by Senator Messner on the same matter because he had not answered satisfactorily he said: There is no formula which can measure goodwill'. We are talking about circumstances in which businesses are bought and sold. We are talking about the circumstances in which someone who has built up a business has sold that business to somebody else. There is a very simple fact, of which I would have thought even Senator Walsh would be aware, that an important element of the sale of most businesses is that the purchaser comes forward as someone who is prepared to buy the business including an element of it which is described as goodwill, an element which is often given a very substantial pecuniary value. What we are dealing with in the question of taxation on the sale of a business is an ascertained amount of money. We are not dealing with some theoretical textbook definition of what goodwill might be. We do not need to be treated to one of Senator Walsh's childish lectures on basic economics. The simple fact of the matter, which he as Minister for Finance should be aware, is that when businesses are bought and sold an important element of the sale price is very often that unascertainable-except in the minds of the seller and purchaser-value called goodwill. I believe that the ignorance which he has displayed in his response to Senator Messner is at least a partial explanation of the way that the Government has structured these tax changes in a way which will be so damaging to many elements of Australian business. The ignorance and prejudice which we have put up with in the discussion on these tax proposals would not matter if they had not affected the tax package itself. The vilification and rudeness which we traditionally put up with in this place would not matter if the misunderstandings which underlie what we have been hearing over the last two days had not extended itself into the content of this very important series of tax changes that the Government is putting forward. It has influenced the tax package. It will damage many people and it is a basis on which this tax package should be reconsidered by this Government and many of the changes which are being made withdrawn. I said earlier that what the Government was putting forward was not in fact a tax package but the shredded remnants of what it had originally proposed as being required for a better taxation system for Australia. What we have had over the last couple of days are pious claims by Ministers such as Senator Button that what the Government has done is lay down clear directions in respect of taxation policy. It has been very smug in suggesting that elements in the community are supporting the clear directions that it has established. Yet the fact of the matter is that just a few months ago the Government was advocating a totally different direction for tax reform in Australia. It was not advocating this extraordinary grab bag of remnants from Option A. What they were advocating was a totally different approach to the taxation system. Mr Keating made a series of very bold statements about that. What Mr Keating said about the original tax proposals was that if we do not as a nation adopt this proposal then we will not see significant reform in this country in taxation for the balance of this century. A little later he said: If this sort of proposal does not get up-- I emphasise that that is the option C sort of proposal he is talking about- one has to decide if there is much point in someone like me worrying about the Australian institutional process and in Australian institutions very much longer. When it was suggested that he would have to back off the proposals that he put forward and that he would have to provide exemptions to the broad-based consumption tax he was emphasising, he said that he was not cutting off exemptions at the negotiating point, he was killing it stone dead as an issue. He said: I am still pressing for a broad-based consumption tax. The result of all this proud talk, of all this chest thumping, and of all this work that was put into it by Mr Keating and other Government Ministers, although most of them hid in the trenches rather than rushing to the front line with their Treasurer, was what was variously described as `Hawke's tax fiasco' in one leading article, as `the big daddy of all back downs' by Michelle Grattan, as a `back down' by Ross Gittins and as `Labor's great tax retreat' in a leading article in the Age. This debate takes place in the context of a total Government retreat on its preferred position and the putting forward of a so-called package which amounts to no more than a dropping of additional taxes on selected sections of the community where it is thought that the political backlash will be least. If we need any proof that the Government has been left with what the ACTU was prepared to admit, we do not have to go very far. We just have to look at the fact that option C was dropped once it was quite clear that the trade union movement would not support it. We just have to look at the actual impact. We just have to look at what the Government actually produced when it finally brought a package forward. What we have-and I look now at what the Government published in its booklet entitled `Reform of the Australian Taxation System'-is a series of changes which impact very squarely upon those limited numbers of Australians who provide employment. Rather than face the issue of rearranging the tax system as it affects the great bulk of the Australian people, the Government, in an act of political cowardice, has chosen to impose new and additional taxes upon the employers, the businesses, of Australia because it believes that there will be less electoral backlash and because it knows that it will have the support of the Australian Council of Trade Unions in so doing. That is not rhetoric. That is a matter of simply looking at the figures which the Government itself has published. When we look at the additional revenue estimates set out in the Treasurer's statement we find that changes are being put forward which will result in revenue changes totalling about $700m in 1986-87. I here cite figures from page 25 of the booklet. We find that, of that $705m net increase in revenue, $630m comes from two impositions on the business community, the employers of Australia. An amount of $320m comes from the changed taxation treatment of non-cash fringe benefits, and the changed taxation treatment of entertainment expenses accounts for another $300m. Quite clearly the additional burdens have been placed squarely upon the employers of Australia. If we look at the projected figures through to 1987-88 we see detailed changes which will provide net additional income of $1,348m and we find that $800m of that comes from those same two categories and several hundred other million dollars which are from different imposts upon the employers of Australia. What has been made clear to the people of Australia is that this Government has abandoned its original plans for bold reform. This Government has in fact been left with the remnants of its package-the remnants permitted to it by the ACTU and those remnants permitted to it because they fall only on the employers and because it believes it can withstand the political resistance of the employers as against the more widespread political resistance of employees. There is no principle in this proposal. There is no decency or justice in it. It is a simple political trade-off which is not geared for the betterment of the Australian economy or for Australia generally. It is good electoral politics-short term perhaps-but what are the consequences for the people of Australia? What are the consequences of just loading the dice still further against those who have to create additional employment? Quite clearly what is being done under this tax package will in fact make employment more expensive. We have twin problems being loaded upon employers by this Government. We have the tax package which is going to add effectively to the cost of employing labour, increase taxation on profits of a business and thereby, by reducing profitability, reduce the incentive to invest. Additionally, a capital gains tax is being introduced-and I will address that further-thereby reducing the incentives which exist for people to establish new businesses and to build up new wealth producing assets in this community which will provide employment for other Australians. Allied with the effect of this tax package, it needs to be remembered that at exactly the same time the Government is entering into the accord mark II and under that accord is setting itself to require Australian employers to accept other additional costs, in particular-as a trade-off against the productivity round-additional superannuation costs which again will make the employment of labour more difficult by making it far more expensive. Already the cost of employing labour is inflated by over 40 per cent above the direct costs of wages. The compounding effects of increasing workers' compensation liability and all the other burdens such as payroll tax and so on that are borne by employers are now being added to by this Government and the on-cost problem, which is acknowledged by Senator Button to be a serious problem in increasing our competitiveness in the world, is being worsened and increased. We have had a great deal of publicity in this country over recent days about the closure of yet another sector of Australian manufacturing. We have heard speeches in this place about the extent to which the Government should be granting further cash benefits to manufacturing industry, or sectors of it, to enable it to survive. We had a great deal of publicity which surrounded the impending closure of Rank Industries Australia Pty Ltd. But the issue which arises because of these difficulties faced by Australian industry is the issue of competitiveness. What chance do we have of having more competitive circumstances for Australian industry when the tax system and the wages and labour system are being changed in a way which makes employment of Australians even more expensive than it has been in the past? I believe that there are simple reasons why Senator Button says that he has some support in the community for the tax package that has been brought forward. That relates really to the proposition that the Government has targeted its tax imposts on the employers of Australia and thereby has sought to mask the political negatives which will otherwise apply. I turn to some of the particulars of the tax package as they will affect business. It has been sought to minimise the impact of a capital gains tax on the basis that it will apply only to future capital gains and that it is being imposed therefore on a relatively small number of transactions in the near future. In fact that aspect of the tax has led it to be described by Robert Gottliebsen in the Business Review Weekly as one of the worst ever produced because it is a tax which discriminates between those who have already generated their wealth and those who have not yet made it. Put more simply, that means that in making decisions about investment there will from now on be this additional complication that some transactions will be caught by a capital gains tax and others will not. That will lead to distortions in the Australian economy. It will mean that there will be an incentive for investors to hold on to existing assets and a disincentive to obtain new capital assets. It will lock in investment funds, and risk-taking in new investments will be discouraged-and this at a time when the Government's own growth forecasts for the economy rely on strong private sector investment recovery. I have already referred to Senator Walsh's apparent ignorance of the importance of goodwill as a factor in the incentive of the man who sets out to establish a new business and to make it a successful business which will be marketable and will provide him with security in his old age. Really the deficiencies of the package go beyond that. What Senator Walsh is doing in this tax package is in fact imposing a capital gains tax on non-speculative gains, the gains which are made by people who work hard to build up an asset, and yet his Government cheerfully leaves speculative gains untouched in many circumstances. If Senator Walsh were so determined to be economically logical, if he were so determined to get some fairness into the system, why does he choose to tax the assets built up by hard work over a long period as against singling out the assets of speculators for which he has such an abhorrence? Indeed, would it not be fairer to pick up the recipients of lottery winnings rather than those who have laboured long for their reward? There is also a sham in the proposed relief of double taxation of dividends. Of course, we welcome that proposal, but the capital gains tax will tax gains on share sales without taking into account the tax already paid on retained earnings. What the Government will be giving with one hand-namely, very welcome relief from the double taxation of dividends-it will take away with the other in cases where instead of dividends being paid after paying company tax profits have been retained in a business to build up its assets. That is a perfectly common and proper business practice. If a business is well run, well managed, and successful, the result will be an increase in the value of its shares. That means that when the shares are ultimately sold they will be subjected to capital gains tax at the marginal tax rate and what would have been tax exempt had it been paid as dividends will now attract taxation because it was retained and built into a capital asset. Distortions still remain in tax treatment as between companies and different forms of savings. Company profits, for instance, will still be taxed more heavily than will superannuation funds. I ask: Where is the efficiency and equity in that? I have very little time left, but I know that Senator Messner will deal with many of the other particulars. The Opposition thoroughly objects to the unprincipled approach which has been taken to fringe benefits tax. That will be a major contributor to estimates that are currently being made that companies will now face increased taxes of between 17 and 18 per cent. It is utterly unprincipled for the Government to say that when employees receive benefits in kind it will be the employers who will bear the tax. A perusal of the White Paper makes it clear that this is simply a matter of administrative convenience. There is no tax justice. It is a further disincentive to investment. It is a further nail in the coffin of those who wish to start up a business and enterprise in Australia and create more employment. We object to this tax package. We think it is unfair to those who will do the essential job that requires to be done in Australia in 1985-to create more jobs for the Australian people. Senator WALSH(Western Australia-Minister for Finance)(3.42) —It has been apparent over the last few weeks and, indeed, ever since the new leadership of the Liberal Party was installed-be it by design or accident-that the Opposition is as confused on taxation policy as it is on wages policy. But the policy changes not only from day to day but also from shadow Minister to shadow Minister on the same day. For example, Mr Howard had campaigned for months for a substantial shift in the taxation base from income tax to indirect taxation. Mr Howard said that this was the only way to go. Early this week, that policy was torpedoed and sunk by Senator Messner, who said: `No, we are not going to have a major shift to indirect taxation at all. All we plan to do is to extend the wholesale sales tax and have a tax on services'. Unless he has changed his mind again, which is quite possible, he did not say that simultaneously, in conjunction with the extension of the wholesale sales tax, he has been promising and his Party has been promising to abolish the existing wholesale sales tax on wine. So apparently, Senator Messner does not know whether he is for a narrowing or a widening of the wholesale sales tax base. In the area of capital gains tax we have had patent dishonesty from the Liberal Party. I refer to a minute of a Liberal Party committee meeting signed by Senator Messner and leaked by who knows. Since there were only five people on the committee, it is quite apparent that the factional fighting and backbiting in the Liberal Party reached the point that at least one member of a group of only five people was so dissatisfied with the Liberal Party leadership change that, within 24 hours, he leaked a minute as confidential as this. I digress. The real point here is the patent dishonesty of the Liberal Party on the taxation reform questions. In respect of a capital gains tax, the minute which Senator Messner signed stated: There is considerable concern among Liberal Senators that the Coalition may oppose the capital gains tax and defeat the Government. This would provide an issue from which a double dissolution may ensue. This is perceived to benefit the Democrats. Some will vote- that refers to some Liberals- to support capital gains tax if the bill appears to be in danger. In other words, in trying to put together that ratbag constituency, to which I referred earlier, to which the Liberal Party is appealing in the hope of winning an election, it will promise to oppose a capital gains tax but only for as long as such opposition is unsuccessful. Likewise, at the next election, it will promise to abolish the capital gains tax, knowing full well that it would not have the majority in the Senate which would be required to do that. The Liberal Party is playing a devious double game. That is evidenced again in the same minute from Senator Messner, from which I quote: The four main nasty issues are central to the package and are the main sources of funds for the `goodies'. By appearing to oppose the `nasties' while supporting the `goodies' opens us to the charge at the very least of inconsistency and more likely, of irresponsibility- these are Senator Messner's words- in supporting income tax cuts, but opposing the means by which they will be funded. Senator Messner has succinctly drawn attention to what is really the basic point at issue here; that in opposing this tax reform package or in opposing what Senator Messner called the nasty issues which are central to the package and which are the means of funding the income tax cuts the Opposition is committing itself, conceivably, to a big spending cut. The Opposition has been challenged on numerous occasions to specify where it would cut from existing outlays $4 billion, $8 billion, $12 billion or whatever was the most recent figure named by some Liberal Party heavy. It has ducked every invitation and every challenge to do that. The Opposition will not cut spending and it will not vote for the taxation package. That means that there will be no income tax cuts. Either this package is accepted or there will be no income tax cuts. What the Liberal Party is for is not only the maintenance in perpetuity of the high marginal tax rates which a significant number of taxpayers are now paying but also the proposition that an ever-increasing number of taxpayers should pay those high marginal tax rates. That is the Liberal Party's policy. If it were ever implemented it would ultimately mean that every honest taxpayer would be paying the 60 per cent marginal rate, because the income tax base would continue to be eroded by measures the abolition of which the Opposition is opposing in this matter of public importance. I will give credit where it is due. I concede that Senator Chaney made some valid points about the Government's capital gains tax. He made the valid point that it would have been better in an ideal world if the tax had been applied to existing assets as well as assets which will be purchased or the ownership of which will be acquired in the future. He stated that there would be some distortions. That must be conceded. But is was not, as Senator Chaney seems to believe, political cowardice or opportunism which caused the Government to make the decision to apply that tax only to assets the ownership of which will change hands in the future. The reason for this decision was the enormous difficulty of obtaining on a particular day a valuation for all assets in the country. Not only is there a logistic problem in getting enough valuers actually to do the job but also there are imperfections in the valuation system itself. Conscientious and recognised valuers can come up with estimates of valuations of property which diverge substantially from each other. But in one particular case which was drawn to my attention both valuations diverged even more substantially from the actual market price. There really is no fully effective test of value other than a sale. It was for that reason that the Government accepted the imperfection of a capital gains tax which is wholly prospective. However-this has always been the most important feature of a capital gains tax-the tax which we have accepted that is to be applied at the personal income tax rate on real gains puts a completely effective net under the income tax base and the income tax system. At the heart of most tax avoidance schemes which have undermined, discredited and almost destroyed the tax system over the last 10 or 15 years was the conversion of what should have been taxed as income to a tax free capital gain. That will no longer be possible because of the capital gains tax that the Government will introduce. A fully effective net-indeed a steel trap-has been put under the income tax system. There will be no way in which taxation on what ought to be regarded as income will be not paid in the future short of outright evasion-either falsification of evidence by a taxpayer or non-declaration of payments received, both of which are quite serious offences. I find it somewhat remarkable that Senator Chaney, having made that valid point and having claimed that it will have some effect and will distort, to some extent, future investments-there is probably a modicum of truth in that-can see that and yet he appeared to be quite unconcerned by the interview broadcast on the Countrywide program on 25 September, to which I referred earlier, in which his Leader criticised the closing down by this Government of the agricultural tax shelters on the grounds that investment in agriculture was either extremely risky or innately low yielding. The remedy that the Leader of the Opposition, Mr Howard, proposed for that was for the Government to make a decision to continue to provide special tax inducements to attract investment into an industry which, according to Mr Howard, is low yielding and risky. The proper incentive for investment should come from the market-place, not from government-induced distortions of the taxation system and not from tax-induced distortions of the real yield on investment. If it is true that the yield on investment in agriculture is innately low, that is the signal from the market-place that no more capital investment in agriculture is wanted. If from time to time it yields the normal rate of return on investment but is extremely risky, the same basic principle applies; that is, if the investment is risky there must be the potential at least of earning above normal yields on that investment from time to time otherwise, again, the signal of the market-place is that that investment should not proceed. Implicit in what Mr Howard has said is the belief that governments are better able to pick winners than private investors. If one believes that, the entire rationale for a market economy and the capitalist system has been swept away. Senator Siddons —How does Japan survive? Senator WALSH —By a mixture of both. Senator Siddons would know that that is logically unassailable. If Mr Howard believes that governments are better able to pick the winners and that governments can judge more accurately the areas of investment in which returns will be best, the logical conclusion of that chain of thinking is that the capitalist system and the market economy should be swept away and replaced by some centrally planned economic system. Senator Chaney denigrated the accord, which reminds me of the Opposition's attitude to wages policy. Mr Howard has been saying that we should have a deregulated wages system; that we should get rid of centralised wage fixing so that wages will then be more responsive and more flexible, economic growth will increase and labour will be attracted from the low yielding industries into high yielding industries and so on. He never did explain, of course, how a Commonwealth government in isolation could achieve that outcome. But that is not the point that I want to make. He anticipated that the concomitant of that policy would be five years of industrial warfare. He gleefully salivated at the prospect of five years of industrial warfare. I would have thought that any sensible business man or woman in Australia ought to be terrified at the prospect of five years of industrial warfare, which is what Mr Howard promises them. He sees five years of industrial warfare as preferable to the achievements of the accord. But last week, of course, Mr N. A. Brown, fortunately, torpedoed and sank that policy as well. I hope that it stays sunk. Let me list for Senator Chaney some of the achievements of the accord which he denigrates. For the third successive year real economic growth in Australia will be of the order of 5 per cent. That has never happened before. At the same time, 430,000 additional jobs have already been created. Business profits, about which Senator Chaney purports to be concerned, have increased by $6.5 billion. We have the lowest level of industrial disputes that the country has seen for 18 years and we have the lowest unit wage costs since 1970. While all that has been achieved the inflation rate has been almost halved. Senator Chaney referred to ignorance and prejudice. I do not know whether he is ignorant of those facts or whether he is prejudiced against the Australian Council of Trade Unions and against any government having any meaningful discussions with the ACTU. I do not know whether his opposition to the accord is due to his ignorance of its achievements or whether he has an ideological prejudice against the ACTU being crucially involved in it-as, of course, the ACTU is. That is probably even more directly relevant to the tax package than it might at first sight appear. As a result of the excellent efforts of the Minister for Employment and Industrial Relations, Mr Willis, and the Treasurer (Mr Keating) last month, the accord has been renegotiated for another two-year period. The ACTU has agreed, on behalf of organised labour, to discount wages by up to 2 per cent in the autumn wages case and it has agreed to support the principles of the accord for another two years. Mr Howard's alternative is that wages should be discounted but we must not have a centralised wage fixing system; we must discount wages but we must have a free market. If Mr Howard has not realised, I presume that Mr Brown has realised by now that those two propositions are incompatible. They are mutually exclusive. We cannot by fiat discount wages unless we have an effective centralised wage fixing system. By the way, I objected not only to the ideological prejudice of the journalist to whom I referred earlier but also to the contradictions in what he wrote and his factual inaccuracies. In the particular article to which I referred, he simultaneously proposed that land prices would fall because of a capital gains tax and that entry into agriculture would become more difficult. Again, those factors are mutually exclusive. He added that 1982-83 was the end of a four-year drought. That statement in itself is a non-sequitur; it is a statement of fact, as I mentioned earlier, that in two of those four years we produced the second and third largest wheat crops ever harvested in Australia. Senator Chaney mentioned goodwill. In a sense, goodwill can be defined as the premium over the identifiable value of assets which may or may not be obtained when the assets in a business are sold. But how would Senator Chaney propose that a premium-if there is one-be separated from the personal efforts of a proprietor, say, in the retail trade, who is flattering customers and thereby attracting customers into his shop over a period or, alternatively, from some exogenous change such as the relocation of the main road which may have either positive or negative effects on the business but which have nothing at all to do with the proprietor? There is no way that those two elements could be separated. Let us assume, as Senator Chaney apparently wishes us to, that that difference, if any, between the sale price and the valuation on assets which can be identified is due to the personal effort put into the business over a number of years by the proprietor. If that is the case, what Senator Chaney calls goodwill is in fact deferred wages on which-there is nothing improper about this-no income tax has been paid but which Senator Chaney and Senator Messner would propose it is quite wrong to tax in a highly concessional way at the end of that period. In summary, there are serious doubts about whether the Opposition is serious in opposing this tax policy at all as Senator Messner's leaked document shows. Even if the Opposition is serious in opposing it, following the Opposition's road entails high marginal tax rates in perpetuity for an increasingly large number of the Australian population and work force. Senator SIDDONS(Victoria)(4.01) —The Australian Democrats are not happy with all aspects of the Government's tax package. Later in my remarks I will detail some of the aspects that we are not too happy about. Having said that, I am bound to point out that the Democrats welcome the broad thrust of the Government's changes to the tax system. This is, in fact, the boldest move on the part of any government in the tax area since John Curtin took income tax away from the States in the dark days of the 1940s. For the past 20 years the Australian tax system has progressively come apart at the seams and the sticky tape solutions that have been applied have not solved this disintegrating process. The tax package that the Government has introduced will, we believe, bring some sort of equity to Australian society. For too long there has been discrimination in favour of those who have been able to gain their income from property via capital gains, at the expense of the millions of ordinary pay as you earn taxpayers. The ability to gain income, tax free via capital gains, has spawned a whole new industry of highly intelligent lawyers and accountants who have done nothing but spend their days dreaming up schemes to avoid tax via capital gains so that the wealthy can avoid the inconvenience of having to pay any income tax at all in many cases. We welcome the general thrust of the government's tax package. Thanks to the Democrats, the capital gains tax will not affect the majority of Australians. The main capital asset most Australians own is the family home, and that will be exempt from the tax. Thanks to the Democrats, the mooted death element to tax has been withdrawn. The welfare of farmers and small business people has been safeguarded as the capital gains tax is to be indexed for inflation. Capital losses are to be offset against capital gains and the tax will apply only upon realisation. These are all initiatives which the Democrats championed and spoke about during election campaigns and which the Government has taken up. There will be no retrospective element in the capital gains tax whatsoever. The fact that capital gains will be levied at the marginal rate of tax will mean that there is no incentive at all to convert capital gains into earned income, or vice versa. The capital gains tax is, in fact, a mild one. It taxes real gains only after inflation has been taken into account. Some of the critics of the capital gains aspect of the tax package have thrown up their hands in horror and said that it is outrageous. It is outrageous because it is levied at the marginal rate of tax of the individual and not, as is the case in the United States of America and Canada, at a flat rate of capital gain. However, the critics in this case are wrong. Countries which levy a flat rate of capital gains do not have that flat rate indexed or the capital gains indexed for inflation. In fact, the flat rate capital gains taxes in Canada and in the United States are more punitive than the capital gains tax that this Government is proposing. The incentive for speculation and the disincentive for productive investments, which have been the basic elements of the tax hitherto, will be eliminated and the emphasis will be placed on productive investment and away from non-productive speculation in housing and land. Shares in companies that produce income will be attractive and so those companies will be able to raise capital more readily. Genuine small business will be encouraged to grow. Their taxes will no longer be used to subsidise the lurks of the few. I now turn to the problems we see in the capital gains tax package at the moment. Firstly, there is differential treatment of the family home and the family farm. The family home or principal residence is to be excluded from any capital gains tax at all irrespective of whether it is a $1m house or not. This means that the farmer, whose home is generally taken as part of his property, is discriminated against. The curtilage system of imputing the capital to the family farm residence will not solve this problem. We suggest that the Government look at the inequity between the treatment of the large domestic home in the city and the family farm. Senator Chaney pointed out that goodwill should not be included in a capital gains tax. Goodwill can be accurately measured. It is a balance sheet item and represents the value of forgone profits particularly for small businessmen who have sacrificed-- Senator Messner —That is tax evasion, according to him. Senator SIDDONS —Yes, indeed. Small businessmen often sacrifice wages so that they can build up goodwill. But not taking into account this aspect we believe that the Government is discriminating against the hard working small businessman. We hope that the Government will give serious consideration to exempting goodwill on a fair and equitable basis. We believe there should have been averaging provisions in the tax so that the tax paid is based on the normal marginal rate rather than the highest tax rate when a substantial gain is realised. We believe that there should be some consideration for superannuation in capital gains, particularly again as it applies to small businesses. Many businessmen put all their available cash into their business and then sell it on retirement. We believe an exemption could be made for a superannuation component of that sale so that at least part of the sale is treated in the same way as a lump sum superannuation payment. We believe the gifting realisation could be unfair to many people, especially to farmers who wish to pass their properties on to their children. These are some of the aspects which we are still very concerned about in the capital gains area. We are also concerned about fringe benefits. I will be making specific proposals about that later. I turn to wholesale taxes. We welcome the fact that wholesale taxes have been rationalised but point out that there will be exceptions that the Government should take into account. For instance, the Government is now proposing to tax solar heaters at a rate of 20 per cent. This is a new industry, a sunrise industry, that is developing a renewable energy source. We cannot see the sense in the Government suddenly imposing a 20 per cent tax on this sort of industry. We are also critical of the Government for having picked up its bat and ball so quickly on the question of a consumption tax. We believe that at the national taxation summit there was considerable support for a consumption tax. The Australian Democrats certainly would have supported a consumption tax if it were reasonably applied-not necessarily at 12 1/2 per cent-and took account of the necessities of life. The Democrats and I believe that such a tax would have been worthwhile and would have received a large measure of community support I turn to fringe benefits. We believe that this is the aspect that will cause most concern in the community generally. We do not object to fringe benefits being taxed. We support it. They have been a tax rort until now. However, we object to the manner in which the fringe benefits tax is to be applied. I have spoken previously on the fact that it is to be applied entirely to the employer. A $500m additional tax is to be imposed on businesses. Some say it will be as high as a billion dollars. That is an additional tax on business that cannot readily be absorbed. It will have a very depressing effect, particularly in the small business area. What would be a fairer approach? We suggest that a logical, objective look should be taken at each fringe benefit and a decision made as to whether the tax should apply to the employer or the employee. I give some examples of how this sort of approach could be applied and made more equitable. Let us take the company car, for instance. We believe that the company car should be taxed in the hands of the employer. Further, we believe that the Government's formula for taxing the company car is satisfactory. We support it. There is no doubt that the supplying of a company car is of benefit to an employer. Therefore, it should be taxed in the employer's hands. Subsidised rental accommodation likewise should be taxed in the hands of the employer. There is no doubt that in remote areas it is absolutely essential that free or subsidised housing be given to workers if they are to be attracted to those areas. So, in our opinion, subsidised rental accommodation should also be taxed in the hands of the employer. Goods and services supplied to employees which are a part of the output of an enterprise should also be taxed in the hands of the employer. However, there are fringe benefits that are not related in any way to the employment of the individual. We believe that those sorts of benefits should be taxed in the hands of the employee. I instance low interest loans. Generally, they have nothing to do with the individual's employment. They are not work-related in any way. So why should not the employee be taxed on that benefit? It is his benefit and responsibility, surely. So we suggest that, after a certain date, any new low interest loans be taxed in the hands of the employee. I do not refer to those loans which already have been granted-we would never support a retrospective tax-but to any new low interest loans. Why cannot they be taxed in the hands of the employee? I turn to entertainment expenses. The Treasurer, Mr Keating, is trying to have us believe that legitimate entertainment expenses should not be incurred in running a business. We do not accept that at all. I suggest that the Government could well consider entertainment expenses being made tax deductible to the value of, say, 20c in the dollar. This would have to be substantiated, but at least it would be fairer than the method that is proposed at the moment by the Government. It would certainly lessen the impact of this tax on the restaurant industry. I believe that it has to be taken into account. Senator Chipp —And heavy penalties against those caught cheating. Senator SIDDONS —Very heavy penalties should be brought against those caught cheating, as Senator Chipp suggests. In summary, we congratulate the Government on the braveness and boldness of its tax package and its general thrust. We support it. However, we implore the Government to take note of the anomalies we have listed. It is not too late to discuss them or to look at equitable, fair ways of correcting them. The Democrats suggest that, if that is done, the community support for this package will be very great and, undoubtedly, it will go to the credit of the Government. This bold attempt to restructure the whole tax package is a milestone in Australia's history. To that degree we support the general thrust of what the Government is doing and congratulate the Government on it. Senator BROWNHILL(New South Wales)(4.16) —The matter of public importance we are discussing today is as follows: The destructive effects on enterprise and employment of the Government's tax package. There can be no doubt that enterprise and employment have and will be affected by the Government's tax measures, although I believe that in the debate today the Minister for Finance (Senator Walsh) has not addressed at all the problems the tax package is causing in the community. We have already heard the very strong concerns of the restaurant industry whose representatives are meeting in Canberra tomorrow. It will be interesting to see whether any of its invited guests-apparently Canberra's Australian Labor Party members are going-will be game enough to attend and try to defend their Government's attacks on this sector of the economy. I restrict my remarks today to what effects the tax package will have on the rural sector of Australia. Clearly, the rural sector has been the subject of a long and sustained attack from this socialist Government. The rural sector bore the brunt of the May mini-Budget, the slashing of the fuel freight subsidy scheme, the scrapping of the liquefied petroleum gas subsidy and the cuts to roads funding and the local aerodrome ownership scheme-cuts amounting to over $180m which affected all rural Australians. The Government knew the wrath of the rural sector. Over 100,000 people in cities all around Australia have protested recently. In Canberra alone, 40,000 people came to tell Prime Minister Hawke personally what they thought of the Government. Whilst Mr Hawke called these people `my friends', it was laughable to see that he was surrounded by dozens of police. He obviously does not have too much trust in his friends if he needed such a large bodyguard. At that rally the Prime Minister told those people to be patient, that the August Budget would provide relief for them. They were patient. Budget night came and went without any more than a handing back of some of the things that the Labor Government took from farmers in the first place. But farmers are patient people. They are a trusting people. So they waited some more, hoping that the tax package would provide relief for them and, more importantly, would not penalise them. After all, the Prime Minister told farmers, and indeed, all Australians, in 1983 that he would not introduce a capital gains tax. As I said, farmers are a trusting people. So they believed that, whatever the tax package held, there would be no capital gains tax. But of course we now know just how much notice any Australian, any farmer, can take of our Prime Minister. Only this morning we heard just how hollow are our Prime Minister's words and promises on the Army base issue. Farmers and others living in rural Australia are starting to wonder about our Prime Minister and his promises. They are starting to see and feel the effects of the tax package. The first effect is the capital gains tax; the tax we were promised we would not be having. Of course, the Federal Government has been at great pains to explain how no one will be affected adversely by this tax. If the predictions that it will raise only $5m are true one wonders why the Government intends to introduce it at all. Treasurer Keating has told us that there is no death duty element in this capital gains tax. Of course, if one examines it, quite obviously there is. Treasurer Keating has assured us that this tax is not discriminatory, but of course it is. Already land prices are falling as a result of this element of the tax package. One of the reasons people move into farming and persevere with it year after year, with low returns on investments and long hours of work, is the benefits they receive if and when they decide to sell. Not only is the worth of the property important then, but it is also a valuable lever in the farmer's ability to raise borrowings for operational and essential capital purchases for the farm, and we must not forget that those purchases create jobs. The death duty element is very clear. It is all very well to say that no tax will be payable if a farmer dies and leaves the property to his spouse, but what happens if the surviving partner decides, after a period of 10 or 20 years, that she cannot cope and decides to sell and live elsewhere? Tax will be payable on that property which was received originally through the death of a partner. Obviously farmers and others are meant to be grateful to the Government for not taxing the property from the original transfer on death. Perhaps this Government has forgotten that the rural community provides over 40 per cent of our export income. That income is provided by people who live on the annual returns from their investment, which are often as low as nil per cent. Over the past five years those people have received price increases on their goods of only 12 per cent while their costs have risen 44 per cent and they have battled to pay interest rates on borrowings of 18 and 20 per cent. It is interesting to note how the Canadian Government regards capital gains taxation. Earlier this year, the Canadian Government moved to allow an exemption from capital gains tax up to a limit of $500,000 for every Canadian. The aim was to encourage Canadians, who save a very high proportion of their disposable income, to invest in risk-oriented new ventures. The Canadian Finance Minister, Michael Wilson, said at the time that it was through capital investment that new ideas are implemented, new activities are generated and new jobs are created. With the paranoia that Senator Walsh has about this capital gains tax, he has a different version of it altogether. The Canadian Finance Minister said that he wanted to let the investor choose where to invest; to have individual Canadians pick the winners within a tax framework that rewards success. Obviously this Government does not want that to be done. The Canadian Finance Minister went on to say: I do not want to further distort the tax system by measures that tell Canadians how and where to invest. How different that approach is from the approach of this Government, which wants to stifle initiative, penalise success and flatten enthusiasm. Compare that with our own Finance Minister Walsh, who was quoted last month as saying, on the subject of capital gains tax: A tax on fringe benefits and a capital gains tax could be used as a trade off with the ACTU in negotiations over wage discounting. That confirms what Senator Chaney has said-a trade-off by this Government with the Australian Council of Trade Unions. It is evident where the priorities and the master of this Government are, but I wonder where it intends to find the initiative and finance to expand Australia. Certainly it will not be in the trade union movement. Unfortunately, if the Government keeps penalising business there will not be any business left to provide it either. The Government has argued that rural property sales will not be affected adversely, yet it has said on several occasions that one of the desired effects of the tax package will be the reduction in the value of rural land. I cannot understand how making a property less valuable today than it was yesterday is a benefit to anyone. The Government has argued that farmers will not be forced to pay capital gains; that land prices move at the same rate as inflation. That is wrong and Senator Siddons is wrong, because I do not think he understands the land and how people put extra effort into the land to produce more and improve the land to make it better for future generations. Independent studies over the past decade show clearly that rural properties have consistently realised capital gains above inflation. This is not something to be penalised. Very likely the land has become more valuable because of the hard work and improvements made to it. Why should any government try to discourage anyone from improving and making more productive a natural resource? I thought that people on the other side of the chamber were interested in conservation. The second aspect of the tax package that concerns me is the discriminatory quarantining of farm losses from off-farm income to a limit of $15,000. This is supposed to be a trap for all the so-called filthy rich, tax evading Pitt and Collins Street farmers who are ripping off the Government for millions of dollars, which honourable senators on the other side of the chamber refer to all the time. This measure is supposed to provide the Government with an additional $105m in the first year and $75m per year after that. Well it might, but what it will do for rural industry will cost far more. Already land prices are falling because rural property has been singled out as the one area in which people will not be allowed to offset losses. A number of aspects of this move concern me. Firstly, many thousands of people buy rural land for a wide variety of reasons. People who are not lucky enough to inherit property very often buy land while they work in another occupation, which is sometimes rural related, such as shearing or contracting, but sometimes not. Over a period they build up equity and make improvements to that land until such time as they have sufficient size and improvements to make a viable living without outside assistance. Others own land which, for one reason or another, over time has become unable to support adequately the family. It is not an uncommon occurrence for a farmer's wife also to be the local school teacher, nurse, secretary or shop assistant. Both these groups could hardly be called Pitt Street farmers whose aim in life is to defraud the Australian Taxation Office. They are genuine, good and deserving Australian people. A third group of people are Pitt and Collins Street farmers. The Labor Government has painted these people in the blackest of colours, labelling them tax cheats and rip-off merchants; yet it is these same people who have brought new enterprise, development and industry to this country. They have been responsible for the introduction and development of the angora and cashmere fleece industries, the expansion of the gene pool in the traditional cattle breeds and the introduction of new breeds such as charolais, maine-anjou, simmental and limousin, all of which have improved the quality of Australian beef. They have been responsible for the expansion and introduction of new and existing nut varieties, such as macadamias, cashews and almonds. This group of people has been responsible for the expansion of such fruits as avocadoes. Ten and even five years ago avocadoes cost over $2 each, when one could get them; today avocadoes are available almost all year round. This must please the Labor Government, which has a paranoia about producing cheap food at the expense of primary industry. The Federal Government tells us that these people are evil, ruining the country and exploiting the system. It is the Pitt and Collins Street farmers who have the financial resources to be able to buy and develop large properties, providing enormous wealth in crops and livestock. In drought times it is those people with off-farm incomes who are able to keep country towns going. It is only those with off-farm incomes who can afford to keep developing and keep the money circulating in the towns. The quarantining of off-farm incomes applies to no other sector of the Australian economy. Why is one form of investment penalised while others are not? For example, Broken Hill Proprietary Co. Ltd can offset its steel losses against oil profits. How can that but not have a destructive effect on enterprise and employment? What other effect can it possibly have? The Government clearly has not thought this tax package through sufficiently. Already Senator Walsh has admitted that business goodwill will be affected and he has already said that job losses will occur. The third element of the tax package that concerns me and which will cause job losses and stifle enterprise is the fringe benefits tax. Car manufacturers are already claiming that car sales will fall from 1 July next year. That is a great way to give incentive to an industry that is already struggling! Again, the Government forgot-or chose to overlook-how this element of the package would affect the rural sector. Most employees on farms are employed on the basis that whilst farmers cannot afford to pay them large cash sums, they often provide housing, vehicles, meat, electricity and sometimes other benefits. That situation has worked for years with the full support of all parties. How this tax package will improve productivity or indeed give additional revenue to the Government eludes me. It will simply mean cutting back on productivity instead of expanding it. The same applies to the decision to change the write-off ability of 100 per cent in the first year for water conservation. By the time the tax cuts are introduced by this Government I believe that this country will have turned the clock back many years. Of course, those who still have jobs will pay more tax. However, there will be significant numbers who will be paying much less tax because they will be jobless. They will be the ones who are put out of work by these great reforms of this Government! Senator MAGUIRE(South Australia)(4.33) —I rise to speak on this taxation debate which has been proposed by Senator Chaney on behalf of the Opposition. I believe that the very matter itself is a sign of the sheer desperation within the Opposition on this tax issue, which, over the last fortnight, has slipped away from it. I refer honourable senators to a front page article which appeared in the Australian Financial Review last Friday following a major article by Mr Gregory Hywood the day before. The headline on the article was `Honeymoon over: Libs in trouble'. The article goes on to point out that less than a month after changing leaders, the Liberal Party is in dire straits. The article says: The John Howard honeymoon has come to an abrupt end. The Australian Financial Review, which probably has been the most expert paper in analysing the tax package, goes on to say in its page one article: . . . the coalition is still struggling to come to terms with the key issues upon which the next election will ride-wages policy and taxation. That is very much the perspective in which this discussion should be viewed today. The Australian Financial Review went on to say: The first signs that the Howard honeymoon was at an end came a fortnight ago when Mr Howard and his shadow executive were unable to develop an effective strategy of opposition to Labor's tax package. That was the front page article of the Australian Financial Review last Friday and it gives perspective to this debate today. This belated taxation policy discussion shows that the Opposition is trying desperately to make taxation an issue three weeks too late. Let us have a look at the tax package in perspective. First of all, it has been made abundantly clear that this package of measures is to redistribute the tax burden, not to increase overall tax. We have said month after month that the tax package simply redistributes the burden without increasing taxation levels within the community. One of the Prime Minister's nine taxation principles which were laid down last year was that there would be taxation reform, not taxation increases. Also, this package of measures which was brought down on 19 September is consistent with the Government's trilogy commitment that taxation revenue collected from the community will not rise as a proportion of Australia's gross domestic product. Again, we have a yardstick by which to measure this package. In fact, there is no overall rise in taxation levels in the community, there is simply a redistribution of taxation burdens. Having established that, how can we say that there will be an overall reduction in employment levels? If the tax burden is being held in relation to gross domestic product and if there is to be no increase in taxation levels but basically a reform of taxation, I cannot see how, taking a global view of the Australian economy, there could be a reduction in employment levels as has been claimed by Opposition members this afternoon. That is a proposition that they will find very hard to establish in the overall community. The fact is that for a number of taxpayers in the Australian community there will be very significant taxation reductions as a result of the package. There will be very large reductions in the income tax burdens of a number of high income earners and therefore there will be higher disposable incomes in the pockets of those taxpayers. That means they will have more ability to spend on the products of the Australian economy. We will find that in what the economists call `income elastic industries' there will be very high levels of expenditure by the individuals who receive tax cuts. There will be higher levels of expenditure in Australia's consumer durables industries and in the travel industry, just to name two areas which are highly responsive to changes in incomes. Those changes in incomes are changes after taxation. Therefore, overall I believe that it will be very difficult indeed for the Opposition to establish any argument that there will be net job losses in the Australian economy. Possibly there will be losses in specific sectors of the economy, and I am sure that all honourable senators will be concerned about that, but taking the global view of Australia's economy, there will be no job losses. This particular tax package was strongly endorsed at the July taxation summit. That is something the Opposition will not admit, but elements of this package were very strongly endorsed at that summit. The summit was a very representative body; it represented many sections of the Australian community. At the summit it was made very, very clear that the Australian community wanted a crackdown on tax avoidance and evasion, particularly tax avoidance through the avenue of fringe benefits. There has been a large escalation in the payment of such benefits in recent years and the tax summit made it very clear that the Australian people wanted a capital gains tax introduced. Now we find that the sectional interests of the community, represented by honourable senators opposite, are screaming their heads off about such items as those that were endorsed by the wider community at the national taxation summit. Those who try to sustain the argument that there will be massive disruption and dislocation are really out of touch with the views of the general community. The community knows the abuses that were going on under the previous tax regime. The community knows all about the free lunch regime that occurred under previous tax arrangements. It knew about the escalation of fringe benefits and the various sums of money that were paid by employers on behalf of their employees. The general community was well aware of those abuses and it has very little sympathy for those who try to champion the cause of sectional interests. There is no doubt in my mind that that is the reason why sections of the media almost immediately dropped their hysteria about the tax package when it was announced, because they realised that they were completely out of touch with the community. In proposing this matter, Senator Chaney used the words `enterprise' and `employment'. I do not believe the taxation package will hurt enterprise in this country at all. For example-and I am sure that Senator Cooney, who will follow me from this side of the House, will point this out-the top marginal income tax rate will be reduced from 60c in the dollar to 49c in the dollar. Similarly the middle rate of 46c in the dollar will be reduced to 40c in the dollar. Small business owners-and I must say that the Opposition suddenly seems to have discovered small business-will be among the major beneficiaries of that change. They will be paying tax at the rate of 49c in the dollar instead of the present 60c. Year in year out Liberal Party senators come into the chamber and advocate the introduction of incentive in the Australian economy. I believe that the incentive to work is the one about which they go on. However, we have not heard very much positive comment about the possible impact of the lower marginal tax rates. I presume that by talking about incentives the Liberal Party means encouraging people to show enterprise and flair, yet they have been very silent on this measure. Certainly, as a result of the changed tax arrangements under the present Government, from the time that those arrangements are introduced no one will have to pay more than half his extra income in the form of income tax. I should say also that the capital gains tax which has been introduced allows capital losses to be offset against gains. Surely that will not harm investment and enterprise because if losses can be offset against gains that will reduce the risk of investment. I think it is very important to bear those factors in mind. Essentially we are removing taxation subsidies for particular activities. We are removing the burden on the honest, ordinary taxpayers who have been called upon for years to subsidise the activities of other members of the community. We are eliminating important taxation shelters; activities in the community which have been set up by individuals to shelter their principal incomes from taxation. I refer to such devices as hobby farms and rented accommodation, which have been classic tax avoidance avenues and tax shelters taken advantage of by a number of taxpayers to protect their principal incomes from tax liabilities. They are now gone, out the window, and good riddance to them. As a result of those measures I believe investment in the Australian economy and the price of assets will reflect more their true value rather than their inflated value as a tax shelter. It is very important in evaluating investment in our community that true returns are reflected rather than returns influenced by their value as taxation devices. With the introduction of the capital gains tax it is important to note that Australia has at last arrived in the twentieth century. Until the introduction of this tax the Netherlands and Australia were the only two developed countries which did not have a tax on capital gains. All the countries with which we normally compare ourselves have had a capital gains tax for many years. The business sector and the remainder of the community have all worked under that tax regime overseas. It is very important to note that the capital gains tax to be introduced by this Government will collect only $25m a year, which is not a particularly large sum of money in relation to the overall Budget of the Federal Government. To put it into perspective, $25m might purchase only one helicopter for one of our guided missile frigates. The important thing is that the capital gains tax will stop people using the device of conversion of income, which is taxable, into gains which have been tax free. It is a totally prospective tax. It does not tax existing assets, and the family home is completely exempt. As I have indicated, capital losses are offset against gains and, most importantly, the tax is levied on a realisation basis. That means that it is levied only when the asset is sold; therefore those selling assets will have the liquidity with which to pay the tax and they will not be caught short. I was interested in the comments made by Senator Brownhill and in his special pleadings for the rural sector. I remind honourable senators that Senator Brownhill was a member of Senate Estimates Committee C, before which expert witnesses from the Bureau of Agricultural Economics appeared. As a result of my questioning of those witnesses about the determinants of rural land values in Australia it became very clear that the BAE had formed the view that over a long period rural land values do not rise faster than the rate of inflation in the community. In other words, over the longer period, perhaps 15 or 20 years, there is no real increase in rural land values. The capital gains tax, which is to be introduced by the Government, allows those selling an asset to deduct the increase in value of the asset due to inflation before the taxable gain is arrived at. Therefore if rural land does not appreciate faster than the rate of inflation, minimal taxation will be incurred by the rural sector. A survey appeared in the Naracoorte Herald in South Australia on 30 September in an article written by an expert-not from the Bureau of Agricultural Economics in Canberra but from the South Australian Department of Agriculture. That survey made it clear that from 1975 to 1984 the value of farm land in South Australia escalated at an average annual rate of 11.7 per cent. The consumer price index over the same period rose by 10.9 per cent. So at the very most there was a real rise of a mere 0.8 per cent per annum in rural land values, which suggests that a very minor taxation liability could be incurred as a result of the capital gains tax. In the Murray Lands region in my State the average annual rise in land prices over that period was a mere 5.5 per cent. As I indicated, the consumer price index rose by 10.9 per cent, so in that large agricultural region of my State those selling farm properties would not incur any capital gains tax at all. Senator Chaney today talked about the need to stimulate enterprise in Australia. But what about the enterprise shown by lower income Australians? They were conveniently ignored by him. That very large group of Australians face high effective marginal tax rates because they depend on pensions and social security benefits which are not only taxable but which are also subject to income tests. They pay effective marginal tax rates often in excess of 100 per cent. Overseas research shows that that group is a most responsive group to changes in work incentives. The DEPUTY PRESIDENT —Order! The honourable senator's time has expired. Senator MESSNER(South Australia)(4.47) —I proudly support the matter of public importance brought forward by the Leader of the Opposition, Senator Chaney, today which reads as follows: The destructive effects on enterprise and employment of the Government's tax package. I address myself firstly to the question of employment because I suppose the most idiotic nonsense that stemmed from the mouth of Senator Maguire a little time ago could have come only from somebody who has the economic detachment he has and who has never taken a risk in his life in terms of business activity; nor does he know or understand the concerns of businessmen who are out there battling in the community. Let me discuss some of the obvious questions concerning employment that arise from the tax package. We know from the restaurateurs of Australia that 10,000 people are to be retrenched as a result of the introduction of the Government's tax package. We read today that it is expected that 15,000 jobs will be lost in the motor car industry as a result of the fringe benefits tax. We could go on with other matters, but I will turn to them later. Surely that is enough to put to rest the nonsense about which Senator Maguire spoke. I remind him that his State of South Australia will be devastatingly destroyed in terms of employment in the restaurant industry and particularly in the car industry as a result of the measures taken by the Government that he supports. The Adelaide News today quotes Mr John Spalvins, the Managing Director of the Adelaide Steamship Co. Ltd, as saying that next year his company will not be buying any new cars. How many more examples do honourable senators want me to cite? His company will be paying $15m in extra tax and he says he cannot afford this and consequently will stop buying cars. If that does not have a devastating effect upon employment in South Australia the honourable senator should tell me what will. A point that ought to be made right here and now is that 70 per cent of all fleet cars that are owned by companies in Australia fall into the Commodore or Falcon class. Only 7 per cent fall into what might be called the luxury car class. Therefore 70 per cent of the market in fleet sales comes from Australian manufactured vehicles, those which provide jobs in this country. Yet this Labor Government wants to destroy those jobs through the fringe benefits tax. We do not have to listen too hard to hear the stupidity that comes from Senator Maguire's mouth. Let us look at the organ grinder and not the monkey and turn to Senator Walsh, who is in part responsible for the tax policy introduced by this Labor Government and which has been clearly designed to destroy jobs in this country and the effects of which clearly he has no understanding whatsoever. I refer to the capital gains tax. The media has been led to believe that this somewhat mild tax will not have any devastating effect on the community. But of course, the opposite is true. Let us just make the first point: By deciding to introduce that capital gains tax on 19 September the Government is going to create a greater gulf between the rich and the poor, because those who already have assets acquired prior to 19 September will get to pay no capital gains tax, whereas those who are now to strive to build up their businesses and to employ more people will have to pay a capital gains tax and, consequently, they will find their assets reduced. That will create the greatest poverty trap in this country that has ever been invented. That arises from this Government's deliberate decision on 19 December to introduce a capital gains tax. This comes from the man that Senator Walsh defended here last night when he was defeated on the Superannuation Fund Investment Trust legislation. He sought to defend the action of the Prime Minister (Mr Hawke) when he was the President of the Australian Council of Trade Unions and just about destroyed this country with inflation during the seventies. We draw attention to the Prime Minister's promise before the 1983 election. When he was asked about whether or not there would be a capital gains tax, he said: . . . and here let me make one point so that even our opponents can understand it, and let me make it beyond all their powers of misrepresentation and distortion. There will be no new capital gains tax. That was the Prime Minister of Australia speaking. This package we are debating today denies that absolutely. The jobs that will be destroyed as a result of the introduction of the capital gains tax will inevitably be laid at the door of the previous destroyer of jobs while he was President of the ACTU in the seventies, who brought about the greatest inflation that this country has ever seen while he was administering the powers of the trade union movement; and of course, we shall see the same result again. Let us look at some of the fundamental fallacies of the Government's proposals. First, there are some very great misunderstandings amongst the minds of this Government about what it is trying to do. First and foremost, it is confused about speculative gains made by the turning over of assets rapidly, as against real gains that result from enterprise and effort generated by businesses and by people wanting to do their own things. The first are already covered by the income tax law. If a tax is introduced on the second, it will mean the destruction of entrepreneurial effort and fewer jobs for Australians. Government senators cannot see the distinction and, of course, they talk only in vague, generalised terms, in the way in which Senator Maguire might speak, about the impact of such decisions upon jobs. Of course they will have devastating effects right across the community. Let us look at the question of negative gearing. Senator Walsh has said here that negative gearing was the source of all evil, it being a great tax shelter which is allowed to grow while there is no capital gains tax. Let us examine the first point about negative gearing. First, the Government's assumption seems to be that there is no economic benefit which stems from that. But of course there is such benefit. There is money expended by people with incomes, which is tax deductible through interest, to build up assets in the way of buildings, homes, and so on, which generate jobs in the building industry. Secondly, those homes and buildings provide rentals or opportunities for people to have housing, or for people to rent them for business purposes, and so on. So it is a fundamental misunderstanding that these loonies in the Labor Party have that no economic benefit stems from that kind of activity, when of course there is. The same principle applies in respect of the rural community, as was pointed out clearly by my colleague, Senator Brownhill, today. But the Labor Party sees it as some kind of tax rort. That is absolute nonsense. But it is not only that illogicality that is at the core of the problem of the capital gains tax. This Labor Government has decided to outlaw, for tax purposes, the practice of negative gearing and, at the same time, it has introduced a capital gains tax to tax the gain which has been allowed to happen previously. The two are totally illogical. The fact is that Government members have argued in the past that there ought not to be a tax holiday for people who have exercised a tax shelter. They have introduced a capital gains tax, but they have retained the negative gearing abolition. It is absurd. It is about time they woke up to themselves. Let us turn to the fringe benefits tax. We have seen the job destructive potential of that in restaurants, in car sales and in numerous industries. One can also see quite clearly that this will amount to a second payroll tax. It has the same kind of job destroying impact as has payroll tax paid to State governments. It is an on-cost which will be built into the cost of all goods and services in this country, which can only drive up the costs of manufacture. What could be worse than increasing costs in this country at a time when the value of our dollar is falling, when inflation is rising, and when we shall be seeing jobs under threat as a result of import competition? That is precisely the situation which the Government is pursuing and which it is putting itself into by the introduction of its fringe benefits tax. It is not only sneaky by taxing employers in the way proposed, but it is outright dangerous in terms of its ultimate effect upon the economic opportunities of employees to find alternative jobs. Senator Maguire mentioned the kinds of jobs which are going to turn up somewhere in the community; but that, of course, is an absolute nonsense. All of these things represent a genuflexion at the altar of mythology put forward by the loonie Left of the Labor Party, who have absolutely no concept of the effects of what they are advocating. Let us just look at one or two other examples of what is included in the package. We hear of the wholesale sales tax, and the way in which it will be applied to goods such as refrigerators, and to consumer durables such as stoves and so on. One hundred and seventy million extra dollars a year will be coming from that source, while there will be some handouts at the lower end of the scales for things such as confectionery. It seems to me to be utterly destructive of what this Government claims to be on about-providing homes for young people who are seeking them-to be driving up the cost of important parts of people's homes such as consumer durables, refrigerators, stoves and other white goods, while at the same time claiming that it is doing something in the interests of tax equity. It is plainly a nonsense, and, clearly, it again demonstrates the illogicality of the Government's position. I return to the question of goodwill and capital gains tax, because it really comes down to this point about enterprise, which we in the Liberal Party want to make so clear to the Australian people. The fact is that if anybody starts up a small business today-be it a delicatessen operator, or a carpenter and joiner who gets his bag of tools and starts to build up a business, or whoever it might be-and works at that business for 20 or 30 years and accumulates a value in it called goodwill, which is the effort which he has put in over that period, and he sells that business and realises a profit which will then, in turn, become the basis of his superannuation for his retirement, that profit will be taxed at the full marginal rate of income tax. Consequently, as much as half of that amount will be paid to the Commonwealth. Twenty years of effort will go down the drain in tax to the Australian Taxation Office, administered by this Labor Government. That is what is so destructive about the Labor Government's package and why it is so bad. It destroys incentive and, what is more, destroys the opportunity for people to build up their businesses as they want to and consequently to build their lives for themselves. We believe that that is wrong. It is entirely contrary to the principles upon which this great nation has been built; that is, solid effort from individuals striving to do their own thing. These are the basic objections which we in the Liberal Party have to the Labor Government's tax package. It is destructive of not only enterprise but also employment and is likely to lead to very severe job losses over time. Senator Maguire —Humbug! Senator MESSNER —Senator Maguire says that that is rubbish. He knows that it is not rubbish. He knows that it is going to happen because he can see it happening already in the car industry in South Australia. He will know tomorrow that it is going to happen in the cosmetics industry and the restaurant industry as a result of his Government's efforts. I hope he is proud when he goes back to South Australia and starts to attend meetings of unemployed car industry workers. I look forward to debating the issues with him. Senator COONEY(Victoria)(5.01) —Today in the Senate we have heard a series of speeches predicated on the following proposition: The destructive effects on enterprise and employment of the Government's tax package. It seems that the way the Opposition has gone about this is simply to state that proposition again and again. If that sort of proposition is to be put forward-one takes it to be serious-one would hope that some hard evidence would be put forward-instead of saying that Senator Maguire is talking nonsense or of talking about the looney Left of the Australian Labor Party. That might be very great theatre, but where does it get us in debating a very serious issue in this community? When Senator Messner was debating what again we take to be a serious question-negative gearing-one would have hoped that he would have put the whole thing in perspective. He said that negative gearing will affect the availability of accommodation, that it is all bad and grim and that people will be on the streets. He asked what young people are going to do about places in which to live. Why did he not mention in that context the 4 per cent depreciation that this package allows on rental housing? That would have been the fair thing to say. One could imagine the following proposition being put: `You will not allow negative gearing but there is a 4 per cent depreciation. However, on balance, negative gearing predominates'. One could respect an argument like that; but simply to put one side of the argument and to leave out of the argument a very vital and essential point, namely, that there is a 4 per cent depreciation allowance on rental property, seems to be going about this debate in a very strange way, and certainly not a way which would help the people of Australia to decide how to accept the economic package. It also indicates to them that really the sorts of arguments being put against it are not the sorts of arguments that should receive credence. Senator Messner said that the car manufacturers are about to go out of business. There is no evidence of that. Let us look at an article in the Adelaide Advertiser-a newspaper from South Australia, which has a very significant part of its economy attached to the car industry. This is the State from which Senator Messner comes and the State in which Senator Messner says there will be disaster. I quote from the Advertiser of 21 September 1985: Toyota, Mitsubishi and the country's largest fleet manager all see a positive side to the fringe benefits tax the car industry fought hard to avoid. Mr Jack Johl, founder of J. M. J. Fleet Management in Melbourne, said that he did not forsee a heavy decline in the number of company cars on the roads after the tax comes into force in July. Both Toyota and Mitsubishi saw the potential for increased four-cylinder car sales. They reason that fleet owners would try to cut operating costs by moving down from the traditional six-cylinder cars. Senator Messner says: `No, they should not be four-cylinder cars; they should all be six-cylinder cars'. Should we argue here day after day whether there should be four-cylinder cars on the road or six-cylinder cars on the road? Are those the sorts of arguments we should enter into in this Senate? Are they the important issues? Or are the important issues in this debate whether the country is to go ahead or to lag behind? The matter brought on for debate today is predicated on the proposition that the economy is going to be a disaster, that there is gloom everywhere, that we are in all sorts of horrible situations and that we will never recover. One looks, therefore, at the Australian Financial Review to see how many companies are in trouble. Page 25 of today's edition of that journal contains the headline: `Profit turnaround for Electronic Enterprises'. Under that it says: With most of the group's reorganisation completed, Electronic Enterprises-formerly Agmac Ltd-reported a healthy 300 per cent growth in sales for the year ended June 30 . . . The next headline is: `McDonald Besser improves'. Under that it says: Restructuring of McDonald Besser Industries Ltd appears to have paid off, with the company reporting pre-tax profit almost doubling, to $1.36m in the year to June 30. Another headline is: `Interwest out of the red', under which it is stated: Perth property developer Interwest Ltd increased turnover fivefold, to $7.4m, in the latest financial year. If we go to this week's Bulletin we see on page 102 the headline: `All sorts are winning from the corporate profit surge'. The article says: As the sharemarket roared to a new peak last week, the final crop of profit reports emerged from June 30 balancing companies-a crop that David Haselhurst reports shows an across-the-board surge in net earnings. That is the sort of thing we have in the contemporary Press. How does that compare with this proposition: `The destructive effect on enterprise and employment of the government's tax package'? Why have these companies I have cited and the stock market not had the insight that the Opposition has apparently had? Why should this insight be confined to the Opposition at the Federal level of politics in this country? The fact is that the proposition put forward by the Opposition is no more than a statement which purports to prove itself but which, when put against the evidence available and the facts of the situation, is clearly wrong. Let us look at which companies are doing well and which are doing badly. Senator Chaney quoted with approval in his speech the comment of Robert Gottliebsen in the Business Review Weekly. This is what he had to say in the latest issue: BHP showed this week the benefits now coming to the company as a result of the foresight of Brian Loton and Jim McNeill in not following the herd. The fashionable strategy of the late seventies and early eighties was to borrow to the hilt to participate in the energy boom. The point that comes out of that is that those companies which are in trouble, if there are any, are in trouble through their own mismanagement rather than through government policy. It ill becomes anybody to blame the Government for what is really the fault of management and, in the case of rural industries, is the result of overseas problems. Senator Brownhill, in his excellent speech, mentioned rural industry but attributed the problems wrongly. This is what was said in the Australian Financial Review of 23 September 1985 under the headline: Rural Australia escapes tax net lightly': Despite complaints from rural lobby groups, farmers have little to fear from the Treasurer's tax package and in the long run the provisions might help young farmers enter the industry, stave off the destabilising competition of predatory urban investors and encourage vital soil conservation. That is so. Is the National Party to be devoted simply to the Collins Street and Pitt Street farmers, or is it, as Sarah Sargent suggests it ought to be, to be devoted to the young farmer who has grown up on his parents' farm and who looks for land so that he can carry on the great tradition, that great rural industry, that has made Australia so strong in the past? My submission is that the best thing to do is not to give the land to the Collins Street or Pitt Street farmers but to give it to the people who have been born and bred on the land, who know the land and who can properly use it. As Sarah Sargent points out, this tax package proposes to give the land to those who ought to have it. Just who does and who does not benefit from this tax package that has been so criticised by the Opposition without producing any evidence? Page 6 of the Australian Financial Review of Friday, 20 September has various articles on the tax revolution. One article is headed: `Windfalls for most taxpayers under new scheme, avoiders excepted'. The article stated: All individuals' taxes will fall by more than $100 a year under the tax reform package, with the exception of two groups . . . Which two groups? The article continues: . . . middle-income earners who are major tax avoiders and high-income earners who avoid taxes. That is the truth. The sorts of people who will be adversely affected by this package are those who have ripped off the system. Great play has been made here today about expenses for lunches, which will no longer be tax deductible. The proposition seems to be that unless people can go to lunch, they cannot do business. I noted the Macquarie Dictionary definition of enterprise. It referred to those who can undertake projects with courage and strength. They are the sorts of people that we need. According to the Opposition, the Australian with vision who can produce goods and services cannot do that without sitting down to discuss it at lunch. So, apparently, lunches are absolutely essential for those people who would otherwise be the captains of industry. It is too ridiculous to contemplate that people apparently cannot do business or carry on their enterprises for the greater Australia unless they sit down to a tax deductible lunch. We are not talking about lunches costing $10 to $20; the sorts of lunches we are talking about cost $200 to $250 a pop. If that is what people need to produce goods and services in Australia, heaven help us! They are not the sort of people, one might think, who would produce the better Australia-an Australia that is devoted to increasing employment. If people are unable to work, to produce or to be entrepreneurial without having a free lunch, the situation is desperate indeed. From all the evidence I have quoted here, this tax package will help Australia. It will put Australia even more firmly on the path that this Government set out on. It will continue to go along that path. Senator Walsh said that a 5 per cent growth rate has been predicted this year for Australia, compared with that of the other countries of the Organisation for Economic Co-operation and Development. The Asian Wall Street Journal of 2 October stated: The average rate of growth being projected for the nons-communist industrial world through the end of 1986 will not be sufficient to contribute effectively to solving major economic problems, the head of the Organisation for Economic Co-operation and Development warned. Jean Claude Pays told the European Parliament that the OECD is forecasting annual growth rates of about three per cent of the United States . . . that is a growth of three per cent for that economy which the Opposition looks at with such longing- over the next 12 to 18 months compared with 4 to 5 per cent for Japan and 2 to 3 per cent for Europe. Australia will have a growth rate of 5 per cent. How can this growth be consistent with the sort of proposition put forward by Senator Chaney today? How could he possibly have brought forward in a serious fashion his matter of public importance, given the fact that Australia has the most successful economy, and it is certainly among the most rapidly growing economies, in the world today? This growth has occurred under the Hawke Government which has been in power for two to three years. It has brought down a series of economic measures which will continue that growth. In the face of that evidence a bald assertion is made in the terms of the matter of public importance, namely: The destructive effects on enterprise and employment of the Government's tax package. It is just not good enough for honourable senators opposite to repeat those sorts of statements. It is said that when mud is thrown some of it sticks. When nonsense is thrown about, some of it sticks. In this case, some of the nonsense has stuck to the Opposition's argument. Senator VIGOR(South Australia)(5.16) —I move: That the Senate take note of the paper. The Primary Industry Bank of Australia was established primarily to increase the `availability of loan funds for purposes relating to primary production, being purposes that are commercially sound, to persons who are, or have a reasonable prospect of, successfully carrying on the business of primary production'. The Primary Industry Bank of Australia has perceived that a major requirement of primary producers in borrowing is for long term loans with variable repayment terms which take account of the fluctuations in income which are due to seasonal and market influences. It is on these terms that the PIBA has entered the market-place. It was established by the Government, also on the favourable basis of a secondary lender. It deals through prime lender banks and rural finance houses which take full responsibility for credit assessment and risk, and for repayment of both principal and interest. Thus the PIBA has only 14 borrowers, which considerably simplifies its loan administration and leaves its resources free to concentrate on developing an efficient and competitive funding base. It is also supported by the Commonwealth through funds lent to it at concessional interest rates. This is to enable it to make loans available to primary producer end-borrowers on somewhat more favourable terms than may otherwise be possible. This year the amount of these deposits by the Commonwealth decreased from $58.7m to $44.8m-that is, a 30 per cent decrease over last year. These deposits now represent only 6 per cent of total rural lendings by the Primary Industry Bank. These lendings are of the order of $729.8m. Last year they represented 8.5 per cent of total rural lendings, which amounted to $694.3m. Yet over the last year new rural lendings have declined from $127.2m last year to $35.5m this year-that is, a decrease of 72 per cent in new lendings. The Chairman of the Bank comments in the report that this decline is due to uncertain economic conditions and depressed commodity prices. Surely one of the prime purposes of the Primary Industry Bank of Australia is to provide finance to rural borrowers to ease the burden of these external variables beyond their control. In fact, the Primary Industry Bank fails to fulfil its obligations to primary producers to provide loans on more favourable terms. In many cases, rual producers have been able to refinance their PIBA borrowings through finance companies at more favourable rates. The PIBA charges top dollar interest rates, presumably because the PIBA charges a margin on top of the prime lending rate which allows it to cover its costs. If one were to ask dairy farmers, or dairy farmer organisations, what they think of the Primary Industry Bank the answer would be: `Shocking'. Dairy farmers, misled by the name `Primary Industry Bank' and by other prime lending banks, expected that they would receive concessional loans in this period of downturn in the industry. Instead they were shocked to find debt reconstruction is cheaper through finance companies. They are most disillusioned. Why should Commonwealth funds be withdrawn from the bank at this difficult period? Once again it appears that farmers are financing the growing costs of government. It is short sighted of the Government to withdraw its loan funds from the major exporting sector of the economy at a time when rural exporters are beset by international markets which are depressed as a result of dumping of subsidised products from other countries and at a time when other countries are supporting their primary export industry by subsidies and dumping at any price to earn valuable foreign exchange. The Primary Industry Bank of Australia has been highly successful both in its aim of providing long term funds for primary producers and in obtaining capital sources for these loans. Primary industries are traditionally recognised as low return industries, yet they account for 40 per cent of Australia's export earnings. Without their contribution to our balance of payments we would all be paying considerably more for all goods as our dollar declines in value. The DEPUTY PRESIDENT —Order! The honourable senator's time has expired. Senator WATSON(Tasmania)(5.21) —The annual report of the Primary Industry Bank of Australia for 1985 gives details of that bank's achievements, its future outlook and its financial statements. Deregulation and a more competitive environment have had a positive effect on that bank. This is reflected in an increase in its net profit of some $580,000 to $3.3m. However, I believe it is somewhat ironical that, although the bank was set up specifically to assist primary producers, today we find that, in some cases, the bank's interest rates are substantially higher than what rural producers can obtain from their own trading banks or other sources. I am aware that a number of borrowers in recent times have repaid their loans to the Primary Industry Bank and renegotiated them with their own trading banks at substantially lower interest rates. This situation exists in spite of financial assistance provided to the bank by the Commonwealth Government. I acknowledge the contribution that has been made by the National Farmers Federation in its appeal to the banking system to assist farmers in need. To the credit of the major trading banks, they have acknowledged the problems and have agreed to treat each case on its merits. I had hoped that the National Farmers Federation could apply the same sort of pressure to the Primary Industry Bank. The farming sector, of course, is one of Australia's most valuable resources. Export earnings are expected to reach something like $10.5 billion this year despite a great deal of unfair overseas competition from areas such as the European Economic Community through its common agricultural policy which is working so dramatically against Australia's interests. Spiralling farm and production costs are aggravating the problems of the man on the land. However, I believe that the Primary Industry Bank is providing an extra avenue of finance to people who may not have been able to acquire finance through other channels in the first place. Despite the problems that a number of borrowers are encountering at the moment when they suddenly find that their interests rates are at least 50 per cent higher than when they negotiated their rates, I still think the bank has a significant role to play as a specialist financial institution. On the other hand, I hope that it will continue to develop a range of facilities which are designed specifically to meet the needs of the rural sector in the future. I hope that the Government will take steps to increase its participation and its interest to enable interest rates to be reduced in the near future to alleviate the plight and indebtedness of so many rural producers in Australia at present. Senator BOSWELL(Queensland)(5.26) —The annual report of the Primary Industry Bank of Australia covers the bank's activities in its provision of long term loan funds to the rural sector. I note that the bank now has loans of over $1 billion to more than 11,000 primary producers. Most of these loans are long term loans between 12 and 20 years. It would be fair to say that the bank is succeeding in its objectives to make funds available to the rural sector for long term growth. I also note that the two main reasons loans are being sought from the Primary Industry Bank are for land acquisition and loan restructuring. Loan restructuring is particularly telling as it reflects the enormous problems currently being faced by the rural sector of Australia. The Bureau of Agricultural Economics estimates that the average farm business debt will be in excess of $50,000 this financial year. With the returns to farm capital now less than 2 per cent per annum the problems that farmers face in servicing this debt are enormous. Farm income this year is estimated to be only one-fifth of this debt. So it is clear that farm returns are down while farm costs and, in particular interest rates are up. It is interesting to note that interest rates have now become the farmers' main on-costs. Their main on-cost used to be fuel prices but it is now interest rates. Escalating interest rates are causing farmers many worries. The National Farmers Federation has estimated that interest rates now account for 7 per cent of farmers' total costs. It is clear that the Hawke Labor Government must accept responsibility for this unreasonable impost on the farmers of Australia. When the Australian dollar plummeted this year due to Labor mismanagement the Labor Government had to work out some way to prop up the dollar so that it did not completely fall off the face of Australia. The mechanism that this Government hit on was to order the Reserve Bank of Australia to tighten up the money supply so that money was scarce and interest rates were high. This allows foreign investors to get a very high return on their money and it evens up the flow of money in and out of Australia. Of course, interest rates were already under upward pressure as financial institutions struggled to finance the big deficits of this Labor Government which continue to grow. As a result interest rates have now gone through the roof. The small business person, the first home owner and the farmer have suffered and have had to bear the brunt of these rises. Interest rates have hit especially on two fronts: The farmer who has borrowed heavily to improve his land or acquire new land and, more importantly, the farmer who has borrowed to survive. I am referring now to the cane farmers of north Queensland. The effects of the high interest rates could have been shielded from farmers if the current Government had not broken its own policy platform when it abandoned the income equalisation deposit scheme. This scheme would have allowed the Primary Industry Bank to function as the Liberal-National Government intended it to function. The Primary Industry Bank was originally set up to take advantage of the IED scheme. In good years farmers had the right to deposit in the Primary Industry Bank and farmers who were not so fortunate in those years had the right to withdraw from that bank. The scheme allowed farmers to invest in the IED scheme in good times and to withdraw funds in bad times. This scheme, coupled with tax averaging, was a self-help scheme that did not cost the taxpayer a cent. It would have protected farmers from the current Government's inefficiency which has caused these disastrously high interest rates. However, because of the Australian Labor Party's blinkers which enable it to say that anyone involved in primary production is a tax cheat, this scheme was abolished. This is just another example of Labor's insensitivity to rural producers. Senator PETER RAE(Tasmania)(5.29) —In support of what Senator Boswell has said I wish to draw attention to the annual report of the Primary Industry Bank of Australia and the extraordinary and continuing nature of that bank's operations. That bank is still obtaining Commonwealth assistance. We find on page 6 of the report: This additional charge brought the effective interest rate on Commonwealth loans for the 1984-85 year to 7.9 per cent per annum. That is a very significant part of the bank's borrowing. There are other figures which show that the bank has made a modest profit but that it has done so by charging interest rates which are higher than almost any other in the market. That is certainly not what one would expect even for long term loans secured on rural property. For instance, as I understand it, under $100,000 attracts interest at 16 1/2 per cent and over $100,000 attracts interest at 19 per cent. Those are incredibly high interest rates for anybody in the rural sector to pay. At some stage I would like to hear the Minister for Finance (Senator Walsh) give us an answer as to why the Primary Industry Bank of Australia is not yet able to operate on a basis where the interest rates charged are a little closer to those prevailing with the normal trading banks of Australia. The other point I would like to raise is the question of superannuation. There does not appear to be any detail of any superannuation in the profit and loss account or in the explanatory notes. Because Commonwealth superannuation has been such a problem, we should get an explanation as to whether the Government is a party to that or not. If it is, what is the situation concerning reserves or employers' liability indebtedness? Question resolved in the affirmative. Senator COATES(Tasmania)(5.31) —I move: That the Senate take note of the paper. Firstly, I congratulate the Australian Industry Development Corporation on the promptness of its report. I wish that all authorities could get their reports out on time. But that is the end of the praise as far as I am concerned for this year's annual report of the AIDC. I was shocked and appalled when I heard that the AIDC had invested in a company called Hospital Corporation Australia Pty Ltd, a subsidiary of Hospital Corporation of America. This was done several months ago. A 35 per cent shareholding was obtained by the Australian Industry Development Corporation, which satisfied the Foreign Investment Review Board requirement for that foreign corporation to invest in Australia in the first place. No doubt the AIDC justifies its investment on the grounds of section 6 of its Act, which states: The functions of the Corporation are- to facilitate and encourage, and to facilitate participation by Australian residents and enterprises in, the establishment, development and advancement of Australian industries . . . This operation was not even a partial Australian industry until the AIDC bought a 35 per cent share. I do not think it can be justified on the grounds of supporting and protecting Australian industry because it was not an existing Australian industry. A side issue in relation to the fact that it was a Foreign Investment Review Board requirement is that there is no mention of this aspect in the annual report of the AIDC. It proudly mentions its acquisition under the heading of `Australianisation', but does not mention the fact that it was a requirement of the FIRB and, if the AIDC had not participated, the Hospital Corporation of America would have had to end its investment in Australia. So the Australian investment aspect of it appals me. I do not think it was an Australian industry until the AIDC participated. The more important aspect is that we have a Commonwealth statutory authority embarrassing the Government. It embarrasses me anyway that we have an Australian statutory authority investing in this sort of private hospital operation. It is bad enough having private hospitals at all without having profit-making private hospitals. It is bad enough having profit-making private hospitals without having them as foreign owned ones. The annual report of the AIDC talks about the well-developed and proven techniques of this international group, the Hospital Corporation of America. Most people would despise the proven techniques of this international group, which just siphons off the more profitable activities of public hospitals. The report states: . . . everything which improves the economics of the private hospital system will help to reduce or contain burgeoning health care costs and relieve pressures on government funds for hospitals. I would suggest that it tends to do just the opposite because it leaves the public hospital services to struggle even more. Neither the Minister for Health (Dr Blewett) nor the Department of Health was consulted about whether this was an appropriate investment or whether it was an appropriate thing for the Australian Government to be involved in. The Minister for Industry, Technology and Commerce (Senator Button), I understand, was not at all happy about this authority getting involved. Of course, no one is suggesting that the AIDC was acting contrary to the Act because it does act at arm's length from the Government and the Minister. It has to take into account a number of factors of government policy, such as the environment, industrial relations and so forth, but unfortunately not health policies. The other aspect that needs to be emphasised is that section 9 of the Act states: . . . the Corporation is not subject to direction by or on behalf of the Commonwealth Government. The AIDC should have used a little bit of common sense about embarrassment to the Government. I think it was an appalling and embarrassing investment for the AIDC to get involved in. The ACTING DEPUTY PRESIDENT(Senator Jessop) —Order! The honourable senator's time has expired. Debate (on motion by Senator Chaney) adjourned. Senator CHANEY(Western Australia-Leader of the Opposition)(5.35) —I move: That the Senate take note of the paper. This is an important paper which has been tabled. It is a paper which was tabled in the other place a day or so ago by the Prime Minister (Mr Hawke). It is an opinion by the Commonwealth Solicitor-General on the issues which have excited so much attention relating to the Australian Bicentennial Authority. It is an extraordinary document in the sense that it was wielded by the Prime Minister as a defence of his own position. In fact, the opinion shows the incompetence of the Prime Minister and his failure to behave in an appropriate way with respect to his responsibilities to the Authority in this particular matter. What we have is an opinion from the Solicitor-General which relates to the payment of approximately $488,000 which was made by the Authority to Dr Armstrong on his departure from the employment of the Authority. The conclusions of the Solicitor-General are that the legal obligation of the Authority to Dr Armstrong comprised superannuation, statutory leave and four months notice, amounting to $122,000. That is a very considerable difference from the figure of $488,000. Of course, it is a vindication of the doubts which have been cast over the way that this matter has been handled. I suppose the major political concern that we have about this matter is in fact the role of the Prime Minister and his failure to carry out his responsibilities in this area. Getting to the bottom of this matter has been very difficult. We did not start by getting detailed legal opinions from the Solicitor-General; we started by getting the minimum of information from Mr Hawke. But it is now quite clear that Mr Hawke, as the responsible Minister, was consulted by the Authority and that he was not a passive observer in this matter but indeed he was a prime mover. It was the Prime Minister who sought the removal of Dr Armstrong from his employment. The Prime Minister was provided with detailed information about the proposed terms on which Dr Armstrong would leave the Bicentennial Authority. It is those proposed terms which are now the subject of this opinion and it is those proposed terms which were known to Mr Hawke and his Department and about which Mr Hawke in fact did absolutely nothing. The involvement of the Prime Minister and his Department proceeds right through to the point where payment was made of this very large sum from the taxpayer, when it was reported that Mr John Utz referred the question of signing the cheque to the Prime Minister's Department and he was directed that he should proceed, that that was something that he should do. The issue which is squarely raised by this opinion, in a political sense, is the issue of the Prime Minister's role and his failure to act in a responsible way. To suggest that this is a matter on which he should not have been put on inquiry is to ignore the size of the sum and the unusual nature, certainly in government administration, of this transaction. It seems to me that virtually every Australian citizen would agree that for the Prime Minister to be a party to the making of a payment of this size without seeking detailed and proper advice, without querying what the precise legal position was and without seeing what the fair obligations to the taxpayer were, is beyond comprehension. We know from the evidence which has been dragged out of the Government that the Prime Minister's direction to the Authority was that it should be generous. Generosity is a very admirable quality in individuals. Generosity with one's property is particularly admirable. Generosity with taxpayers' funds has to be judged in quite a different light. I would have thought that most of the people of Australia, whose interests are supposedly looked after by the Prime Minister, would have preferred him to say that what was required in this matter was that there should be fair dealing with Dr Armstrong if, as the Prime Minister required, he was to be removed from his employment. What we have had, and what is conclusively demonstrated by this opinion, is a gross failure on the part of Mr Hawke to live up to his responsibilities. He has discredited himself in the way that he has dealt with this matter. He has allowed out information only when it was quite apparent that it was going to be dragged out, either through the agency of the Senate Estimates Committee or by the persistent questioning by the Opposition and the media who have taken an active interest in this matter. The fact is that the opinion stands as a condemnation of the Prime Minister. It is a matter which will require more extensive debate in this place, although the principal debate to date has taken place in the House of Representatives. The Prime Minister is responsible for his negligent conduct in this matter. It is a sad fact that an alert Prime Minister, a Prime Minister who was doing his duty, would have sought the legal opinion which he has now sought far too late. Senator VIGOR(South Australia)(5.43) —The opinion we have before us does not touch on a number of the important questions surrounding the Australian Bicentennial Authority. It has no hope of doing so. The questions given to the Solicitor-General by the Prime Minister (Mr Hawke) and his advisors were narrowly tailored. There was to be no investigation of the manner in which Dr Armstrong was dismissed. Not all the files were available, certainly not those of the Authority pertaining to the negotiation of the terms of the deed of settlement. On page 3 of the opinion the Solicitor-General says: Hence my answers to the questions are based upon documents provided to me. And only on those documents. The proper time for this sort of investigation was when the Prime Minister was weighing his options. No attempt to turn back the political tide will reverse the damage that has been done by the Prime Minister's precipitate rush into action. It is a sad irony that the Department of the Prime Minister and Cabinet could not prod the Prime Minister or his staff into providing it with information of vital relevance to these matters earlier. Staff have expressed their surprise at documents turning up up to a month after issue. The Department of the Prime Minister and Cabinet has its own problems. On 28 August Mr Reid asked what rights, if any, he had not to disclose anything to the Senate Estimates Committee. In a minute of the same day we find the following inaccurate assertion about the Senate Estimates committees: The Senate and its committees have full control and compulsive powers over witnesses who appear before them. At the start of last Friday's Estimates committee proceedings Senator Richardson pointed out that this was not true of Estimates committees. It seems inconceivable that a Department priding itself as a shepherd and refiner of information could stumble so badly under pressure. What checking mechanism went astray? Have others been misled by similar slips at other times? The whole Bicentennial Authority drama shows up a microcosm of the clash of uncomprehending cultures in our community. The world view and langauge of the participants are mutually exclusive. One has only to look at the statements of the Prime Minister, the evidence of Mr Reid and the evidence from the Department of the Prime Minister and Cabinet to see this. Similar problems are arising each day in our nation because we fail to foster proper communication between the various cultures and parts of our society. Our bureaucrats are well versed in maintaining order and keeping a tight grip on troublesome options. They are not encouraged to ask `Why?' or `Is there another way?'. Private enterprise has its own ethos and was represented by the Bicentennial Authority. The media has another form of language and goes searching for more and more leaks. We have politicians who tend to operate in the short term and do not necessarily understand the language of any of these groups of people. This leads to a real problem within our community. This is one of the problems we have to solve. It seems extremely important that the issue concerning the Bicentennial Authority is investigated in full. We do not know about the quality of the monitoring program of the Department of the Prime Minister and Cabinet and its predecessors in relation to the Bicentennial Authority. We do not know whether the talent on the Board of the Authority can be put to much better effect by better communication. Debate interrupted. The ACTING DEPUTY PRESIDENT(Senator Jessop) —Order! The time allotted for the discussion of Government papers has expired. Debate resumed from 18 September, on motion by Senator Peter Baume: That the Senate take note of the report. Senator GEORGES(Queensland)(5.47) —As the Joint Committee of Public Accounts is continuing its inquiry on matters which arose from this report, I move: That the resumption of the debate be made an Order of the Day for the next day of sitting. Question resolved in the affirmative. Motion (by Senator Ryan) agreed to: That consideration of Committee Reports pursuant to Sessional Order be not further proceeded with this day. Senator TATE(Tasmania)(5.48) —I present the twelfth report of 1985 of the Senate Standing Committee for the Scrutiny of Bills, concerning the Export Market Development Grants Amendment Bill 1985, the Foreign States Immunities Bill 1985, the Grain Legumes Levy Collection Bill 1985 and the Parliament (Powers, Privileges and Immunities) Bill 1985. I also lay on the table the Scrutiny of Bills Alert Digest. No. 11 dated 9 October, 1985. Ordered that the report be printed. Senator SIBRAA(New South Wales) —by leave-I wish to inform the Senate of the current inquiries being undertaken by the Joint Committee on Foreign Affairs and Defence. As the Senate will be aware, the Committee may receive references from either the Senate or the House of Representatives from the Ministers for Foreign Affairs and Defence and from its own deliberations. In the absence of the specific references, the Committee has resolved to conduct three discrete inquiries and, consistent with its resolution of appointment, has appointed three sub-committees to inquire and report to the Committee for subsequent tabling in both Houses when adopted by the Committee. The three broad areas for inquiry are: The management of national defence and security; Australia and the Philippines; and disarmament and arms control. The inquiry into the management of Australia's defence and national security is a logical development of earlier reports by the Committee, notably on threats to Australian security and the structure and capability of the Australian Defence Force. In particular this inquiry is expanding and developing themes outlined in the final chapters of the Committee's 1984 report: `The Australian Defence Force: Its Structure and Capabilities'. The Defence Sub-Committee's terms of reference are to investigate and report on the management of Australia's defence and national security, with particular reference to the determination, management and implementation of national security policies; the suitability of the existing central defence organisation for peace and war; and the interaction of civilian and military agencies, the bureaucracy, the Executive and the Parliament. The Committee aims to table its report on this reference by the end of 1986. The decision to conduct an inquiry on the Philippines is based on several considerations, including the importance of the Philippines to Australia by virtue of its geographical location in our region, its membership of the Association of South East Asian Nations, its important links with the United States and its troubled internal situation, which is inescapably a major focus of interest for a wide range of states, including Australia. In its 1984 report on Australia and ASEAN the Committee gave only brief consideration to the situation in the Philippines, noting that the range of possible outcomes made detailed speculation difficult. In view of the factors outlined above, the Committee has concluded that a more thorough examination is warranted. The Committee recognises that an inquiry will involve consideration of sensitive and controversial issues. The Committee considers that the regional importance of the Philippines and the high level of community interest which exists in Australia concerning the Philippines fully justify a comprehensive inquiry. In recent years the Committee has reported on regional affairs in its reports on Indo-China in 1981 and ASEAN in 1984. A report on the Philippines will maintain the Committee's interest in the countries of South East Asia, with which we share close and important relations. The Sub-Committee on the Philippines has terms of reference to investigate and report upon the situation in that country and its implications for Australia, with particular reference to the importance of the Philippines to regional stability and Australian interests; the current political and economic situation in the Philippines and likely future developments; the state of Philippine-Australian relations; and appropriate Australian policies towards the Philippines. Finally, the Committee's current inquiry into disarmament and arms control is nearing completion after almost two years of investigations. As we all recognise, this is an immensely complex and difficult area of fundamental importance to the future of humanity. In its projected two-volume report, the Committee is attempting to survey the issues, highlight the critical areas and underline the means by which Australia can make a substantive contribution. I will have more to say on this matter in the Senate when the report is tabled. Debate resumed. Senator SHORT(Victoria)(5.54) —In my remarks before the suspension of the sitting for lunch I commented on the Government's proposal to pay a higher level of bounty to producers of high technology machine tools than to producers of low technology machine tools. I said that the Opposition supported sensible and cost-effective policies to modernise machinery used in Australian industry and to have that machinery manufactured in Australia. Prima facie this differential bounty approach may have some appeal. As Senator Chaney has said, the Opposition is not opposing it. However, it raises several important considerations. It implies, firstly, that Australia should encourage domestic production of high technology machines, equipment and the like, rather than middle or lower order technology. Secondly, it implies that somehow or other the Government is in a position to pick those industries more likely than others to succeed; therefore, it should back those industries through special or selective treatment, which is what a differential bounty proposal means. I believe that this most important issue must be resolved in the determination of industry policy in the future. The issue is whether industry policy should be industry neutral or industry selective. Throughout the Australian community there are many differing views on that; differing views within the trade union movement, industry and employer associations and the political parties. I believe that there are many problems with selective industry policies, particularly if they are positive policies for, hopefully, growth industries, as distinct from policies whose main purpose is to support ailing industries. Those problems boil down to one main question: Whether the Government, by disturbing normal market forces, through such things as differential incentives, can produce a better result in terms of resource allocation than would occur if the Government had not been selective in the assistance it handed out. Senator Siddons earlier today mentioned the role of the Ministry of International Trade and Industry in the Japanese context in these areas. It is worth pointing out that MITI has not been selective in its assistance, by and large, over the years, nor has it been big in the task of attempting to pick winners. The role of MITI has been to co-ordinate and liaise rather than to direct. In terms of high and low technology in Australia, which do we need? Can we say now that we need high or low technology? Senator Siddons said that government policies need to have rifle shot accuracy in these areas. I would ask Senator Siddons whether he really believes that governments and bureaucrats can ever hope to achieve such accuracy. I do not believe that the private sector can, let alone people and governments removed from the private sector. We need also to ask ourselves whether we should be applying suitable technology rather than necessarily inventing or producing it. If we can do both, so much the better, but it may not be possible in all cases. We need to apply appropriate technology if we are to improve our international competitiveness, which must be our primary objective. I turn now to comment on the Bounty (Agricultural Tractors and Equipment) Bill. This Bill proposes the continuation of bounty assistance for Australian produced agricultural tractors until December 1992 and an extension of the bounty arrangements to original equipment parts and accessories for tractors. In two respects the Government's proposals go beyond the assistance recommended by the Industries Assistance Commission for this industry. Firstly, the IAC recommended that its bounty proposals should go to the end of December 1990 rather than the end of 1992. Secondly, the IAC recommended, in effect, the immediate removal of the temporary assistance that has applied to the industry over the past two years, whereas the Government, as I understand it, is proposing to phase down the assistance, including the recent temporary assistance from the present high levels over a two-year period. Senator Chaney has foreshadowed that the Opposition will move amendments to the Bill to bring it into line with the recommendations of the Industries Assistance Commission in these two respects. I stress again, as I did earlier in my remarks, that it would be totally incorrect-a total misinterpretation-to describe these amendments as being in any way anti the interests of the local industry. The agricultural tractor industry is one of the oldest still surviving manufacturing industries in Australia. It goes back to the early part of this century. It was one of the first industries to be considered by the then Tariff Board after its formation in 1921. The industry first received bounty assistance in 1922 and it has continued to receive such assistance in the intervening 63 years. It survived no less than 15 Tariff Board reports over the years and two additional reports by the IAC since that body replaced the Tariff Board in the early 1970s. The fortunes of this industry have fluctuated wildly throughout its history. In the past decade or so, however, its fortunes have trended downward. For at least 25 years prior to 1982 there were two major local producers of agricultural tractors-International Harvester Australia Ltd. and Chamberlain John Deere. There were and still are several small manufacturers of very large tractors which are covered by this Bill, but I will not deal with them today because they are a minor part of the total industry. International Harvester ceased production in 1982, leaving Chamberlain John Deere as the only major manufacturer. Chamberlain is owned 51 per cent by the Australian public and 49 per cent by Deere and Co. of the United States. Its production facility is located at Welshpool near Perth in Western Australia. Only 10 per cent of the Australian market today is met from local production. A decade ago that proportion was 20 per cent. Even in that part of the total market in which Chamberlain operates, the company holds less than 15 per cent of the market. Employment in the production and sale of locally made agricultural tractors has declined considerably over the past decade, from about 1,600 people in the mid-1970s to about 600 today. A large part of that employment reduction has been due to the closure of International Harvester in 1982. However, Chamberlain's employment has also almost halved in the past five years and the company has recently announced plans to retrench another 110 employees. Chamberlain has significantly reduced its capacity for tractor production in recent years and has increased its activities in other related areas of manufacture. To its credit it has also extensively rationalised its production facilities to improve its technical efficiency. But despite these changes, local agricultural tractor production has not been viable for many years. It has either produced losses or it has produced profits which represent a quite unsatisfactory return on assets. Although the long term bounty arrangements made in 1976 provided the industry with declining assistance that was not high in relation to some other protected industries, that long term assistance has been bolstered over the past two and a half years by assistance which has raised the total level of assistance to not far short of the equivalent of 50 per cent effective rate protection. The Government's recommendations basically perpetuate this high level of protection for the next year, phasing down over two years to a bounty of 25 per cent until the end of 1992, by which time the needs beyond 1992 will have been reviewed. The Opposition appreciates that the Government has been confronted with a difficult decision in this case. We have a declining industry occupying a minor share of the Australian market. The industry is unprofitable and has no real growth prospects. For 63 years now it has benefited from the munificence of Australian taxpayers who provide the bounty funds. Despite the taxpayers' largesse, the industry has not prospered for many years now and shows no real likelihood of doing so. It may not survive, even with continued assistance at the level being proposed by the Government. That level involves an estimated $8m this year and some $6m a year after the phase-down-in other words, a total bounty payment, virtually all of it to Chamberlain, of a further $45m approximately over the life of the Government's current proposals. There must be a very large question as to whether the continuing use of taxpayers' funds is justified. My personal view is that it is very difficult to justify this. The Opposition's official view is broadly in line with that, although we will not seek to reject the Government's proposals in their entirety. However, our amendments will have a twofold benefit for taxpayers without significant detriment to Chamberlain. Our amendments will restrict the payment of the bounty to the period ending 31 December 1990 instead of 31 December 1992 as proposed by the Government. The amendments also remove immediately the temporary assistance that the industry has been receiving over the past two and a half years and puts the industry on its long term footing-that is, its footing until the end of 1990 as from now rather than after a two-year phase down from its present unacceptably high level of assistance when the temporary measures are taken into account. The two Bills before us illustrate in quite different ways some of the key issues facing Australian industry. They also show some of the key issues facing government in its efforts to encourage the development of Australia's manufacturing sector. In the end, however, the issues boil down to two-how can Australian industry become more internationally competitive; and, secondly, how can Australian industry be encouraged to adapt to changing markets, technologies and consumer demands? In other words, I believe that what we are debating-and this is part of a wider debate-is how Australian industry can become more vital, more market oriented and more entrepreneurial. There are no easy answers to those questions, but there are some things that can be said. First, industry needs government to get off its back. How can industry flourish in Australia if it is to be assailed at all levels by an ever-increasing array of government taxes, charges and regulations? The Treasurer's recent tax package is a classic illustration of just what to do if one wants to inhibit industry and to discourage enterprise and effort. The Government's tax package is the most anti-business series of measures that any Australian government has introduced in a very long time. That was the subject of debate today on the matter of public importance. However, the tax package is merely part of a continuing process whereby the Hawke Labor Government has, for two and a half years now, insidiously promoted an anti-business environment in this country. No wonder business, particularly small business, is struggling. No wonder there has been virtually no dint made in Australia's tragic unemployment rate. No wonder interests rates are at their highest real level in living memory. No wonder more and more Australian companies are going off-shore and confidence in the Australian dollar has slumped to an all time low. The Government must get off the back of the business sector; it must review its dangerously anti-business mentality. The Government must also use its so-called special relationship with the unions to bring greater sanity into our wage fixing arrangements in Australia. If we do not get greater sanity and greater flexibility, we will continue to destroy jobs in Australia and create new jobs overseas. That is what this Government appears to want, but it is not what the Opposition wants. In condemning the Government for its anti-business approach I do not necessarily include the Minister for Industry, Technology and Commerce, Senator Button. I agree with much of what he says on industry development and restructuring. He has said publicly that he agrees with many of the things that we on this side of politics say about the need for greater flexibility in our wages and other arrangements and about the need to reduce labour costs. The problem seems to be that Senator Button cannot match his rhetoric with corresponding action on the Government's part. His rhetoric seems to have a nasty habit of getting rolled in Cabinet. I am not sure what the Opposition can do to assist him in this matter over the next couple of years until we win government, but we would be pleased to do whatever we can to assist. The ACTING DEPUTY PRESIDENT(Senator Jessop) —Order! The honourable senator's time has expired. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(6.11) —in reply-I am indebted to Senator Short for pulling together some of the strands in the debate-one strand silly, the other sensible. Perhaps I can deal with them one by one. First of all, if he wants to assist me I do not think he will do it by making speeches such as that. He said that I, the present Minister, agreed with many of the things that had been put by his side of politics. I think that is presumptuous in the extreme. I put it that the Opposition is starting to agree with what I have been saying for the last two and a half years as it gradually gets its act together. That is quite apparent if we look at the debate which has taken place on industry policy in this chamber over the last two and half years and on a wider variety of other matters. When the Opposition gets its act together on issues such as wage fixation, taxation and a whole range of other matters, perhaps the debate in the chamber will get better still. I genuinely compliment honourable senators on the contributions to the debate on the Bounty (Metal Working Machines and Robots) Bill 1985 and the Bounty (Agricultural Tractors and Equipment) Bill 1985. I will deal first of all with Senator Short's last little piece of rhetoric, which was a set of assertions rather than arguments. He accused this Government of being anti-business. He said that the tax package was anti-business. I suppose he justifies that by the Government's assault in the tax package on fringe benefits, because that is the burden of Question Time here from the Opposition-concern about the removal of entertainment deductions and things of that kind. The very important things about the tax package which Senator Short chose to ignore are the simple facts that this Government, in the tax package, has dealt with two issues which the present Opposition talked about for 27 out of the last 30 years in government and did nothing about; that is, the double taxation of dividends, the importance of imputation and the importance of dealing with the situation where funds in this country were being siphoned off because of all sorts of distortions in the tax system, into Surfers Paradise flats and things of that kind-into the property market and not into industry-and, of course, the very important question of the marginal taxation rates. Those are the two important elements which will be of long term benefit to industry in this country. I do not have the particular quotation in front of me but, I think on 19 September in an editorial in the Australian Financial Review, the point was simply made about the tax package that for the first time in many years the stock exchange will become the most important vehicle for marshalling equity capital in this country. It went on to say that the capital gains tax which had been announced by the Government removed a tremendously important distortion in the taxation system which had been detrimental to industry for a long time. Senator Short cannot have it every conceivable way. The sooner the Opposition learns that under its new leader, the better. It cannot have free lunches and all these things that it wants, which are apparent from the way it asks questions here in Question Time about the taxation regime announced by the Government, and it cannot do these things, which are very important to industry, at the same time. It cannot have all those things at once. I find it extraordinary that the Opposition should come in here and talk about this Government making very little dint in unemployment. My God, look at who created it in 1981 and 1982 because of the total failure of a wages policy, apart from anything else. Those are some of the issues which I think the Opposition seriously has to address. It should not go on with this rhetoric about the Government's anti-business stance. On the other hand, I think Senator Short made some very serious points about industry policy, which I know has been a matter of interest and concern to him for some time. He did that by asking a series of rhetorical questions which, at the end, he answered by saying that there is no easy answer to them. The essential question was: `How can we make industry more competitive?'. As Senator Short said, there is no easy answer; there is a complex of answers and a complex of policies which are relevant to answering that basic question. On one particular aspect Senator Short joined issue with Senator Siddons on something that had been said by him. Senator Short asked these sorts of rhetorical questions: Can we say we need low or high technology industries? Can governments or bureaucrats achieve such accuracy? Can the private sector even achieve such accuracy? Should we be applying or producing better technology? The last question was asked relative to the bounty on machine tools. If we look at the total assistance package in respect of the computer industry, robotics, machine tools and so on, the answer of the Government is quite clear: We should be both applying and producing better technology. We do not see them as being in the alternative. Senator Short —I did not say that. Senator BUTTON —That is what the honourable senator said. Senator Short —No, I did not. Senator BUTTON —I am sorry, but that was the rhetorical question the honourable senator asked. The answer is that we should be doing both. That is why minimum rates of duty have been brought in in respect of all those pieces of equipment which I mentioned which are central to any industry regeneration in this country. That is why a bounty was recommended and prescribed in respect of these industries, and indeed extended to exports. It is in these areas that we have to support our industries and we have to do it on a basis which will not have adverse downstream effects. Senator Short also took Senator Siddons to task on that series of rhetorical questions about so-called picking winners. The picking winners debate in Australian industry policy is extraordinary, confused and very difficult. I contribute to that. I find it a very difficult question and I do not think any of us-I can only speak for myself-have all the answers on that issue. There are two diametrically opposed points of view. Senator Short says that we should not pick winners. I particularly quote from his speech at the Liberal Party Conference earlier this year, when he said: Who would do the targeting? Inevitably governments and bureaucrats. But how can these people pick particular industry winners better than the market place? They cannot, as history has proved time and time again. That is a good statement of a particular position on this issue. But he went on in the next paragraph to say: There can be very little room any longer for policies which merely serve to prop up ailing industries with doubtful long term prospects. If I might say so, that is a straight transposition into a winner picking exercise- Senator Short —No. Senator BUTTON —Yes, because who makes the judgment about that? It is exactly the same people-the bureaucrats, the sorts of people the honourable senator talked about before. Which are the ailing industries? Who makes that judgment? Bureaucrats do. Later, in the same speech, the honourable senator again addressed that question but in a slightly different form. Perhaps I do not need to go through that now. The question of picking winners is very difficult. Senator Puplick gave us a little lecture last night about the evils of picking winners, but five minutes earlier he referred to important reports by the Australian Science and Technology Council, on machine tools and robots; I forget the other matter, but both ASTEC reports were on the same general subject matter. Those reports advocated special investment allowances and a number of industry policy remedies to encourage the use of these tools in Australian industry. Senator Puplick chastised the Government. What a pity it was, he said, that the Government did not see fit to act on the ASTEC suggestions. Five minutes later he was giving us a lecture about the evils of picking winners in terms of industry policy. I am not attacking Senator Puplick about that. Everyone who talks about this issue does the same thing, including me. I am just saying that it is a very difficult area, and one in which any of us should be very careful about being too prescriptive and too ideological. I am not talking about being politically ideological but being ideological in terms of industry policy on these matters. Everywhere that one hears people talking about this issue there are very great inconsistencies. Senator Siddons displays much greater clarity of mind on the issue than the rest of us. He is quite sure that we should pick winners, and he goes on to say why. Senator Lewis —Does he think Siddons Industries is a winner? Senator BUTTON —Of course it is a winner-look at its recent performance-and probably for many of the reasons that Senator Siddons advocated in terms of particular policy prescriptions. It is important for me to refer to what Senator Siddons had to say. He began by talking about the Ministry of International Trade and Industry in Japan. MITI is the great maker of international industry policy dreams. It is said to have been immensely successful. It is said to be the arch winner picker of the world; it is the one that picks all the winners. If one talks to people in MITI about it, one finds that they have a little less enthusiasm for their success than probably even Senator Siddons does. Senator Siddons —The policy is to play it down. Senator BUTTON —I know; but let the honourable senator ask people in MITI whether they have ever made any mistakes about picking winners. They will say: `Yes, we have made a few mistakes. We told Honda that they should not build motor cars. We are inclined to concede now that that may have been a mistake. We also thought that we had persuaded Sanyo not to go into consumer electronics. We now concede that that might have been a mistake'. They have a list of those sorts of things. Senator Siddons —There inevitably will be mistakes. Senator BUTTON —Of course there will be mistakes. All sorts of things are said about MITI-that it allocates vast dollops of money all over the place to support and encourage industries, and so on. I do not think that that is correct at all. The crucial thing about MITI is its success as a co-ordinating department. One of the great successes of Japanese industry has been its flexibility and the attention which the financial system and the banks have given to supporting Japanese industry. It is in that context, of course, that the steps taken by this Government to deregulate our banking system and the financial sector will be of very great benefit to industry in the longer term, because much more competitive packages will be available to industry than we have ever had in this country previously. That is something that the Japanese banks have been providing for a very long time. Senator Siddons made a very positive point about the importance of co-ordination between Government and industry. I agree with that point entirely. He would describe the Industries Assistance Commission as being confrontationist. I think that the effects of the IAC's work over a long period have produced that environment. It is sometimes an unfair characterisation-understandably, perhaps-of the IAC's role. It is very important to consider what that role is. Fundamentally, it is, first, to expose to public scrutiny the different levels of assistance, inputs and so on given to various industries, in the interests of public examination of those matters. Secondly, I think that a very important part of the IAC's role is to look at the question of overall resource allocation across the broad spectrum of productive activity in Australia. They are very important matters. It may be that the way in which the Commission has interpreted that role has led to perceptions of a confrontationist position-which I fully understand-but I do not think that one can dismiss the IAC's role entirely. However, Senator Siddons made a very important point about the need to co-ordinate industry and government activities and, of course, to involve the work force in that process. He has been a very strong advocate of industrial democracy. I do not necessarily agree with Senator Siddons's details of the methods by which he would arrive at these sorts of solutions, but the idea that the work force has a stake and a share in the industry and should be part of the consultative process in respect of an industry, is very important indeed. One of the great tragedies of the Australian industrial relations scene, which has been detrimental to industry, is that for many years employers-not employers such as Senator Siddons was, but others-never felt it necessary to involve unions and employees in discussions about the importance of profits in industry. They never felt it necessary to do that at all. Why did they need to do so? It was said that it was not the business of the employees to know what profits are for and what they are spent on, or their business to understand the functions of profits in industry. I know; I worked in this area for a long time. That was always said. That has been a tragedy for this country, because the legacy of that sort of thing has been immensely damaging. Only recently are some of these things starting to be understood. We grew up in an industrial relations climate in which people saw that, say, their company made $60m profit and they thought: `We ought to have a bit of that too; we work here'. That is a perfectly understandable reaction. The function of profits in an enterprise was not considered a subject which should be seriously addressed with unions and the work force. I say to Senator Siddons that we as a government, because we happen to believe in the importance of the discussion of these matters and in co-ordination in relation to them, have established a series of industry councils, in various industries, which I think have been very helpful. One makes slow progress in these sorts of bodies-slow progress in bringing about attitudinal changes and understandings of the kind which Senator Siddons and I, I believe, would both regard as being important. But each of those industry councils has been working for a year now preparing what they call a stocktake of their industry. That involves looking at the strengths and weaknesses in a particular industry area. The sorts of things which are being identified are very interesting, right across the spectrum. Union misunderstandings about certain things, bad management, lack of marketing skills, and those sorts of things, which are all pretty accurate and which are being identified in that consultative process. It is painstaking; it is difficult; but in the important task of bringing about attitudinal change from the old confrontationist approach, which screwed up industry in this country, that process is tremendously important. I want to give Senator Siddons one or two examples of this process at work. Twelve months ago the Australian shipbuilding industry was legitimately written off by most not particularly well informed commentators. Nearly every major shipbuilding yard in that industry today is almost in the position of turning away work. The industry has a lot of work to do-partly because of Government policy; we made some concessions to the industry in various ways, such as extending the bounty for exports and knocking off the iniquitous 2 per cent revenue duty on imports for that industry, and a number of things. We did that conditionally on an understanding about the future of the industry with the shipbuilders and unions. All I can say is that today the sorts of demarcation disputes which bedevilled that industry are very largely being resolved-it is not over yet; we cannot claim any degree of perfection-and employment in the industry has grown by 5 per cent in the last six months and will continue to grow. The sort of thing I am putting is possible if the right approaches are made. I am saying that I share many of Senator Siddons's views. The difficulty is to express that in concrete terms and to bring about the necessary incentives to change attitudes and so on in relation to these matters. Much the same sort of comment could be made about the steel industry. There are all sorts of problems associated with particular industries, but much the same sort of general observation could be made about the steel industry as a result of the changes which have been brought about by this Government. If I might say so, having agreed with many of Senator Siddons's assumptions and sharing many of them, I really think we have to be a little less simplistic about the success of the Japanese industrial experience. The first thing I remind him of is that Japan is a factory. It is a manufacturing island-the most successful factory in the world. It has no other resources. It has not been deluded over many years into believing that its future may lie in some other Eldorado such as the last Government promised us with the mineral booms and so on. It is not deluded into believing that its future might lie on the sheep's back or things of that kind. It has never deluded itself about things like that over the last 100 years. Japan is a manufacturing island and is totally dependent on a manufacturing culture, something we have never had here. I think it is not quite correct to say that Japan has adopted a strategy of treating its workers differently and involving them in decision making. There is a lot of truth in that, but there are two views about that. I commend to Senator Siddons a not uncritical reading of the book Japan in the Passing Lane about the Toyota manufacturing company. I commend to him a reading of a book by an Australian resident in Japan, whose name I forget, entitled Bonsais to Levis. They are very important books. There is a whole range of them about Japanese manufacturing culture. The honourable senator has been to these establishments in Japan, as I have. I do not think we will ever reach the stage in Australia of people doing 5BX during tea breaks rather than having a cup of tea. I do not think it is possible to reach that stage because of very profound cultural differences. Of course, the Americans have locked themselves into a vast industry of literature in trying to work out where they went wrong and the Japanese went right. In the United States there are these extraordinary developments such as quality control circles. Nothing is done about them in the United States, they are taken to Japan, Japan develops them to a perfect art form and now they are going back to America and coming to Australia. All these things are happening and the American literature is full of discussion about the Japanese success. I think I can summarise all that literature by saying that a great variety of reasons, in terms of the general industrial environment, the financial environment, but, very importantly, the cultural environment, has led to much of the success of Japanese industry. Senator Siddons —Taiwan could equally be called a manufacturing island. It has not had much success. Senator BUTTON —That is a topic I would sooner not embark on because I am not xenophobic about these things, but in terms of industry policy I might be if I started talking on that subject. Interestingly enough, I think the Japanese word which best describes the success of its industry policy is `huan' which means a notion of harmony in industrial relations, in enterprise success and so on, which I think has been immensely important to Japan. I share Senator Siddons's views about some of these issues. I am not yet in my mind persuaded that one should go to the winner-picking strategy that he advocates with the same precision that he advocates. I think it very important to think of industry policy, not so much in terms of picking winners in products and firms but in terms of what one might call the strategic approach. The strategic approach to industry policy is the one which a country like Sweden has. Sweden is not a country which targets or picks winners. Sweden's industry policy is to determine which major areas of industry it is going to be in and to make sure that the infrastructure for those things, the research base and all the things which government properly provides as ancillary to and supportive of industry are set up not only for 1985 but for 1995 as well. Senator Siddons —If we could do that in Australia it would be a start, wouldn't it? Senator BUTTON —I agree. There is a lot to be said for that view. If I might say so with respect to honourable senators who have spoken, I am putting only another confused view about picking winners. I regard every view that has been put on this topic as being fairly confused and myself as being no exception to that process, but I think it is an important issue in the debate which has taken place and one which has to be addressed. Senator Chaney said much the same as Senator Short. At some stage he addressed all the wider issues which we often talk about here and attacked the accord mark 2 as a shocking burden on industry. It is easy to do that. The alternatives are horrendous to comprehend. He gave a speech which I think was based on a Press release which he put out a week or so ago after Rank Industries Pty Ltd in Sydney collapsed and which one journalist unkindly described to me as Friday's bubble and squeak. I think it was, because in that release, after initially saying that the Rank company had collapsed because of inadequacy in the dumping laws and having found that that was not so, he suggested a number of other reasons why it had collapsed. All those reasons have some legitimacy about them. If we lived in a perfect world we would have no State government charges impacting on industry and no Commonwealth Government charges. We would have lower wages. We would produce a whole lot more goods and have nobody to sell them to. I do not think it is necessary to deal with many of the things to which Senator Chaney referred because we could go on for the life of this Parliament, and the next I suppose, debating the validity of the Government's approach to wage fixing policies and so on and it is not a matter I want to pursue here at great length. As I understand it, honourable senators are generally supporting the legislation in relation to the machine tool industry with some criticisms or rhetorical questions. I come back to the tractor bounty legislation and to what Senator Short said. I have a lot of sympathy with his view. It is a view which would not however be put if we were talking about a tariff rather than a bounty. I think that is probably true. There are two basic means of traditional industry assistance in Australia-the tariff and the bounty. I am not criticising the honourable senator; I have some sympathy with the view. He asked: Because Chamberlain John Deere Pty Ltd has been assisted by a bounty for 63 years, why should the taxpayers' money continue to be spent on this industry which has not performed particularly well? Had it been a tariff I do not think he would have addressed it in quite the same way. I think that some distinction can be drawn there. We had some difficulty in this package in resolving the questions which have ultimately been resolved in the legislation in its present form. We were very conscious that Chamberlain John Deere was making some changes to its company structures. For that reason, we extended the higher level of bounty for the next two years. In extending the bounty at the other end of the scale to 1992 instead of 1990, as was recommended by the Industries Assistance Commission, we were again concerned about questions of continuity in relation to this company's operations. I say to honourable senators that I would not have agreed to this proposal at all if it had not been for the fact that this company is the only significant manufacturer of tractors in this country. I do not think that I would approve a proposal for any other industry in similar circumstances in the way that we have done here. I think that is important. We made a judgment on it; we may well be wrong. All that Opposition senators are saying is: `We are a bit critical of your judgment. We do not dislike Chamberlain John Deere'. They cannot say that they dislike Chamberlain John Deere. One of the difficulties in making any speeches on industrial policy is that one cannot say things like that. It was just a matter of judgment about what we should do, and it may be that we were wrong. I think that we were right. The ACTING DEPUTY PRESIDENT(Senator Jessop) —Order! The Minister's time has expired. Question resolved in the affirmative. Bills read a second time. The Bills. Senator CHANEY(Western Australia-Leader of the Opposition)(6.42) —by leave-In relation to the Bounty (Agricultural Tractors and Equipment) Bill, I move: (1) Clause 4, sub-clause (1), definition of `terminating day', leave out the definition, insert the following definition: ` ``terminating day'' means 31 December 1990 or such later day, not being a day later than 30 June 1991, as is fixed by the Minister by a notice published in the Gazette before 31 December 1990;'. (2) Clause 12, sub-clause (1), leave out paragraphs (a), (b) and (c), insert: `an amount equal to 25 per cent of the value added to the tractor by the manufacturer.'. (3) Clause 12, sub-clause (2), leave out paragraphs (a), (b) and (c), insert: `an amount equal to 25 per cent of the value added to the cab by the manufacturer.'. All of the amendments relate to points which were raised in the second reading debate. The first amendment refers specifically to the period for which the bounty is payable. The effect of the amendment is to reduce the period of the bounty from now to 1992 from now to 1990; in other words, it will reduce the period by two years. The second amendment relates to the imposition of a uniform bounty of 25 per cent of the value added by the manufacturers for the whole of that period, as against the Government's proposal, to allow a higher rate of bounty for the first two years. The third amendment simply relates to the value added to the cab by the manufacturer. Essentially, the Opposition is seeking to reduce the period of assistance granted by way of bounty under this legislation and to reduce the bounty to 25 per cent for the whole of the period of the bounty scheme. I think that I should clear up a couple of points which were raised in the second reading debate by Senator Siddons on behalf of the Australian Democrats. He certainly spoke in terms which suggested that we were opposing the extension of any assistance to Chamberlain John Deere Pty Ltd. It should be quite clear that the Opposition is proposing that the company should receive assistance in the form of the 25 per cent bounty which was recommended by the Industries Assistance Commission. We are seeking a reduction only in the high level of bounty which is proposed for the current two-year period. There also seemed to be some slight misunderstanding in what Senator Siddons had to say about tractor manufacturing in Australia. In fact, large tractors are manufactured by a number of manufacturers who, to this point, have not been eligible for bounty in most cases. So there is a sector of the industry which is not owned by Chamberlain John Deere and which is currently producing tractors and is producing them profitably. The basic decision and judgment which had to be made by the Opposition were reasonably well summarised by the Minister for Industry, Technology and Commerce (Senator Button) in his remarks at the end of the second reading debate. Of course, we have not had access to the total information which has been made available to the Government, but given the losses of recent years, it is not at all clear to the Opposition that after the next two years the tractor manufacturing operation at Chamberlain John Deere will be very different from what it is now. It is not clear that under the lower level of bounty it will be in any sense a more guaranteed profitable operation than it is now. In the absence of that certainty and on the basis of the history of this matter and the examination that has been undertaken by the Commission, it is the view of the Opposition that it would be preferable not to grant the further extension of assistance which the Government is proferring in this legislation. I do not wish to pursue the matter further than that. I also refer very briefly to some comments which were made by the Minister in his reply. It is all very easy to refer to the need for co-operation in industry. That is a matter on which there is a great deal of common ground; indeed, there is total agreement on it in this chamber. But substantial problems are faced by manufacturing industry which are directly affected by governments, both State and Federal. For example, State governments have a very significant influence on the cost structure of manufacturing industry and, in particular, on labour on-costs through the combination of such things as payroll tax and workers compensation arrangements. I recall discussions with representatives of Chamberlain John Deere in which they referred to the very substantial imposts on the company and pointed out that in the absence of some of those imposts they would be able to avoid the need for taxpayer subsidy. The Commonwealth also has a very substantial influence on the costs which are loaded onto manufacturing industry. No doubt Senator Button would have heard on the news this morning-it was reported in a number of places-that a recent survey showed that the cost of employment to manufacturing in Australia is very high, compared with our competitors and certainly compared with the United States of America. That is a matter which goes directly to the competitiveness of Australian industry. It is very easy for the Minister to say: `If we worried about that too much, there would be no one to buy the goods which are produced'. The fact of the matter is that the policies of this Government have a singificant influence on some of the elements of costs which afflict manufacturing industry in Australia. The Minister spoke of my reference to the prices and incomes accord mark 2. In that accord we had the agreement of the Government to forgo its commitment, made as recently as in the last Budget, to argue for the discounting of the consumer price index increases which were caused by the devaluation of the dollar. In the accord mark 2, that Budget commitment was varied. The Government stepped back from it and postponed to next year any argument in favour of discounting. The Government is currently supporting that viewpoint before the Australian Conciliation and Arbitration Commission. It is arguing directly in favour of additional wage costs for Australian employers, including companies such as Chamberlain John Deere which are finding competition very difficult. In the same accord mark 2, we find an agreement between the Government and the trade union movement that the problem of on-costs should be further compounded by putting additional obligations on employers with respect to superannuation as a trade-off in the productivity round. Under the terms of that accord an additional three per cent is to be added onto wage costs next year. It is simply not good enough for Senator Button to say that it is not necessary to deal with these matters. They are a very important part of the problems which are faced by manufacturing industry in this country. It is very important to note that the Government supports a centralised wage fixing system which makes it very difficult for wage arrangements in particular industries to reflect the competitive position those industries face and the profitability they are able to achieve. I think these matters are as fundamental to the future of manufacturing industry in this country as are the equally important matters on which there is such widespread agreement. I can understand the Minister preferring not to deal with those matters. I simply say to him that, in the long term, I do not believe Australia can avoid facing up to some of those important structural difficulties which afflict our industry and make it more difficult for it to be competitive. The sort of co-operation in the work place which has been argued for by Senator Siddons and by others in this debate and adopted by the Minister is a co-operation which has to extend to facing up to the economic realities which confront particular industries, as well as a co-operation in achieving the common objective of producing high quality goods. It is also a common objective to survive in a world which is very competitive and where that competition cannot be avoided. I have moved these amendments on behalf of the Opposition. It is the view of the Opposition that the Government has not made out its case for going beyond the recommended level of assistance which was put forward by the Industries Assistance Commission. We do not believe that, with the knowledge that is available to us, we can support that proposition. Accordingly, we argue in favour of our amendments and we urge the Committee to adopt them. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(6.52) —The Government does not accept the amendments moved by the Opposition. I indicated why earlier. I do not have any hostility to the amendments which have been moved; I cannot think of what else I would have done had I been in opposition. But, as I have said, we had to make a decision about this matter. We believe it important that the industry be given assistance beyound 1990 so that it will be able to plan a little further into the future with a necessary degree of confidence. We also think that the long term rate of bounty proposed by the Industries Assistance Commission is correct. In the next couple of years, when this industry is getting over some very important structural and investment problems it will benefit from the additional bounty level in that period. For those sorts of reasons we do not accept the amendments which have been moved. Senator Chaney asked the rhetorical question-I think it was a fair enough question-whether we can be certain that in two years time this industry will be in good shape. Like everything else, of course, it depends on a wide range of issues. I think we can be certain if it rains a lot and the Australian dollar stays much as it is at present. If the Australian dollar appreciates a lot and there is a drought I think we can be quite sure that the company concerned will be in trouble. There are a range of factors which affect that. I do not wish to be dismissive of the importance of the other matters raised by Senator Chaney. I am fully aware of the very substantial and long term structural problems that this country faces. However, I think it is fair to recognise that Australia will not be a low wage country under any government. We will have to arrive at a competitive situation in that understanding. Many of the most significant manufacturing countries, including Japan, are not low wage countries. They are countries which, by a combination of a variety of policies, produce many more competitive industries than we have. Of course, the question of costs is important in that broad spectrum of issues. I do not think it is correct to say that Australians a high wage country compared with the United States of America across the board. In individual industries where I have have looked at figures that is simply not true. I am talking about productive industries as distinct from the broad level of wages across the United States, in which case this situation might be much truer than in respect of particular industries. In chastising the Government about these things I think it is important to remember two points: Firstly, earlier in 1985, when we were debating this legislation, real unit labour costs in this country were lower than they had been in any period of our history since 1968; that is to say, real unit labour costs have reverted to that level. Secondly, I think it is important to remember that the profit share of Australian industry is at its highest, certainly since the early 1970s. Those are important factors which have to be remembered in terms of commenting on the Government's attitude to industry and business and the success or otherwise of government policies. It is not correct, as Senator Chaney said, that the Government broke a commitment in the last Budget. I invite Senator Chaney to read the Budget Statements again. There was no such commitment in the last Budget. There was a commitment in respect of taking into account the effects of the devaluation in the wages system. There was no commitment about devaluation in the September case. If Senator Chaney reads the Budget Statement again he will find that that is quite explicit. He can ask me a question about it tomorrow at Question Time if I am wrong. He should have a look at what the Budget Statement said. What the Government has done is quite consistent with what is in the Budget Statement and there is no breaking of a commitment. A number of other issues were raised in the course of Senator Chaney's remarks, many of which I agree with. He raised the question of workers compensation on-costs, payroll tax on-costs, and so on. I commend to the New South Wales Government and other governments the steps which have been taken by the Victorian Government in relation to workers compensation. I mention that these steps have been vigorously opposed by the Liberal Party of Australia in Victoria on behalf of the insurance industry. Nonetheless, they are sensible steps which have been well received by industry in Victoria. They have reduced considerably the premiums which will be paid by industry in respect of workers compensation. I believe that the South Australian Government is following that course and I hope that other State governments will do so. So there are a number of things which are important in that regard. The Government does not accept the amendments. We commend the Bills in their original form. Senator CHANEY(Western Australia-Leader of the Opposition)(6.57) —I simply wish to make a comment with respect to one of the last points made by the Leader of the Government in the Senate (Senator Button). He said that, if I read the last Budget, I would see quite clearly that the words used are equivocal. But when the matter was pursued post-Budget assurances were given, both in this place and in the House of Representatives, that what was being sought by the Government was a full discounting for the costs of giving rises. The explanation given by the Minister for Industry, Technology and Commerce and his colleagues was that that was what those words meant and the weasel-words that were used in the Budget were clearly explained to mean that. I think the Minister is simply gilding the lily in this debate and misleading this chamber in a quite obvious way. Amendments negatived. Bills agreed to. Bills reported without amendment; report adopted. Bills (on motion by Senator Button) read a third time. The PRESIDENT —Order! It being 7 p.m., under sessional order, I put the question: That the Senate do now adjourn. Senator MISSEN(Victoria)(7.00) —Tonight I wish to draw attention to an article which appeared today in the Australian newspaper. That article, which was written by Alan Fewster, is headed `Government bows on code for South Africa'. I wish to make it clear that what I read in that article is very frightening and disturbing. Having followed this matter very closely over a number of years, I am concerned that we should gain knowledge of this matter by the indirect method of obtaining statements from the Press that the Government has apparently bowed to pressure on this subject. I remind the Senate that some months ago the Minister for Foreign Affairs (Mr Hayden) was very quick to trumpet the success of the Government in putting forward a code of conduct which we had not had covering Australian companies and which we should have had for many years. At that stage he made it very clear that the Government was firm in its intention to carry on this undertaking. It should also be made clear that he was aware that there was quite a bit of scepticism, as he mentioned in his speech, by some black South African activists and others about the efficacy of codes of conduct. Consequently, it was fundamental that there should be carried and brought into force a worthwhile and workable scheme-not one which has now obviously become a farce, if one reads what appears in today's newspaper. Since I have not been able to obtain a copy of the code I seek leave to incorporate in Hansard the article appearing in today's Australian, 9 October, headed `Government bows on code for South Africa'. Leave granted. The article read as follows- Govt bows on code for S Africa Exclusive by ALAN FEWSTER THE draft code of conduct for Australian companies trading in South Africa has been watered down following pressure on the Federal Government by business groups. Guidelines which would require Australian companies to ``take reasonable measures'' to provide their employees in South Africa with certain fringe benefits have been removed, and there is a clear commitment to continued trade with South Africa. In a draft of the code prepared jointly by the Department of Foreign Affairs and business groups in June, Australian companies were directed to provide leisure and health services, educational and library assistance, housing, welfare, transport and subsidised meals. Requirements in Section 7 of the code dealing with ``quality of life''. have now either been removed or rewritten in less specific terms. The Federal Government announced in April that a code of conduct would be established in the absence of comprehensive economic sanctions approved by the United Nations Security Council and observed by South Africa's major trading partners. The code will apply to Australian companies or their subsidiaries, branches or affiliates operating in, investing in or having representation in South Africa and which employ non-white personnel. Other changes to the new code, a copy of which The Australian has obtained are: THE inclusion in the preamble of the sentence: ``While there is no evidence that Australian companies operating in South Africa do not act as good corporate citizens. . .'' A CLEAR commitment that Australian trade with South Africa will continue. The earlier draft read: ``Australian commercial relations with South Africa have been allowed to continue.'' It now reads: ``Australian commercial relations with South Africa will continue.'' Integrate REMOVAL of the requirement that companies should ``abolish the practice of segregation which is a particularly offensive form of racial discrimination'', and its replacement with a direction that they ``should integrate''. REMOVAL of the recognition that to fully implement the policy of appointment solely on the basis of ability ``the education disadvantages of non-white employees may need to be compensated for''. REMOVAL of the requirement that training and development programs should ``facilitate and accelerate'' the movement of non-whites into more senior positions. REMOVAL of the requirement for companies to provide material assistance and aid to non-white employees adversely affected by the South African labour and residence laws, and its replacement with a direction that they ``should provide advice'' only. In the draft proposed in June, the section on quality of life began: ``Australian companies operating in South Africa should recognise the particular conditions which affect the living conditions and family situations of non-white employees in the country. ``Companies have social as well as commercial responsibilities in these circumstances and Australian companies there should concern themselves with the quality of life of their employees and their families.'' The latest version of the same section of the code, agreed between the Minister for Foreign Affairs, Mr Hayden, and business groups in the past three weeks, reads: ``Australian companies should concern themselves with the quality of life of their employees and their families. ``Recognising that this is not inconsistent with their concern for the welfare of their workforce, companies should aim to provide, in an equitable manner, fringe benefits such as . . .'' The code then lists a number of pension and insurance benefits, but does not include retrenchment benefits, which were part of the earlier draft. The directions to companies on fringe benefits which have been removed read: ``Companies should also take reasonable measures to assist in: ``Housing of employees with their families, wherever legally possible, close to the place of work. ``Promotion of welfare of employees' families, including their accommodation where families and employees are separated through the legal requirements of the apartheid system. ``Transport of employees where they are disadvantaged by restrictive residence requirements and migrant labour policies. ``The provision of leisure and health service facilities. ``The provision of library and educational assistance, especially for children of employees. The provision of subsidised nutritious meals to lowly-paid employees.'' Clarification Business groups are also seeking clarification from the Department of Foreign Affairs over what sanctions an independent administrator who will monitor the code will have to counter non-compliance, and whether his deliberations will come under the Freedom of Information Act. According to the draft code, ``detailed information provided to the administrator will remain strictly confidential''. If after consultations with offending businesses, the administrator finds ``an evident intent to continue with non-compliance'' he can report this to the Parliament. Senator MISSEN —I want to deal with a statement made by Mr Hayden in the House of Representatives on 18 April and debated in this House a week or fortnight later. I took part in the debate and expressed certain views. In that statement Mr Hayden indicated clearly that it was the intention of the Government to enforce a code of conduct and made it very clear that the Government had been pursuing this matter for many years, as had previous governments. I have had the opportunity of obtaining under the Freedom of Information Act a very great mass of material from the Government and previous governments on their efforts to obtain this code of conduct. The pile which is six inches deep on my table is mostly records of government information. I say to the Minister for Resources and Energy (Senator Gareth Evans), who is in the chamber, that any idea that I am not interested in this matter and that other members of the Opposition are not interested in it would not in any way be correct because we have taken a consistent interest in this matter over many years. Mr Hayden stated: . . . the Government conducted a broad-ranging review of all our relations with South Africa in May 1983. He went on to say that the Government had finally decided on a voluntary code, not a compulsory code, and stated: In this context it was decided also that the question should be investigated whether or not a formal, voluntary code of conduct should be observed by Australian companies with commercial interests in South Africa. I wish to announce to honourable members that, as a consequence of this investigation, the Government has decided that such a scheme should be introduced. Clearly the scheme was definite and it was only a matter of subsequent discussion of details. The idea of having a code of conduct and an investigation of previous codes which existed and still exist among other countries such as the European countries and the United States of America had been gone through and the Government had in mind that this was going to be done and that this would have an effect. He stated: . . . the introduction of an Australian Code of Conduct will be a positive and productive action. So it is very important that we recognise that this is not just a piece of cosmetic art on the part of the Government but is, indeed, something which is intended to influence opinion throughout the world. Mr Hayden continues: There is, however, no Australian requirement for Australian companies to apply any particular practices or employment standards in their business dealings with or in South Africa, although some companies may be covered by the scope of other business codes of conduct. This Code of Conduct is designed to remedy this omission and is in line with action taken by other major trading nations. An Australian Code of Conduct, attuned to the current labour situation in South Africa, will provide support for reformist political change in South Africa. Can there be any doubt about the intention of the Government to proceed with a code? After discussing the question of a voluntary or compulsory code and agreeing, for the time being, that that voluntary code is one that has to be tried, he stated: The Code does not require companies to take action outside what can reasonably be considered normal commercial activities or industrial relations practices, nor are companies expected to breach South African laws. For these reasons the Government expects and hopes that the maximum number of companies would agree to adhere to the Code. I am pleased to see the Acting Foreign Minister here tonight. I trust he will tell us in what way that code was introduced. The idea contained in this document was not one which did not fully carry out the responsibilities of what the Government considered the Australian companies could do. During this speech, Mr Hayden also outlined from paragraphs (a) to (h) the code's provisions and covered the various matters that would be needed, and very desirable matters they are too. He continued: As the Code will be a voluntary undertaking it is desirable that there be consultations with relevant Australian interest groups, prior to the Code's finalisation, in order to obtain maximum domestic support for it. That is the only suggestion I can find anywhere that it was not finalised at that stage. Naturally it is a matter on which details should be discussed. Those discussions have gone on obviously to the great discredit of Australia and this Government. We now find the article which appears in today's Australian. I am unable to be given a copy of the proposed amended code. We are told in the Australian- Senator Gareth Evans —You were offered one on an embargoed basis, weren't you? Senator MISSEN —Yes, certainly. I was offered one on an embargoed basis provided I did not use it. That is no use to me. Senator Gareth Evans —You could have seen for yourself whether your indignation was justified. Senator MISSEN —I have not come to my indignation yet. We will deal with that in due course, but my view- Senator Gareth Evans —Don't take forever. I can short circuit it. Senator MISSEN —The honourable senator will hear the story. I have spoken to his Department and to others this afternoon and tried to get it out of them, but they will not give it up. This article states that the draft code of conduct for Australian companies trading in South Africa has been watered down following pressure on the Federal Government by business groups. The Government has had ample opportunity. This afternoon my staff and I have taken the opportunity to see whether the Department will make available this drafted code which is set out in the article as containing many instances of watering down of the code. For example, there is a requirement in it that matters of quality of life shall be considered. It states: Requirements in Section 7 of the code, dealing with `quality of life', have now either been removed or rewritten in less specific terms. . . . . . . . requirement for companies to provide material assistance and aid to non-white employees adversely affected by the South African labour and residence laws, and its replacement with a direction that they `should provide advice' only. So it goes on. I will not repeat the article, because it is already in Hansard. It is clear that that redraft is a shoddy replacement of the existing code which was set down before the Parliament at that time. In the discussions which I have had this afternoon to endeavour to obtain a copy of this document-as the Minister points out, it was offered on the basis that I could not use it elsewhere- Senator Gareth Evans —Except for your own enlightenment, which would be a positive advance. Senator MISSEN —My own enlightenment is a matter of great fascination to me and perhaps to the honourable senator, but this is more important to me. Senator Gareth Evans —It is more important for you to make some grandstanding speech than it is to get at the truth. Senator MISSEN —The honourable senator should stop mumbling and listen to something for a change. We should know what is in this code. I am glad to see that the Minister is now fighting with another back bencher and that gives me a brief breath of fresh air. Mr McColl of the Department, to whom my staff member spoke and to whom I subsequently spoke, said that the document is not publicly available but it has been made available to various businesses and other organisations which have been involved in the development of the code. That does not include members of parliament, senators or others. We apparently have no concern in this matter. We were given the original code and now it has been a matter of discussion only with business and other organisations-presumably with trade unions. Apparently someone has disclosed a copy to the Australian; no one knows how it got hold of the copy. The fact is that when I put to Mr McColl that this should be made available to all members of parliament-that we should know what alternative arrangement is now proposed by this Government and what watering down of this proposal has taken place-he said: `The interests of the members of parliament will be taken into account. When the document is completed it will be released and made available to everyone'. I said that that would be a fait accompli. Once the decision is made and the negotiations have finished and we have made fools of ourselves in the eyes of world, we will be expected as members of parliament to come in and look at this matter. In some people's eyes this code of conduct has doubtful prospects of success. It is thought to be not sufficiently strong. But to water it down after announcing it is the worst of all possible worlds. Senator Gareth Evans —That is an utterly false assumption. If you will sit down, I will explain. Senator MISSEN —The Minister will have plenty of chances. Senator Gareth Evans —God preserve us from the truth. Senator Lewis —Pull him into line or we will never get home. Senator MISSEN —It is all right; let him go on. After being deceived into thinking that the statement would be adopted, we find now that that is not so. One can imagine the anger of black Africans and others concerned with this matter, who are not convinced that codes of conduct are adequate remedies but who will now not be convinced that this Government really means what it says when it talks about codes of conduct or South Africa itself. Senator GARETH EVANS(Victoria-Minister for Resources and Energy and Acting Minister for Foreign Affairs)(7.12) —It is regrettable that Senator Missen should have chosen to foist his indignation on us tonight, following the story in the Australian this morning, because there is no foundation for either; that is to say, there is no justification for Senator Missen's indignation because there is no justification for the terms of the Australian story, with its heading `Government bows on code for South Africa'. Senator Missen would have discovered that for himself had he accepted the offer of the Department of Foreign Affairs to make available a copy of the document to him on his request today. He was offered it, as we have discussed across the chamber, on an embargo basis because the document is not final. Senator Missen chose to stand on his dignity and not accept access to the document on that basis, and as a result he has gone off completely at a tangent tonight. I set the record straight as follows: I am advised that the code, which is still in draft form and is the subject of discussions with business and trade union representatives, most certainly has not been watered down in the manner suggested by the article. The code continues to require Australian companies to eliminate racial discrimination in their South African operations and establishes a framework in which non-white employees would be employed on a basis no less favourable than that for white employees. The revised version of the codes has been strengthened in some ways over the original draft and now requires companies to support changes to South African laws adversely affecting their employees. Most of the changes to the code which are under consideration at the moment, including those reported in the Australian, are simply drafting changes designed to tighten the wording without affecting the substance of the code. For example, provision of standard fringe benefits remains a requirement of the code, although specific reference to retrenchment benefits is omitted. It is omitted because such benefits are already included in the remuneration indicator used in the code. There is, in any event, provision for contributory unemployment insurance. Other benefits, such as housing and transport, are not obligatory, but the revised draft does include a specific reference to the setting aside of funds for such purposes. The article is also misleading when it notes the removal of a reference to facilitated and accelerated movements of non-whites into more senior positions. The code continues to require companies to implement programs which encourage the movement of non-whites into such positions. Finally, the article is incorrect in its assertion that the revised code does not require companies to provide aid in relation to legal matters. It is obviously the desire of the Government to settle the final shape of this code as soon as possible after the consultative process that we have set in train with business and trade unions is completed. I will consult with Mr Hayden on his return to determine when it might be possible and appropriate to make public the full text of the revised code, but in the meanwhile I hope that we do not get a repetition of the mischievously false stories of the kind which appeared in the Australian this morning and the mischievously false indignation that unhappily we have been treated to tonight by Senator Missen on an entirely false premise. Senator COLSTON(Queensland)(7.15) —On 10 September a question was asked in this place of the Minister for Finance, Senator Walsh, in relation to home loans and loan service fees. The issue was raised by Senator Haines. The relevant matters which were discussed in the question and answer on that date were as follows: The Government has for some time had a ceiling on housing loan bank interest rates. That ceiling is currently 13.5 per cent. Senator Walsh stated in his reply that there are no Government proposals to alter that ceiling. The Minister for Finance said that some financial institutions at that time were charging the regulated ceiling of 12.5 per cent. Others apparently were not, 13.5 per cent being suggested as the lowest interest then applying. A further matter raised was the service charge which some banks are now levying on their customers. Those fees, which have been introduced recently, vary. For the Commonwealth Savings Bank of Australia, they range from $30 to $90 a year for mortgages from $1,000 to $100,000. For loans over the latter sum higher loan service fees are payable. As far as I could understand on 10 September, the thrust of Senator Haines's question was not directed at the actual amount of the service charge, even though that was an important consideration. What appeared to be more important was that some financial institutions might be using the loan service fee as a back-door method of thwarting the Government's intention of keeping home loan bank interest rates at a maximum of 13.5 per cent. If that was the major thrust of the question, the Minister did not address that matter in great detail. Following complaints which I have received from Queensland residents, I intend to speak on this matter as well. There seems to be a fair amount of evidence that at least one bank-probably there are others-has introduced a loan service fee with the aim of thumbing its nose at the 13.5 per cent interest rate ceiling which has been set by the Government. My comments refer specifically to the Commonwealth Savings Bank of Australia, but probably apply equally to other financial institutions. Those who have home loans from the bank are now paying 13.5 per cent interest. In addition, they have now been served notice that they will pay a loan service fee which will be levied half-yearly. Anyone with an oustanding balance of $30,000, for instance, will be required to pay an extra fee of $70 per year. To my mind, and certainly to the minds of my constituents who have approached me, this is nothing but a deliberate ploy to counter the 13.5 per cent ceiling set by the Government. For the Government's own instrumentality to do this is appalling behaviour. Those who have approached me have received a circular letter entitled `Loan Service Fee'. In part, the letter states: Due to the continually rising costs of maintaining and servicing home loan accounts, we have found it necessary to introduce a small Loans Service Fee to offset these expenditures. The letter goes on to mention that the fee will be levied half-yearly and mentions the actual charges, some of which I mentioned earlier. I find it hard to believe that the claim of `continually rising costs of maintaining and servicing accounts' is truthful. Has the extensive use of computers in the banking industry increased costs? Surely costs should decrease as computers continue to take over tasks that were previously performed manually; or is the claim of rising costs an admission of inefficiency? Perhaps to some extent it is, but is more likely that it is a spurious claim to camouflage a strategy aimed at circumventing the 13.5 per cent ceiling. I do not intend to burden Hansard by seeking to incorporate the text of the Commonwealth Savings Bank letter. However, I seek leave to table a copy of the text in case it is of use to honourable senators. Leave granted. Senator COLSTON —I thank the Senate. When the Minister for Finance spoke on this matter on 10 September, he remarked that the service fee represented only a small increase in the interest rate which the borrowers are paying. This is acknowledged, but I must mention two points: Firstly, an extra commitment of $50 or $70 a year is a real burden on many of the constituents whom I represent. It is far too easy to sit here in the Senate chamber and forget the daily struggles faced by some people out in the real Australia. An extra burden of the type I mentioned can make this struggle even more severe. If I may digress for a moment, I should say that when I first entered this chamber, this was one of the particular groups which I expected a Labor government would protect. I still expect it to do so. Secondly, I would need great persuasion to be convinced that the bank which I mentioned is not like the tax evader, trying to find loopholes in the government directive that the ceiling be 13.5 per cent for housing loan bank interest rates. The Minister said on 10 December: The Government will keep under review the home loan service charge to ensure that it is not used as a surrogate interest rate increase. I ask the Minister and the Government not only to keep these charges under review but to scrutinise them carefully at this stage. A fundamental question is whether the loan service fees can be justified, especially as banks operated without them prior to this. I ask the Government to address this question as well. There is little, if any, pain for a large corporation to increase its charges when its customers are locked in, cannot go elsewhere and must pay whatever is charged. For those having to pay, however, there are difficulties and if I have to take sides, it will be on the side of the consumer. It may be too much to ask the banks to look at their own consciences, but I do ask them to do that. Senator VIGOR(South Australia)(7.22) —I wish to address the matter which was brought up last night by Senator Bolkus and deal with some of his claims. I did not obtain the documents from Hansard until late this afternoon. Since then I have contacted the office of the Minister for Employment and Industrial Relations (Mr Willis) to ask it to expedite the answer to question No. 412 on the Notice Paper which relates to this matter. I am also in the process of obtaining a number of documents which I believe will refute totally any and all of the claims made in this place last night by Senator Bolkus against Don Chisholm. At this stage I have managed to obtain two documents but in order to obtain a number of other documents from the Government I may be required to make application under the Freedom of Information Act. I will then be able to prove conclusively, with attested documents from the Government, that the statements which Senator Bolkus made were in fact false and unchecked. Unlike Senator Bolkus, I believe in checking my facts and in having firm documentation before coming forward in the Senate. I believe it is extremely important to refute the types of bogus claims that Senator Bolkus has made. I wish to reaffirm my conviction of Don Chisholm's integrity. He has been involved in business for 20 years, and I am obtaining a set of references from his previous employers to that point. He has been unemployed since he left the Birdwood Mill, approximately four years ago, except for the period when he was involved in the community employment program with Adelaide Community and Educational Television. I would like to deal with some of the claims that I can currently refute on the available documentation. The first of these is the claim that Donald Chisholm was involved in the Board of ACE Television at the time he was in its employ. I seek leave to incorporate two documents in Hansard. The first is dated 27 April 1984 and is a letter of resignation from Don Chisholm to Mr Rick Coy, who was Chairman of ACE Television. Leave granted. The letter read as follows- 27.4.84 The Chairman, Ace-TV Inc. Dear Mr Coy, This is to confirm my acceptance of the position of Executive Officer. I will endeavour to continue to the work we have all done towards Public Television. It is only proper that I should submit my resignation as a Director before taking up this position and I trust that the Board will accept this as my resignation. I look forward to the next twelve months and hope that we can obtain our objectives. Thank you and kind regards. Donald Chisholm Senator VIGOR —I thank the Senate. I also seek leave to incorporate in Hansard a certified extract of the minutes of the Board meeting of ACE Television held at 8 p.m. on Monday, 30 April-four days later-in which the Board approved the application for Donald Chisholm's employment and accepted the resignation that had been tendered between the two Board meetings. Leave granted. The extract read as follows- ACE TELEVISION INC. Minutes of the Board Meeting held on Monday April 30, 1984 at 8 p.m. at 84 Franklin Street, Adelaide Present: T. Easton, D. Vigor, G. Saunders, P. Howes, D. Chisholm, M. Masterton, R. Buttery, M. Craig, R. Coy, J. Naylor, H. Astbury, C. Robinson. Apologies: T. Brown, J. Beeton. It was moved that the meeting close at 10.00 p.m. Moved: C. Robinson Seconded: M. Craig Carried The question was raised concerning the extent of Rick Coy's input into the meeting; given the amount of input he has, it was decided that Mara Craig should chair the meeting. 1. CEP Jobs: That Anne Tsoulis be employed as the Administrative Officer and that she begin work as soon as possible. Moved: R. Coy Seconded: M. Masterton Carried That Donald Chisholm be employed as the Research and Development Officer, and that he begin work as soon as possible. Moved: R. Coy Seconded: H. Astbury Carried Donald Chisholm's resignation from the Board was accepted with thanks. That the vacancy on the Board, created by Donald Chisholm's resignation be filled by someone from the multicultural community. Moved: T. Easton Seconded: R. Coy Carried Murray Masterton reported that his replacement will probably be Nigel Stark, who Murray will bring to the next board meeting, which will be his last. There will be a sub-committee meeting (R. Coy, Gary Saunders and C. Robinson) to look at job descriptions and titles, in consultation. Senator VIGOR —I believe that these two documents prove beyond doubt that Don Chisholm in fact was not a member of the Board of ACE Television at the time he was an employee of that organisation. The next claim made by Senator Bolkus was that Mr Chisholm had set up a trust in some way to defraud people. Senator Bolkus —He said it himself. Senator VIGOR —He certainly did not say that he had set up a trust to defraud people. Firstly I must correct that whole idea. Senator Bolkus should check his facts. A trust was set up by Mr Chisholm's father in 1978, long before ACE Television or the CEP grants were under any type of consideration and while Mr Chisholm was an employee of the Birdwood Mill in South Australia. I am getting copies of the trust deed and various documents so that the relevant information can be incorporated to prove these facts. Mr Chisholm has assured me of them-I am getting taxation returns for both himself and his de facto companion, Wendy McPherson, to prove that Donald Chisholm in no way benefited from the trust while either receiving unemployment benefit or being in the employ of ACE Television. Unfortunately, because of the time scale, I do not have these documents today. I will return to this in the Senate once I have the full documentation. I will seek to incorporate the relevant documents in Hansard. Another claim was that while Donald Chisholm was employed he had Wendy McPherson working. Wendy McPherson has on several occasions taken up casual work with the Birdwood Post Office and, I understand, with several other organisations, sometimes on a voluntary basis. The employment at the Post Office was on a paid basis. All of this has been fully declared to the Department of Social Security and I am currently seeking documents to prove this and, as I have said, the requisite taxation forms which I believe will prove conclusively that no defrauding of either the Government or anybody else has been carried out by Donald Chisholm or Wendy. Some rather strange claims were made concerning Donald Chisholm receiving unemployment benefit while campaigning. In fact, as I understand it now, Donald Chisholm is not in receipt of unemployment benefit. Up until the time when his candidacy was confirmed, he was in fact available for work and registered with the Commonwealth Employment Service. I understand that Wendy McPherson, who is not currently casually working, is on unemployment benefit. Neither of them is in receipt of any money from any other source. I am obtaining documentary evidence to support this statement, so that I can table it in the Parliament. I fail also to understand Senator Bolkus's paranoia about ACE Television. He states that ACE Television was set up with some type of aim to subvert the introduction of the Special Broadcasting Service in South Australia. I fail to see how it could ever have achieved such an end or could ever have been set up for such a purpose, and it seems to be a very strange claim by Senator Bolkus. I must say that ACE Television has as members and as correspondent organisations a number of very well respected Adelaide institutions, such as the University of Adelaide, Flinders University and the South Australian College of Advanced Education. That is on the educational side. We also have support, and people involved in the Board, from the Ethnic Communities Council and from the United Ethnic Council. People from both councils have been involved in our meetings and in consultations with us over the years. We also have a very strong community base from production houses and community organiations that are interested in putting forward their views. No organisation that is involved in this is interested in subverting the SBS, and our relations with SBS are very cordial. The whole of this attack on Donald Chisholm has political motivation, obviously, and I believe that it is a misuse of the Senate. I deplore Senator Bolkus's attempt to smear a citizen of Australia under privilege. If he wished to raise points here, he should have checked his facts before coming here. I shall prove that it is possible to check those facts and to get documented information. Once I have all those attested facts, Mr President, I shall be returning to present the documents to the Senate. Senator BOLKUS(South Australia)(7.33) —I do not wish to take up too much time in responding to Senator Vigor's remarks. I should like to make two very quick points. The first one, although trivial, is in respect of Adelaide Community and Educational Television. I never claimed that it was set up with the purpose of subverting the Special Broadcasting Service, but its activities at the time of crucial decision-making period for the introduction of SBS into Adelaide were such that, if successful, they would have undermined the introduction of that service there. With respect to Donald Chisholm, I stand very much by the substance of the allegations that I made yesterday. It is my belief that on the basis of his own confessions in newspaper articles and other material that I have seen, Donald Chisholm should not have an entitlement. His position with respect to the ACE Television Board was one of such close proximity that he should have precluded himself from obtaining the job, considering also the fact that under the stated aims of the community employment program he was not in one of those categories of persons who should have been given priority. In respect to the second aspect, the unemployment benefit, I do not feel that I have been swayed at all by Senator Vigor's bombastic defence this evening of a very close ally. I shall just wait until the Government investigates the matter and the right course is taken. Question resolved in the affirmative. The PRESIDENT —Before the Senate adjourns, I advise honourable senators that Estimates Committee A will meet in the chamber and that Estimates Committee B will meet in committee room No. 6. Prior to the sitting of the Committees the bells will be rung for three minutes. Senate adjourned at 7.35 p.m. The following papers were tabled: Australian Citizenship Act-Regulations-Statutory Rules 1985 No. 260. Banks (Shareholdings) Act-Regulations-Statutory Rules 1985 No. 233. Barley Research Levy Act-Regulations-Statutory Rules 1985 No. 243. Census and Statistics Act-Australian Bureau of Statistics-Release of Lists-Proposal No. 5 of 1985-Provision of Classification Codes to the Patent, Trade Marks and Designs Office. Christmas Island Act-Regulations 1985-No. 2 (Motor Traffic Ordinance). Currency Act-Regulations-Statutory Rules 1985 No. 241. Dairying Industry Research and Promotion Levy Act-Regulations-Statutory Rules 1985 No. 245. Defence Act-Regulations-Statutory Rules 1985 No. 235. Excise Act-Regulations-Statutory Rules 1985 No. 234. Export Inspection Charge Act-Regulations-Statutory Rules 1985 No. 258. Honey Export Charge Act-Regulations-Statutory Rules 1985 No. 242. Honey Levy Act (No. 1)-Regulations-Statutory Rules 1985 No. 246. Honey Levy Act (No. 2)-Regulations-Statutory Rules 1985 No. 247. Live-stock Slaughter (Export Inspection Charge) Act-Regulations-Statutory Rules 1985 No. 236. Live-stock Slaughter (Export Inspection Charge) Collection Act-Regulations-Statutory Rules 1985 No. 237. Meat Export Charge Act-Regulations-Statutory Rules 1985 No. 238. Migration Act-Regulations-Statutory Rules 1985 No. 261. Navigation Act-Regulations-Statutory Rules Nos. 248, 249, 250, 251, 252, 253, 254, 255, 256, 257. Pig Slaughter Levy Act-Regulations-Statutory Rules 1985 No. 244. Postal Services Act-By-laws 1985-Postal (Amendment) No. 5. Remuneration Tribunals Act-Regulation-Statutory Rules 1985 No. 239. Seat of Government (Administration) Act-Ordinances 1985- No. 52-Rates (Amendment). No. 53-Motor Omnibus Services (Amendment). No. 54-Motor Omnibus Services (Amendment) (No. 2). Shipping Registration Act-Regulations-Statutory Rules 1985 No. 262. Telecommunications Act-By-laws- Telecommunications (Charging Zones and Charging Districts) Amendment No. 60. Telecommunications (General) Amendment No. 45. Trade Commissioners Act-Regulations-Statutory Rules 1985 No. 240. Wool Industry Act-Regulations-Statutory Rules 1985 No. 259.