Wednesday, 4 December 1985 The DEPUTY PRESIDENT (Senator Hamer) 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 petition of certain concerned citizens of Australia respectfully showeth: that the actions of trade unions have gone beyond their traditional goals of protecting workers' conditions and rates of pay and have reached the point where they are seriously affecting the economic health of the nation and the people. Your petitioners therefore humbly pray: 1. That all Governments throughout Australia acknowledge and protect the Right to Work on Behalf of all Australians. 2. That the total sovereignty of individual governments be recognised as a fundamental requirement of a workable, balanced Federal system of government. 3. That all necessary steps be taken to protect the citizens of Australia from any compulsion, threat or intimidation to join any trade union. 4. That the supremacy of elected governments over the sectional interests of trade unions be recognised, and 5. That the provision of essential services be maintained, free from industrial disruption. And your petitioners as in duty bound will ever pray. by Senator Short (from 11 citizens). To the Honourable the President and members of the Senate in Parliament assembled: The petition of the undersigned citizens of Australia respectfully showeth objection to the metric system and request the Government to restore the Imperial system. And your petitioners as in duty bound will ever pray. by Senator Macklin (from 23 citizens). To the Honourable The President and the members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia respectfully showeth and in concern for peace support: 1. A move towards unity, co-operation and peaceful co-existence amongst all peoples of the earth. We pledge our agreement to an immediate bilateral freeze of the development and deployment of all nuclear weapons and to speed negotiations to dismantle all such weapons of mass destruction under the supervision of a neutral peace-keeping force. 2. The establishment of a Ministry for Peace to focus our energies towards non-violent resolution of world conflicts, encouraging our government to pursue its own independent policies in foreign affairs, non-aligned to any one polarity, with the aim of bringing about lasting and peaceful co-existence worldwide. 3. The establishment of a Senate Select Committee on Nuclear Disarmament and Peace to examine and debate all submissions by way of petitions and proposals and to assist in the creation of the Ministry for Peace. And your petitioners as in duty bound will ever pray. by Senator Macklin (from 38 citizens). To the Honourable the President and members of the Senate in Parliament assembled: The petition of the undersigned respectfully showeth:- But for a High Court decision narrowly favouring the Federal Government, recently discovered 20,000 years old archaeological cave sites near the Franklin River Tasmania, equal in importance to those in the Vesere Valley in France, would have been destroyed, like a United Kingdom Government unable to stop a Wiltshire authority from clearing Stonehenge for a freeway. The constitutional basis for protecting historical and environmental assets remains weak. Your petitioners therefore most humbly pray that the Senate in Parliament assembled should request the Government To hold a referendum to amend the constitution so that: The Federal Government has the duty and a right superior to state and local governments to set above the commercial advantage of one generation, protect and restore, those things we hold in trust for the future- Being relics, sites, features, areas, wildlife, buildings or things of Aboriginal and other historical, cultural, scientific, aesthetic, ecological or environmental importance; To care for the maintenance of the balance of nature, manage land, marine and atmospheric use so as to avoid their degradation and act in any other matter seen to be in the same spirit; To prevent beach and related mining, military and commercial use of uranium; to preserve heritage areas, the Great Barrier Reef region at least as orginally defined in the 1975 Act and extended into Torres Strait. And your petitioners as in duty bound will ever pray. by Senators Macklin (from 55 citizens) and Mason (from 19 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 Macklin (from 206 citizens). To the Honourable the President and members of the Senate in Parliament. We the undersigned express our concern over the sale of the Belconnen Mall due to the likely detrimental effect on the provision of community facilities presently existing in the Belconnen Mall. 1. In particular we seek guarantees that the present child care centre and community facilities be retained by incorporating the same into the conditions of sale of the Belconnen Mall and that the services will receive the same level of funding and support currently provided by the Canberra Commercial Development Authority. 2. That a financial commitment to the Building of Stage 4 of the Belconnen Mall listed under section 14C in the Ordinance of the Canberra Commercial Development Authority be undertaken. Stage 4 to consist of community facilities such as community hall, large glassed enclosed community park, exhibition space, health and fitness club, ice rink, amusement centre and office accommodation. Your petitioners therefore humbly pray that this petition be considered. by Senator Vigor (from 147 citizens). To the Honourable President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully shows: That we strongly support `The Australian Capital Territory Smoking and Tobacco Products Advertisments Prohibition Bill' introduced by Senator Evans, because it represents the first positive national step towards the eventual elimination of wide spread serious ill health caused by smoking tobacco. And your petitioners as in duty bound will ever pray. by Senator Vigor (from 90 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned respectfully showeth: Every citizen should have- 1. A constitutional guarantee of the right to vote and 2. A constitutional guarantee of the equality of votes. Your petitioners most humbly pray that the Senate in Parliament assembled, should- Support the Constitution Alteration (Democratic Elections) 1985 Bill. And your petitioners as in duty bound will ever pray. by Senator Macklin (from 24 citizens). To the Honourable the President and members of the Senate in Parliament assembled. We the undersigned citizens of Toowoomba and employees of Pixie Ice Cream P/L do respectfully pray that the 10 per cent sales tax on ice cream be removed forthwith-for the following reasons: That the Government has failed to consider the jobs (some of us will be vulnerable) which will inevitably be lost as a result of consumer resistance to higher prices. That the Government has ignored the damaging effects on two already hard-pressed industries: dairying (source material valued at $46 million a year) and sugar ($14 million). That the Government has grossly underestimated the cost to thousands of low income families of higher ice cream prices as a result of the tax. That the Government cannot justify taxing ice cream which is regarded by all authorities as an important, nutritous food and which is a key product in the Consumer Price Index. We request that the Senate, in Parliament assembled, will amend the Sales Tax (Exemptions and Classifications) Amendment Bill 1985 in such a manner as to remove the sales tax on ice cream. Your petitioners as in duty bound will ever pray. by Senator Macklin (from 16 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: 1. In this aging Australian society children are our most precious resource. 2. We request that any changes to the Child Care Act should ensure the protection of these children by providing for quality care by mothercraft nurses or other trained child care professionals. 3. We urge that funding provided under the Child Care Act should ensure the maintenance of the present standards of 75 per cent of award wages and conditions for approved child care professionals. 4. We also ask that available child care places be provided according to the needs of the children rather than through restricting access according to the work-related needs of parents. And your petitioners as in duty bound will ever pray. by Senator Zakharov (from 45 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of the Commonwealth of Australia respectfully showeth: That a Government decision to force, at the expense of viewers, the transfer of WIN TV (and any future local broadcaster) from VHF to UHF transmission, while excluding Sydney metropolitan TV stations from this requirement, will place in jeopardy the future of the Illawarra and South Coast region's only local commercial TV operator. Your petitioners request the Senate to protect the interests of the hundreds of thousands of television viewers within the area from Wollongong to the Victorian border served by WIN TV, by preventing the Government from taking this unwarranted and discriminatory action which disadvantages both viewers and advertisers on the South Coast to the benefit of the metropolitan networks. And your petitioners as in duty bound will ever pray. by Senator Michael Baume (from 101 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of certain citizens of Australia respectfully showeth: That the taxation proposals as outlined in the Government's `White Paper' are anti-business, They will destroy incentive, by penalising business growth; they will cost Australians jobs and contribute to higher welfare payments, Such taxes will discriminate against and inhibit progress, growth and employment throughout the nation. Your petitioners therefore pray that the Tax Proposals be rejected. And your petitioners as in duty bound will ever pray. by Senator Boswell (from 29 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 fertilization. And your petitioners as in duty bound will ever pray. by Senator Robertson (from 2,112 citizens). To the Honourable the President and members of the Senate in Parliament assembled: We the undersigned concerned Australian citizens respectfully point out: That we recognise the Commonwealth Government's genuine concern and respect for United Nation's initiatives and policies. We, your petitioners, humbly pray that your honourable House will take notice: 1. That the UN Food and Agricultural Organisation has stated that `All seeds and other plant breeding material is the heritage of all mankind, and should be freely available to all'. 2. That by the granting of plant variety rights and patents thousands of plant varieties and plant genetic diversity has been lost forever and many countries now regret having legislated for such patents and rights. 3. That we reject the principle that PVR legislation is either just, necessary or desirable for Australia. 4. That you will remember the UN statement as outlined above and reject any moves to have PVR legislation enacted by your government. And your petitioners as in duty bound will ever pray. by Senator Zakharov (from 20 citizens). To the Honourable the President and members of the Senate in Parliament assembled. Your petitioners humbly pray that the Senate, in Parliament assembled, should: Request the Government to introduce a Bill providing: That the LD50 test, whereby animals are used in the testing of cosmetics, industrial and household substances be abolished. That, at this moment, animal experimentation be limited to medical research only and that accurate records be kept of all animal research in Australia. That, over the next 10 years, animal experimentation be phased out completely. by Senator Georges (from 67 citizens). To the Honourable the President and the members of the Senate in the Parliament assembled. The humble petition of the undersigned citizens of Australia showeth that whereas: 1. They are completely satisfied with the design of the existing Australian National Flag. 2. They are aware it properly reflects the immutable characteristics of Australia namely: (a) The Union Jack, itself the creation of three Christian Crosses, represents the nation's historical origin and the source of its language and law; (b) The Southern Cross on an azure blue background signifying its geographical location; (c) The large star depicting the advent of Federation. 3. They know the flag has been a source of inspiration to generations of Australians in peace and war. 4. They recall that millions of native-born Australians and newcomers to these shores from other parts of the world have become united under its proud symbolism. 5. They are certain that any change to the flag will produce division in the Australian community. Your petitioners therefore pray that the Parliament will give a speedy passage to the Flags Act Amendment Bill which provides that the Australian National Flag can only be changed by a referendum. by Senator Vanstone (from 65 citizens). Senator MORRIS(New South Wales) —by leave-I present the following petition from 2,497 citizens from Parkes which is not in accordance with the Standing Orders: Telecom Employees in Parkes and the surrounding districts ask for the support of the community in their campaign to retain the district office and so keep this vital source of employment in the Parkes area. We, the undersigned, pledge this support. Petitions received. Senator JESSOP(South Australia) —I give notice that, contingent upon the order of the day relating to committee reports No. 5, relating to the report by the New Parliament House Committee on the precincts of the new Parliament House, being called on, I shall move an amendment to the motion that the Senate take note of the report, as follows: At the end of the motion add: `, and the Senate agrees with the Committee's recommendations'. Senator COONEY(Victoria) —I seek leave to postpone until the next day of sitting Business of the Senate, notices of motion Nos. 1 and 2 standing in my name for this day of sitting for disallowance of the Crimes (Amendment) Ordinance (No. 3) 1985 and the Crimes (Amendment) Ordinance (No. 4) 1985. Leave granted. Senator BOSWELL(Queensland) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) notes the statement by the Treasurer (Mr Keating) that the Government would be seeking joint control of all superannuation fund trust boards, with equal numbers of employee and business representatives; (b) calls on the Minister for Finance (Senator Walsh) to explain why he is planning to reintroduce legislation, already defeated by the Senate, which will give the Australian Council of Trade Unions clear control of the biggest superannuation fund in the country, the Commonwealth Public Service Superannuation Fund; (c) notes that the move to make three out of the five representatives on the Commonwealth Public Service Superannuation Fund ACTU representatives, makes a complete mockery of the Treasurer's claim that the Government would ensure that the ACTU did not control superannuation trust funds; and (d) condemns the Government for its continuing campaign to try and mislead the public into believing that the recent superannuation agreement will not give enormous and unjustified financial powers to the ACTU. Senator GRIMES(Tasmania-Manager of Government Business) —I table papers 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. Barley Industry Research Council-annual report 1984-85-pursuant to section 35 of the Barley Research Act 1980. 2. Australian Pig Industry Research Committee-annual report 1984-85-pursuant to section 16 of the Pig Industry Research Act 1971. 3. Australian Meat and Live-stock Corporation-annual report 1984-85-pursuant to section 49 of the Australian Meat and Live-stock Act 1977. 4. Housing Assistance Act 1981-annual report 1983-84-pursuant to section 15 of the Housing Assistance Act 1981. 5. Special purpose flights by the Royal Australian Air Force-schedules. 6. Department of Defence-annual report 1984-85. 7. Department of Aviation-annual report 1984-85-pursuant to section 29 of the Air Navigation Act 1920. 8. Australian Film Commission-annual report 1985-pursuant to section 44 of the Australian Film Commission Act 1975. 9. Timber Creek land claim-report by the Aboriginal Land Commissioner. 10. Aboriginal Land Commissioner-annual report 1984-85-pursuant to sub-section 61 (3) of the Aboriginal Land Rights (Northern Territory) Act 1976. 11. Community law reform for the Australian Capital Territory-1st report-pursuant to section 37 of the Law Reform Commission Act 1973. 12. Standing in public interest litigation-report-pursuant to section 37 of the Law Reform Commission Act 1973. 13. Department of Employment and Industrial Relations-annual report 1984-85-the report also incorporates the annual report of the National Director of the Commonwealth Employment Service. 14. Australian Shipping Commission-annual report 1984-85-pursuant to section 35 of the Australian Shipping Commission Act 1956. 15. Australian National Railways Commission-annual report 1984-85. 16. Australian Capital Territory Architects Board-annual report 1984-85. 17. National Exhibition Centre Trust-annual report 1984-85-pursuant to section 63 (H) of the Audit Act. 18. Advance to the Minister for Finance-statement on expenditure for October 1985. 19. The Pipeline Authority-annual report 1984-85-pursuant to section 45 of the Pipeline Authority Act 1973. 20. Australian Water Resources Council-minutes of the 1985 general meeting. Senator HARRADINE(Tasmania) —by leave-I tried to get in touch with the Manager of Government Business (Senator Grimes) before this morning but unfortunately he was engaged. I suggest that Paper No. 11, Community Law Reform for the Australian Capital Territory, which recommends that the Law Reform Commission deal with very substantial matters relating to medical services to minors, suicide, euthanasia and so on, is of far more importance to society than some of the papers that appeared before it on the list. I simply ask whether that paper could be put a little higher on the list. Senator GRIMES(Tasmania-Manager of Government Business) —by leave-For Senator Harradine's information-I can understand that he does not know this-the order of the papers on the list is the order of their receipt. It has nothing to do with an order of priority determined by anyone on this side. I certainly concede the point made by Senator Harradine when I look at some of the papers listed above the paper on Community Law Reform for the Australian Capital Territory. I think the sensible thing to do is to move a motion at the appropriate time that the papers be taken in a different order. Motion (by Senator Grimes) agreed to: That, unless otherwise ordered, the hours of meeting of the Senate on Wednesday, 4 December 1985, be- 10 a.m.-12.45 p.m. 2 p.m.-6.30 p.m. 8 p.m.-10.30 p.m. Bills received from the House of Representatives. Motion (by Senator Grimes) agreed to: That so much of the Standing Orders be suspended as would prevent the questions with regard to the several stages for the passage through the Senate of the Bills being put in one motion at each stage, and the consideration of such Bills together in the Committee of the Whole. Ordered that the Bills may be taken through all their stages without delay. Bills (on motion by Senator Grimes) read a first time. Second Readings Senator GRIMES(Tasmania-Minister for Community Services)(10.10) —I move: That the Bills be now read a second time. I seek leave, Mr Deputy President, to incorporate the second reading speeches in Hansard. Leave granted. The speeches read as follows- PETROLEUM REVENUE BILL 1985 This Bill permits the waiving of crude oil excise liability where a State Government introduces a resource rent royalty on petroleum developments within its jurisdiction, and where the State also enters into a revenue-sharing agreement with the Commonwealth. It should be read in conjunction with the Excise Tariff Amendment Bill (No. 2) 1985 which I will be introducing immediately after this Bill. On 25 June 1985 the Premier of Western Australia and I announced that the Commonwealth and Western Australian Governments had agreed on the broad arrangements for the introduction of a resource rent royalty on income from petroleum production from Barrow Island. Barrow Island is an onshore development within the jurisdiction of Western Australia. The resource rent royalty is a State initiative, developed in consultation with the Commonwealth, to replace the existing State ad valorem royalty and the Commonwealth crude oil excise which currently apply to Barrow Island petroleum production. The resource rent royalty will be based on the Commonwealth's resource rent tax-or RRT-which was announced on 27 June 1984 to apply to Offshore ``Greenfields'' petroleum projects developed after 1 July 1984. The RRT has always been seen by the Commonwealth as a model for resource taxation generally, but will apply only in offshore areas, where Commonwealth jurisdiction applies. The Western Australian Government has had the taxation regime on Barrow Island under review for some time. Among other concerns that the Government shared with the producers, was that future investment on Barrow Island could be rendered uneconomic under the present levy regime. The reason for this concern was quite straight forward, and provides a good example of the advantages of the rent tax concept. Being a mature oil field, further investment on Barrow Island cannot be expected to be as productive in terms of the amount of oil produced per dollar invested when compared with the results from earlier investments there. Had the existing levy and royalty regime continued, economic production of oil could have been terminated prematurely, unless other complex concessions under the levy arrangements were devised. Under the resource rent royalty, the full value of the capital and operating cost can be written off in the year in which they are incurred. Major new investments are therefore encouraged and consequently this will assist in maintaining production which would otherwise decline. If, of course, the investments are sufficiently productive and profitable, then the resource rent royalty takes a share for government revenue. An example of the sort of major investment with marginal return that could occur on Barrow Island in the future, could be the use of enhanced oil recovery techniques which could involve applying very recent and advanced technology. For both constitutional and general policy reasons, the Petroleum Revenue Bill is not limited to Barrow Island. The Commonwealth/Western Australian announcement on resource rent royalty of 25 June I referred to earlier concluded with a general invitation to all States to approach the Commonwealth with proposals to apply a resource rent royalty to projects in their jurisdiction. The Bill is designed to allow the Commonwealth to waive excise in any situation where a relevant resource rent royalty is introduced and a relevant revenue-sharing agreement has been concluded. The first Schedule to the Bill sets out in general terms a model agreement which a State would need to enter into with a producer to satisfy the Commonwealth that an acceptable rent royalty was being implemented. The main features of the first Schedule-the model resource rent royalty agreement-are as follows: It will replace the Commonwealth crude oil excise and the State ad valorem royalty. The royalty rate will be 40 percent. The threshold rate of return which a project must achieve before the resource rent royalty applies will be, at a maximum, the rate applying to the offshore RRT, i.e., the long-term bond rate plus 15 percentage points. The royalty will be payable on income from the recovery of all petroleum, including crude oil, condensate, LPG, natural gas and ethane. Current and capital expenditures will be written off as deductions for resource rent royalty purposes immediately in the year in which they are paid, with any excess of expenditures over receipts in a particular year being compounded forward at the threshold rate to the next year. Payments and receipts relating to the provision of debt and equity capital will not be allowable as deductions. Each member of a joint venture will be assessed for royalty on the basis of its actual expenditure on, and revenue from, the project. Overall liability for royalty will not be influenced by changes in ownership or implementation of farm-in-agreements. The resource rent royalty will be levied prior to company income tax and will be a deduction for company tax purposes. The second Schedule sets out a model revenue-sharing agreement which any State introducing a resource rent royalty would need to conclude with the Commonwealth before the Commonwealth's crude oil excise was waived. This Schedule of the Bill contains a formula to establish a revenue-sharing ratio for any given project. The revenue share ratios have been based as far as possible on the concept of revenue neutrality, compared with the existing arrangements. Data relating to individual projects are considered to be commercial-in-confidence and therefore estimates of revenue under a resource rent royalty regime cannot be made public. As well, the Schedule sets out certain auditing requirements which the Commonwealth required for accountability and to protect its share of the royalty revenue. When the criteria contained in these schedules are satisfied, the Commonwealth will waive its excise. I believe that revenues of State and Commonwealth Governments are protected satisfactorily by these arrangements while producers face a far more flexible tax regime that reduces significantly the interference of the tax regime in their investment planning. In the case of the Barrow Island field, the Western Australian Government is currently negotiating a detailed agreement with the operator-Western Petroleum Limited (known as WAPET)-along the lines contained in the Bill. The need for a revenue sharing agreement has also been foreshadowed which, in accordance with the second Schedule, will give 75 per cent of the revenue to the Commonwealth and 25 per cent to the State. If both the agreement with WAPET and the agreement with the Commonwealth satisfy the criteria contained in the two Schedules, then the Commonwealth will proceed to waive its crude oil excise. Any overpayments of excise which could arise where the resource rent royalty applies retrospectively from the date of proclamation of the legislation to 1 July will be refunded. The Bill represents a major step forward in reform of resources taxation in Australia. The resource rent tax concept is now firmly established in the petroleum sector both offshore and onshore. I am sure other States and the Northern Territory will see the merits in the Commonwealth's policy on rent taxes and take advantage of this important legislation. I commend the Bill to the Senate. EXCISE TARIFF AMENDMENT BILL (No. 2) 1985 This Bill proposes to amend the Excise Tariff Act 1921. The move from the ad valorem royalty and excise regime to a resource rent royalty will require some transitional measures to apply. The Excise Tariff Amendment Bill (No. 2) 1985 meets the more important transitional arrangements. It is essentially a machinery Bill. It will enable the Commonwealth to determine appropriate levels of excise on the residual crude oil and naturally occurring LPG stocks held by producers at the date on which a resource rent royalty comes into effect. The measures provided for in the Bill will ensure that the Commonwealth's revenue raising position is protected. Data relating to individual projects are considered to be commercial-in-confidence and cannot be made public. I commend the Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. The DEPUTY PRESIDENT —I have received letters from the Leader of the Government, the Leader of the Opposition in the Senate and the Leader of the Australian Democrats nominating Senators Aulich, Haines and Puplick to be members of the Joint Select Committee on an Australia Card. Motion (by Senator Grimes)-by leave-agreed to: That the Senators, having been duly nominated in accordance with the Resolution agreed to by both Houses, be appointed members of the Joint Select Committee on an Australia Card. Motion (by Senator Grimes) agreed to: That, unless otherwise ordered, Orders of the Day relating to Committee Reports, be considered in the following order- (a) No. 6-National Crime Authority-Joint Statutory Committee-First Report (b) No. 4-New Parliament House-Joint Standing Committee-Report on planning for Senate and House of Representatives' Chambers (c) No. 5-New Parliament House-Joint Standing Committee-Report on the precincts of the New Parliament House and the Parliamentary Zone Debate resumed from 3 December, on motion by Senator Walsh: That the Bills be now read a second time. Senator MAGUIRE(South Australia)(10.12) —For years, members of the Opposition and their gurus have been telling Australians that there is no such thing as a free lunch. Week after week, month after month, year after year, members of the Liberal Party of Australia have been telling Australians to tighten their belts and to make economic sacrifices, using the slogan `there's no such thing as a free lunch'. They are now proposing in this House to support tax subsidised lunches for a narrow elite group of the community-5 per cent of the population. As I pointed out last night, in those countries with which we normally compare ourselves, such allowances are not available. There is no comparable general allowance in the United States of America or in Great Britain. The removal of the taxation subsidy for lunches does not mean that the restaurant industry will collapse. I shall quote some spokespersons involved in that industry. For example, Ms Jill Heavan, the leading Adelaide restaurateur, the Manageress of Ayers House Restaurant in Adelaide, has said: The legitimate business lunch will survive. Mr Harold Lasky, the Managing Director of Diners Club Ltd, should know about the potential effects on the restaurant industry as a result of the removal of the tax subsidised lunch, because a great proportion of the turnover of Diners Club comes from the restaurant industry. He was quoted in the Sydney Morning Herald of 21 September as saying: I think the people who are genuinely involved in a lunch to discuss business will continue to do so. There will, of course, be a transition period for restaurants, in which restaurants find it necessary to target their business towards a different clientele. Restaurants will have to aim their food and prices towards the family rather than the business man. Good quality, reasonably-priced restaurants will continue to be profitable. It was particularly interesting to see an advertisement placed in the Australian Financial Review by Sydney's Lucy's Restaurant. Lucy's Restaurant of Castlereagh Street, Sydney, advertising in that national daily newspaper on 20 November, said: Lunch without the taxman. Thanks to Paul Keating, business at Lucy's has greatly improved. At Lucy's prices, tax deductions are not an issue. There we are. A leading Sydney restaurant has said that business is booming as a result of the Government's tax package. That restaurant is not crying over the Government's tax package. Instead, it is making a very positive response to the new position facing it. It should be remembered in assessing the impact of this measure to remove tax deductibility for lunches that all of the extra revenue from that measure will be given back to Australian taxpayers in the form of personal income tax cuts. That is a very important point to bear in mind. Australians will have more disposable income. They will be able to consume more. More Australians will be able to afford restaurant meals. They will be able to afford them out of their own pockets and not out of the pockets of the taxpayers of this country, because they will have higher disposable incomes. There will, of course, be some exceptions to the general rule of disallowing entertainment expenses as a tax deduction. Some expenses will continue to be allowed. Expenses incurred in operating a business for the provision of entertainment will be exempt from the new arrangements. Expenditure on entertainment for promotional or advertising purposes will be exempt from the new measure. The cost of overtime meals covered by an industrial award will be exempt from the new measure. The cost of a person's meals while living away from home will be exempt. The costs associated with in-house dining and recreational facilities for employees will be unaffected. That refers to staff canteens. The cost of meals while attending a seminar will be tax deductible also. I wish to make a few comments about the unfortunate publicity campaign being carried out by the Opposition, the hospitality industries and, regrettably, a small section of the Australian media. I refer to the advertisements which have been appearing in daily newspapers in the context of the South Australian State election. Very expensive advertising has been undertaken by the restaurant industry, which has been taking out full page advertisements forecasting doom and gloom in the industry. Senator Knowles —If you were fighting for your survival you might do so too. Senator MAGUIRE —I will get on to that in a moment. The restaurant industry has intruded into the South Australian election, and now it is fair game. It underestimates the common sense of the average Australian taxpayer. Under previous arrangements, the average Australian had a healthy suspicion about free lunches. Now, the more the abolition of free lunches is attacked the more attention is drawn to the lurk that they were. That is what is going on. It is a totally counter-productive campaign. The more they advertise the more support that is lost by the free lunch advocates. Let us look at some of the advertisements which have been appearing in the South Australian media. An advertisement in the Adelaide News on 29 November said: `. . . . give Canberra the message.' It advocated sending Canberra a message about tax changes for the restaurant industry. Liberal Party supporters are advocating that a message be sent to Canberra. That is what they are doing. It is very unfortunate for the current Leader of the Opposition, Mr Howard. He is very concerned about that, because he is now trying to distance himself from the South Australian election result on Saturday. He is trying to separate himself from that result. To put it frankly, Mr Howard does not want the South Australian election to be fought on Federal policies. That is the truth of the matter. That is the last thing he wants. I refer to the report of a very revealing interview of Mr Howard by Mike Steketee in the Sydney Morning Herald last Friday-a very revealing interview indeed. I will quote Mr Howard's words. He stated: Like all State elections, South Australia will be decided predominantly on State issues. That is what he said, with no qualification at all. His supporters in the Liberal Party of South Australia, the people who are placing these nonsensical advertisements in the Press, have not got the message; there is no co-ordination. They are still saying: `Send a message to Canberra'. He desperately does not want a message sent to Canberra. That is the last thing he wants as a result of the South Australian election this Saturday. I know what the message will be out of the South Australian elections on Saturday and Mr Howard has a jolly good idea too what is coming for him on Saturday. The Liberals are trying to have it both ways on this question of free lunches. They say they will vote against the Government's proposal to abolish the free lunch. By saying that, they are trying to win the support of the restaurant industry in this country. Look again at Mr Howard's interview with Mike Steketee in the Sydney Morning Herald last Friday. He gave no pledge at all in that interview to repeal legislation to end free lunches, in the unlikely event that he becomes leader of this country one day. In fact, the interviewer very pointedly drew attention to that fact. I believe that the hospitality and tourism industries of this country should not be taken in by the nonsense that is being put around by this Opposition and sections of the industry. The campaign by sections of the industry, the Opposition and a small section of the media has totally dicredited itself. The most extreme statements are being made on this subject. I simply quote Sir Frank Moore who is Chairman of the Australian Travel Industry Association. He is on record in the Adelaide News last week as saying that, as a result of this measure, Australia will become the white trash of Asia. As a result of this Government removing free lunches for an elite group in the community- Senator Cooney —How many are in that group? Senator MAGUIRE —It was 4.7 per cent, I think. As a result of this Government removing free lunches for an elite group in this community we are being told that Australia will become the white trash of Asia. What absolute rubbish to make such a nonsensical claim! That shows a total loss of perspective by the opponents of this measure. We have had dire predictions about the number of jobs that will be lost as a result of this measure, all of them totally unsubstantiated. A survey was quoted last night by Senator Messner-who is very vocal at the moment-from BIS-Shrapnel on the impact of this measure on the industry. Senator Messner omitted to say that that survey and its findings had been comprehensively destroyed by the Commonwealth Treasury in a report on the matter. That appeared on the front page of the Australian Financial Review of 25 November. One of the things that survey ignored was the positive impact of the tax cuts being financed by this measure. It totally ignored the further expenditure by Australians from the taxation reductions they will be receiving as a result of the revenue raised by this measure. Senator Messner totally ignored that. From examining the outrageous claims that have been made by Opposition spokespersons, by the industry and by beat-up merchants in the media about the number of jobs that might be lost as a result of abolishing the free lunch for an elite group in the community, it seems that the loss of job predictions range, generally speaking, from 10,000 to 18,000. That is a fairly large range. But, of course, those predictions are based totally on guesswork and are totally unsubstantiated, as is the norm with claims made by members of the Liberal Party. Then, of course, we have the completely outrageous claim made by Mr Hodgman, who is a Tasmanian member of the Liberal Party. This is the one that I believe really takes the cake. He has told us that 80,000, not 18,000, jobs will be lost. As Senator Walsh quite rightly pointed out in this House some time ago, fewer people than that are working in the entire industry in Australia. There are not even 80,000 people working in the industry in Australia, yet outrageous claims are made about potential job loss in the industry. We have had all these nonsensical claims about the flow-on effects to the wholesale suppliers to the industry-the food merchants and the butchers-and about the loss of business by those wholesale participants in the industry. The heroic assumption that is being made by the opponents of this legislation is that people will stop eating. That is what it is all about. The opponents are trying to convince the Australian public that people will stop eating. That is the way they are making their claims. I have some concrete figures on the labour situation facing the restaurant industry. I do not have estimates; I do not have propaganda; I have the facts. These official figures have been released by the Commonwealth Employment Service. They are based on the number of job vacancies which are lodged with the CES by employers. They show that 9,726 jobs are vacant in the entertainment and hospitality industries. That compares with only 8,078 jobs vacant in those industries 12 months ago. It seems as if the entertainment industry is growing rather than contracting, as some on the other side would have us believe. In fact, 1,648 more jobs are on offer-a 20 per cent increase in 12 months. That is the situation facing the restaurant and hospitality industries. I understand that those figures are paralleled in South Australia where those ludicrous advertisements are appearing. The CES cannot fill all these job vacancies. It cannot handle the demand. Perhaps that is why an advertisement was placed in the Adelaide Advertiser last month by a company known as Murrick Enterprises. It is a hospitality staff placement and consultancy company. It is right in the centre of the industry. Under the bold heading of `Hospitality Industry', the advertisement asked businesses to `register with us now'. There is obviously sufficient demand for staff in the hospitality industry to keep a specific hospitality industry employment agency going in South Australia alone. That is what is going on. It is clear that the real effects on employment in the restaurant and hospitality industries are well below those claimed. I have noted that new restaurants are opening. That fact is ignored by members of the Opposition. I refer to the opening of a new restaurant in the Riverland region of South Australia which was advertised in the Press just recently. Senator Messner seems to have ignored that. Restaurants are opening. What the Opposition has been saying on this whole subject is absolute nonsense. As for the proposition that the free lunch is an integral and necessary part of business in this country and that business will collapse without it-that is the claim being made-I need only to quote the employee of one restaurant in Adelaide. That employee, who worked in a topless restaurant, said that all she had overheard discussed at so-called business lunches was football, racing and sex-a very frank statement indeed. I support this legislation. It is long overdue. It removes a tax lurk which was available to 5 per cent of the electorate and brings more fairness and equity. Senator SIDDONS(Victoria)(10.30) —We are debating the Taxation Laws Amendment Bill (No. 3) 1985 and allied Bills which will put into effect most of the Government's tax raising measures and which is one side of the Government's total tax reform package. The whole of the Government's tax reform package, I might say at the outset, has placed the Australian Democrats under considerable pressure because without our vote this package will not go ahead. The fundamental issue facing the Democrats at all times was this: If there were no tax reform there would be no tax cuts. I will call on members of the Opposition later to clarify what their position is. Are they for tax reform and tax cuts, or are they against tax cuts? Are they for restoring incentive to the individual via tax cuts or are they not? I believe that our approach to this whole tax reform package whereby we insisted that we discuss the matter with the Government as a total package-not only the legislation before us today but the whole package, the tax cuts and all the Government's revenue raising measures-has been a good one because we have now been able to make our position abundantly clear to the Australian people, and without any doubt that has lifted a cloud of uncertainty from the corridors of this place. Business people out there in the community can now see clearly the way ahead. They know what costs they are going to be up for. As an industrialist and as the chief executive of a public company that was employing 1,800 people when Mr Howard was still a suburban solicitor, I make the point that the worst possible environment for business is uncertainty. It stops forward planning, it stops investment decisions and it has a stifling effect on the economy generally. That uncertainty has now been eliminated; people know what costs they are up for. Let us look at the political implications of the blocking of these tax measures. Had these Bills been delayed over the Christmas period, during that period of uncertainty the lobby groups affected would have organised their campaign, massive amounts of money would have been raised and the corridors of this place would have swarming with lobbyists in the New Year. Already the entertainment industry has spent well over $300,000 in its campaign between September and now. Goodness knows what sorts of funds would have been expended had the period of uncertainty extended into the New Year. Had these Bills been delayed there is no doubt that we would have had an election in 1986. I ask members of the Liberal Party of Australia: Do they want an election in 1986 in their present state of disarray? Senator Messner —Sure. Senator SIDDONS —Do they want to face the prospect of the Labor Party controlling both Houses of Parliament-a very real prospect? Senator Messner —Give us half a chance. Senator SIDDONS —Senator Messner has been very vocal. I listened to him in silence last night, and I suggest that he extend the same courtesy to me. Opposition senators are already on record as saying: `We cannot block this legislation. We will have to get somebody on the Opposition benches to cross the floor if the Democrats do not do the job for us'. They cannot block money Bills without being prepared to face the consequences of an early election. What has been achieved by the Democrats' initiative in this area? I intend to go through that in some detail. I should point out, nevertheless, that the Taxation Laws Amendment Bill (No. 3) covers such things as mining exploration expenses being allowed to be offset against other group income and reductions in film concession taxes. It takes away any concession for forestry and oil. That has been a tax lurk for a long time. It taxes the tertiary education assistance scheme allowance. It changes Australian Capital Territory taxes. It gives concessions to race horse owners. It applies the prescribed payments system to owner-builders. It allows a royal commission access to tax records. It includes a joint tax agreement with Finland. The Taxation Laws Amendment Bill (No. 4) denies entertainment expenses. It requires substantiation of employment related expenses. it extends company tax to unit trusts. It changes deductions for water conservation. It contains some changes to the superannuation tax rebate. I would like to touch on many of these points but time will not permit that, so I intend to concentrate on the total tax package and to explain, I hope, to the chamber the position of the Australian Democrats on the whole package. The passage of the legislation will mean that billions of dollars in tax cuts will be given to all Australians over the next two years. The top marginal rate of tax will be reduced to 49 per cent, a very important initiative. The current 60-plus per cent top marginal rate has been absolutely destroying incentive in this country over the last 15 years. During seven of those years, of course, the Liberal Party was in power-during a period of which the coalition parties had control of both Houses of the Parliament-but it did nothing about reducing the 60 per cent top marginal rate of tax. The ordinary Australian-the tradesman, the school-teacher or the secretary-is taxed now at a marginal rate of 46 per cent, a rate of tax that was designed 20 years ago to catch the millionaires. What does the Liberal Party propose about these important issues? It stands for free enterprise and for incentive of the individual. How would it restore incentive? Where would the billions of dollars come from if the Liberal Party had its way in blocking the tax raising initiatives of this Government? The first point I want to make is that the Democrats consider a capital gains tax absolutely vital if tax avoidance rorts are to be cracked down on. We did not at any stage support a punitive capital gains tax. The capital gains tax in its present form is now one of the mildest of any Western country. Before the legislation ever-- Senator Knowles —That doesn't make it right. Senator SIDDONS —If the honourable senator thinks that capital gains are unimportant and that we can crack down on tax lurks without a capital gains tax, I am afraid her Party did not demonstrate how that could be done when it was in government. The first point I make is that before a capital gains tax ever came to the Parliament, before it was ever made public, six concessions were made to the Democrats by the Government. They were, firstly, that the family home would be excluded from a capital gains tax; in other words, no capital gains tax would apply to the great Australian dream, the family home. The Government continues to reaffirm that. The second concession was that any capital gains tax would be indexed for inflation. This will be one of the few Western countries where that applies. Thirdly, we were absolutely insistent, and the Government conceded, that there should be no retrospectivity, so that assets owned before 19 September do not attract a capital gains tax. The fourth concession was that the Government reduced the death provisions for assessment of capital gains tax. The fifth concession was that losses should be offset against gains-something that was not to apply until we discussed the matter with the Government. The sixth concession was that the capital gains tax would apply at the marginal rates of tax. In pure logic we will now have a capital gains tax which makes no distinction between income earned by effort, by labour, and income earned as a result of capital gains; they will be treated the same. Any income earned by whatever means will be taxed at the same marginal rate. Those six concessions were vitally important and they were conceded by the Government even before the legislation came to the Parliament. We then had a close look at the fine print of what the Government proposed. We were particularly concerned about the impact of many of the tax measures on small business and the farmer. As a result of that examination and of detailed discussions with farmers and small business, we put in writing to the Government 14 requests designed to minimise the impact of the tax measures on small business and the farmer. Of the 14 requests we put in writing to the Government, it agreed to ten. We put those requests to the Government three weeks ago. The Government took two weeks to consider them, during which period the Liberal Party virtually ignored them. They did not receive a lot of publicity. A week ago we engaged in very intensive negotiations with the Government. As a result, the majority of our requests-80 per cent-were agreed to. Our requests were, first, that employee share owners should not be disadvantaged compared with other shareholders; second, that goodwill should be taken as a legitimate deduction in assessing capital gains; third, that capital gains tax should be averaged over a period of five years; fourth, imputation; fifth, that sales tax on solar panels should not be applied; sixth, that sales tax on atlases should not be applied; seventh, that the quarantining of farm losses was unfair and had to be liberalised; eighth, that the write-off period for water conservation should be reduced from five years to three years; ninth, that community welfare groups as opposed to religious groups were being unfairly treated; and, tenth, that the taxing of outputs of firms that giving employees use of facilities that were not otherwise being used should be taxed at a special rate. They were the ten requests the Government agreed to. I shall go through them and explain how important they are and precisely what the Government has agreed to. The Government did not agree to four of our requests. It was not prepared to put a ceiling on the family home for capital gains purposes. We suggested that a ceiling of $500,000 for a family home was not a bad figure for a tax deduction. The Prime Minister (Mr Hawke) said no to that request because he had made a categorical promise to the Australian people in an election campaign that there was to be no tax whatsoever on the family home. That promise is to remain. The gifting of assets to immediate members of the family was not agreed to because the Department of Treasury pointed out to us that to do so would open up a Pandora's box of tax avoidance measures, the like of which we had not seen before and, on careful assessment of its case, we agreed with what it said. So the tax on capital gains in the area of gifts to families is to remain. The third request the Government did not agree to was that sales tax on slow combustion stoves should be removed. The Government said that it would cause all kinds of problems in definition and was worried about pollution in congested city areas. The fourth request the Government did not agree to was that the elimination of the tax deductibility for entertainment expenses should be phased in. I will cover that matter at greater length shortly. Let me talk first about the concession on goodwill. Our request to the Government was simply that for a small business, defined as any sole trader, partnership or private company with assets of $1m, or less, a goodwill component which we defined as 20 per cent of net profit after tax was a reasonable assessment. The Government objected to our definition of goodwill on the grounds that to relate it to profits could be unfair because some sole traders took out large amounts of the benefits of business in salaries, whereas some took no salary at all, and that profits fluctuate quite widely, particularly with small businesses. So it was left that our request for the goodwill on small business would be met in terms similar to those in which we couched it and that careful thought would have to be given to the definition of goodwill so that it did not open up tax avoidance. That is where the matter rests. The Democrats have not got the definition from Treasury yet, but we are certainly not pressing Treasury for it. We believe it needs to be very carefully worked out and that sometime in the new year we will have it. In the meantime we have an assurance that the Government will discuss the definition with us before it is made public, and that it will meet the general terms of our initial request. Senator Macklin —That is everything under $1m? Senator SIDDONS —Every enterprise under $1m, including, I might add, the farm, so that is a very considerable concession to the farmer. Most restaurateurs run a small business, so the goodwill allowance to the restaurant industry, as with any other small business, will be of considerable benefit to them if they want to sell their restaurants at any time. The goodwill concession is a very considerable one. I must say that I get a little cross when I have to sit through question after question from the Opposition during Question Time asking whether the Government could take goodwill into account. The Democrats managed to get that concession as a result of our negotiations but the Liberal Party says that those concessions did not amount to anything-the very concessions that it has been trying to get- Senator Elstob —They're too busy fighting amongst themselves, that's why. Senator SIDDONS —I could not agree more. I think the idea of the Opposition wanting to fight an election in the next few months is so much foolhardiness. The next concession I want to talk about is the one to welfare groups. It seemed to us to be very unfair that religious organisations were to be given tax concessions as they applied to fringe benefits, but that welfare groups were not to be given those benefits. Treasury, in answer to our request on this, said that if all welfare groups were to be given special treatment we would have an immediate enormous proliferation of welfare groups across the country and that that would become an avenue for tax avoidance. What the concession finally came down to was this: As the Government funds most of the legitimate welfare organisations it has said that if any welfare organisation can put in writing a clearly stated case that it has been disadvantaged by the tax the Government will give special consideration to its claim and will ensure that it is not unfairly disadvantaged. That has yet to be spelt out in detail, but that is the undertaking. I think honourable senators will agree that it is a very considerable concession by the Government. I turn to employee share ownership. There have been comments in the media about this as well as a great deal of confusion. The simple fact is that under existing legislation an employee buying shares over a period of, say, five years through weekly deductions from his or her salary or wages was to be taxed on the difference between the issued price of those shares and the price of the shares when they had finally been paid off. These employees were to be taxed on the capital appreciation over that whole period whether or not the shares had been sold. Any other owner of shares was not to pay the capital gains tax until the capital gain had been realised, until the shares had been sold. So there was no doubt that the employee share owners who were purchasing their shares over a period were being seriously disadvantaged. The Government has agreed that the difference between the issue price to the employee and the market price at the time of issue will be taxed, because that is a straight cash benefit to the employee, but that will be the only tax applying to those shares until they are sold. Therefore, the appreciation over the period in which they are buying the shares will not now apply. This represents a very considerable benefit in a vitally important area. Apart from government ownership of the means of production or investor ownership of the means of production, the Australian Democrats believe the better way is for the employees themselves to have a substantial stake in and ownership of the means of production. That can be done through employee share ownership. There is now no hurdle or problem to allowing that initiative to proceed. I hope the Government will move even further in this area later. I turn to the next major concession granted as a result of the Democrats' negotiations. It concerns the quarantining of farm losses. As honourable senators know, the original Government proposal was that quarantining of farm losses should apply to those people who have incomes of $15,000 a year shading out to those people on incomes of $30,000 a year. Anybody who is earning $15,000 a year is on a pretty low salary. That income level does not reasonably apply to most Australians. After much negotiation the Government agreed to a formula whereby a person could earn $20,000 off-farm income and could apply any tax losses to that income to reduce his taxation and that that would shade out from $20,000 to $40,000. In the case of a partnership-most farming enterprises are partnerships-the concession is $40,000 shading out to $80,000. That means that even very high salary earners on, say, $80,000 a year, will be able to write off a large measure of their income. The cost of that concession was estimated by the Treasury to be no less than $45m. The averaging provisions are important. Capital gains can now be averaged over a five-year period so there will not be any punitive tax on individuals when those individuals sell their assets. Senator Messner —That is nonsense. Of course, there will be. Senator SIDDONS —I know that many of Senator Messner's supporters are very happy that these averaging provisions have been applied. Instead of paying a top marginal rate of tax in the year in which a small business is sold, the capital gains benefit will be averaged over five years. Many small business people are on the lowest rate of marginal tax; they earn very low salaries. The averaging concession will be of considerable benefit to farmers who very often work well below the basis wage and to small business people who work 16 hours a day and earn very little salary. That will be of great benefit to those people. I should have mentioned the quarantining of losses relating to farms. It will now mean that only 2 per cent of farmers in the community will be affected by the quarantining initiatives of the Government. That 2 per cent will represent those farmers on very high incomes-the so-called Collins Street farmers. The Australian Democrats look on these tax initiatives of the Government as the first major reform to taxation law in this country for 40 years. It is the greatest initiative that has been applied since the 1940s when Curtin took the income taxing rights from the States. It represents a major tax reform package. We now know that the package will pass the Parliament; the uncertainty applying in this area has been removed. The grandstanding by politicians will now very quickly die away. We are not saying that the Government's tax package is perfect- far from it. We could criticise many things and have done so from time to time and we will certainly do so in the future. We are very concerned that the Government has given concessions to big business, mining companies and oil companies whereby they can write off exploration losses against other income. That will cost around $50m. Senator Messner —But it will not do it for farmers. Senator SIDDONS —Exactly. In this we agree. I believe it has put farms in a special category, which is unfair, and that has been pointed out to the Government. Late last year the Government also allowed a concession whereby a company can write off interest charges against any of its subsidiaries. That has meant that the Alan Bond company of Western Australia was able to take over the Castlemaine brewery simply because of the fact that the interest charges on the enormous amount of money he borrowed overseas can now be written off against the profits of not only Bond Corporation Pty Ltd but also of the target company, in this case Castlemaine-Tooheys. So a flea can now attack an elephant. Having got control of the elephant, there will be enormous tax concessions relating to the profits of the target company. That will cost some $200m in a year-a concession which, from where the Democrats stand, we consider was not necessary, was a very severe cost on government revenue and has encouraged the spate of take- overs, which do nothing to improve the productive capacity of this country but merely lessen competition. In summary, I hope I have made clear that we have been under enormous pressure. I beleive that we have negotiated harder than anybody else could have done. The Liberal Party's attitude of standing flat-footed and putting up a facade of opposition to the legislation got nothing for anybody. At least the tax package now incorporates massive tax cuts to all Australians and will benefit the economy very greatly, no doubt, in the future. If the Government controlled the Senate, there is no doubt that the tax reform package would have been much more severe. It would have been a great problem to business and to the community generally. If the Liberal Party controlled the Senate, we would have no tax reform at all. That has been made very clear by its past record and by its attitude to this package now. The Liberals cannot look past the lobbyists who crowd the corridors of the Parliament. We think that if ever there was justification for the Democrats as an independent third political force in the Senate, this has proved it. I think I speak for all the Democrat senators when I say that we believe we have performed a very worthwhile service to the Australian community in negotiating a tax package with the Government that will not impinge unfairly on any one section, particularly small business and the farmers. It will be of immense benefit to all Australians in the next two years as the effect of the substantial tax cuts begins to be felt in the community. Senator REID(Australian Capital Territory)(10.59) —There are a number of Bills in this tax package, but I wish specifically to address my remarks to the Australian Capital Territory Stamp Duty Amendment Bill 1985 and that part of the Taxation Laws Amendment Bill (No. 3) 1985 which relates to changes to legislation in the Australian Capital Territory. It is necessary for me to go back to the second reading speech of the Minister for Finance (Senator Walsh) who, when referring to these Bills, said: These measures are part of the wider proposal to better align ACT taxes with those levied by the States. These measures would be a little more convincing if there were some better reason for raising taxes in the Australian Capital Territory than merely to bring them into line with those levied by the States. The Minister could perhaps have dealt with this matter somewhat differently, rather than merely treating us in this manner. It is worth looking into the implications of Australian Capital Territory taxes being aligned with taxes in the States, because there is no clear statement from the Government as to which States or which taxes have been considered. There are not uniform taxes throughout the States and one wonders for how long any taxes introduced into any State will appear in the Australian Capital Territory, presumably for no better reason than that the State wanted them introduced here. It is necessary to look at what has gone on. These measures seem to be a bit selective. If it is a revenue raising measure it probably comes into effect; if it is some form of concession it seems to have been left out. It is to some of those concessions that have been left out that I specifically wish to turn this morning. I refer to the question of payroll tax. For a long time Australian Capital Territory firms have had levied upon them payroll tax in line with the New South Wales rate, but we are always months behind. This means that although there is an annual adjustment, firms in the Australian Capital Territory have been disadvantaged by being unable to use the money they have had to pay out while waiting to be brought into line with New South Wales. This may not amount to very much; it may well be that some people just do not see the point in this at all. But the adjustment is made long after the payments. The Pay-roll Tax (Territories) Assessment Amendment Bill 1982 enabled future increases in the level for exemption from payroll tax to be prescribed by regulation. Even so there were considerable delays before the effect took place. On 22 November 1985 an increase in the level of exemption was announced, to come into effect from 1 July 1986. This is a new trend in payroll tax; even so the necessary regulation needs to be in effect and hopefully that will take place long before that date and not months later. Looking back to this year, 1985, we see that the New South Wales change occurred on 1 January 1985, but while the change in the Australian Capital Territory in fact took place from 1 January it was not gazetted until 31 July 1985. Many Australian Capital Territory firms had to pay the higher rate of payroll tax during that time. As I said, it tends to work one way. If it is revenue raising it happens pretty smartly; otherwise it may well be delayed. It is in the area of the master builders apprenticeship scheme and payroll tax that we seem to be most disadvantaged. There is no exemption from the payment of payroll tax in the Australian Capital Territory scheme even though the other State schemes, except for those in Western Australia and Tasmania, exempt the payment of payroll tax. On 15 February 1984 the Minister for Territories and Local Government, in a letter to the Master Builders Association, conceded that there was a very strong case for a rebate of payroll tax on the master builders apprenticeship scheme. The scheme operates to get young people experience in the building trade so that we will have tradesmen for the future. At present 84 apprentices are managed by the master builders at a cost of $1.2m. There could be two, if not four, more apprentices in this exemption which applies in most other States applied in the Australian Capital Territory. The Government says that it is committed to training for young people. We have had the much-heralded and expensive launch of Priority One: Young Australia, but this scheme is operating and it works, and with a little effort it could be made more effective. It could benefit from this exemption to which I have referred. The fact is that if many of these apprentices had been with small building firms payroll tax would not have been paid at all, but because they are in one large scheme payroll tax is levied, and we do not seem to be able to persuade the Government that there should be an exemption. The Master Builders Association is filling a gap; it is producing very competent young apprentices and the scheme is being eroded because it does not have this concession. To return to the two specific Bills, I point out that there are some areas in which we need to ask the Government to consider changes which would bring us more into line with the New South Wales legislation which this legislation mirrors. There is a suggestion that needs to be addressed-that this legislation is retrospective. At the Committee stage I will move amendments in relation to this to each of the two Bills. I have had a number of submissions, in particular one from the Law Council of Australia, which says in paragraph 6: The Law Council is opposed to the imposition of taxation on a retrospective basis. I do not wish to go in detail through all the clauses that are affected, but I seek leave to incorporate the Law Council's submission from paragraph 5 to the end. The submission sets out the details of the clauses which are affected. Leave granted. The submission read as follows- 5. The remainder of this Submission sets out a number of areas in which the Law Council regards the proposed legislation as being deficient. We have not raised minor or mere drafting points but only points which seem to us to be, though technical, of importance. We would urge the Government to ensure that the proposed legislation is amended to overcome these deficiencies prior to it being passed. 6. The Law Council is opposed to the imposition of taxation on a retrospective basis. There are sufficient indications from the proposed legislation to suggest that the Government is not intending for it to have a retrospective operation: see particularly section 8 of the Australian Capital Territory Stamp Duty Amendment Bill 1985 which provides that sections 3, 6 and 7 of that Bill (which sections include the levying of the loan securities duty) ``apply to instruments executed on or after the date of commencement of this section''. However, there are a number of areas where we consider that the proposed legislation could have a retrospective operation and we would submit that these deficiencies should be rectified: (a) Section 8 of the Australian Capital Territory Stamp Duty Amendment Bill, quoted above, should be amended to state positively that the amendments referred to shall not apply to instruments executed on, or transactions or matters or things occurring, prior to the date of commencement of that section. (b) The proposed section 58M of the Australian Capital Territory Taxation (Administration) Act (``the Administration Act'') allows duty to be imposed in respect of events occurring after the date of execution of a particular loan security, where, for example, further advances are made pursuant to that security, or where the total amount secured by a security is increased whether or not pursuant to that loan security. While proposed section 58M (1) (c), covering only one of these situations, specifically provides that duty can only be imposed where the original loan security was executed on or after the date when the provisions come into operation, other parts of s58M do not so specify, in particular s58M (1) (b) and s58M (4) and (5). Thus, for example, it is possible to read s58M (5) as imposing duty in respect of advances made pursuant to a security executed prior to the date of commencement of the provision. We suggest that amendments be made to these parts of s58M expressly to state that the provisions only operate where the original loan security was executed on or after the date of commencement of this section, in the way provided for in s58M (1) (c). (c) A number of the proposed provisions require instruments to be lodged with the Commissioner for assessment within, for example, 30 days after the instrument has been executed: see proposed ss58K (a), 58M (1) (a), (3) (b), (4) (b), (5) (d), 58P (2) (b), 58Q (2) (b). These provisions should be amended to ensure that lodgment is not required in respect of an instrument which is executed prior to the commencement of the provisions, so that, for example, an instrument executed within the 30 day period prior to the commencement of the provisions should not be one in respect of which lodgment is required after the provisions commence. 7. The proposed section 58P of the Administration Act imposes duty on a collateral security ``unless the primary loan security or any other collateral security for the same money as is secured by the primary loan security has been duly stamped''. By section 3 (b) of the Australian Capital Territory Stamp Duty Amendment Bill 1985, stamp duty is then imposed on that collateral security. Therefore, a collateral security which is executed after the commencement of the amendments and which is collateral to a primary loan security which was executed prior to that commencing date (and hence which cannot be said to be ``duly stamped'') will be liable for ad valorem duty, even though the clear intention of section 58P (1) is that a collateral security should not be so liable to duty. The essence of the collateral securities exemption is that, because a collateral security does not increase the moneys already secured (since it must be a security for the same money as is already secured by the primary loan security), it should not be liable for loan security duty; loan security duty is imposed as a result of moneys becoming secured. We therefore submit that section 58P should be amended so that such a collateral security is not dutiable, by excluding from the liability for duty a collateral security where the primary loan security is exempt from duty or is not liable for duty. 8. Proposed section 58R of the Administration Act allows a body corporate to elect to pay duty by a monthly return procedure in the case of a corporate debenture issue. The provision requires details to be set out, and duty paid, in respect of the debentures issued during the preceding month which ``are connected with the Territory''. This phrase covers a loan security where it is executed in the Territory by the Borrower or where the whole or part of the property secured by the loan security is situated in the Territory; proposed s4 (11) of the Administration Act. We do not consider that this is an effective territorial connection for the purposes of the undertaking procedure, since once a corporate debenture issue is secured over property which includes property located in the Territory, it would seem that all debentures issued during the course of the issue would be required to be stamped. Further, it would appear that no credit would be available to the extent to which duty has been paid elsewhere in Australia under s58T, because that provision is limited to a situation where duty is payable on a ``loan security'', and under the procedure in s58R the dutiable document is the instrument brought into existence at the end of each month, which would not usually be a loan security. In this regard, s58R(3) does not go so far as deeming the instrument to be a loan security, but rather simply states that the duty payable is the same duty that would have been payable had the instrument been a loan security. The credit provisions of s58T do not appear to apply to that instrument. We therefore submit that the proposed s58R should be amended so that it operates in the same way as the equivalent undertaking procedures in New South Wales (s84D of the NSW Stamp Duties Act 1920) and Victoria (s137M of the Victorian Stamps Act 1958), namely, duty should only be payable in respect of those debentures which were during the preceding month ``subscribed for in'' the Territory. At the very least, even if this amendment is not made, the monthly instrument required to be lodged under s58R (2) should be deemed to be a loan security, so that s58T can apply to it. We note in this regard that, as presently drafted, since that instrument would not usually be a loan security, the phrase in s58R, ``connected with the Territory'', would not necessarily have the meaning ascribed to it in s4 (11), since that latter provision relates only to ``a loan security''. Senator REID —Thank you, Mr Acting Deputy President. The submission would not make exciting listening, but it is necessary to the substance of the debate to have that information before us. There is no suggestion by any person that the Government intended this legislation to act retrospectively. It may well be that if this matter ever finished up in the High Court of Australia it would be ruled retrospective, but I do not think that it was the Government's intention to let things get to that stage or to that expense. The amendments that we propose to this legislation would ensure that it would not act retrospectively and for that reason we will move them at the Committee stage. There are other anomalies which need to be addressed. In New South Wales if one proceeds to consolidate a number of titles on which there have been mortgages there is provision for the mortgages to carry forward, in a sense, and not acquire duty for a second time. If one has three titles and one abandons them so that they may then be consolidated into one title, one then has a new mortgage which covers the mortgages that previously existed. Under the Australian Capital Territory legislation if one wishes to consolidate leases or make a change of purpose clause one would need to surrender the lease, discharge the mortgage and get a new title with the consolidated lease or the change of purpose clause, and one would then have a new mortgage. One would have paid duty on the mortgage the first time and, the way in which this legislation is drafted, it seems that one would have to pay duty again the second time. I believe that can be corrected, perhaps by an amendment to the Real Property Ordinance. It needs to be done and I would like an undertaking from the Government that it will attend to this and adopt that course of action as a concession. It applies in New South Wales and there is no reason why it should not apply in the Australian Capital Territory. There is a provision in New South Wales whereby a first home owner can get deferral of payment of stamp duty over a period of five years. There is no suggestion that that provision is actually in the Stamp Duties Act, but in fact it is an administrative arrangement which applies in New South Wales and is of benefit to first home buyers. Under the same principle which the Minister for Finance used to bring in this revenue raising legislation, he might also introduce this deferral into the Australian Capital Territory to give that benefit to citizens of this Territory who are also having great problems purchasing and maintaining homes at present. The very high interest rates which operate at present are having an effect on many people's ability to maintain their mortgages. This point was conceded only the other day in this chamber when the Minister for Education (Senator Ryan) commented on the number of constituents she was seeing who have this problem. These same people, of course, are somewhat bemused by the legislation that we have before us at present, which is all revenue-raising. Many of these people thought that the announcement in the tax package that there were to be tax concessions really meant something and that they would be better off with tax reductions. But if these tax concessions come at all it will not be for a very long time. With the disappoinment of that announcement and the ever increasing interest rates I am now in a position where I am seeing-as I have been-people who are running into difficulties with their mortgage repayments. It is worth looking at just one letter which I have which sets out the plight of a number of people in the Australian Capital Territory. I will not use the constituent's name as it is not relevant but, of course, I have it. The letter states: Dear Senator Reid I am writing to you to seek your assistance in a matter of house loan repayments. In December 1984 I purchased a home for myself and my two dependent children. The purchase price of the house was $85,000.00 of which I contributed approximately 50% and borrowed the balance from Canberra Permanent Building Society over a 25 year loan period. During the ensuing 12 months the interest rate on this loan has risen four (4) times . . . I noticed an announcement in the Canberra Times this morning that the Canberra Permanent Building Society expects to have to raise interest rates and mortgage repayments again in about three months which, of course, will exacerbate the problem I am referring to. I return to the letter which continues: . . . increasing my repayments from $479 per month to $529 per month (an increase of 10.5%) and an overall interest rate hike of 2%. I was distressed to hear yesterday that a further interest rate increase was imminent. This letter was written some several days ago. The letter continues: This will increase my house repayments to approximately $546 per month, an increase in 13 months of $67 a month or $804 per annum. The new repayment figure of $546 per month now represents over 40 per cent of my nett income, a situation which I find very difficult to cope with along with other cost increases such as electricity, rates, food etc. I am a single parent with two teenage children (ages 15 and 13 years). On a single income and with the rapid increase in interest rates I am finding that day to day living has now become a matter of mere survival from pay day to pay day. The letter goes on: I would appreciate it if you could advise me on the following: and these are the points which the Government must address and must answer- (1) Is there any course of action I can pursue to try to alleviate this escalating interest problem. Perhaps the Treasurer (Mr Keating) can tell us when interest rates will come down. The letter continues: (2) Is there any help available for a person in my position. Is there any help available for those persons who are attempting to support their families, provide accommodation and do the sorts of things that any family wants to do for their children? I repeat that the letter states: (2) Is there any help available for a person in my position. The tragedy, of course, is that this constituent has to seek help. She is a woman in employment, buying a house and looking after her children, but she needs to say these things. The third question is: (3) How much longer will this interest rate increase continue. This constituent is not the only constituent who is asking that question but, as yet, we do not have answers. As Senator Messner has said, people all over Australia attempting to purchase their own homes are saying: `How much longer will this go on? How much longer will I be able to keep my house?' This constituent states that, if she has to sell her house, or if she is forced out of it and she has to seek government accommodation, it will be a tragedy for her, it will be an additional cost for the Government and it will not solve anything. I seek leave to incorporate in Hansard this letter that I have received because this constituent goes on to deal with a number of other matters which are relevant. Leave granted. The letter read as follows- 27 November 1985 Senator M. Reid 47 Mort Street BRADDON ACT 2600 Dear Senator Reid I am writing to you to seek your assistance in a matter of house loan repayments. In December 1984 I purchased a home for myself and my two dependant children. The purchase price of the house was $85,000-00, of which I contributed approximately 50% and borrowed the balance from Canberra Permanent Building Society over a 25 year loan period. During the ensuing 12 months the interest rate on this loan has risen four (4) times, increasing my repayments from $479 per month to $529 per month (an increase of 10.5%) and an overall interest rate hike of 2%. I was distressed to hear yesterday that a further interest rate increase was imminent. This will increase my house repayments to approximately $546 per month, and increase in 13 months of $67 per month or $804 per annum. The new repayment figure of $546 per month now represents over 40% of my nett income, a situation which I find very difficult to cope with along with other cost increases such as electricity, rates, food etc. I am a single parent with two teenage children (ages 15 and 13 years) on a single income and with the rapid increase in interest rates I am finding that day to day living has now become a matter of mere survival from pay day to pay day. I would appreciate it if you could advise me on the following: (1) Is there any course of action I can pursue to try alleviate this escalating interest problem. (2) Is there any help available for a person in my position. (3) How much longer will this interest rate increase continue. I feel that if these increases become a monthly or two monthly occurence as they have been over the last few months I will be forced to sell my home and then become a burden on the Government as I will not be able to buy another home and will have great difficulty in obtaining rental accomodation, which as you know is at a premium in Canberra and probably more costly than loan repayments. I have worked for the past 12 years to support myself and my two children and now find that, although I have provided them with a roof over their heads, I am finding it increasingly difficult to provide the other essentials of life such as clothing, food and education. My daughter is in Year 9 at a Government school and wishes to progress to university. My son, due to physical disabilities attends a private school with special education facilities at a cost of some $750 per year which will increase as he rises through the secondary grades. These factors, along with the house repayment increases is making our lives exceptionally difficult. As my elected representative in the upper house, I would appreciate it if you could bring this problem being suffered, not only by myself but by many many others in the community, before Government and take some steps to put a stop to this situation of rapidly increasing interest rates that is now and will continue to cause such hardship within the community. I would appreciate any assistance you can offer. Yours faithfully The ACTING DEPUTY PRESIDENT(Senator Jessop) —Senator Reid, do you want the name of the person who wrote the letter to be included? Senator REID —The name has not been included on the copy which I have submitted. I certainly have the name and have spoken to the woman in question. There is no need for her personal affairs to be displayed in that way. In summary, the Bills provide specifically for revenue raising in the Australian Capital Territory. I have referred to those areas where I believe the Bills do not deal with the Australian Capital Territory fairly as compared with New South Wales. I ask the Government to undertake to make those concessions which I have sought. I specifically urge the Government to accept the amendments which put the question of retrospectivity beyond any doubt and to examine most closely the submission from the Law Council which I have incorporated. I certainly urge the Government to look at the question of the master builders apenticeship payroll tax scheme to which I have also referred. Debate interrupted. Senator DURACK(Western Australia) —by leave-I give notice that, on the next day of sitting, I shall move: That leave be given to introduce a Bill for an Act to amend the Family Law Act 1975 with respect to maintenance and the enforcement of decrees. Senator TOWNLEY(Tasmania) —I seek leave to move a motion to withdraw notices of motion standing in my name. Leave not granted. Debate resumed. Senator TOWNLEY(Tasmania)(11.17) —Today the Australian Democrats told us how many concessions they had obtained from the Government in their dealings. I must admit that some of the benefits which they have achieved will be of help. However, the question I ask myself is: Have they obtained enough benefits? In view of the fact that sometimes the Democrats go in all directions, I have to wonder whether they will all vote in the same way. If they do not vote in the same way, will it mean that some of them feel that not enough benefits or concessions were obtained? I am sure that we will not know which way the Democrats are voting until the numbers go up. If the Government can allow some alteration to this tax package, which was supposed to be complete, as dictated by the Democrats, I believe it should accept some of the amendments proposed by the Liberal Party, particularly the amendments relating to the restaurant industry. The Treasurer (Mr Keating) admitted in his speech in the other place that there are legitimate claims that should be allowable for businesses as businesses expenses, but he seemed to indicate that it was just too hard for the Government or the Commissioner of Taxation to organise. No doubt other speakers will expand upon that later. I believe that early next year the Government will see the effect of this legislation. At that stage the holiday period will have passed and restaurants will have to reduce their staff further. I have been informed that some restaurants already have had to reduce their staff and that they will look at the situation much more closely next year. Senator Knowles —A temporary upturn. Senator TOWNLEY —There has certainly been a downturn in the restaurant industry. I believe that some retaurants are continuing during this holiday period, which is one of their busiest times, and after that they will make decisions. I am sure that some restaurants will not support the Government's claims. I have suggested in this place that reducing tax is a way of trying to get some initiative back into the Australian community. Years ago I suggested that there should be a 50c limit for any personal tax rate. Before the light struck the then National Country Party in Queensland-- Senator Aulich —Has it ever? Senator TOWNLEY —They have a lot of lightning in Queensland and they have to get struck every now and then. Way before then, I was one of those who suggested that Australia should copy countries such as Switzerland and Hong Kong, both of which have a flat tax structure. I think that in Hong Kong a flat tax of something like 15 per cent applies. In Switzerland, which is a quite different country in many ways, there is a flat tax of about 25 per cent. Anything that moves us along that course towards a lower tax rate, which provides more initiative, is something which I believe has a lot going for it. To obtain such a structure for our tax system is a problem for this Government, as it was for its predecessor. We have to recognise in this country that the time has come when there has to be a true attempt to reduce government spending. On many occasions I have pointed out that over recent years Australia has been spending much too much. This has been particularly so since the Hawke socialist Government came to power. Australia is more in debt per head, as I have said before, than many of those South American countries about which we have heard so much over recent years. We are more in debt per head than Argentina, Brazil, Mexico and Chile. One thing noticeable under the previous Fraser Government was that there were real attempts to keep the deficit at a much lower value than has been the case since the Hawke socialist Government came to power. I do not believe that this country can go on like this for much longer. I also believe that in years to come the people of Australia will hate the Australian Labor Party, which has allowed the massive overseas debt to rise so rapidly. A country is not much different from an individual. If an individual borrows too much the time comes when the bank, or whoever is lending the money, says that it will not lend him any more or, if it does, the interest rates that it asks are even higher than the rates that the present Government is having to offer to keep the value of our dollar up where it would like it to be. We have to keep in mind that our public debt interest rose from $967m, or 4.4 per cent of Budget outlays, in the financial year 1975-76 to $5,656m, or 8.9 per cent of Budget outlays, last financial year. It is expected to rise by nearly $1,100m to $6,724m in the present financial year. That figure represents 9.7 per cent of Budget outlays. That is a frightening amount. Whilst I do not like to talk about figures, because I know that many people do not listen when one talks about figures, it is a frightening amount and a very frightening increase in the proportion of our outlays that is being paid out as interest. The amount represented 4.4 per cent of Budget outlays in 1975-76. This financial year-if things go the way the Government thinks they will, I think that position will be worse than this-the figure will be up to 9.7 per cent of our total Budget outlays. That is more than is spent on education, health or defence. We are getting to a very dangerous situation. To put the amount of interest that we are paying into figures that can be understood, the figure is 67 followed by eight zeros. I was not in the last war, but if I had been followed by one zero I would have been worried. Certainly, a figure followed by eight zeros is a very frightening one. The Government's spending has to be reduced, or at least it must be held static whilst we attempt to trade out of our very real difficulties that I believe almost put us on a par with those countries of South America. One has only to look at the prices we are getting these days for some of our major commodities. It is very difficult to sell our wheat. The prices we are getting for our coal, iron and other exports are not increasing to the extent we want. If we are not very careful we will become a Third World country. Getting back to what the Democrats claim to have done, what guarantee have we that the Government will bring in legislation to reduce tax rates in this country? Have the Democrats obtained a cast iron guarantee that that will happen? I have been advised that the Government will not be able to honour its commitment to reduce tax rates. The value of the Australian dollar is such that, I believe the Government is already looking for ways to get out of that commitment. Therefore I believe we are now being presented not with a whole part of a package but with a tax increase package and it is very doubtful whether tax reductions will ever come to fruition. If the Government is serious about this package it should bring in tax reduction legislation now, dated, if the Government wishes, for the time it has stated it will become effective. If the Government does not bring it in now we have no way of knowing whether it is serious. We have seen the Government change its package because it was told to by the Democrats. It is a real pity that the Government will not accept, because it is stubborn, some of the amendments that have been foreshadowed by Senator Messner on behalf of the Liberal and National parties. About a week ago I said that I would support a reduction of taxes. That is the main change I want to see happen in this country. I am now not sure that that will happen and unless the Government can bring in supporting tax reductions at the same time, I will not necessarily support its legislation. Senator COONEY(Victoria)(11.27) —The argument for entertainment allowances being tax deductible has been put very well by the other side. Perhaps all that can be urged has been urged most eloquently by honourable senators opposite. The difficulty that this side faces is this: That advocacy has been undertaken on behalf, as Senator Maquire has said, of about 5 per cent of those employed, which leaves this side to represent the other 95 per cent. That is the problem. If funds are abundant there are no problems at all with taxation. The other side has pointed out that a free lunch is perhaps a matter that could be taken into consideration but if, as honourable senators opposite have said, there are problems with taxation and how the money is to be divided, are 95 per cent to be denied proper tax relief for the sake of 5 per cent? By that I do not indicate that the 5 per cent should not have their case put as it has been. What I say is that the 95 per cent are entitled to have their case put-and put strongly. Should a person who is troubled with mortgage payments, troubled with the amounts of money that go out of the income that comes into the household each week, not be entitled to some consideration? People who get additional consideration are those who get the entertainment allowance. They get all the other benefits that the ordinary wage earner gets but, in addition, this 5 per cent wants a further allowance above and beyond what others get; that is, an entertainment allowance. I have no difficulty with the Opposition putting the argument as it has on behalf of the 5 per cent. However, I should say that honourable senators opposite get paid the same as honourable senators on this side who are advocating on behalf of 95 per cent of the public, as distinct from the 5 per cent. That is a reality. Is the proposition about an entertainment allowance that people cannot be entrepreneurial, people cannot do business, people cannot produce, carry on industry or trade without doing it over lunch? If that is the proposition does it mean that a judge who will hand down sentence can do so only if he goes to lunch with the prosecution and the counsel for the defence in order to work out his judgment? I can understand the proposition that, if one has lunch with someone, that ought to be a tax deduction because business is done in nice surroundings. But honourable senators opposite put the argument with vehemence; they say that this is absolutely crucial. This is a vital element of their argument. It is the emphasis honourable senators opposite give to that which leads one to the conclusion that they are saying that no industry can be carried on, nothing can be carried on, unless it is done over a free lunch. If honourable members opposite are not saying that, there will be an opportunity for others to correct it later but certainly the vehemence with which the arguments have been put from the other side would lead one to that conclusion. Later speakers in this debate may disabuse me of that opinion by simply saying: `A business lunch is not really vital for their business; it is simply an additional perk of office'. If that is the position there are certainly enough Opposition speakers following me who could disabuse us of that opinion. Senator Messner —You won't listen; that's the trouble. Senator COONEY —The people outside will not listen? I am sure people will listen if the honourable senator puts his argument logically, strongly and well. The honourable senator said that that has not been done. I thought the Opposition had done a good job putting its argument but if it now says that the argument has not been put properly, perhaps Opposition senators who will speak later can put the argument with the vehemence which the honourable senator thinks is appropriate. We will wait and see what is said about that. As it remains, the Opposition's proposition seems to be that business cannot function in this country, industry cannot be carried on, unless it is done over lunch between the lobster and the caviare or whatever else one has. In my old trade we used to work over lunch preparing what had to be done for that afternoon. Apparently, some say that this cannot be done unless it is done outside the office, away from the papers that would otherwise be needed, away from the facilities that people normally need to do business and at a considerable price and at a restaurant. It seems perhaps ungracious that people are willing to take others to lunch to do business if they get a tax deduction for it but are not willing to take them to lunch if it will cost them anything. I often wonder about the graciousness of that. It seems rather ungracious to say to someone: `I will take you to lunch only so long as I can get a tax deduction for it'. Senator Townley said that the real answer to this matter is a flat tax and he suggested that everybody pay a flat rate of 25 per cent. So a person on $4,000 would be taxed $1,000 and be left with $3,000 to live on and a person on $200,000 would be left with $150,000 to live on. Does that mean that a person earning, say, $10,000 a year with four children would be left with $8,000 while a person on $100,000 a year with no children would be left with $75,000? Is that equity? It was put by the Opposition that that is the equitable way of doing things. We on this side of the Senate say that the family man, the person who is battling to educate his children, to pay off a mortgage and to set himself up in life, should be given some regard for those situations; that a deduction ought to be allowed for his children, that the family ought to be encouraged, and that it ought to be recognised in the tax structure. To say simply that those sorts of considerations should be ignored and that people should all be taxed at the same level, no matter what their incomes are or their sources, seems to this side of the Senate to lack equity. But again, that is a proposition put by the Opposition, and it will be interesting to see whether Opposition speakers who follow me in this debate adhere to the proposition that there ought to be a flat tax, or whether they will move away from that. It is said that Australia is more in debt than various other countries. It was not pointed out that the major debt is private debt, or what that debt is compared with this country's assets. It is a playing around with figures to create what can only be called a false impression. A complaint was made by Senator Reid, properly, that interest rates are a problem for mortgagors. I understand that the Opposition's proposition is that interest rates for housing loans should be deregulated. Senator Messner —You are about to raise the ceiling, after Saturday, aren't you? Senator COONEY —Well, there will be various-- Senator Messner —After the South Australian election, up they go. Senator COONEY —The evidence is the only thing that we can go on, and it is that there is a proposition, accepted by Senator Messner's Party, that interest rates for housing loans ought to be allowed to rise. If that is not the situation, the 10 speakers to come on the other side can deny that. If there is a denial now that the Opposition embraces the proposition that housing loan interest rates should be allowed to rise to whatever level banks might care to put on them, one of the 10 speakers who follow me will have the opportunity of stating that. If none of them does, the conclusion can reasonably be drawn that they accept the situation that the banks should be allowed to declare whatever interest rates they like for housing loans, and then it is a matter for the people of Australia to judge whether they want to accept that situation. In any event, Senator Reid having quite properly raised the question of interest rates for housing loans, it is left where it is. This side says, `Yes, there are restrictions, and there are limits on the amount of interest that banks can charge people who borrow for housing'; the Opposition says, `No, no such limitation should prevail'. That is the situation. The other thing that ought to be mentioned about the measures brought in by this Government is that they have made an attack on the poverty traps. An illustration is that as from 1 November next year, the amount of private income that a pensioner may earn before his or her pension is reduced under the income test will be increased by $10 per week for single pensioners and by $20 per week for pensioner couples. This will increase the amount that single pensioners can earn each week without affecting the pension from $30 to $40, and for couples the figure rises from $50 to $70. These measures bring in provisions to enable pensioners to earn more than they previously did, to get extra income so that they can sustain a decent standard of living. If that sort of situation is brought about by coming down on entertainment expenses, does anybody complain? That is the choice. Do we take measures which will help to enable money to be given to those who need it-mainly pensioners-or do we leave tax deductibility to people who want to have lunches, and, as Senator Maguire so eloquently put it, very expensive lunches? Again, this Government will abolish the separate income test on rent assistance. At present, as is said in the statement, this test leads to the withdrawal of 50c in rent assistance for the first and each subsequent dollar of income earned. Abolition of the test will mean that a benefit of up to $15 a week will flow to 300,000 pensioners with non-pension incomes in private rental accommodation. Also, the Government proposes to assist pensioners with children further. That has already been set out in the statement. The Government looks at the people in real need of help, and it gives it to them. In addition, as Senator Maguire will confirm, the Government has lowered the base rate of taxation, the lowest rate, to 24 per cent, I think, whereas the best that the Opposition could do when in government was to reduce it to 30c in the dollar. This Government is given over to the proposition that those in need should be helped, and that if money has to be taken from anywhere in rearranging the way that money in the community is distributed, it should be taken from those who can afford to have it taken from them. Whereas it is true that the Government takes away the entertainment allowance, it gives extra benefits to pensioners and to those on lower incomes, and indeed, it reduces the rate of taxation for everyone. Senator Peter Baume —No, it doesn't. That is simply wrong. Senator Messner —That is totally misleading. Senator COONEY —No, that is right. The tax rates will be lowered. Senator Messner —When? Senator COONEY —They will be lowered, in accordance with the scheme, next year and the year after. That is the proposition. Senator Messner —Some time, never. Senator COONEY —It is dreadful to see such cynicism coming from people in this chamber whom we have come to know and love. But there is no doubt, as night follows day-- Senator Messner —After you see an assets test and a lump sum superannuation tax which were not promised, you know how to take it. Senator COONEY —Senator Messner's difficulty is that the Government has set down a program, which I think the honourable senator secretly admires, and the only way that he can get over it is to say, `It will not happen'. I could understand a proposition put by the honourable senator-- Senator Messner —Have you been living in academe all your life? Senator COONEY —Let us follow through what the honourable senator has said. I could understand an argument coming from him in which he said, `The Government's proposal is wrong for the following reasons', and then set them out. But he does not say that. He says, `The Government's proposal is never going to happen'. It must follow from that, as night follows day, that what he is really saying is, `Yes, the Government's proposal is good; the only way that I can get round it is simply to say that it will not happen'. The reality is that it will. By his comments, the honourable senator is really endorsing the program that the Government has set forth. I have not gone into these matters as deeply as Senator Maguire did in his excellent speech. The reason I have not done so is that Senator Maguire's speech was definitive in this area. Senator Messner —You are in real trouble then. Senator COONEY —I do not think so. I thought that Senator Maguire's speech was lucid, well researched and very accurate. Senator Boswell —Written by the ACTU. Senator COONEY —If Senator Maguire's speech was written by the Australian Council of Trade Unions-which it was not-or if it was written by anyone else, what does that matter when he pointed out the great benefits that will come to this country through the Government's program? If the benefits are there, if what Senator Maguire was saying is true and correct, if, as he said, there will be benefits to everyone, if he says, `I am here to look after the 95 per cent of the population, as distinct from Opposition speakers who look after the 5 per cent'-that does not seem to be denied-what does it matter who wrote the speech? That is the point I make. I think that the speech has about it all the hallmarks of Senator Maguire. It is clearly a speech by him. Senator Boswell would agree with that. He wants to help the poor, does he not? Senator Boswell —I do, but I don't want to help by putting them out of work, and that is exactly what you are doing. Senator COONEY —Of course Senator Boswell does. Of course he wants to help those who are less fortunate. This is the program by which we have set out to do it. Senator Messner —It will help the accountants and lawyers; that is about it. Senator COONEY —I will not, on Senator Messner's invitation, go into a hatred session on accountants and lawyers. I think accountants and lawyers perform very good and proper functions. With great respect to Senator Messner-I know that he did not intend this-the effect of his comment is to condemn the lawyers and accountants of this country; they are members of very honourable and very productive professions. The fact that some lawyers and accountants might do the wrong thing does not mean that all accountants and all lawyers do it. In fact, they are both very traditional and very honourable professions. I defend them and rebut the suggestion that in some way they should be condemned. In any event, the reality of the whole matter is that this is a great scheme and, as Senator Siddons has said, an historic scheme, encompassing the greatest reforms that have been made in this country in the last 40 years. Senator PETER BAUME(New South Wales)(11.47) —The simple answer to the argument of Senator Cooney and the simple explanation of the Opposition's position, which has been put already by Senator Messner, is that the Opposition believes that any expense legitimately incurred in the earning of income should be allowable for the purposes of income tax. That is in essence what we are asserting, and that is what the Government is setting aside. All the sophistry and all the arguments relating to non-legitimate expenditure do not go to the issue we have raised-that expenses legitimately incurred should be allowed. We will continue to make that principle known in the community, and the Australian Labor Party in the end will have to explain why it has now moved to a situation in which legitimate costs to business will no longer be allowed to be offset as expenses. The Senate is debating a package of Bills, one of which is the Social Security (Poverty Traps Reduction) Bill 1985. I wish to address a few words to that Bill. It is timely that we do so. Senator Cooney drew attention in his speech to the need to support the most needy people in society. Indeed, he drew attention to the provisions of this part of the tax package, and it was timely that he did so. Poverty in Australia, as measured, is increasing. I note from the Sydney Morning Herald of 11 November-a notable date, the sixty-seventh anniversary of Armistice Day 1918-that the number of people below the poverty line in Australia is measured at 800,000 and rising. The Canberra Times of the same day, referring to the same figures on deprivation, talked about a major departmental study revealing 40,000 people homeless and more on the verge. There is no doubt, when we look at deprivation and need, that Australia has an urgent requirement to respond to that need today and now. Indeed, the Government, in its taxation package, saw fit to identify certain poverty traps and to indicate that it wished to respond to them. What is a poverty trap? A poverty trap is a disincentive created by a combination of a taxation rate and a benefit withdrawal, so that when people who earn a certain income lose a part of their benefit and have to pay tax end up paying tax at such a punitive marginal rate that they give up trying. They may discover that they are better off not trying or that for every dollar they earn they may keep as little as 1c. Senator Maguire —Twenty-four cents in the dollar. Senator PETER BAUME —I notice that the senator from South Australia, who has had his go, continues to chatter on. There are very many poverty traps in existence. The Government has determined that it will address three of them. In one case the Government has addressed the trap by indicating that it will take steps to overcome it. For one of the three poverty traps, the one involving the separate income test on rental assistance, it has proposed measures which will actually address the question of the high effective marginal tax rate. On that issue only can the Government be said to have addressed the poverty trap. We say to the Government: Congratulations. That is a worthwhile endeavour. We welcome the fact that the Government has looked at that poverty trap, and that part of the legislation is welcome. The two other poverty traps which the Government says it has addressed, it has not addressed. It has increased the income free margin before the poverty trap applies, but the people who are receiving certain benefits will discover that the poverty trap is still there. The high effective marginal tax rate-that is what a poverty trap really is-will continue to operate at exactly the same level except at a higher level of income. So, while the Government has given some useful relief to many people, it has done nothing and proposed nothing to touch the poverty trap itself; the poverty trap being, as I said, a combination of a high marginal tax rate and a benefit withdrawal as people earn their income. The Government must acknowledge that it has done nothing to affect the poverty trap itself in the other two matters. When the Government seeks to increase the pension free area by $10 a week for single pensioners and $20 a week for married pensioner couples, and when it seeks to increase the disregarded income for pensioners with children, it is giving people some temporary relief, but when their income increases exactly the same poverty trap will operate and those people will be caught. I ask the Government to acknowledge that it has not touched the poverty traps about which it has trumpeted so much. It is bad enough that it is trying to sell to the public something which it has not in fact done, except in one of the three cases. In the other two cases it has not done it. But, worse than that, the Government has acknowledged that the poverty traps exist. I have indicated that the level of poverty is rising; yet the Government has said that it is unwilling to take any action to relieve these poverty traps until the end of next year. The people who are caught by the combination of benefit withdrawal and high marginal tax rates will get no benefits whatsoever for another 12 months from a government which says: `These measures are necessary to help the least able to look after themselves, to help the needy, to help people who are caught in what the Government acknowledges are undesirable poverty traps'. Why will they not be helped until next year? The Government has found its way open to do some other things this year. I had occasion to look at the Budget Speech for 1985-86. I have just picked out the Government's announcement for benefits to the racing industry. The Government has found its way clear to say: Three measures are to be adopted to assist the horse racing industry. By the way, I am not objecting to the measures but I want to contrast the readiness of the Government to respond to the racing industry and its slowness to relieve poverty traps. The Government said: First, the income tax exemption currently applying to some sporting clubs, such as football and athletic clubs, is to be extended to horse and greyhound racing clubs. That measure will apply immediately, by the way. But the pensioners caught by these poverty traps will wait a further 12 months. That is one indication of the Labor Government's priorities. The Budget Speech states further: Secondly, a more generous livestock valuation option will be available to horse breeders for the purpose of the trading stock provisions of the income tax laws. But the pensioners will wait another 12 months before any action is taken to ease the poverty traps in which they are caught. The Budget Speech continues: Thirdly, to assist in improving Australia's thoroughbred bloodstock, all horses imported after tonight are to be exempt from sales tax. The Government is able to take that action on Budget night, but when it comes to relieving the poverty traps in which needy Australians are caught, they have to be grateful that the measures will take effect in October 1986. Surely if it is worthwhile responding to these poverty traps it is worthwhile doing so now, today, when this legislation passes. Senator Kilgariff —They are not showing much horse sense. Senator PETER BAUME —I say to my colleague, Senator Kilgariff: The Government is not showing much compassion. That is the point. Again, by looking at the Budget Speech and looking at this measure we get a clear idea of the Australian Labor Party's priorities: Improving Australia's thoroughbred bloodstock is a priority which must be responded to immediately on Budget night, but the pensioners can wait until October 1986. The public should understand that that is the set of priorities of the Australian Labor party. Senator Michael Baume —Pensioners lose by the length of the straight. Senator PETER BAUME —My cousin says: `Pensioners lose by the length of the straight'. I think that the pensioners of Australia can dwell upon this and reflect upon the priorities that drive the Treasurer, Mr Keating, on. Secure behind the very high income that he draws for himself, he will never be in the position in which the people caught in poverty traps find themselves. Further, many other people are caught in poverty traps and no help has been offered for them. I have had some tables prepared within the Parliamentary Library. They are based upon a number of assumptions about the way we and the Library believe the taxation system works. If these figures are correct-I have every reason to believe they are-they indicate that poverty traps are a serious problem today for very many pensioners. For example, let us look at the effective tax rates which age pensioner couples are paying. For every dollar they earn over $70 per week or have as other income, they are paying tax at effective marginal tax rates that are higher than the rate of the highest income earner in Australia. In fact, a pensioner earning $70 per week is paying effective tax of 68c in the dollar when we combine the tax he has to pay and the benefits which are withdrawn. That goes as high as 80c in the dollar when a pensioner's income is about $180 a week and later on even goes as high as 94c in the dollar. These are the effective marginal tax rates which pensioners are facing. Let us look at the situation of supporting parents with, say, two children. This group of people are often desperately anxious to earn more income for themselves, to get out of dependency and become independent again. For every cent they earn over $64 per week they are paying tax at an effective marginal tax rate that is higher than that of the highest income earner in Australia. They are paying 62c in the dollar and it rises later on to 99c in the dollar. There are supporting parents who, at a certain level of income, if they earn an extra dollar, will keep 1c of that dollar. The Labor Government with its set of priorities has not seen fit to try to help with that poverty trap either, the same as it did not help with the other poverty traps; it simply lifted them a little. Let us look at the situation facing a married unemployment beneficiary with two children. For every cent he earns over $80 a week he is paying tax at an effective tax rate of 100c in the dollar. What kind of incentive is there for any person on the unemployment benefit with two children paying 100c in the dollar to lift a finger to try to improve his situation when every cent he earns will be taken from him either as tax or by way of benefits to be withdrawn? Above $80 and up to a level of about $273, a person does not pay just 100c in the dollar, he has effective marginal tax rates which go as high as 129c in the dollar; that is, for every extra dollar he earns he loses $1.29. Senator Michael Baume —That is the Labor incentive scheme. Senator PETER BAUME —My cousin says: `A Labor incentive scheme'. It certainly is not an incentive for any of these people to do anything to help themselves. I urge the Government, if it is really going to look at poverty traps, to look at some of those high effective marginal tax rates. How does the Government explain the fact that it is willing to give immediate relief to race horse owners but it is going to make the pensioners wait until October 1986? How does it explain the fact that what it calls poverty trap reduction in fact does not affect two of the poverty traps out of the three to which it has responded? The Opposition welcomes the relief the Government has given to the one poverty trap it has touched-the one involving the separate income test for rental assistance. We welcome and support that measure. The other measures constitute simply another incomplete, partial and delayed benefit for people-a benefit which, if it is important enough to include, should have been included for immediate relief of the poor, if necessary by delaying some of the other benefits which were given so readily in the Budget. On behalf of the Opposition, I move this amendment to the motion for the second reading of the Social Security (Poverty Traps Reduction) Bill 1985: At end of motion, add: ` but the Senate notes with concern- (a) that the measures contained in the Bill will not take effect until November 1986; and (b) that, in respect of two of the poverty traps, while the Bill increases the levels of income which may be earned without affecting social security benefits, it does not affect the existence of those poverty traps as such'. That motion does no more than state the facts. I hope the Senate will see its way clear to respond to them. Finally, I noted earlier the defensive self- aggrandising speech made by Senator Siddons on behalf of the Australian Democrats. Senator Siddons wanted to tell the Australian people how much the Democrats had done. We do not need Senator Siddons to tell us this. It may be better to find out how the cartoonists of Australia regarded the achievements of the Australian Democrats in altering the tax package. First, a cartoon in the Sydney Morning Herald of 29 November shows a dinner-jacketed Paul Keating at the door of his house tossing a one cent coin into the begging cup of Don Chipp while Don Chipp says: `All it takes is grit and determination'. If we do not like that cartoon we can look at the Canberra Times of 29 November, which is an even more accurate commentary on just what the Democrats did and did not achieve. It shows a sphinx-like Paul Keating-that might be the best description-standing behind Don Chipp, the Don Chipp as we know him, I must say- Senator Michael Baume —Battered. Senator PETER BAUME —Yes, a battered Don Chipp. There is a tax package all done up in front of them and Don Chipp is saying: `We regard it as a damned important victory. We get to choose the ribbon'. That just about sums up what the Australian Democrats have done. They in fact have sold out on the Australian people. Let no one be in any doubt. They have achieved nothing. They have sold out and the Australian people will be the losers. I commend the amendment and arguments put by my colleague, Senator Messner. Senator KNOWLES(Western Australia)(12.05) —I think we have heard some very interesting debate so far on the Taxation Laws Amendment Bill (No. 4). We are yet to figure out what Senator Maguire was saying. I think it is rather disturbing when we have a Government senator who can say that there may be some effects on the restaurant and hospitality industry. I suggest that the best thing Senator Maguire could do would be to go out and check whether there will be any effects on the restaurant and hospitality industry. I can assure him that if he jolly well went out he would find out-- Senator Walsh —He is too busy to have a long lunch. Senator KNOWLES —Not jolly likely! He certainly was not busy preparing his speech because he did not have any facts in it. I have never heard such unadulterated rubbish in this place or in my life as what Senator Maguire said. He had absolutely no regard for the facts or for the people who are or will be, in fact, suffering. Senator Messner —Which State does he come from? Senator KNOWLES —South Australia. It is very interesting-- Senator Boswell —What would he know about the wine industry? Senator KNOWLES —Precisely. Senator Maguire has done absolutely nothing to try to protect his wine industry which he said was not even suffering in South Australia. My colleague Senator Peter Baume has already covered very adequately the position the Australian Democrats have taken on this matter. For Senator Siddons to talk about the six concessions the Government has given the Democrats is ludicrous. I think the only concessions the Government has given the Democrats has been to allow them six discussions, and that is about the limit of it. We have only to look at the jolly weak amendment put up by the Democrats. They have sung a song for the last month or so saying that they will be the pirates, the pioneers, who will save Australia from the wrath of this Government. The Democrats' amendment states that they agree to this Bill with reluctance. Is that or is that not weak? That says it all; they agree to it with reluctance. If that is not grandstanding, what is? I want to address the subject of the entertainment tax. The blanket disallowance of entertainment expenses, as embodied in this legislation, is a fine example of the Hawke socialist Government's attitude to the private sector and small business in particular. Without attempting to differentiate between legitimate and spurious claims for entertainment deductions and without considering the extent of profit and job losses in the hospitality industry, this Government has just decided to single out a major aspect of business life as a scapegoat for its failure to contain costs and revenue losses in other areas. From the outset, this Government has made no attempt whatsoever to prove its case, to the effect that thousands of dollars are being lost to revenue by deductions that are essentially false. Looking at the statement of 19 September, the basic justification for the disallowance of entertainment expenses is contained in one sentence: A good deal of claimed business entertainment is done on a reciprocal basis and as much for social and personal benefit as for business purposes. I ask members of the Senate: Where is the hard evidence to back up this assertion? What percentage is legitimate? The Government has paid absolutely no regard to what percentage is legitimate and I think it is about time it did so. This Hawke Government likes to hide behind vague generalisations and sneering references to the `so-called business lunch'-the free lunch. The Government keeps referring to the free lunch. At the same time, this Government blandly admits that its actions will result in the denial of deductions for general business purposes. But in the Government's words, there is no practical alternative. I suggest that it is about jolly time the Government looked for a practical alternative because there is a legitimate point to be raised here. But the Government says: `No, we can't look at that; it's simply all too hard'. We could all be excused for thinking that this Government could not be bothered with trying to find a way to draw a distinction between legitimate and improper use of claims for business entertainment expenses. Deep down the Hawke Government seems to have felt that a degree of business bashing was in order to appease the trade unions and all the factions within the Australian Labor Party-the Left, the Right, the left right out, the Centre Left and all the rest of them-and as a punishment for failure to support the original tax package at the embarrassing Tax Summit of last July. Neither is the Hawke Government prepared to elaborate on the estimated savings of $310m in 1986-87 resulting from this measure. For a government which purports to understand the private sector, the Hawke socialist Government shows a profound lack of understanding of the role of entertainment in furthering business growth. Entertainment on a reciprocal basis, which was referred to so disparagingly, is a time-honoured adjunct of business life, especially when dealing with the Japanese. One could hardly say that the Japanese enjoy a reputation for inefficiency or laziness. Senator Boswell —You could take them to McDonald's. Senator KNOWLES —Yes, that is what the Government would love-take them to McDonald's. The Japanese are particularly efficient people. They know how to run businesses. We are meant to ignore them completely when they visit us. The point must be made strongly that small businessmen need to use business entertainment as a substitute for expensive marketing and public relations campaigns that only larger businesses can afford. The claim by this Government that it is trying to knock big business on the head is absolutely absurd. The Government is affecting the small businessman more than anybody else. A large company can afford all the alternatives. A small legal firm, for example, may badly need to have an annual party, an annual function or whatever, to encourage its existing clientele and to increase its clientele. The attracting of new clients is surely part of profits. Nor should we accept the arguments of the Minister for Finance (Senator Walsh)-a Western Australian senator who shows absolutely no regard for the Western Australian situation-and Senator Maguire that somehow the worker with the paper bag of sandwiches is subsidising a businessman in a restaurant. What a childish jolly attitude that is. There again, they have consistently shown that they simply do not understand the problem. Senator Parer —He is doing his best. Senator KNOWLES —I can assure the honourable senator that he needs to do a lot better than that. The Senate should take the point made by the Perth restaurateur who noted that the same businessman might over a lunch clinch a deal to create many new jobs for those so-called sandwich eating workers. Comments by the Treasurer (Mr Keating) and the Minister for Finance display an uncaring arrogance towards their critics and a bland disregard for the wider consequences of their action. On 15 October the Minister for Finance admitted that the Government had made no study of the possible employment consequences of this decision and contented himself with the assertion that money diverted from the restaurant industry would move into other areas where it might do more for the long term health of the economy. Is not that a very sane, sensible statement? The Minister for Finance does not seem particularly concerned that the hospitality industry of Australia is a major employer of young and unskilled labour. Let us not forget that. According to the labour force survey of the Bureau of Statistics, some 214,000 Australians were employed in restaurants, hotels and clubs in August 1985. I would have thought that a responsible government would have tried to think through the employment consequences of disallowing entertainment expenses which are having a very real effect within Western Australia and across the nation. The contrast has to be drawn between the punitive attack on the business lunch and the mild reduction of tax concessions on films which will still attract a 120 per cent tax free component of earnings. The Government hereby hopes to save $35m, although the tax White Paper earlier identified that this whole tax shelter cost nearly $100m in 1984-85. We can conclude only that if Phillip Adams had lobbied for the restaurant industry instead of the film industry probably a lot fewer Australians would be looking towards diminished livelihoods and lost jobs. In the Government's supposed zeal to throw the baby out with the bath water by disallowing all entertainment expenses, the Hawke Government has nonetheless created a grey area between business lunches and tax deductible seminars. The Government is saying that one can have a tax deductible seminar as long as it runs for four hours and no refreshments are served. Is not that just fine? Many seminars, especially for the small businessman, are twilight seminars. They start at about 4.30 or five and run for about an hour or maybe two hours. The Government is saving: `You cannot have those. The small businessmen and operators can no longer go to seminars that are going to be educational for them in the long run'. Of course, the Government would not have considered any of those small businessmen, those professional people, who operate individually, but has just made a blanket ruling that a seminar should run for at least four hours. Neither do such people have access to in-house training like the professionals employed by large firms, but this Government does not want them to have access to training in seminar situations either. I should add that these seminars are followed not by dinners but by light refreshments, giving participants the opportunity to discuss what they have learned and other industry related matters. If any Government senators had ever bothered to go to a business seminar they would know jolly well that after these seminars what is discussed is not the price of eggs in China but business-but the Government could not care less about the small businessman. How absurd it is for the Hawke Government to discourage small business self-education when its own commissioned statistics point to the fact that small business failure is closely related to the lack of any formal training. Last May the Department of Industry, Technology and Commerce released a report on `Small Business Programs-Research and Evaluation'. These figures show that of 4,130 small businesses existing between 1973 and 1981 50 per cent had failed by 1981, and that of these 73 per cent of the owner managers had failed to attend any training course. This Government is saying: `It does not matter if you continue to go broke; do not go to any training courses'. Another survey showed that only 27 per cent of small business people had attended courses or had even read relevant books. Surveys like this are clearly a waste of time and money if the response of this blinkered Hawke Government is to further discourage self-education when it is so badly needed. If the Government is not prepared to advance detailed figures of its own, it cannot sit back and sneer at several surveys and predictions as to employment effects of its action. On 1 August Mr Les Rogers of the National Restaurant and Catering Association warned that the elimination of tax deductions, causing a 10 per cent drop in business, could result in the closure of over 7,000 restaurants and the loss of 10,500 jobs. Shortly after the announcement of the tax package a survey by Horwath and Horwath predicted a 15 per cent loss in sales, confirming the loss of 10,000 jobs. By 19 October a survey by the Restaurant and Catering Association revealed that 5,000 restaurant workers in Australia had already been sacked a month after the announcement, with downturns of at least 30 per cent. It helps to recall at this stage that on 23 September the Minister for Sport, Recreation and Tourism (Mr John Brown) had predicted a fall in trade of 10 per cent and the closure of restaurants that had been set up as tax rorts-yet another Minister displaying a complete lack of understanding for the industry. The American Express survey released on 24 October may have exaggerated projected job losses at 40,000, but at the same time we cannot ignore the fact that 70 per cent of the 304 restaurants surveyed expect to lose at least one-fifth of their business-and this Government simply does not care. Those restaurants employing over 19 people on average expected to cut numbers to 16, which must translate into a heavy loss of jobs, if not actual dismissals. Finally, as Senator Messner said last night, we are warned by a survey released at the end of October by BIS-Shrapnel on behalf of the Australian Tourism Industry Association that 11,000 jobs would be lost in the hospitality industry and over 7,000 jobs elsewhere, a total of some 18,000 jobs. When Senator Messner mentioned that in this place last night the Minister for Finance sneered at it and just laughed. So we can see that he is treating this whole thing as a joke. This report strongly questions the assertion by the Government that $310m will be saved. Rather, there will be a loss to revenue of $105m in lost profit, and a rise of $34m in unemployment benefits. Reduced purchases by the hospitality industry could involve a loss of $77m in indirect tax revenue. This would cut the effect of the revenue gain by two-thirds. Even if the surveys were half right, an important section of the economy has taken a severe blow. One of the biggest lies being pushed by this Hawke Government is that the disallowance of entertainment expenses is most likely to affect the rich, the wealthy businessman, and the large firm. In practical terms, as I have already said, it is going to affect small business and professional people most-not large businesses, because large businesses have expertise that they can draw on. I would like briefly to inform the Senate of exactly what is happening in Western Australia and to the whole infrastructure that supplies the industry in Western Australia. There are over 800 restaurants within the metropolitan area-a highly competitive industry that operates on low profit margins and in which the market-place removes inefficient operators. Proprietors of restaurants that I speak to do not need to be told by the Minister for Finance, Senator Walsh from Western Australia, that they are running tax shelters and indulging bludgers. The wage component of restaurants has increased from around 30 per cent to anywhere up to 47 per cent, and for this reason the erosion of profit margins through this government-induced recession is causing many restaurants to run at a loss. At the same time the average restaurant faces problems in borrowing its way out of any difficulty as most have so little collateral. The cost squeeze is compounded by the fact that the most severe loss of business has been in the lunch trade, where penalty rates least apply. We must not think that the unusual Christmas upturn is different; it is not. All it is doing is delaying the inevitable. It is very much a short term reprieve. Many restaurants have already suffered bulk cancellations for Christmas functions and some of the others are surviving only on the remaining commitments they already have for Christmas. The point must also be made that job losses cannot be expressed only in terms of dismissals. The number of people who have had reduced hours is absolutely enormous. People in the restaurant industry do not want to be given the surprise news: `Whacko, you can go home tonight at 10 o'clock'. They do not want to go home at 10 o'clock. They are being paid an hourly rate and they have budgeted on an hourly rate. Senator Peter Baume —They want to work. Senator KNOWLES —They want the work. They want the input. Because they do not register on Commonwealth Employment Service figures, this Government has the audacity to say that the industry and the people whose livelihoods depend on this industry are not being affected. How much more blinkered can it get? The October CES figures are simply too early for anybody to deny that there is a problem. It is preposterous of the Government to use those figures as a yardstick with which to clobber restaurateurs over the head and beat them into silence. Let me now cite some hard evidence of what is happening to a couple of businesses. Mr Gordon Traill, President of the Restaurant and Caterers Association of Western Australia, stated on 7 October that there had been a drop in business across the board of between 25 and 40 per cent. At his own restaurant, the Mediterranean, this had resulted in staff hours being cut by 166 hours each week, the equivalent of four full time jobs. This, of course, is a concrete example of how actual dismissals are being avoided or minimised. Another prominent and successful restaurateur, Mr Sandy Khoo of the Emperors Court, reports a 25 per cent loss of dinner clients with turnover down 30 per cent overall. The state of the lunch trade, at the time of the year when it is expected to improve, has declined drastically to a stage when on 19 November he had two customers and on Wednesday, 20 November, there were nine. This is a restaurant with a capacity of 200 and it is well known and very popular. This means that eight staff still had to work for nine customers. The result has been that one of four highly qualified cooks has been laid off, a drink waiter and a trainee have also gone, a bar manager has not been replaced and the hours of part time staff have been cut to a bare subsistence level. It must not be assumed that this problem affects only the so-called high quality restaurants. There are consistent reports of reduced turnovers across the board. Nor should it be assumed that we are dealing with a problem that affects only our capital cities. In the regional centre of Bunbury in the south-west of Western Australia both suppliers and restaurateurs confirm a collapse of the lunch trade. Two leading restaurants report a drop of 40 to 50 per cent in lunch time business, causing one to reduce staff from six to four, with reduced hours for part time workers. While again it is true that the seasonal upturn is now stabilising the loss of business, the fact remains that business is still down at its traditionally best time of the year. Senator Messner —And it undermines tourism. Senator KNOWLES —It has undermined tourism right across this country and will continue to do so. The tourist industry in this country is already suffering from this Government. We need more incentives, not disincentives. In addition, the businesses that back up the restaurant industry are being affected dramatically. A leading seafood supplier reports a 15 per cent drop in sales, with the decline most marked in the high priced items bought by restaurants, such as lobsters and prawns. The sales figures for the Central Oyster Supply have dropped and in fact are comparable with the weekly returns of October 1983 when the number of restaurant outlets was far smaller. When companies' sales are being compared with those of 1983, we are surely seeing a problem that cannot continue and cannot be allowed to continue. These reduced sales figures from an efficient supplier dominating the restaurant market tell a far more tangible story than any statistic from the CES or any Government senator possibly can. These losses to the Central Oyster Supply will also involve a loss to its carriers at some 9 per cent of the projected loss to the supplier. Inevitably, while this business will continue to survive, it will be looking to reduce its staff rather than to expand and double its staff by an extra 12 employees as was originally planned. I add that this particular company has built a new processing plant which certainly would not have been built had it been able to foresee the ludicrous action being taken by this Government. The wine industry is yet another industry that has been affected. As I have already said, the South Australian Labor senator, Senator Maguire, showed absolutely nil respect for the South Australian wine industry. Fortunately in Western Australia we have more concern for the Western Australian wine industry. Sales to restaurants are down by one-quarter to one-third, with particular effect on the sale of premium wines. Senator Walsh —So the free lunch is a drunken binge after all. Senator KNOWLES —When such a firm does 40 per cent of its business through restaurants, it is faced with a 10 to 15 per cent drop in its overall turnover. It is interesting that the moment one talks about the wine industry, Senator Walsh pipes up and says that all one is doing is going on a drunken binge. That is the mentality that we are dealing with-the mentality of a Labor socialist Minister who says when one is talking about the all important wine industry that one is going on a drunken binge. Senator Parer —He is very sensitive! Senator KNOWLES —Yes, perhaps he is sensitive to it. But the damage does not stop in the wine industry with the loss of profits; it goes right back to the Western Australian suppliers of premium wine who have been relying on restaurants as a major outlet. I ask the Senate to recall that the small wine producers were the worst hit by the imposition last year by the Hawke Government of the 10 per cent sales tax on wine. They have already been hit by that 10 per cent sales tax by this socialist Government. It is not a matter of reduced profits. We should realise that in the south-west of my State most vineyards are still within the 10 to 14 year establishment stage, before which steady profits cannot be expected-a stage that the Government is doing its best to prolong. If this Government is allowed to run rampant even further, the 10 to 14 year establishment stage will be prolonged even further-to 20 years at least. I doubt whether the ramifications of the disallowance of entertainment expenses received any consideration before this decision was taken, much less any concern. Other suppliers to the hospitality industry cannot be ignored, such as the linen suppliers who do 90 per cent of their business with restaurants. One particular supplier has already retrenched two staff out of a staff of 22. A supplier of paper serviettes doing 75 per cent of business with the hospitality industry suffered severe losses in monthly sales. The point must be reiterated that when major suppliers suffer such downturns it is clear that the hospitality industry is suffering right across the board. This legislation ought not to be dignified with the description of a tax reform; it is simply a tax change. It is an ill-conceived attack on business put forward without evidence of the dimensions of the misuse of deductibility or of the wider effects it would have. As a result we have seen difficulties created for the small business sector both in respect of businessmen who make valid commercial use of the business lunch and dinner, and in respect of the very large segments of Australia's hospitality industries and the service and primary industries that supply them. Thousands of Western Australians are being affected by this legislation. Let us make sure that no more Western Australians or other Australians will be affected. I urge the Senate to support the amendment that we are putting forward. There are legitimate lunches; there are legitimate claims. All we are asking is that this Government simply allow the same deductions for this section of the business community as for any other section of the business community. The ACTING DEPUTY PRESIDENT(Senator Colston) —I call Senator Jessop. Senator Georges —This will be good. Senator JESSOP(South Australia)(12.31) —Mr Acting Deputy President, I immediately seek your protection from my left, from Senator Georges. I know that he can become rather violent on occasions, which has been evident in recent times. He has not had a haircut either. There have been some very thoughtful contributions from Opposition senators to this debate on the Taxation Laws Amendment Bill (No. 3) and allied tax Bills. It is of regret to me and to many people throughout Australia that the suggestions made by members of the Opposition in their very thoughtful speeches have not been regarded as significant by the Government. Moreover, and perhaps even more significantly, the Government has had no regard for the outrage expressed throughout the community of Australia about the damage that will inevitably be done and has already been done by the taxation measures that the Government has seen fit to introduce. I am very disappointed that the personal tax deductions were not introduced immediately. That was something that needed to be done to encourage people to put more effort into their work, to spend more money, to generate more revenue for the Government in other ways. It just demonstrates how badly thought out this package has been. The Hawke Government has adopted this package, some of which the Senate is considering in these Bills. These measures are designed to raise money in order to provide Australian taxpayers with long overdue personal tax reductions. Senator Georges —Do you object to that? Senator JESSOP —No; I am saying that I am all for that. But I object to the manner in which this Government chose to do it. These reductions should have been provided, at least in part, immediately. I do not think the Treasurer (Mr Keating) did his sums correctly. People throughout Australia have to wait for the personal tax reductions until next year, with a little more the following year. By the end of this Parliament, both the Treasurer and the Hawke Government will go down in history as the worst economic managers in Australia's history. Regrettably, many Australians will be forced to suffer at the hands of the Hawke Government because of the economic course that it has chosen to take. I add that the best thing that was going for this Government during its term in office was the wage freeze initiated and put in place by the Fraser Government. It was about the only thing that had any effect on the economy. The people of Australia will remember 1985 as the year of the Hawke Government's taxation mess. It will be long remembered for a tax summit that revealed the decadence, disorder and disunity of the Hawke Ministry. It will be remembered as the year in which Mr Hawke was able to exercise his expertise in attacking entrepreneurial drive and businessmen throughout Australia who create wealth and jobs. For over a decade when he was President of the Australian Council of Trade Unions he led the charge, creating inflation, unemployment and a record number of strikes. It was with that background that he came to lead Australia as Prime Minister. During this year Mr Hawke and his Treasurer have attacked the restaurant business, the wine industry, the food and beverage industry, the fishing industry, the farmers, the hospitality industry, the convention industry, the travel industry, the tourist industry and the made in Australia car industry. The Taxation Laws Amendment Bill (No. 4) is the result of confusion and ideological vindictiveness at the hands of the Hawke Government towards small business. Honourable senators ought to examine some of the effects of the tax measures in the Bill. A lot has been said about this package, its alleged pleasantries and its unpleasant aspects. I start with the so-called pleasantries. The pleasantries are supposed to generate the need for the damaging unpleasantries of these measures. First, let us not forget that all the benefits are for the future. Only part of the promised tax cuts comes into effect in the next financial year. The rest are due in the following year. At the same time, the Government is fuelling inflation which will mean that the effects of the tax cuts will be cancelled out before they come into being. I mention the plummeting dollar and the escalating interest rates which today reached a record level, I think, of 19.75 per cent. These are combined with indexed taxes on items such as beer, petrol and cigarettes. It was a very clever move by the Hawke Government, was it not, in its first Budget to increase automatically the price of petrol every six months? It is an inbuilt inflationary factor, because no matter what commodity one deals with, transport costs are very significant. Fuel costs represent a major percentage of overall costs. Beer, petrol-all these commodities-are consumed essentially by the working population, the people this Government purports to represent. Inflation means that, by the time the tax cuts arrive, most wage and salary earners will be in higher personal income tax brackets. Therefore, the revised personal income tax provisions will not give much relief at all. We will be back to our present terrible situation. In order to assuage the wage and salary earners, I have no doubt that it will be necessary for the Government to increase the rates of the tax unpleasantries in this Bill and to find other ways to milk the community. The present tax package must be seen in this light because the effects of this Bill will be cumulative. In other words, more of the same will be absolutely necessary if the Labor Party continues its present extraordinarily inept economic management. The critical aspect of the Taxation Laws Amendment Bill (No. 4) is that a substantially increasing tax burden will be placed on com- panies. Estimates of the figure vary from between 15 to 20 per cent. Corporate costs inevitably will be increased which, in turn, will adversely affect employment, prices and investment. The Government believes that corporate profits are such that business can afford this hike of 15 to 20 per cent in company taxes. This is not the case, even with a profit share of 15 per cent of the gross domestic product-not high by world standards. Businesses are still recovering from previously low profit levels. The mining industry, agriculture, the raw material processing industry and most of the manufacturing industry has not yet recovered from the slump of the early 1980s. The only industries that have made a small and fleeting recovery are the building industry, the motor vehicle industry and the service industries. The building industry has recovered mainly as a result of an injection of government funds. The motor industry and service industries are the very industries for which this Bill will create most dificulties. I deal first with the motor vehicle industry. The tax on company cars is supposed to be a tax on salary packages. However, the majority of company cars are used by people such as salesmen, maintenance personnel and supervisory staff who must move from office to field or factory floor. Others affected are laboratory staff who are troubleshooters in industry and who have to go from the laboratory to their premises. The Hawke Government certainly had these industries in its sight and particularly the bosses or owners of businesses. They will not go without at all. Some in intermediate management may lose their Fairlanes or Fairmonts, but the boss will still buy his fully imported Rolls-Royce, Mercedes or Porsche. According to the figures I saw in Monday's Australian Financial Review the growth in sales of such imported luxury cars has not been affected by the tax on company cars. Senator Georges —Not yet. Senator JESSOP —No, it has not. That is right. But let us see where the industry is being affected. For the year to May growth in the upper luxury car market was 34.2 per cent. For the year to October it was 33.7 per cent, which is only a marginal change. However, growth in the market for average motor cars to May was 22.8 per cent. By October the growth rate had fallen to 5.9 per cent. The article I refer to is worthy of incorporation in Hansard. Senator Georges —Oh, come on! Senator JESSOP —It is only a small article. Is the honourable senator frightened of it? He is frightened to read it, frightened that the public of Australia will realise what a mob of phonies Government members are. Mr Acting Deputy President, I seek leave to incorporate in Hansard this short article which sets out in detail the effects of the tax on company cars on car sales. The ACTING DEPUTY PRESIDENT(Senator Colston) —Senator Jessop, the article does not look too short to me. Senator JESSOP —It is. It is only very short. You can have a look at it if you like, Mr Acting Deputy President and, if the Minister for Finance (Senator Walsh), who is at the table, agrees, I would appreciate having it incorporated in Hansard. Leave not granted. Senator JESSOP —Honourable senators opposite are still getting upset about it. Sales in the car industry, which affect the average worker, plummeted from 22.8 per cent in May this year to 5.9 per cent in October. That shows what an incredible imposition this Government has placed on the motor vehicle industry. At this rate it will not be long before the growth of the motor industry will be negative. In other words, the Australian care industry will be shrinking, which will mean a loss of jobs, profits and taxes and various sorts of losses by the States in registration fees, by insurance companies in comprehensive insurance and by the State Government Insurance Corporation in South Australia in third party insurance. At this very moment I suspect that a demonstration is being held in South Australia by the motor industry against the Hawke Government's devastating impositions which have created such a downturn in business. The industry would be demonstrating against John Bannon and the Bannon Government for their gutlessness in not standing up to the Hawke Government. It is no wonder that people in South Australia are extemely upset about the damaging effects of the taxation package this Government has introduced. It is all very well for honourable senators opposite to try to interject, but a considerable amount of anger is being demonstrated right now in South Australia against the Bannon Government. In Adelaide, just this week, a demonstration was held which was organised before the election was announced. It was a spontaneous revolution against the gutlessness of the Bannon Government. I believe that it is an endorsement of the assurances that have been given by the future Olsen Liberal Government which will be in control of the Treasury benches after Saturday. Debate interrupted. Sitting suspended from 12.45 to 2 p.m. Senator CHANEY —My question is directed to the Leader of the Government in the Senate. It arises from the speech that the Treasurer gave yesterday to the Euromoney conference, which has already been referred to in this place. I ask: Does the Minister agree that the Government's reported intention to press ahead with legislation which would give the Australian Council of Trade Unions control of the Commonwealth Public Service superannuation fund makes a mockery of the Treasurer's assurances to the Euromoney conference that the Government believes not in employee control but in shared responsibility? Senator BUTTON —Frankly, I am not sure what the arrangements are in relation to the Commonwealth superannuation fund. Senator Chaney —You have legislation before the Parliament. Senator BUTTON —Yes, I understand that, but I think there have been discussions about that legislation. I do not think the honourable senator can rush to the conclusion that the legislation is necessarily going forward in its present form. Senator ZAKHAROV —Is the Minister for Community Services aware that the head of the child care studies course at the Prahran College of Technical and Further Education in Victoria wrote to all applicants for this course on 21 November advising them that intakes into the course may need to be drastically cut for 1986? The letter claims that this action is necessary because of the reduction in the level of subsidies which centres will receive as a result of the recent amendments to the Child Care Act. Is the Minister concerned about this situation? Senator GRIMES —Yes. Senator Zakharov understates the situation when she suggests that I might be disturbed about this occurence. What in fact has happened is that Ms Bissland, who is the head of the child care studies department at Prahran College, has written to all potential young students who are applying for places in the child care studies course in her department advising that the number of people acceptable for that course in 1986 may need to be drastically reduced because of the Government's changes to child care funding. I believe it is an appalling state of affairs when the head of a department, funded by Commonwealth and State governments, takes this attitude and writes this sort of letter for party political purposes to young people who are wishing to increase their opportunities of obtaining work in an area in which there are indeed increased opportunities for work. Ms Bissland's claim that there will be a reduced need for trained staff in child care centres is absolutely false. It is of considerable concern to me that she should make such a statement. Senator Peter Baume —It is a sense of deja vu. Senator GRIMES —It is a sense of deja vu, indeed, and those of us on both sides of the place have heard this sort of rubbish from people in Victoria such as Ms Bissland. I wish to point out that this is false. Centres in Victoria and elsewhere will still be required to employ qualified staff to maintain quality care, first of all to meet licensing requirements-I hope Victoria will soon have licensing requirements, like the other States-and, secondly, because they will not receive Commonwealth funding unless they do provide qualified staff. Ms Bissland claims in her letter that the reduction in the level of operational assistance will mean that centres can no longer afford to employ qualified staff. Ms Bissland deliberately ignores the fact that whilst there is a reduction in the operational subsidy, there is in fact an increase in the fee relief subsidy and there will be an increase in the amount of fees received from parents, and centres will in fact receive the same amount of funds. Senator Chipp —What political party does she belong to? Senator GRIMES —I do not know what political ties Ms Bissland has. I am not very interested in that. What I am concerned about is that young people who are seeking to improve their capacity to get a job, to improve their qualifications, are being dissuaded from doing so by individuals such as this. I will be raising the matter with the Minister for Education in Victoria, Mr Cathie. In the meantime I can only say to the Prahran TAFE that if it does not wish to conduct this course I am sure Mr Cathie, and perhaps even my colleague Senator Ryan, will be willing to transfer the funds it gets to conduct this course to another institution which will. If heads of departments in TAFE colleges are going to play party political games like this, they do not deserve the funding that they receive and in future I will make every effort to make sure that they do not get it. Senator REID —My question is directed to the Minister for Finance. I refer him to the statement made by the Minister for Territories relating to the local council to be established. He said that a guarantee will be included so that the existing level and range of services can be kept up for two years. I also refer to a statement made by the honourable member for Canberra on Australian Broadcasting Corporation radio this morning, when she said: You know, we have got a five-year guarantee. I mean in politics I think we are very fortunate in that we can say for the next five years this proposal will not cost people any more and the services will not be reduced. Can the Minister tell us what the proposals are for the financial partnership between the Commonwealth Government and the people of Canberra once the council is established? Senator WALSH —The question comes within the Treasury portfolio and not the Finance one, but subject to the prevailing level of the Australian Capital Territory's own State-type taxation being maintained, there is a guarantee of maintenance for two years and, subject to confirmation by the Treasurer, I think it is to be negotiated from then on. The DEPUTY PRESIDENT —Before I call on the next question I draw the attention of honourable senators to the presence in the gallery of former Senator Neville Bonner. I welcome him back to the Senate. Honourable senators-Hear, hear! Senator AULICH —I ask the Minister representing the Minister for Defence and the Minister for Foreign Affairs whether he has seen the article by Mr Ian Davis in yesterday's Age entitled `NZ forces face US military equipment ban'. Could the Minister comment, first, on the allegation that the United States has asked Australia to ban New Zealand soldiers, sailors and airmen from using American equipment in service with the Australian Defence Force? Secondly, could he comment on Mr Davis's claim that the Prime Minister has refused to see the New Zealand Deputy Prime Minister, Mr Palmer, during his visit to Australia this week, as a `signal of displeasure to the Lange Government'? Senator GARETH EVANS —The article in question is one that is riddled with inaccuracies. I am able to say quite squarely, so far as the first part of the question is concerned, that the Government is not aware of any such plan. It has certainly not been signalled to the Australian Government in any shape or form whatsoever. As a result we are not in a position to believe anything other than that the article is not factually based in that respect. Perhaps more significant still is the claim that was made by the journalist that the Prime Minister had refused to see the New Zealand Deputy Prime Minister, Mr Palmer, who is now in Australia, and the interpretation attached to that, that this was to be construed as a `signal of displeasure to the Lange Government'. I am able to say that those suggestions are utterly and absolutely without foundation. As the Prime Minister himself said in Adelaide yesterday, no request to see him was made by Mr Palmer and, accordingly, there has been no question of any decision being made not to see him. I am further able to say, having just had lunch with Mr Palmer, that from his point of view there is equally no substance whatsoever in that suggestion. There is enough mischief being created on this matter without it being contributed to by journalists engaging in wild flights of speculative fancy. Senator MACKLIN —Is the Minister representing the Minister for Aboriginal Affairs aware that out of the funds appropriated for the national Aboriginal trachoma program in the last three years-$1m each year-only half has in fact been spent? Further, is the Minister aware that 60 per cent of that half a million dollars has gone on administrative costs and not on treatment for the 4,500 Aboriginal people who are going blind from trachoma? Given the fact that the funds have been appropriated, that trachoma reports have argued for community based programs and that communities in high trachoma areas have already sought funds, I ask the Minister to explain why nothing will be done in this matter until March next year. Senator RYAN —I have some information on the administration of the trachoma program and its expenditure. The report on trachoma and eye health has been received and Mr Holding is having the report distributed widely to enable interested organisations the opportunity to comment on the report and to assist him in implementing the most effective on-going program to improve this area of Aboriginal health. During 1984-85, $524,611 was expended by the Department of Aboriginal Affairs and a further $41,553 was expended by the Commonwealth Department of Health on the trachoma program. To date an amount of $200,600 has been allocated to State trachoma committees during 1985-86. These committees will continue to operate until Mr Holding is in a position to implement the most effective on-going program to combat trachoma. Senator MACKLIN —Mr Deputy President, I ask a supplementary question. I asked the Minister whether-the figures she gave confirm this-only half the amount of money allocated for this program currently is being spent. After all, the Minister for Aboriginal Affairs had the trachoma report on 28 August this year. That means that although we have had the report for six months nothing will happen until next year. I ask: Will in fact that $1m appropriated, not only this year but last year, be spent? Senator RYAN —I will have to refer the request for specific information to the Minister. However, I am sure that Mr Holding is at least as anxious as Senator Macklin is to see that program effectively administered. I am sure he has been giving the matter his close attention. However, I will see whether I can get more detailed information on the program implementation for Senator Macklin. Senator BLACK —My question is addressed to the Minister representing the Minister for Social Security. In view of the practice of the Queensland Housing Commission of raising the rents of tenants eligible for family income supplement, can the Minister advise the Senate whether this Federal supplement is intended to be assessed as income? If the supplement is not intended for assessment as income, can the Minister advise what steps the Federal Government intends to take to protect the living standards of low income families in Queensland who are also tenants of the Queensland Housing Commission? Senator GRIMES —Senator Black brings to our attention yet again an action of the Queensland Government, in particular acting through its various welfare departments, which is making life difficult for low income people and particularly unemployed people. What has happened in Queensland in this case is similar to what happens with its scheme of assistance to help those who have a disability, where the Queensland Government applies a much more stringent means test than does the Federal Government. The Queensland Government Housing Commission routinely sends all tenants who appear to be eligible for family income supplement a notice advising them to apply for this payment from the Department of Social Security. Senator Chaney —That is a good thing, isn't it? Senator GRIMES —That is a good thing, as Senator Chaney says. As he was the Minister responsible for introducing the family income supplement, I think he should think it is a good thing. At the same time, the Queensland Housing Commission calculates what it considers the tenant's family income supplement entitlement should be and immediately takes that into account as income. I am not sure that Senator Chaney will agree that that is a good thing. The tenant then has some three to five weeks to produce to the Queensland Housing Commission written advice from the Department of Social Security as to his or her family income supplement entitlement, or lack of it. If this advice varies from the QHC's calculations retrospective adjustments are made. If the tenant does not produce a response the Queensland Housing Commission imposes a $20 a week fine until the tenant produces such a document. What is more, this penalty in fact can be increased each quarter. Therefore, the QHC, acting as judge and jury-without a trial in fact; if one can do that-imposes this fine. I think this raises many questions about the Queensland Housing Commission's powers and rights over its tenants. No other State housing commission adopts such an attitude towards its tenants as to fine them for not applying for the family income supplement. In Victoria, New South Wales and South Australia family income supplement is not taken into account as income, nor is it taken into account as income by the Department of Social Security or the Australian Taxation Office. In the Northern Territory the Housing Commission advises tenants to apply for family income supplement. As Senator Chaney says, that is a good thing. If those people receive the family income supplement that is taken into account as income. If they do not receive that supplement, it is not taken any further. In Tasmania and Western Australia family income supplement is taken into account unless the tenant proves otherwise. People certainly are not in any of those States fined an amount above the maximum rate of family income supplement for one child, which is now $16 a week, if they do not apply. The supplement was not intended to be assessed as income. The fact that some housing commissions do assess it as income I suppose is a moot point. To what extent such housing commissions should encourage tenants who appear eligible to apply for family income supplement is a moot point. I happen to agree that the more we encourage people-they are all poor people-to apply for such supplements, the better off they will be and the better off we will all be. Senator Chaney —They often do not know. Senator GRIMES —That is right. We suspect it has a low take-up rate. Certainly that encouragement is worth while. However, for the Queensland Housing Commission to fine people an amount more than the family income supplement maximum payment, and to continue to fine them more and more if they do not reply to the dictates of the Queensland Housing Commission I think is overstepping any reasonable boundary that any government of any political persuasion in this country would apply. I am advised that my colleague Mr Howe, the Minister for Social Security, has brought this matter to the attention of the Minister for Housing and Construction to see whether he can raise with the States the question of achieving a consistent policy towards counting family income supplement in determining rents for housing commission tenants. I believe that quite apart from this the Queensland Government should ask the Queensland Housing Commission to desist from this practice, although I suppose the Housing Commission in Queensland is carrying out this practice only at the instruction of the Queensland Government, which I am afraid is par for the course for the Government in that benighted State. Senator PETER BAUME —My question is directed to the Minister representing the Attorney-General. I refer the Minister to the comment by the Leader of the Government in the Senate last week which, in effect, criticised the Premier of New South Wales, Mr Wran, for publicly asserting the innocence of Mr Justice Lionel Murphy, who is now awaiting retrial. Those comments were a clear and deliberate attempt to influence the course of justice. I refer also to the Minister's admission this week, in response to a question from Senator Durack, that he did not know whether the Government was considering action against Mr Wran. Does the Minister yet know? Has he read Press reports that the Director of Public Prosecutions is undertaking investigations into Mr Wran's remarks? When does the Government expect to receive advice from Mr Temby on the nature of the action he will be taking or recommending, in keeping with the proper conventions, against Mr Wran? Senator GARETH EVANS —I have been advised by the Attorney-General that he in turn has been advised by the Director of Public Prosecutions that he is considering, as is his statutory duty to do, the remarks made by Premier Wran. I have no advice or information as to when that response will be received from the Director of Public Prosecutions. I make the point, as I did yesterday in answer to a question from Senator Puplick, that the Director of Public Prosecutions is an independent officer who exercises with robust independence all the functions that are part of his role. Senator REYNOLDS —Is the Minister representing the Minister for Foreign Affairs aware that both Catholic and Anglican clergy are committed to supporting eight Irian Jayan refugees who have made their way to the islands in the Torres Strait? Both clergy have received endorsement from their bishops, and many church members in north Queensland, and no doubt elsewhere, support their actions in offering a safe haven to these refugees. What plans does the Government have to resettle Irian Jayan refugees? How will the Government respond to this commitment when clergy in the Torres Strait are faced with the dilemma of defying either their consciences or their Government? Senator GARETH EVANS —The only information available to me on this matter is a brief supplied today by the Minister for Foreign Affairs on the whole question of unauthorised entry of Irianese in the Torres Strait, which is in the following terms: On 10 June 1985 five men from the province of Merauke in Irian Jaya crossed from Papua New Guinea to Boigu Island, which is of course Australian territory in the Torres Strait. Each of those five applied for refugee status. Their applications have been considered by the Determination of Refugee Status Committee, the DORS Committee, and its recommendation has been presented to my colleague the Minister for Immigration and Ethnic Affairs by his Department. The Government's position, as announced on 17 July, is that as a matter of policy the Government will not grant permanent resident status to any of the five. If it is determined that the five should be granted refugee status, they will be regarded as refugees temporarily in this country, pending their resettlement in a third country. Officials have been directed to review the policy framework for the handling of unauthorised arrivals in Northern Australia. I think the question also extended to eight Irian Jayan refugees, and there have in fact been another three Irianese men who arrived on Boigu Island in the Torres Strait during the weekend of 12-13 October. When an officer from the Department of Immigration and Ethnic Affairs conducted the usual screening for illegal entrants, it was established that the men in question were seeking refuge in Australia. Those three have since been interviewed as applicants for refugee status. The Minister advises me that his attention has been drawn to recent Press reports that another 16 Irianese intend to cross from Papua New Guinea to Boigu Island. There are a small number of Irianese living in a Papua New Guinea village near Boigu. What their intentions are is for the present purely speculative. We assume and trust that they have heard what the attitude of the Australian Government is-an attitude I have now repeated on behalf of the Government here again today. Senator WATSON —Does the Minister for Education agree with Professor Helen Hughes's recently reported comment that `Australia's neglect of intellectual values has meant that people in responsible positions often lacked professional qualifications and were thus unwilling to recognise the need for professionalism'? Would the Minister state what plans are being made to promote excellence throughout the whole schools system instead of the mediocrity and satisfaction with second best effort that pervades our education system today? Senator RYAN —Whether I agree with Dr Hughes's assessment is secondary to the fact that I certainly do not agree with the assumptions that underlie Senator Watson's question. I certainly do not agree that the second rate or the mediocre dominates our education system either at school or tertiary level. I am quite familiar with Dr Hughes's views on a number of issues relating to education. Some of them I agree with; some of them I do not. I think that Dr Hughes's general concern to see Australia become a leader in our region in educational and associated matters is an important concern, which I share. But I also think that Dr Hughes suffers the disadvantage of having spent most of her working life outside Australia and working in and dealing with an education system of an entirely different kind from the one we have here. I think that some of her criticisms of our education system reveal a lack of familiarity with what actually is happening throughout our schools and tertiary institutions. I hope that as she spends more and more time in this country and becomes more and more familiar with some of the developments that are being sponsored by our Government and by previous governments in recent years she will have a more realistic appreciation of some of the very fine things that are happening in our education system. That is not to say that we cannot do better. Our Government came to office-indeed has come to office twice-with two very important values underpinning our education policies. Those are the values of equity and excellence. Through our education policies at schools level and in tertiary education we have pursued both of those values simultaneously. We have made education more accessible. For example, the greatly improved retention rate in upper secondary years demonstrates the success of the improved access to schools; and in terms of tertiary education we have also seen greatly improved access to TAFE colleges and universities by previously disadvantaged groups, such as students living in the outer western suburbs of Sydney and Melbourne, students living in regional centres, and particularly disadvantaged groups such as Aboriginal people. We have demonstrable and measurable improvements in access as a result of our policies. At the same time we have concerned ourselves with issues of quality and relevance. In regard to schools, we have sponsored a major review of the quality of education chaired by Professor Peter Karmel, perhaps our most distinguished researcher and policy formulator in this field. Consequent upon that review, we are revising both our recurrent funding policies and our approach to special purpose programs in schools to ensure that the outcome of improved quality of education for all students is being met. So far as tertiary education is concerned, we have now had instituted via the Commonwealth Tertiary Education Commission a series of discipline reviews which will ensure that the major disciplines in all our universities are thoroughly scrutinised by outstanding practitioners of those disciplines to ensure not only that high standards are maintained but also that where any problem of standards may be identified it will be overcome. It is very important that we concern ourselves with quality because as a social reform government, a government that is intent on bringing the benefits of education to all Australians and not just to those who by background or income can afford to purchase it, we want to be sure that improved access, which we are achieving, is access to the highest possible standard. We would have considered that we had failed in our program of social reform if improved access by disadvantaged groups to education was access to any inferior kind of educational opportunities. So we are pursuing these matters. Dr Hughes may not be aware of the success that we are having-but she may be, because I am not entirely sure that the paraphrase of her views presented to us by Senator Watson in his question is accurate. I conclude by stating that we already have a very high quality education opportunity available to students throughout Australia. The fact that we have such a queue of students from overseas anxious to take advantage of university education in this country is but one demonstration of the fact that we have a high quality product here. Senator Lewis —What about the queue of Australians trying to get education? Senator RYAN —Indeed, the fact that we have an increasing number of young Australians anxious to take advantage of higher education is further demonstration that what they want is of a satisfactory quality. We are an ambitious, reform government and we are determined we will reallocate, review and redistribute resources so that the quality of education at all levels is constantly improving under our administration. Senator ROBERTSON —The Minister for Education will be aware that teachers in Aboriginal schools in the Northern Territory are today holding a 24-hour stoppage to protest the Northern Territory Government's proposed cuts in funding for Aboriginal schools. Will she comment on the claims made by the Northern Territory Minister for Education that, first, the Commonwealth restricts the participation of Aboriginal children in specific purpose programs; and, secondly, the allocation of Federal funds discriminates against Aboriginal communities? Also, what programs are being administered by the Commonwealth to assist the Northern Territory Government in Aboriginal education? Senator RYAN —It is convenient that Senator Robertson's question about what is happening in Aboriginal education in the Northern Territory follows upon Senator Watson's question concerned with the quality of education. There is no doubt that the most disadvantaged Australians in educational terms are Aboriginal Australians. It is certainly the case that the Commonwealth, under our administration, has given the highest possible priority to using the resources available to us to improve educational opportunities for Aboriginal children. However, because the constitutional responsibility for education resides with States, and the Northern Territory in this respect has undertaken State responsibilities, we cannot directly provide the basic educational opportunities in schools throughout the Territory. As Senator Robertson and perhaps other senators will know, I always recoil with great concern when I hear of teachers taking industrial action that involves withdrawing their services from the children-not that I do not support the right of teachers, like all other workers in our society, to withdraw their labour. But we all know that for teachers to withdraw their labour from the classroom creates problems for students, and it is with the students' welfare that I am always primarily concerned. So I am aware of this stoppage and I am concerned about it but I must say that I have sympathy with the Northern Territory teachers' frustration over this issue. I share the frustration because we attempt to work in partnership with the Territory in education and other matters. The Commonwealth puts a great many resources into improving education in the Territory-I can instance for Senator Robertson what some of those additional resources are-but it does not have the responsibility for the basic administration of the schools. I have been engaged in correspondence with the Minister for Education in the Northern Territory for some months over matters concerning Aboriginal education, in particular the bilingual program, which is very strongly supported by Aboriginals throughout the Territory and by the teachers who have been working in that program. But because there has been some change in the Department of Aboriginal Affairs funding of various education initiatives in the Territory we have not been able to prevent the Territory from withdrawing some support from that bilingual program. I am not able to say precisely to what extent support has been withdrawn because I have had advice from the Northern Territory Minister that conflicts with the information given to me by teachers in the schools. Clearly there has been a rundown of support for the bilingual program and in those parts of the Territory where the bilingual program is absolutely essential to the early learning stages of Aboriginal children that is really crucial. But it is simply inaccurate and disturbingly misleading for the Northern Territory Minister to claim that the Commonwealth is not contributing more than its share to improving educational opportunities in the Territory, especially for Aboriginal children. For example, the disadvantaged schools program in the Northern Territory increased between 1981 and 1984 by 270 per cent, and the country areas program increased over the same period by 170 per cent. The disadvantaged schools program operates nominally in per capita terms but the Northern Territory, because of the greater disadvantage of Aboriginal children, attracts a higher per capita grant. The special disadvantaged schools per capita grant for the Northern Territory is $121 per eligible student whereas in Senator Chaney's State of Western Australia it is $79 and in Tasmania it is $84. The disadvantaged schools program serves 14 per cent of the most disadvantaged students nationally but in the Northern Territory it reaches 27 per cent of students. So it is quite clear that there is positive discrimination in our funding programs in favour of Aboriginal students in the Northern Territory. As well as that, we have a special Aboriginal capital program-- Senator Chaney —I raise a point of order, Mr Deputy President. The answer is reaching the proportions of a statement. Whilst it is a very valuable statement could I suggest that the Minister incorporate the balance of it in Hansard so that we can have the benefit of it at a later time? The DEPUTY PRESIDENT —Order! The President has repeatedly asked Ministers to keep their answers concise. I think that Senator Ryan is extending her answer rather far, but how long her answer is is in her hands. Senator RYAN —The reason I am extending my answer is that the extent of the Commonwealth's positive involvement in the education of Aboriginal children in the Northern Territory is great. Senator Robertson asked me what it was and I have drawn attention to some of the major programs by which we give positive discrimination in favour of Aboriginal children in the Territory. If this bores Senator Chaney, I suppose I should take that into account; if it upsets him, perhaps I should be more sensitive to his feelings. But the fact of the matter is that in terms of Commonwealth programs there is no way that we can be assessed as having done anything other than completely fulfil our responsibilities to those children. Senator Sanders —I rise to order, Mr Deputy President. Standing order 100 clearly says: In answering any such Question, a senator shall not debate the matter to which the same refers. This is obviously a debate. Question Time is being misused because of the debating tactics of the Minister. Question Time is for gaining information; it is the only way we have of getting information. I urge you to take my submission into account. Senator ROBERTSON —Mr Deputy President, I have a supplementary question. Despite the fact that the only interest in Aboriginal education is obviously on this side of the chamber-- The DEPUTY PRESIDENT —Order! The honourable senator will ask his question without a preamble. Senator ROBERTSON —I am making a statement. This is a fact. I am covering up all the nonsense from next door. Did the Northern Territory Government not undertake in 1978 to maintain the standard of education available at that time? Senator RYAN —I understand that it did and it is disappointing that it now seems unwilling to fulfil that commitment. Senator BROWNHILL —Is the Minister for Industry, Technology and Commerce aware that farmers applying for diesel rebates have been told that their claims will not be processed until `procedural adjustments' have been made within the Australian Customs Service? Considering that this initiative was first determined prior to August and announced in the Budget on 20 August-some 3 1/2 months ago-does this not indicate at best inefficiency of a government department and at worst an attempt by government to avoid paying its bills at the expense of the Australian farmer and fisherman? Senator BUTTON —It does not indicate anything of the sort. If the honourable senator could persuade his Party to expedite the Senate program so that we could get the necessary legislation through the Senate, that would help for starters. Senator Peter Baume —It has nothing to do with the matter. Come on! Senator BUTTON —Yes, it has. I am not aware of whether the farmers have been told that procedural adjustments in the Department of Industry, Technology and Commerce have prevented payments to date, which is the allegation made in the question. I will have that investigated and let the honourable senator know. Senator HARRADINE —In view of the urgings by the Minister for Education, my question is addressed to her. It relates to her request to school leavers to consider tertiary education. What advice would the Minister give to a school leaver on the north-west coast of Tasmania, where unemployment is very high-indeed, the highest in Tasmania-who is a member of a one-income family of five, whose two older sisters are at the University of Tasmania in Hobart where accommodation expenses for her parents are $190 a week, whose two younger brothers are at school, whose mother has had her family allowance cut by the Government by $84.55 a week from 1 November this year, and whose parents have told her that they just cannot afford the extra $80 a week in accommodation expenses which she would face if she had to go to Hobart for tertiary education as well as a further cut of $39 a week in the family allowance? What advice would the Minister give to that child and to the parents of that child? Is it a fact that the north-west coast of Tasmania is the most highly populated area without easy access to a tertiary education institution? Senator RYAN —Nothing that Senator Harradine has recounted in his question suggests that any advice should be given to such a student other than that she should seek to gain access to tertiary education. It is difficult. There is a tertiary education assistance scheme or TEAS allowance which has been increased by our Government in successive Budgets and for which more increases are planned over the next few years. If the family is a low income family and there are a number of dependent children, it is quite possible that that student would qualify for TEAS if she is qualified to gain a place in the University of Tasmania in Hobart. The situation faced by that young student is one faced by many full time students throughout Australia, and they have to seek part time employment to supplement their TEAS allowance in order to undertake tertiary studies. It is difficult, but hundreds of thousands of students do it and indeed that is the traditional way in which students from anything other than affluent families have been able to get the benefit of tertiary education. The fact that there are many more tertiary places available under our Government is an encouraging development for those students. The fact that we are looking at ways of making tertiary education available to students living in regional areas should also be a source of encouragement. We do not expect students to rely on their parents alone for income support. As was the case with most people in this place who had the benefit of tertiary education, it is usually necessary for students to seek part time employment. Because of the successful employment policies of our Government there is a great deal more part time work around than there was. Students have several months each year when they are not required to be at university involved in their courses, and during that time they can take advantage of part time work opportunities and they need to do so. If Senator Harradine would like to send me the details of the specific case he has raised, I will certainly investigate to see whether that student is eligible for tertiary assistance. If that student is not eligible for that assistance she is certainly not from one of the poorer families, because 40 per cent of students are eligible for some form of tertiary allowance. That is not to say that the people whom Senator Harradine mentioned are not struggling, but they are certainly not amongst the poorest families in our community because the poorest families are eligible for TEAS. My advice would be that if that young person has gained the marks to gain her a place in the University of Tasmania, she should take that place and get some part time work. Ultimately that would be the best possible decision she could make. Senator HARRADINE —I ask a supplementary question, Mr Deputy President. Senator Ryan has not answered the last part of the question which was related to the north-west coast of Tasmania. Has she responded to the meeting of more than 200 such parents in the Burnie Civic Centre about this very question? Senator RYAN —I thought that the last part of Senator Harradine's question was to do with the rate of population growth in Burnie and I do not have information available to me that would enable me to confirm or deny that it is the most rapidly growing part of Tasmania. I am prepared to accept Senator Harradine's suggestion that it is. I have not seen any direct message coming from that meeting of parents to which he referred but it is certainly the case that the whole thrust of our higher education policy is to provide opportunities in regional areas and there may well be some plans already being developed to enable students who live further than travelling distance from the institution to undertake studies by distance education. It is always a possibility for students to enrol in external studies courses. Again, we have several institutions on the mainland which are expert-Deakin University, for example-and which offer a very high quality of external studies courses. Students can enrol in those if they really find themselves unable to live away from home. I am prepared to look at any requests coming from parents about these matters and would simply repeat that there are far more extensive opportunities for students, especially students from poorer families, to undertake tertiary studies under our Government than there were under the previous Government. Senator SHORT —My question is directed to the Minister representing the Treasurer. I refer him to the announcement on Monday of this week of a continuing blow-out in the growth of the money supply, despite the policies of the Hawke Government having already forced up real interest rates to their highest level in at least half a century. Is it a fact that this rate of increase in the money supply-more than 16 per cent on an annual basis-is far in excess of that which is healthy for the economy? When will the Government take the inevitable step, dictated by its own damaging overall economic policies, to increase interest rates still further in order to bring the money supply under better control? Will these increases take place this week or does the Government propose to delay the increases until next week, after the South Australian election? Senator WALSH —Senator Short referred to real interest rates and claimed that they were high. It is dead easy to get real interest rates down. Even John Howard could do that. The way to get real interest rates down is to push up the inflation rate and John Howard did that very successfully. He pushed the inflation rate up to 11 1/2 per cent at the time when this Government came into office, and for every 1 per-centage point one adds to the inflation rate one brings the real interest rate down 1 percentage point. That is the Liberal Party's formula for getting real interest rates down-by pushing up the inflation rate. Any fool can do that. I had difficulty following the logic of the question because Senator Short seemed to claim simultaneously that the money supply growth rate was too high and that interest rates were also very high. Yet high interest rates are associated with a very low rate of money supply growth relative to economic growth. I am not sure where he stands on that question. More importantly, over the last 12 months or so it has been shown-and the Treasurer has frequently drawn attention to this fact-that these conventional measures of money supply growth, whether they be M3 or M6, are less meaningful than they were before the deregulation of the economy. It has long been a matter of considerable doubt as to whether they were very meaningful even in the pre-deregulated era. I am disappointed to find that in the years since 1975 when Senator Short left the Treasury and in the years he has spent in the Parliament, he does not seem to have weaned himself at all off the crude Friedmanite monetarist theory which holds that increases in the money supply, leaving aside the fact that these cannot be measured, are directly associated in a 1:1 ratio with changes in price levels. This completely ignores the fact that there are two variables on either side of that equation other than the price of goods and the supply of money-even if one could measure them, which one cannot do with any precision, either before or after deregulation. Finally, on the question of interest rates, as I said, it is very easy to get real interest rates down. All one has to do is push up the inflation rate as Mr Howard did when he was Treasurer. I must point out that the highest interest rates ever recorded in any official way were recorded in April 1982 when the 90-day bank bill for first class borrowers hit 22 1/2 per cent. Interest rates are certainly higher now than the Government would like, but they have a long way to go before they equal that record. Senator SHORT —I ask a supplementary question. Do I take it from Senator Walsh's answer that he would deny that even in nominal terms housing interest rates, bank prime rates and overdraft rates are at the highest level ever? Would he, by his answer, deny the view expressed by the Secretary to the Treasury in a speech last week that monetary policy and interest rate policy are critical to the success or failure of government economic policies? The DEPUTY PRESIDENT —Before you answer, Senator Walsh, I point out that you are not obliged to discuss the remarks made by the Secretary to the Treasury which is not a supplementary question. Senator WALSH —Thank you, Mr Deputy President, for that guidance. Senator Short mentioned housing interest rates. Housing interest rates are higher than a lot of people would like them to be, but they are nowhere near as high as they would be if the Liberal Party were to come into government. Mr Howard has promised to abolish the ceiling on bank loan housing interest rates. Of course it follows that that would be in complete conformity with his record as Treasurer. On 2 December 1980 he lifted the ceiling to 11 1/2 per cent from the previous 10 1/2 per cent. On 14 August 1981 he lifted it from 11 1/2 per cent to 12 1/2 per cent and on 19 March 1982 he lifted it from 12 1/2 per cent to 13 1/2 per cent. If he were to get into government, or if his policies were to be implemented by a Liberal government in any State, there would be no limit to housing interest rates at all. Senator ELSTOB —Does the Minister representing the Minister for Immigration and Ethnic Affairs agree that immigration can help economic development and create jobs? How has the Government countered the fear that immigrants are taking jobs from Australians? Senator GRIMES —One often hears concerns from people in the community that we should cease the immigration program in order to protect jobs. I suppose one could argue that an unrestricted immigration policy, a complete open door policy, may affect jobs in the way that some people suggest, as Senator Elstob has pointed out. But a sensible immigration policy with a growth in immigration in the right places can help to stimulate the economy and assist jobs. The Government is supported in its program by various research projects which have looked at the economic consequences of immigration. A recent report of the Committee for the Economic Development of Australia makes it clear that an increase in migration can assist recovery and improve job prospects for some of the unemployed. It is important to say, as the report states, that this can occur. The report points out that a carefully designed program can give job prospects a relatively greater boost. The study found that expenditure by recently arrived migrants, partially financed by the funds that they bring with them, can substantially affect the pattern of consumer demand, including the demand for housing. The increase in migration in 1985-86 is focused mainly on the economic categories of skilled labour, employer nominees and business migrants as well as the family reunion part of the program. In each of the economic categories there are specific requirements to ensure that the unemployed are not adversely affected by migrant entry. For example, skilled labour entry is available only in occupations in short supply in Australia and an employer nomination is accepted only if a position cannot be filled in Australia. The Government uses every opportunity to inform the community that any fears of adverse employment opportunities resulting from the immigration program we have now are essentially misplaced. But, of course, it is obvious that, during times of economic difficulty, there is a tendency in all countries, Australia included, to blame minority groups and migrants are sometimes the easiest minority group to blame. As Senator Elstob's question implies, it is important that we, as members of the legislature, do not indulge in such scare tactics and I point out that this Government's migration program is carefully designed to avoid any adverse economic effects. Senator SANDERS —I ask the Minister representing the Minister for Aviation whether the Government is aware of a questionnaire being circulated by the Independent Review of Economic Regulation of Domestic Aviation which is worded in such a way as to slant the answers in favour of retention of the two-airline policy and, specifically to indicate that lower air fares could be introduced only if there were slower planes, no meals and a reduction in seating space? Will the Minister allow the immediate importation of East-West Airlines of Australia jet aircraft? Furthermore, will he allow East-West to operate the Launceston to Sydney run as the previously issued licence from the Department of Aviation actually entitles it to do? Senator GIETZELT —I am aware that the Independent Review of Economic Regulation of Domestic Aviation is currently conducting a survey to discover what consumers think about domestic air services in Australia. It is the first such survey designed to establish customer preference; what passengers require from our domestic airline services. I gather that the question that I have been asked, that is, whether there are any objectives that would establish a preference for a reduced form of service in lieu of lower air fares, would be one of the questions asked of consumers to establish their general reaction to the existing services provided by the two main airline operators. I point out to Senator Sanders that 49 such questions are being asked in the survey and that is only one of the options that have been placed before consumers. The reason is that cost reduction avenues have to be explored to see whether they would involve any effective trade-off so as to establish their feasibility, depending upon the reaction of consumers. The survey, which is being conducted by an independent government organisation, has to have regard to that approach, bearing in mind the two-airline agreement, to which Senator Sanders has expressed his own opposition. I have pointed out on previous occasions that the Government's hands are tied in respect of the two-airline agreement. It has no flexibility whatsoever. Whatever surveys are conducted the Government has to take its legal position into consideration. The two-airline agreement, which was entered into by the previous Government, binds this Government from 1985 until 1990. The Australian Government cannot certify that the importation of an additional F28 is justified having regard to the legal position it finds itself in. It is not a decision of this Government but a decision of previous governments which binds the views of this and succeeding governments until 1990 when the agreement will be up for renegotiation. I repeat, as I did on a previous occasion when this question was asked of me, that East-West is fully aware of the restrictions of the two-airline agreement and the restrictions placed on services on the trunk route from Launceston to Sydney to which the honourable senator has referred. Of course, there are different views. I stress that, until 1990, there is no way in which this Government or any succeeding government can alter that existing three-way agreement between Ansett Airlines of Australia, Trans Australia Airlines and the Commonwealth Government. It is a binding contract. As such, East-West Airlines has no recourse to this Government to import any new planes or to operate any routes having regard to the existing arrangements in that two-airline agreement. Senator COOK —I refer the Minister representing the Minister for Employment and Industrial Relations to public debate and random Opposition musings about the deregulation of the Australian labour market as an alternative to the Government's wages policy. Will the Minister say whether relevant experience in labour market deregulation suggests that such a policy would have economic benefits for Australia? Senator WALSH —Early last month, when I spoke at the Committee for the Economic Development of Australia annual meeting, I referred to the matter which Senator Cook has raised-that is, the deregulation of the labour market-and said that the Thatcher Government's experiment with a deregulated labour market has produced substantial increases in real wages for the employed, large increases in real labour costs and a forecast unemployment rate above 12 per cent by the end of the year. The actual unemployment rate is over 13 per cent which I think is a faster rate of growth than the growth rate of factions in the Liberal Party of Australia. For those in unionised employment in the United Kingdom, real wages have risen faster in the 1980s than at any other time in the post-war era. Between 1982 and 1984 real unit labour costs rose by 2.1 per cent. That is not real wages. Real unit labour costs rose by 2.1 per cent. Ironically, over the same period real unit labour costs in Australia have fallen to the lowest point since the late 1960s. While real labour unit costs were going up by 2 per cent in those 2 1/2 years, real wages increased by more than 5 per cent. That is the experience in one country of deregulating the labour market-big increases in real wages to those in employment. We can contrast that with Australia's position, for example, where there was an annual fall of 3 1/2 per cent in our real unit labour costs between 1982 and 1984 under a regulated labour market and the prices and incomes accord. The experience of the two countries was that in Australia real labour unit costs fell by 3 1/2 per cent, under a regulated labour market with the prices and incomes accord, and in the United Kingdom, with a deregulated labour market, real unit labour costs increased by more than 2.1 per cent. Apart from that, the experiment in the United Kingdom has thrown more than three million people on to the dole queue and, as I said before, unemployment is already above 3 per cent. It is disturbing, to say the least, that some people in Australia-I will not restrict it to the Liberal Party-have so little capacity to learn from what happened in Australia from 1981 onwards and what has happened overseas. The reality is that we do have firms with a good deal of monopoly power. We do have a unionised labour force. In that situation, even at a time-in the case of the United Kingdom-of economic stagnation there have been very large increases both in real wages, for those lucky enough to retain their jobs, and in real unit labour costs. That could be expected to be even more pronounced in a period of high economic growth. Indeed, that is precisely what the Australian experience has shown. After the deregulation of the labour market by Mr Howard in 1981, real wages increased by 11 per cent in the first year and 14 per cent in the second year. That was at a time of reasonably high, although short lived, economic growth. There is every reason to expect that if that experiment were to be repeated in Australia we would relive the unhappy experiences of 1981 and 1982, when 176,000 jobs were destroyed, and we would relive the even more unhappy experience of the United Kingdom under the Thatcher Government's policy of labour market deregulation. Senator GARETH EVANS —Yesterday Senator MacGibbon asked me a question about alleged leakage on the subject of submarine tenders about which I undertook to seek further information from the Minister for Defence. In response to Senator MacGibbon, the Minister for Defence has replied that inquiries were made about the source of the leak, but the source could not be determined. Certainly, there is no basis in anything that the Acting Commonwealth Ombudsman said in his letter or anywhere else for Senator MacGibbon's assumption that, as he said, the leak obviously occurred from the Minister's office. While the leak was unfortunate, the Minister for Defence endorses the thrust of the reply given to Senator MacGibbon yesterday; namely, that since the discussions by the Caucus committee and the Cabinet endorsed the conclusions of the exhaustive examination processes of the Department of Defence, which processes were commended by the Ombudsman, there is no basis whatsoever for allegations of any improper influence affecting the outcome. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Gietzelt) read a first time. Senator GIETZELT(New South Wales-Minister for Veterans' Affairs)(3.05) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- The purpose of this Bill is to extend the period of operation of the amendments to the standard of proof in determining pension claims and appeals which were passed by the Parliament in May this year. The Bill will extend the period of operation for a further six months from 6 December 1985. The need for the introduction of this legislation arises from the obstruction and intransigence of the Opposition and the Australian Democrats in relation to the Veterans' Entitlements Bill. Mr President, the Government greatly regrets that it is being placed in the position where it is necessary to introduce this legislation. Without it, the previous standard of proof which applied to determining pension claims would again apply. This could have the effect of requiring that nearly all pension claims must be accepted. The Government has acted promptly, effectively and responsibly to prevent such a huge and completely unacceptable misallocation of public funds. Moreover, it has in this regard received the support of major ex-service organisations and, at least until now, members of the Federal Opposition. In this context, I draw the attention of honourable senators to a number of statements on the public record by persons who have played key roles in the community debate surrounding these legislative provisions. The National President of the Returned Services League, Sir William Keys, said in a letter to the Prime Minister of 23 July 1985: Ex-service organisations accept that the O'Brien case would result perhaps in an excessively high acceptance rate. In a similar vein, Sir William observed in his August 1985 newsletter: (T)he RSL the representatives of other veterans' groups . . . were determined to approach the matter of consultation in a positive way, recognising the Government's concern about the implications of the O'Brien case and the fact that this could lead to almost automatic acceptance of all conditions and a consequent and unacceptable escalation in the total cost of compensation payments. The RSL National Secretary, Mr Ian Gollings, said in his address to the Annual Congress of the New South Wales Branch of the RSL in June 1985: I believe that it was inevitable that the Government would move in the direction it has, following the O'Brien case, to change the standard of proof provisions. Since the Nancy Law case acceptance rates have moved from 35 to 40% overall to the order of 90%, while in death cases the acceptance rate is now almost 100%. The Legacy Co-ordinating Council of South Australia, in a submission to me of 8 August 1985, noted: Legacy recognises the difficulties stemming from the High Court decision in the O'Brien case and concedes that some amendment to the present Act was necessary. Their Victorian counterparts stated on 16 September 1985: Legacy recognises the inherent difficulties for the Government stemming from the High Court's decision in O'Brien and concedes that the precedent laid down went too far, making some amendment of the legislation necessary. Similarly, the Queensland Branch of the RSL, in a letter of 21 August 1985 to the member for Leichhardt, Mr Gayler, observed: Many veterans' organisations had realised that the provisions of Section 47 . . . had been defined in recent High Court cases to give entitlement to war pensions on an overgenerous basis. I have on file several hundred other expressions in this vein from regional veteran organisations and individual members of the ex-service community. Many such communications have in fact been forwarded to me by members and senators, including senators opposite. After one of the most elaborate and extensive pro- cesses of consultation ever undertaken by any Australian Government in relation to any legislative measures, a draft of clause 119 of the Veterans' Entitlements Bill, which deals with the standard of proof to be followed in determining pension claims and appeals, was agreed to by the Government and ex-service leaders. The Government is satisfied that the clause will negate the effects of the O'Brien decision, while veteran groups have agreed that it meets their requirements of imposing no onus on a claimant for pension and of not denying pensions to deserving claimants. In confirmation of this, the RSL National Headquarters stated in a press release dated 18 October 1985: The revised clause 119, concerning the standard of proof, was noted and considered to be generally satisfactory subject to its possible eventual testing in the courts of law. The RSL National Secretary, Mr Gollings, wrote to me in identical terms on 21 October 1985. Furthermore, I would particularly draw the Senate's attention to the fact that, in recognition of this substantial agreement between the Government and ex-service organisations, the Opposition leadership quite properly and responsibly endorsed the revised clause 119. The Opposition spokesman on Veterans' Affairs, Mr Tim Fischer, MP, said in an interview on radio station 2CN Newcastle on 31 October 1985: (The) O'Brien case, which was a High Court decision by one vote, which gave a whole lot of repatriation cover to someone who never left Sydney, caused a lot of difficulty. And this Bill seeks to responsibly wind that back. In the interests of the true veteran it does that. He reiterated this view in the second reading debate on the Bill in the House of Representatives on 12 November 1985, when he said: (It) appears that there has been an effective winding back of the O'Brien situation but that there is still provision fairly and justly for acceptance of war- related disability Later in that debate he agreed that: The position of veterans' organisations is generally to support the passage of the Bill . . . Mr President, it is with profound regret that I observe the abandonment by the Opposition of this balanced, sensible and informed approach to its parliamentary responsibilities. Its actions in relation to the Veterans' Entitlements Bill and related legislation reveal that it now places cynical politicking ahead of both its professed commitment to fiscal responsibility and its previous reassurances to the Parliament and the taxpayer. The Government will not countenance the misappropriation of hundreds of millions of dollars of public funds in paying compensatory pensions and benefits to those for whom in some instances there is not a scintilla of evidence in support of their claim for compensation. The Bill before the Senate is in the present circumstances the minimum measure that is necessary to honour this obligation. I commend the Bill to the Senate. Debate (on motion by Senator Kilgariff) adjourned. Senator HARRADINE(Tasmania)(3.06) —I move: That the Senate take note of the paper. The report concerning community law reform for the Australian Capital Territory deals with three specific matters-the community law reform program, contributory negligence in fatal accident cases in breach of statutory duty cases and funeral costs in fatal accident cases. I have only five minutes in which to address this paper which has been presented today. I will deal with only the first aspect of this report; that is, the aspect dealing with the community law reform program. Honourable senators will note that at pages 10 and 11 of the report the Law Reform Commission sets down a number of references which it feels should be made the subject of a reference by the Attorney-General to the Australian Law Reform Commission. Indeed, at pages 5, 6 and 7 it sets forward some 59 suggestions for references in respect of the community law reform program. Page 10 of the report identifies four areas which it feels should be the subject of a reference from the Attorney-General under the community law reform program. Those areas are: Suicide, voluntary euthanasia and related matters; withholding of treatment to severely handicapped new-born children; consent of minors to medical procedures; and the status of children legislation. Honourable senators will also find that at page 9 the Commission suggested that a reference be given on de facto relationships. Then it discovered that the Human Rights Commission was already giving consideration to the recommendations made by the New South Wales Law Reform Commission on that subject. As far as I am aware, very few of us would have realised that the Human Rights Commission was in the middle of a detailed inquiry on the subject of de facto relationships. The Human Rights Commission appears to be less restrained than the Law Reform Commission in jumping into areas of fundamental importance. I suppose one thing which can be said in favour of the Australian Law Reform Commission as opposed to the Human Rights Commission is that the Law Reform Commission has to wait until it receives a reference from the Attorney-General. If the Attorney-General, who has the ability to adopt an overall perspective of the workings of all the agencies under his control, declines to give the Commission a formal reference, that is the end of the story for the time being. Not so, of course, the Human Rights Commission, which is less restrained and has the ability to jump into all kinds of areas without first seeking the formal approval of the Attorney-General. I give an example of that. On Monday or Tuesday night, I am not sure which-this is a long week in politics-I attended a meeting of 400 to 500 people in Canberra to listen to people expressing grave concern at the latest occasional paper from the Human Rights Commission entitled `Legal and Ethical Aspects of the Management of Newborns with Severe Disabilities'. According to one expert this paper challenges existing legal concepts and their foundation in a framework of human rights. As I mentioned, that paper was from the Human Rights Commission. Further, it is claimed that the purpose of the Human Rights Commission paper is clearly that of providing an avenue for destroying the human rights framework upon which we base our ethics and our legal system in order to replace it with a more flexible system of reasoning which would allow human individuals to be treated as expendable if they failed to comply with `normal adult' standards of capability and functioning. Personal value and equal status would be judged not by who we are but by what level of function we can, at any given stage, achieve. The arena of appointed non-elected, so-called experts is not the proper forum to which such fundamental issues should be relegated, particularly if the papers are prepared by a person such as Dr Helga Kuhse from Monash University, who has an axe to grind or who has a utilitarian philosophical attitude on euthanasia. Question resolved in the affirmative. Senator BROWNHILL(New South Wales) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later, Mr Acting Deputy President. Leave granted; debate adjourned. Senator MICHAEL BAUME(New South Wales)(3.13) —I move: That the Senate take note of the paper. The annual report of the Department of Defence puts to rest the false propositions spread by the Government that it is actively expanding and increasing Australia's defence arrangements. I draw attention in particular to one paragraph in the report which is on page 38. It shows that this Government's activities are significantly reducing the defence effort and the defence target set by the previous Government. The report states: In its budget for 1984-85, the Government introduced a system of cash limits to apply to the bulk of administrative expenditure of a non-salary kind. The report continues: For Defence, strict adherence to the cash limit has involved many economy measures, some of which have had undesirable effects because of the need to accommodate the full effects of inflation and the exchange rate depreciation occurring in the latter part of the year. I want to dramatise to the Senate that the Defence Department is particularly subject to the problems arising from the mismanagement of the Australian economy which has resulted in such an enormous depreciation in the Australian dollar. The report continues: Although economies were achieved in expenditure on travel, transport, freight, telephone and energy usage without seriously disrupting planned Defence activities, some constraints in military activities were necessary in order to manage within the cash limited allocations. This is the significant part: Unless the effects of these constraints can be overcome, longer term deterioration in military competence in certain areas could arise. That is the Government's own Department stating what the consequences of the Government's defence strategies and what the policies applied to those defence strategies will be. We have the right to hear from the Minister for Defence (Mr Beazley) about what the Government plans to do to ensure that there will not be longer term deterioration in military competence in certain areas or, if it is the Government's intention that that should take place, what are the areas the Government is happy to see deteriorate. I further point out in denial of the Government's high posture-it is simply an empty posture on defence-that the report concedes that a substantial part of the real increase of some 2.8 per cent in defence outlays last year was directed towards meeting obligations for equipment and facilities entered into in previous years. It had nothing to do with the present Government; it was the result of proper and sensible policies which were put in train by the previous Government. The most important criticism of the Government appears at page 8 of the report which, in one of its quaintest expressions, states: Australia's region of primary strategic interest-defined as comprising our surrounding ocean areas, seas and straits and the nations of the South-East Asia and the South-West Pacific-remains one of the most stable in the world. Justification for having this extraordinary restraint on defence spending because our region is one of the most stable in the world seems to fly in the face of what has been happening in Thailand, Vietnam, Papua New Guinea, Irian Jaya, New Caledonia, Kiribati, Cambodia and so on. The report acknowledges that these are problem areas. It stresses the problems created by the Soviet presence in Vietnam which has continued to expand, the domestic political turbulence in the Philippines and so on. What is particularly fascinating in the report is this statement: Among the many factors which have reinforced this intrinsic regional stability- I have just established that it is not stable- and the capacity within the region to maintain a satisfactory rate of economic development,- we could tell that to the Philippines- the continued cohesion of ASEAN . . . This is really interesting, because one of the major activities of the Minister for Foreign Affairs (Mr Hayden) has been to try to destroy any cohesion of the Association of South East Asian Nations. ASEAN has consistently criticised Mr Hayden's activities. He has been disruptive and disturbing to ASEAN. If the Department of Defence feels happy about ASEAN and its growing influence in making the area a relatively peaceful one in its terms it must simply mean that, despite the activity of Australia's Foreign Affairs Minister, there is relative cohesion in ASEAN. I put it to the Senate that the annual report of the Department of Defence is basically very critical of the activities of this Government. Senator SANDERS(Tasmania)(3.18) —I take note of Senator Michael Baume's remarks. He noted that in the annual report of the Department of Defence the Department feels that the primary strategic interest remains stable in our area. This brings up the whole question of what our defence is for-who are we defending ourselves against? I think it is obvious that our defence planners realise-- Senator Peter Baume —Tasmanians; that is the answer. Senator SANDERS —The honourable senator said that perhaps we are defending ourselves against Tasmanians. We certainly need defence against some Tasmanians in this chamber. Our Defence Department is recognising the fact that this is a stable area. The mere dealings of Russia with Kiribati in terms of a fishing agreement are not a threat to the area. A Russian base at Cam Ranh Bay is not a threat to the area. Of course it is not a threat to the area. Senator Jessop —What about the submarines that are cruising there all the time? Senator SANDERS —The honourable senator asks: What about the submarines that are cruising around our shores? Senator Jessop —What about the nuclear-powered submarines? Senator SANDERS —He brings up the issue of nuclear-powered submarines. Why are Russian nuclear-powered submarines here? They are here because the American fleet is here. This brings up the whole point of who is our enemy. Is it the Russians? Are they intent on invading Australia? Of course they are not. They cannot successfully invade Afghanistan. How can the Russians successfully take over Australia by warlike means? Certainly they would like to take over our economic system, but not to invade us. Our dangers are basically the presence of a United States battle capability, the United States bases, the United States nuclear-armed and nuclear-powered ships in our ports which make us nuclear targets and targets of the Russians. ANZUS drags us further and further into involvement in World War III. Our whole defence strategy is based around the fallacy that somehow if we please the United States, if we buy its weapons and ships at great cost to ourselves, it will come to protect us. Frankly, ANZUS did us no good at all in 1961. When Indonesia moved into western Papua New Guinea and took over the area, we asked the United States to take some action under ANZUS and it said: `No, our interests are not in taking action in this area because we have interests in Indonesia in terms of oil, rubber and tin, and we do not want them to go commo'. So the United States will not protect us in our only possible confrontation. I am not saying that it will happen, but our defence analysts say that our only possible worry in this area is Indonesia, and the flashpoint could be as the Indonesians move into eastern Papua New Guinea. Under our present defence strategy, which depends on the United States coming to our aid in times of this crisis, we have no capability of our own. Where are our close ground support aircraft? We have heard the Department of Defence say that we cannot use our FA18s for close ground support because they are too expensive and are too easily knocked out by ground-to-air missiles. Also, they have fatigue cracks. Where are the close ground support aircraft, and the helicopters and gunships, that we could use in a confrontation in Papua New Guinea? Where are our transport aircraft, our surveillance aircraft and our patrol boats? We cannot afford them because we are pouring all of our money into weaponry which matches the United States nuclear strategy-namely, nuclear-capable FA18s and nuclear-capable frigates; and now we are building six submarines, and the admirals say that we are building them to protect our sea lanes in time of the next war. That is 1942 thinking. The next war will be a nuclear war. We will not have sea lanes any more. Yet we are pouring billions of dollars into submarines and neglecting our traditional forces, neglecting the land forces and airborne forces which are what we need to protect Papua New Guinea and northern Australia. The present defence policies desperately need an overhaul if we are to truly defend Australia in this late part of the twentieth century. Senator GEORGES(Queensland)(3.23) —In what we call an accelerated debate, we each get five minutes to debate a very important subject. I must come to the defence of the Minister for Foreign Affairs, Bill Hayden, and give him some credit for the initiatives he has taken. In our area, the initiatives have lessened tensions and opened up paths for negotiation between those powers that confront one another. I was surprised to hear from Senator Michael Baume a eulogy on behalf of the Association of South East Asian Nations. The ASEAN position is fairly clear and fairly partisan. If one reads about the positions that the countries of ASEAN take and the announcements that they make, one finds that they are partisan in being completely opposed to the Government of Vietnam. They take a position which is pro-Pol Pot and a previous regime. Their position is to arm and to continue to arm those forces which seek to continue the confrontation in Kampuchea, and they are working against the peaceful trends which are developing, of which trends Bill Hayden had been the leader. Senator Peter Baume —The peaceful trends in expansionist Vietnam, eh? Senator GEORGES —Oh, Senator, if you are going to talk in terms of expansionism and Vietnam, you will be talking rather idle talk. That is what ASEAN says-that Vietnam is engaged in an expansionist program which threatens the regimes of ASEAN countries, regimes which are militaristic, dictatorial and completely oppressive of their own peoples. That is what the ASEAN regimes represent. Senator Michael Baume —But the Defence Department likes them. Senator GEORGES —Yes, the Department of Defence may take the position that the honourable senator takes, but I have always found the Defence Department to be well behind the changing peaceful attitudes. In fact, I often wonder whether defence departments here and overseas have a vested interest in confrontation and take some comfort from the possibility of war. When the rest of us are endeavouring to solve the world's problems by peaceful means, the defence departments are thinking in terms of the past-and so is Senator Michael Baume. I have to use the word `Michael' because I want to separate the honourable senator from Senator Peter Baume, but maybe the latter thinks in the same way. Senator Crichton-Browne —Are you happy about Cam Ranh Bay? Senator GEORGES —Cam Ranh Bay has been a development which has been forced upon the Vietnamese. There has been some change in the last days which ought to give the honourable senator some comfort. The change is that there is now developing an understanding between Vietnam and the United States. It is belated; it should have happened ages ago. Were it not for people such as Senator Crichton-Browne and Senator Michael Baume, it would have developed far more rapidly. The honourable senators are behind the times. An understanding is taking place there that goes far beyond their thinking. Fortunately for us all, this is happening in spite of the honourable senators. My five minutes is almost over. Here we have an opportunity for a wide-ranging debate on a very important issue and the clock cuts off just when we are starting to develop our argument. I am starting now to put the point of view that I would want to put, but I now have to cede to Senator Puplick. As I have said previously, the Senate will have to take another look at its Standing Orders and see that we have more time to discuss very important matters when they are raised in this place. I put it to Senator Michael Baume that he should take another look at what is happening, rethink his position, give some understanding to the position of Vietnam and to Cambodia, and realise that if they are taking a position with which he does not agree, we have forced them into that position by the fact that we have not understood them, we have opposed them, and we have fought against them. Senator PUPLICK(New South Wales)(3.27) —I was intending to speak on one of the papers which appear later in today's list, but there comes a time at which one gets absolutely fed up to the back teeth with the anti-American drivel which appears to be the sole motivation of the Australian Democrats. I shall therefore say something about the ANZUS Treaty and, in particular, its value to Australia arising from this defence report. The first point I make is to refer honourable senators to a letter which appeared in the New Zealand Herald of 12 April 1985 written by Dean Rusk, a very distinguished former American Secretary of State, dealing with the way in which the Americans understood the operation of ANZUS. He says in part: From the United States' point of view, we took for granted that if Australia or New Zealand were attacked, the United States would have to be involved in their defence. He goes on to deal with history in relation to Indonesia, and he says: When Sukarno, of Indonesia, was making hostile moves against Malaysia, I personally told his Foreign Minister, Mr Subandrio, that if elements of the Australia-New Zealand forces in Malaysia were subject to attack, that would trigger the Anzus Treaty because those forces would be covered by its provisions. I turn now to comments contained in the House of Representatives Hansard for 22 May 1969. I put these comments to Senator Sanders: The Prime Minister brought back a reaffirmation of the ANZUS treaty by President Nixon in such unequivocal and categorical terms that it gave heart to every member on this side of the House who still believes that the ANZUS treaty is the most precious piece of paper in Australian archives. The statement goes on: We have joined with the United States in the ANZUS treaty. The United States has given us a certain undertaking that it will help in our defence if we are attacked. Yet further it continues: . . . what sort of morality is to accept what the treaty gives and to give nothing back in return? We on this side of the House believe that we have this sense of morality. If we enter into a treaty for the security of the people of this country for the rest of this century, we cannot have it one sided. We have to give and take. For the assurance which we get under the treaty we are prepared and have the courage to run these risks and accept the responsibilities which the treaty imposes upon us. Does Senator Sanders accept that as a valid statement about ANZUS and its value? I presume that he does not, but he ought to because those are the words spoken in the House of Representatives on 22 May 1969 by the then honourable member for Higinbotham, Donald Leslie Chipp. If Senator Sanders wants to tell us that now, all of a sudden, these views about ANZUS no longer exist, if he wants to tell us-as he did today-that as far as Cam Ranh Bay is concerned the position of the Soviet Union involves no security implications for Australia, let him do so. Clearly that Soviet base does have security implications for Australia's trading routes. What is exposed here is the craziness of the Australian Labor Party's decisions on things such as the replacement of aircraft carriers, the winding up of the Fleet Air Arm and the like. Senator Sanders really ought to take a far closer look at the security and strategic implications of his views. All we hear from Senator Sanders and Senator Chipp these days is a one-sided diatribe against the United States of America, a one-sided assault upon everything American and upon all of our relationships with the United States. Implicit in that is a total view that Australia, Australians and Australian governments are all somehow craven and cowardly and are prepared to submit themselves supinely to whatever the United States wants and to take their orders from Washington without any degree of independence. If that is the sort of attitude which the Australian Democrats take towards the American alliance and the integrity of the Australian people, they collectively should be ashamed of themselves. Senator MacGIBBON(Queensland)(3.32) —This is a most regrettable occasion in that the report from the Department of Defence, which is one of the more important reports to come before this Parliament, was not available to the Senate at the time it should have been. I have had only the most sketchy of views of some photocopied parts of it. Senator Georges —Don't let that trouble you. The rest of us had the same opportunity. Senator MacGIBBON —Yes. There are a couple of points I would like to make. I reinforce completely Senator Puplick's views in respect of the views of the Australian Democrats. When Senator Sanders was going on in his usual shallow, superficial and vacant-minded way, asking who our enemies were, Senator Kilgariff interjected: `Well, Australia's enemies quite clearly won't be the sort of enemies you have'. I think that is very true. Senator Georges took us back to the early part of the 1920s and 1930s with a few of the old socialist Marxist views on international affairs and talked about the Vietnamese being frightened by the Kampucheans, the outrageous expansionists in the military regime in Kampuchea. The Vietnamese moved into Kampuchea on Christmas Day 1978, after they had signed a treaty of friendship and co-operation with the Soviet Union. They have been there ever since, murdering, turning people out of their homes and driving hundreds of thousands of refugees into the most abject poverty across the border in Thailand. Where is the threat to Vietnam in Kampuchea? Senator Georges has inverted the whole situation and talked about the Kampucheans threatening the Vietnamese, when the Vietnamese have about the third largest standing army in the world. I wish to deal with the parts of the report that I have seen. I note with respect to capital equipment an entry for the Wamira, the new basic trainer aircraft. This is an important thing. The Australian Government has used about $48m-it is rumoured that that figure is probably up to $60m now-of taxpayers' money to build a new basic trainer aircraft for the Royal Australian Air Force. The Australian Aircraft Consortium has been disbanded and the management of this project has now been put in the hands of Hawker de Havilland Ltd or Hawker Pacific Pty Ltd. That was done because this project has been so badly mismanaged. I believe the Parliament should have time to reflect on the wisdom of what we are doing here. We have invested four or five years work and, as I said before, between $50m and $60m of the taxpayers' money and we have got nothing for it. We may get an aircraft that is usable in time as a basic trainer, but at about half the cost we can buy aircraft overseas which fulfil the same role. Close ground support for the Army has been mentioned as a future role for this basic trainer. All I say about that is that it is absolute nonsense. If a highly sophisticated aircraft like an FA18 cannot live over a battle-field in the low level role-I believe that is true given the weapons systems we have today-an aircraft of about one-tenth the complexity and purchased at about one-tenth the cost simply will not survive at all. The solution does not lie in going to a cheaper and less technologically developed aircraft. The solution to the problem is to provide the requisite fire power for the Army by increasing both its armoury and its artillery capacity. That is something which this Government has shown no interest in doing at all. The previous Government did embark-- The ACTING DEPUTY PRESIDENT(Senator Colston) —Order! The honourable senator's time has expired. Question resolved in the affirmative. Senator KILGARIFF(Northern Territory) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator KILGARIFF(Northern Territory) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Senator ARCHER(Tasmania) —I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. The ACTING DEPUTY PRESIDENT(Senator Colston) —Order! The time allotted for consideration of Government papers has expired. Senator HARRADINE(Tasmania) —by leave-I move: That the Senate take note of the paper. I seek leave to continue my remarks later. Leave granted; debate adjourned. Debate resumed from 29 November, on motion by Senator Missen: That the Senate take note of the report. Senator MISSEN(Victoria)(3.38) —When this matter was brought on on Friday there was no time for debate. My tabling statement was set down and the report was tabled in this Parliament. I think it is important that there be some short debate on this important clash between the National Crime Authority and the monitoring committee so that honourable senators can think about this matter over the Christmas recess. Clearly, we must resolve this question when Parliament resumes. Unquestionably, a complete impasse has developed and has now gone on for nearly a year. The Joint Committee on the National Crime Authority is unanimous in the view that it is impossible to carry on like this and that all we are doing at the moment is providing a cosmetic appearance of monitoring an important Commonwealth authority while in fact we are not able to do so, for reasons which are set out in detail in the report. I want briefly to expand on the remarks which I made in the tabling statement and to invite honourable senators to consider certain matters which I think are important. In the first place, as I have said, an impasse has existed for many months. It is clear that the National Crime Authority is not prepared to give to the monitoring committee the information it seeks, information which would enable the committee in any way to judge such things as whether proper use is being made of the country's money, whether a proper examination is being made in following up the Costigan inquiries, which were handed over to the National Crime Authority, whether proper use is being made of State task forces, whether the right procedures are being followed as far as the machinery is concerned and whether morale inside the organisation is correct. These are but some of the things which need to be considered. I stress in the first place that we are not concerned to rehear or examine the particular ideas held by the National Crime Authority. I want to assure the Senate that it is not the intention of the Committee at any stage to do that, but it is its belief that it must make the judgment as to the necessary equipment and information which it may have. I mention briefly that there has been a leakage of the Committee's report. I mentioned this when I tabled this report last time. I have had time to think about this and have come to the conclusion that it is certainly in no interest of the Committee members, at all, that there should be any such leakage. I stress that the leakage does not involve any information derived from the National Crime Authority being brought out into the public arena; it is merely that the report has been prematurely given into the hands of the newspapers. It is curious that that has happened since the report has been printed. The report has been in its final stage for some weeks. Since the Chairman is in one House and I am in another, there was a delay of some weeks before the report could be brought down in each House on the same day. It is impossible for us to tell who leaked this information, but it is clear that it is embarrassing to the Committee because of the very point that the Committee has made; that is, that it is necessary for it to have information. One of the arguments used by the National Crime Authority against supplying information to the Committee was that committees of the Parliament tend to leak information and that information tends to get away from them. We already know that there is an intergovernmental committee. This means that a mass of people will have information coming their way. Therefore, there is a great chance of leakage from that source. I say specifically to the Minister for Education (Senator Ryan), who is at the table-I see it is not the Minister representing the Special Minister of State (Mr Young)-that I hope that before this debate is over today we can have some assurance from the Minister that no member of his staff leaked or indiscreetly gave this information on the Committee's report to the Press. Senator Jessop —It seemed to be fairly detailed. Senator MISSEN —It was certainly detailed information and there was clear knowledge of the report. We have checked with all senators and I have been assured by the reporter from the Australian since I spoke last about this matter that the leakage certainly did not come from the Senate at all. One can never be sure of these things and one cannot say exactly where it came from, but it was reported as coming from `government sources'. There was some discussion in the other House because one of the members of the Committee took it to be government members. I do not necessarily take that to be so, but `government sources' has a very wide implication. I hope we will have some assurance from the Minister before this day is out that it did not come from the Minister's office. I am not directly suggesting that he would have done this. I will put that matter aside. It is a problem which cannot be allowed to stop us from pursuing and resolving the whole matter. I think it is best to illustrate the difficulty the Committee is in by reference to an example in this Parliament. In the Hansard of 22 August Senator Siddons is recorded as asking a question of Senator Button about the taking of a large quantity of drugs. He wanted to know whether the finding and smashing of the drug ring by the Australian Federal Police had been due to the workings of the National Crime Authority and whether information came from the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union. Apart from the fact that we are told that it did not come from the Costigan Royal Commission, we have been able to find no information about this. In answer to Senator Siddons's question, Senator Button stated: I am unable to say what the National Crime Authority has done in respect of that reference. I think it is a matter which the parliamentary Joint Committee on the National Crime Authority would appropriately examine. It may be quite right that he would think that, but in fact he is quite wrong because we have not been able to find out anything about this matter. Senator Button went on to say: I think that is a matter which the Joint Committee on the National Crime Authority would probably wish to look at. Senator Chipp interjected: How long has it had to look at it? Senator Button indicated finally that he expected that the Committee would do something about it. In a supplementary question, Senator Siddons asked: Can we get any assurance from the honourable senator that the parliamentary Joint Committee will be given the reference and will report on the matter forthwith? Senator Button looked at me and saw that I was aware of the fact that the question had been asked. He gave an assurance that we would be able to do it. The fact is that we are unable to answer that question. Since that time, the Chairman of the Committee, Mr Alan Griffiths, has written to the Chairman of the National Crime Authority seeking information about this matter. In reply, on 11 October Mr Justice Stewart, while disposing of the question of whether information came from the Costigan Royal Commission, stated: The Authority does not feel at this stage that it can provide details of the material which was in fact referred to it by the Royal Commission, nor of the role it played in the arrests which were referred to in the question. So we are in no position whatsoever to answer the query raised in this Parliament and that question has remained unanswered since August. I take that as just one particular example of the difficulty in which this Committee finds itself. It can ask for information, but it has no way of insisting on having any information placed before it. The members of the Committee are unanimous that they must have that right, otherwise they will not be able to succeed. There are two parts to the recommendation of the Committee. The first part of the recommendation states: The National Crime Authority Act 1984 should be amended to provide: (a) that the Parliamentary Joint Committee on the National Crime Authority should have the power to do such things and make such inquiries as it thinks necessary for the proper performance of its duties; and The same provision applies to any other committee empowered in this Parliament. A committee should have the power to call for papers and the power to demand information to enable it to carry out the normal work of an ordinary committee of the Parliament. The second part of the recommendation states: (b) that where information sought by the Committee is of such a nature that its disclosure to members of the public could prejudice the safety or reputations of persons or the operations of law enforcement agencies then it should be made the subject of a separate report to the Chairman and Deputy Chairman of the Committee. Neither the Chairman nor I particularly welcome having that task in hand, but it is felt that where there is a risk of damage being done to the reputation or life of a person we should receive such reports from the National Crime Authority which can tell us the reasons why this information should not be disclosed. We can then filter this information through to the Committee and ask the Committee whether it thinks it should persist with the request for information. The Committee, of course, must be asked. (Extension of time granted) We believe that this would solve the problem; it may not. It is a matter for the Senate to determine whether more immediate steps should be taken. If honourable senators read the report and the remarks in it, they will see that an impasse has been reached which must be dealt with and dealt with quickly; otherwise there is but a charade of accountability. Let me make it quite clear what we seek. I make it clear that we do not seek any skirmishing through the facts, trying to rehear evidence and stating what we would have done sitting in the appeal, as it were. I will quote the remarks made by Senator Durack on pages 10 and 11 of the report during the debate in the Committee stage of the Bill. He stated: The purpose of the committee will not be to get into the details of particular cases. I think it could be most undesirable for the Parliament to turn itself into a grand inquisitor of crime. This is a quite inappropriate role for this Parliament or any committee of the Parliament. The amendment specifically provides that it is not to investigate particular cases. It will not be second guessing what the Authority has done in a particular case. Nevertheless it will have the authority to monitor and review the performance and functions of the Authority; so it will have a wide brief. The problem is that we are advised by Mr Chris Maxwell of counsel that we have that power under the terms of our charter. This is denied. That is a power which counsel set out. We can examine such things as: . . . the Authority's decision whether or not to investigate the matter, and the reasons for that decision; whether or not a reference has been requested and/or given in relation to the matter, and the reasons therefore; the particular kind of investigation or other action under section 11 upon which the Authority has resolved to embark; the progress of such investigation or action; the likely or actual outcome of such investigation or action; the powers of the Authority under the Act being utilised for the purpose of such investigation or action; the adequacy or otherwise of such powers. Unless we can do so, at the moment we can gain no idea of what the Authority is doing. We know that there are `references' for which the most vague particulars are given, for quite adequate reasons. But we know that we cannot tell whether the Authority is fully occupied. We do not know whether the morale of the staff is good. We cannot tell whether adequate attention is being given to references. From that point of view we put it to the Senate that answers were given by Mr Brazil on behalf of the Attorney-General's Department who, after saying that he did not think that we had this power, went on to say that it was not his concern as to whether this will make the monitoring Committee useless. That may not be his concern, but it is the concern of this Parliament. I put it to the Senate that, therefore, it is necessary for it to act quickly on this report by the Committee. Unless that is done, the work against organised crime will be greatly weakened. The ability of the Committee to monitor on behalf of this Parliament is a charade which must be ceased. Senator ARCHER(Tasmania)(3.52) —The report of the Joint Committee on the National Crime Authority, which is before us, is a matter of considerable regret to all of us in that it covers a situation which never should have arisen. It should and could have been nipped in the bud. It is my belief that the former Attorney-General should and could have obtained an understanding between the Committee and the National Crime Authority at the time the Committee was set up and when the duties of the Authority were being dealt with. That was not done. We are now left with a situation which, right from the first day, has been unsatisfactory in the best interests of the job. To look at the Committee we must look at the Authority first and see what we expect of it. Why is there an Authority? What is it there for? How do we see that it produces the maximum performance? Unfortunately, the Authority got away to a very bad start because of the slack takeover from the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union, the time taken to get staff, to get reorganised, to get premises, to get records, to set up methods of operation and so on. I think we all concede that the legislation is quite ineffectual and needs a considerable amount of stiffening if we want to have an authority that is capable of making a big impact on organised crime. I do not think anyone really believes that the Authority can operate to maximum benefit with the legislation it has now. The problem before us has been outlined very considerably. However, the Committee and the Authority see the position of the Committee very differently. The Committee's tabling statement stated its views and requests very adequately. The tabling statement stated: . . . the National Crime Authority Act should be amended to make it clear that the Committee has a right of access to the full range of information held by the Authority . . . The next paragraph on page 7 stated: . . . the exercise of the full powers of inquiry vested in a parliamentary committee. On the top of page 8 the statement read: However, I wish to stress the Committee's view that it must be the final arbiter of the extent to which information permissible within the terms of an amendment to the legislation . . . ought properly be provided. That is an absolute request for everything that is vested in the Authority. I understand that that is what the Committee is seeking. If, as Senator Missen has put, the Committee is actually seeking considerably less than that and does not, in fact, want full access to all the records of what is happening, I prefer that we treat it accordingly. The report contains a recommendation that the Committee should be given `power to do such things and make such inquiries as it thinks necessary for the proper performance of its duties'. This view may well change very considerably between members of the Committee or between the current Committee and a committee that may follow it. I believe that if we really understand what relationship we wish there to be between the Committee and the Authority, we need to state it more carefully than in terms of having powers to do such things and make such inquiries as the Committee thinks fit. I request the Committee to reconsider this matter and see whether it can put together a better method to cover this attitude. Of course, the Authority relies on the legislation. Section 51 (2) raises the problems that arise for members of the Authority if they divulge or communicate to any person any information. That section too is extraordinarily broad. It refers to `any person' divulging any information. Again, the Committee says that that provision precludes it from making disclosures. The Committee also has to rely on section 55 (2) which states: Nothing in this Part authorizes the Committee- (a) to investigate a matter relating to a relevant criminal activity; or (b) to reconsider the findings of the Authority . . . According to the views expressed by Senator Missen, that is not the Committee's intention. That is clearly covered by the request it has made in the suggested amendment. Because of the difference of opinion, of course there is a disagreement as to what will happen from now on. The report refers to the matter as what the `parliament intended'. I think it is important that we reconsider what the Parliament intended. The best place to go for that is the actual Hansard transcript of the debate. I do not wish to read it all to honourable senators. We were getting close to the end of a session in June 1984 when this legislation was being hustled through the Senate. What came clearly out of that debate was that Senator Evans, who was leading for the Government; Senator Chipp, who was interjecting on behalf of the Australian Democrats; and Senator Durack, who was speaking for the Opposition, were all very unified on the view that it was not a matter of getting involved with the cases the Authority was dealing with. I again request that the Committee put the matter together in a manner that will confirm that that is the case and specifically exclude any reference to these matters. It would be quite undersirable to go any further into the actual running of the cases and the reference the Authority may have. The disagreement is most regrettable. It is certainly up to the Parliament as a whole to determine what will happen. Does the Parliament believe that the Committee should, in its own terms, have the power to do such things and make such inquiries as it thinks necessary and a right of access to the full range of information held by the Authority? Does the Parliament believe that section 51 of the Act, requiring secrecy in the performance of the Authority's duties under the Act and the denial of access to matters of detail that concern the Authority regarding security, personal reputations and safety, is respected? I trust that the Parliament can have regard to this matter in the near future. However, whichever point of view we support, all honourable senators would agree that total confidentiality is absolutely essential in the vital matters handled by the Authority. Regret- tably, the media seem to be able to rely on weak and unreliable members of the Parliament or people elsewhere to get information of a confidential nature. We have seen it with the Age tapes, we have seen it here and we have seen it in many other cases. I regret that the more people who have access to this information, the more likely it is to get away. With this information in mind, I trust that the Senate as a whole is able to recommend to the Committee that we have another look at it, and please let us get the Committee into working condition. Senator JESSOP(South Australia)(4.01) —I would like to speak for a moment or two on this motion to support what Senator Missen has said concerning the difficulties that the Joint Committee on the National Crime Authority has faced since we have been monitoring the Authority. Early in the piece we had some information, publicly stated, that one of the employees of the Authority, a lawyer, had resigned because he felt that he was not fully occupied and because the morale within the Authority as far as he was concerned was not what it ought to be. We believe it is part of our responsibility to make further inquiries to ensure that the staff are fully occupied. This lawyer was being paid of the order of $700 a day and he felt quite guilty about receiving that amount if his talents were not being used in an effective way. We as a committee feel that it is very important to be able in our monitoring role to call for witnesses within the Authority without getting into any investigatory matters at all. Senator Georges —That means that you are running the Authority day by day. Senator JESSOP —No, we are not. The Authority itself is not held in very high regard in Australia at the moment. You read the Press and you will find-- Senator Georges —Look-- Senator JESSOP —Look, stop interjecting! I get fed up with your trying to disrupt me. What I want to say is that we have a very important role to play. We certainly do not want to get involved, nor do we intend to get involved, in matters with respect to investigation. We have never suggested that and it is not our intention to do so. It would be wrong for our Committee to get into that sort of personalised detail. Senator Georges —Well, you have. Senator JESSOP —We have not got into that personalised detail with respect to drug pushers. We know the types of cases that are being followed, but we do not expect any specific details at all. We have examined the computer system of the Authority and questioned whether it is secure. We have been assured that the Federal Bureau of Investigation has been to look at it and that it is as secure a system as possible in these days. Senator Missen —Is it being properly used? Senator JESSOP —That is another matter we want to find out. Is it being properly used for the benefit of the Authority? Is the law that has been prescribed by the Government sufficiently tight? Does it give the Authority sufficient power to do the job we expect it to do? That is one of the jobs we want to follow through. I can assure Senator Archer-and I am sure that I speak for the rest of the Committee-that there is nothing sinister at all about the report. We just want to be able to do our work, as any other committee does. Senator Archer —I am not accusing you of being sinister. Senator JESSOP —I think the honourable senator said that he did not want us to be involved in personal matters. We do not want to do that at all. We do not want to have our Committee getting involved in anything that is going to jeopardise the secrecy or investigative efficiency of the Authority. We want to be in a position to back it up and to report to the Parliament in an intelligent way. We have found it very difficult to get even general information. As Senator Missen said, Justice Stewart has agreed, where there may be matters of some sensitivity, to consult with the Chairman, Mr Griffiths, and the Deputy Chairman, Senator Missen. As Senator Missen quite properly said, that information would be distilled and reported to the Committee and the appropriate decision could be made. We know that some staff of the Authority believe that changes could be made to the legislation to assist them in their work. I want to help them to follow through and deal with these major criminals in Australia who are creating so much concern throughout the community with respect to drugs and so on. I just wanted to support what Senator Missen had to say. I will be very happy to discuss the matter, as I am sure he would and the Chairman would, if there are any matters that are still in doubt; and I am sure that we can clear those matters up satisfactorily. Senator MISSEN(Victoria)(4.07) —in reply-What we desire here is that this matter go to the responsible Minister and that discussions take place. With respect to Senator Archer, it is no good sending it back to the Joint Committee on the National Crime Authority for us to look at it. He may not think that we have sufficiently spelt out what is necessary for the proper performance of our duties-that may have to be spelt out in the Act-but it is quite pointless to take this matter back to the Committee because we have reached an impasse in our communication with the Authority and it is important that we get some movement in the situation. We made no particular reference to the words used in our recommendation. We have never desired to investigate individual cases or to reconsider the findings of the Authority, things which are not permitted under the Act anyway. Those two things are quite specifically excluded from us. But the Authority takes the Act to be so wide in its restrictions as to mean that we cannot ask what it is doing. We have to resolve, probably with longer language than is in the Act, exactly what the wording means. Consequently, I think it important now for the Attorney-General (Mr Lionel Bowen), the Authority and the Committee to discuss the type of legislation required. What we have done is to put the situation before the Minister because it is his problem now; it is not a problem we can solve. Consequently, we assure the Minister that the last thing we want to do is to delve into details, to say how we would have done it, to go into individual aspects or to do something of that sort. We want to know though that actions are being fully explored, that plenty of work is being done and properly done-- Senator Jessop —And the morale of the staff. Senator MISSEN —That the morale of the organisation is good and, as I mentioned by way of interjection, that the computer is being used for valuable purposes and not just to store material. That is just one example. We want to make sure that the right methods are being used by the Authority. We cannot assure this Parliament of anything at the moment. Because of that, we believe it is our duty to put this matter before the Minister. This is merely a motion to take note of the report, but I hope that if anybody gets any ideas over the recess period they will bring them to my knowledge, to the knowledge of the Chairman, to the shadow Minister or the Minister so that we can get this resolved early in the New Year. Question resolved in the affirmative. Debate resumed from 14 November, on motion by Senator Robertson: That the Senate take note of the report. Senator CRICHTON-BROWNE(Western Australia)(4.09) —I move the following amendment to the motion that the Senate take note of the report, which is in the terms of notice of motion No. 83 given by me on 14 November, when the report of the Joint Standing Committee on the New Parliament House was tabled: Leave out all words after `that', and insert `The Senate- (a) accepts the necessity for the interior finish of the Senate chamber in the new Parliament House to maintain in suitable form the dignity and atmosphere of the present chamber; (b) considers that it is appropriate for the new chamber to have a basically wood-panelled appearance, taking advantage of, and making use of the wide range of timbers to be found throughout Australia; and (c) rejects the proposal, recently revealed to senators, for the walls of the new chamber to be lined with fabric of varying colours, not consistent with the traditional red colour common to Westminster-style Upper Houses. In my view this is a debate of very considerable importance to this chamber. As I suspect is the case with many honourable senators, it was only recently that I had an opportunity to become interested in the design and the layout of the new chamber. I am indebted, as I am sure are all senators, to the President for providing a display model in his office which gave us all an opportunity to form judgments. I must say that for my part I was pretty much astounded and certainly very disappointed with the concept that had been put forward. One has to ask oneself where the architects got their ideas from. Without being too critical in a general sense of architects, it seems symptomatic of architects that they have their own ideas of what is good for the rest of the world. One gets the impression that the concept of these architects was not drawn from a viewing of the operations of this chamber. I am seeking to be objective and I do not want to single out anybody in particular for the concept. One might be inclined to criticise the architects or the Parliament House Construction Authority. I make no judgment on where the responsibility up to this point rests. However, I have to say that I get the clear impression that the interior design of the Senate chamber in no way reflects or fully appreciates the functioning or operational systems of the Westminster tradition. If one were to accept the break away from the traditional Westminster red and the substitution of `Australian Pilbara reds', I can only say that the salmon pink shades that I have seen are not the colour of the Pilbara. I do not say that without some authority. I lived in the Pilbara for six years. Having looked at the design and the colours, I see no comparison between the stark basic red of the Pilbara and the anaemic-- Senator Vanstone —Balmain colours? Senator CRICHTON-BROWNE —One might say Balmain, but certainly the anaemic, modest, pale pinks that we have seen in the design. There is certainly no relationship between the two. Of course, the great tragedy is that in Australia we are going through a euphoric phase of wanting everything to be Australiana. Naturally, that will date everything that we do. Once we get over this inferiority complex we will find that the chamber in the new Parliament House and the Parliament generally will be dated. With regard to the reality and the intent of the chamber, I quote from the report: In each Chamber the symbolic colour is maintained to present a unified interior, yet it is gradually lightened as it rises toward the light entering from the clerestories and skylight at the ceiling thereby unifying the whole space. To me that gives a clear impression of the esoteric judgment of the architects. Senator Jessop —You wouldn't call it Utopia. Senator CRICHTON-BROWNE —One certainly would not call it Utopia. One realises from that extract what was intended by the architect. But having viewed the proposals for the chamber, they certainly give me an impression of being an absolute mish-mash of misunderstanding as to the purpose of the chamber. I wished to raise other matters but there are other senators who wish to speak briefly this afternoon. I am very anxious that this matter be put to the vote. On that basis, I will decline to speak further. I hope that those contributing to the debate will do so in a constructive way and will support my proposition, and that following that we will have a quick vote. Senator TATE(Tasmania)(4.15) —I had not intended to speak this afternoon or in fact today but I have been encouraged by the motion moved by Senator Crichton-Browne to make known my views about the complexion and cosmetics of the chamber of the new Parliament House. As he has pointed out, it is very important that continuity be sought in not only the functions carried out in this chamber but indeed the whole atmosphere in which those functions take place. I doubt very much whether we will be able to carry the sense of this chamber as a House of review with us to the new building unless some of the physical geography of this place is also transferred in symbolic and cosmetic terms. I am looking for something which will be conducive to recreating the considerable deliberative debate that goes on in this chamber. To help create that atmosphere, let us take with us some of the attributes of this beautiful chamber which I have grown to love and admire over the seven years that the people of Tasmania have seen fit to send me to this place. I see much merit in Senator Crichton-Browne's proposition that we retain the wood pannelled walls and the effect around the galleries in the new Parliament House. The fact is that there is a variety of timbers all around Australia which are of immense beauty and which would themselves become a symbol of the Federation. If we had timbers from the various parts of Australia, they would add to the tradition of the wood panelled walls and galleries of this chamber. I see some symbolism in taking timbers from right around Australia instead of having the very weak, insipid pink, somewhat reddish, somewhat salmonish, fabric colours that are being foisted on us at the moment. In fact, Senator Crichton-Browne has made it very clear that in his opinion the so-called attempt to capture the colours of the outback has utterly failed and the suggested colours bear no resemblance whatsoever to the striking reds of the Pilbara region. I must say that to my Tasmanian eyes none of the reds or pinks have any appeal whatsoever. In fact, if I were looking for something more agreeable to my eyes, I would look to the beautiful greens and emerald colours that we so much admire in Tasmania. I see there is interest on all sides of the chamber in this matter. What is required is a continuity of function, aided by a continuity of the geographical attributes of this chamber. We need wood panelling and red colouring. The red colour is symbolic of those good parts-I do not say that all parts are good-of the Westminster tradition transferred to the colonies. In fact, just this week we passed a Bill in this chamber which cuts off many of the traditional legal links with the United Kingdom. Nevertheless, we are inheritors of the Westminster tradition and ministerial responsibility. I believe that, insofar as the Senate colours at the moment reflect the colours of the upper House in the Westminster Parliament, that tradition should be continued and transferred to the new site. I am delighted that Senator Crichton-Browne brought this matter to the chamber by way of an amendment. It is about time that senators took a bit more interest in what is going on in the design of their chamber. We saw what an awful orthopaedic mess was made of the seats and chairs that we were supposed to sit on in conducting the business of this place. Unless senators take control of the colour and the panelling of the chamber, it will end up looking like the foyer of a Sheraton hotel instead of a chamber of review. Senator VANSTONE(South Australia)(4.19) —I support the amendment moved by Senator Crichton-Browne. There are many things I would like to say about this but, bearing in mind that other senators also wish to speak, I will be brief. I seek leave to incorporate in Hansard a letter that I wrote to the President on 16 September 1985 which clearly outlines some of my views on this matter. I have shown the letter to the Minister for Resources and Energy (Senator Gareth Evans), who is at the table. Leave granted. The letter read as follows- My dear President, Thank you for the opportunity to view the plans and displays relating to the new Parliament House. There are a few comments that I believe it is appropriate to make. One of the advisers made the point that it had been deemed appropriate to shift from `Westminster' red and green to `Australian' red and green. The extension of this point was that after considerable research the `appropriate' green had been discovered. I understand this appropriate green is described as `young eucalyptus' and following on from that the appropriate red is the red in the veins of the leaves. I am not enamoured with these ideas. I would be more than grateful to be given permission to see the research that led to each of these conclusions. I do trust that it will reveal what it is that has occasioned the Australian public to suddenly develop an abhorrence for Bottle-Brush (Senate) red and Bottle (House of Representatives) green. Additionally I will be interested to see whether the said research, in reflecting this desired shift away from Westminster colours also asserts a desired shift away from the Westminster system of Parliament. In my view the `red' carpet sample is more appropriately described as ochre/mud. The adviser further explained that a fabric would cover the walls of the Chamber and that the colour scheme in the Chamber would extend from the dark colour of the carpet to the lighter covering on the walls in the public gallery. This graduation of colour and the use of a fabric was to achieve three things: 1. Acoustic benefits 2. Focus on the Chamber 3. Visually emphasise the link between Parliament and the people. I make the following points: 1. Acoustic Requirements-I understand that in other Parliament Houses they have managed to have an acoustically suitable Chamber without using fabric on the walls. May I enquire as to the reason it is regarded as impossible to achieve the desired acoustic standard using timber. 2. From a purely domestic point of view I believe that timber is easier to keep clean and looking good. Fabric on the other hand is not easy to keep clean, it collects dust, shows grubby marks and furthermore deteriorates to a condition that can best be described as tatty. 3. The Press Gallery-If one wanted to truly represent the relationship between the Australian people and their Parliament may I be so bold as to suggest that we alter the plans and put the Press Gallery smack in the middle or rather between the Chamber and the people. 4. Wallaby Mentality-I personally regret that development in Australia of what I choose to refer to as a wallaby mentality. This mentality requires those afflicted with it to feel and believe they are not Australian unless they engage in a consistent and jingoistic rubbishing of aspects of our society that history has been so kind as to pass on to us. This resentment at acquired values is directed particularly to those things British and American. The burning passion to surround ourselves with things `Aussie' and to expel matters seen as being English or American reminds me of the phrase `unless ye see ye do not believe'. Are we soon to be presented with macrame vegemite jars to decorate our office walls? Will America's Cup tea towels be standard issue for each office? 5. The fabric shown to us by the adviser as being an indication of what will go on the walls and which was crafted or worked in some way, showed a distinct resemblance to table cloths I have seen in country hotels and reminded me of one of my late grandmother's shawls. I further make the point that what an architect or designer believes is appropriate today, may well not be appropriate in five or ten years time. Given the expenditure involved I feel I should be forgiven for believing that it would be more appropriate to adhere to classic and basic requirements of style and function rather than pursuing today's ``flavour of the month'' image. Not to do so is to ignore the deep-seated traditional values within our society. All too frequently tomorrow's projections become yesterday's fad. As you probably realise John Kennedy said `Civility is not a sign of weakness'. Let me steal his style and say that traditional atmosphere is not necessarily a rejection of challenge, change and reform. Would you be so kind as to provide me with details of the access to the Chamber that staff will be provided with and the proximity to the Chamber of any areas in which Senators will be able to discuss matters with their staff. I do hope that a forum will be provided for all Senators to discuss these matters together. Yours sincerely, AMANDA VANSTONE Senator for South Australia Senator VANSTONE —I thank the Senate. I would like to make a few comments specifically with respect to this report. Page 2 of the report states: The design of the Chambers endeavours to create a sense of `intimacy' within spaces . . . I may have a different idea of what is intimate in the archtiectural sense than do the architects and interior designers, but I certainly think they have failed in their endeavours in that respect. When one peruses the answers given at certain Estimates committee hearings one finds that the architects, interior designers or somebody from the Parliament House Construction Authority went to Europe to look at the Volvo factory because it was held to have some sort of similar arrangement with the Senate and House of Representatives chambers. So much for intimacy within the chambers. Also on page 2 of the report the point is made that the chambers are surrounded by lobbies for senators and members at ground level. I raise the point, as I did in my letter to the President, that there should be a space very close to the chambers for senators and members to discuss matters with their staff. Comment has already been made about the use of symbolic red and green. I think we should stick with the traditional Westminster red and green. I accept that some people would say that we are not in Westminster; but I say that we are not in central Australia. The true analogy to draw is that we are in a parliament that runs on a Westminster-style system and accordingly, we should use Westminster-style colours. The next point I make is with respect to the fabric panels for acoustics. I simply cannot accept that it is not possible for architects to design the surface of wood panelling to achieve the same result they would achieve with the recommended fabric panels. The last point I make is that on page 4 of the report we are told in pagragraph No. 14: Translation galleries are included in the design of each Chamber to provide facilities required on occasions when the Chambers may be used for mutli-lingual conferences. The translation system will be cabled to all floor level positions in each Chamber. I register a protest at the Senate and House of Representatives chambers having money spent on them to prepare them to be used as convention centres. It is my view, which I have expressed before in relation to this Government using the chambers of this Parliament as convention centres for the assorted summits it has, that this is totally inappropriate. Each chamber of Parliament should be used for parliamentary business, and parliamentary business alone, in my view. Having made those points, I think it is fair that I not take up the time available to me and give it to other senators who wish to speak. Senator COOK(Western Australia)(4.24) —I disagree with all the previous speakers. I am amazed, and I am sure that people who are listening to this debate are amazed, that the Senate is sitting a week longer than the House of Representatives with a huge legislative program before it, yet we are engaging in an indulgent debate about what colour the Senate chamber should be in several years' time when we take our places in the new Parliament House. The people of Australia are well and truly entitled to ask what the hell we are doing if we descend to that degree of indulgence. My dismay at this debate is eclipsed only by the fact that there seems to be a degree of bipartisanship across the chamber between the conservative-the traditionals-and the orthodox members of this chamber, all of them joining hands across- Senator Crichton-Browne —As distinct from the pinkos. Senator COOK —I will deal with you in a minute, Senator Crichton-Browne. Don't worry, you've got it coming. There is a keen desire to turn one's back on modernity, on a contemporary view of the new Parliament House, and on the attempt to make the new Parliament House relevant to Australia, and to try to re-incorporate the traditional British model which is more relevant to Britain than to this country. It is about time we designed our chamber to suit Australia and Australia's needs and tastes. That is what the proposal for the new Parliament House attempts to do. It is surprising that the conservatives-I use that word as a general term for all those who have argued for tradition-prefer Politburo red to any of the changes that are being suggested. It says something about the authoritarian view of traditionalism and conservatism that Politburo red-the red that surrounds us in this chamber-is the preferred choice of honourable senators who have spoken previously. The plans for the new Parliament House reflect contemporary taste and design. The new Parliament House is scheduled to be opened in our bicentennial year. The idea of the new Parliament House is to reflect a coming age, not an age that is past. It ought to reflect what the traditions will be in the future and not what the traditions have been in the past. It is about time we dragged ourselves, kicking and screaming, into the late twentieth century and set cornerstone on the new Parliament House which reflects a modern view of the world, rather than harking back to the age-old orthodoxies of the past. I think it would be a grave mistake to try to replicate this chamber in the new Parliament House on the hill behind us. It is my very firm view that the traditions of this chamber, particularly on 11 November 1975, should never be immortalised. Senator SANDERS(Tasmania)(4.27) —I oppose this amendment for the reason that it would lead to the destruction of yet more rainforest timbers. Honourable senators interjecting- Senator SANDERS —Look at the response we get in here-a braying and snorts of derision-when someone starts talking about Australia's heritage, rainforest timbers. This chamber is lined with rainforest timbers. There is mahogony and cedar in here-beautiful timbers. Unfortunately, we cannot now find enough cedar in existence in the rainforests of Queensland to line a chamber such as this. We simply cannot find this type of cedar because it has been logged out as we had no appreciation of the native woods and trees of the country. Senator Tate —Mr Deputy President, I take a point of order. This chamber is panelled with Tasmanian blackwood, not cedar. The DEPUTY PRESIDENT —There is no point of order. Senator SANDERS —If the honourable senator cares to do so, at a time of his convenience I will take him around and show him cedar in this chamber. I will also show him mahogony. Perhaps together we can find some fine Tasmanian blackwood. We will find the timber because it was put in this chamber many years ago. The honourable senator would be hard pressed to find the same type of blackwood or any other rainforest timber in Tasmania since the implementation of dangerous woodchipping and other exploitative policies. I point out that page 79 of a report tabled in this Parliament entitled `Rainforest Conservation in Australia' and presented to the Hon. Barry Cohen, Minister for Arts, Heritage and Environment, by a working group on rainforest conservation in September 1985, states: The most significant of the areas liable to future logging are in northern Queensland, where 1986-- that is, next year-- will mark the end of an era of more than 100 years of virgin rainforest logging, as virgin areas available for logging will have been worked through. According to this report, in 1986-one year from now-there will be no more virgin rainforests. They will have been logged through. There are also substantial areas of virgin rainforest in Tasmania, where logging has been deferred until 1988-three years from now-pending a comprehensive inventory and assessment by the State Government department. Previously in this chamber I pointed out that the State Government department in question is the Department of Forestry which has as its-- Senator Crichton-Browne —Mr Deputy President, I take a point of order. At the risk of curtailing this debate, I say that I was rather hoping that in decency we could have had a vote. I put it to you, Mr Deputy President, that although Senator Sanders might be into virgin rainforests, they are irrelevant to this debate. I ask that he confine himself to remarks relevant to the debate. The DEPUTY PRESIDENT —Paragraph (b) of the amendment reads: Considers that it is appropriate for the new chamber to have a basically wood-panelled appearance, taking advantage of, and making use of the wide range of timbers to be found throughout Australia . . . Therefore, Senator Sanders's remarks are relevant. Senator SANDERS —Thank you. I will limit my remarks because I know that other senators wish to comment on this. Senator Gareth Evans —We do not want to vote today. Give people an opportunity to think about it. You just keep talking. Senator SANDERS —I will keep speaking while others discuss the merits or otherwise of coming to a vote. The point is that the chamber could be tastefully lined with some fabric or material other than wood. If it is to be lined with wood I suggest that the wood be obtained from present woodchip areas-from the logs which are now being chipped and taken to Japan. The wood could be fine Tasmanian oak. It could be other Tasmanian timbers, such as myrtle, which are being woodchipped and sent to Japan. This wood should be preserved. If the chamber must be lined with wood it should be lined with wood which is saved from the Japanese and saved from the avariciousness of the woodchip companies. Senator CROWLEY(South Australia)(4.31) —My views on this are clear, at least in terms of colour. I have circulated letters to my colleagues supporting very much the use and the proposal of use of the colours that go to the heart of the central desert of Australia. In particular I have made reference to the colours in the Fred Williams Pilbara series. I do not believe we could do any better than that. If the dye mechanisms have not produced sufficiently satisfactory colours, that is perfectly open to further experimentation until we arrive at a perfectly lovely colour or series of colours. It has been explained very clearly to those of us who took the time to have a briefing from Ric Thorp and others from the Joint Standing Committee on the New Parliament House that the acoustics of the chamber make it quite impossible to use timber panelling as has been proposed. I do not think Senator Sanders need fear for the timber because it is not possible to use it if we want a chamber of that increased size, compared with this chamber, and intimacy to allow conversations to be heard as they are with the acoustics in this chamber. We have been advised that all sorts of experts have deliberated quite considerably on that area, and I do not believe any honourable senator who happens on this by chance on the second or third last day of the session would be qualified to speak against that expertise. Our desires or preferences may be put but I do not believe we could claim expertise. I am further advised that the timber that is proposed to be used in the new Parliament House has already been cut down. It is actually to be taken from timber already felled. Senator Sanders need not fear for trees currently standing. I strongly support the proposals for change. I think we are moving, on the occasion of the Bicentennial of Australia, to a time when it would be most appropriate to make some statements for the independence and significant difference of this Parliament House from the one we are in now. I also think we can continue sufficient traditions, particularly through the processes of what happens in that room. Therefore I think the colour of the room is largely irrelevant. One has only to visit the chambers in various countries that continue the Westminster system to see how each country has expressed that in its own different way. I think it is a monument to nonsense to lead arguments of tradition and continuity to justify those sorts of positions. I have no qualms at all in disagreeing with Senator Tate. I find it remarkable, in a man of his perspicacity, to be so entrenched in this one small area. I ask members of the Opposition whether the red they are proposing is the red they so often find under their beds. I also must say that the honourable senators who claim not to be informed sufficiently to this point ought to be chided a little for not interesting themselves in the continuing process and review of construction of the new Parliament House. Those of us who have taken a little time to maintain an interest would understand what a fantastic and splendid building it will be and what a wonderful opportunity it is for Australia, which is now in the process of building what I think is the greatest building currently under construction anywhere in the world, to have that as a matter of great pride. I think-this is strongly in support of Senator Cook's remarks-that we are making a new into-the-future Australian Parliament House, not a memorial to times past. Senator PUPLICK(New South Wales)(4.34) —I rise to support Senator Crichton-Browne's amendment. As my understanding is that the time allotted for this debate is due to expire in about three minutes, can the Minister for Resources and Energy (Senator Gareth Evans) indicate whether an opportunity might be provided before we rise, for a vote to be taken. I hope that is the correct method, otherwise- Senator Gareth Evans —Sort out your priorities. It took three years to get this sorted out. Senator PUPLICK —I well recall being in this chamber when Senator Evans managed to detain it for more than an hour, as a member of the then committee reporting on the new and permanent Parliament House, because the matter was, in his view, of such enormous significance that he thought it necessary to seek an extension of time to tell us about all of his views on the importance of the aesthetic design of the building, about the architects and about all the work that he had put into the whole thing. I am not prepared to accept that Senator Evans finds it inconvenient to have matters decided now, because when he wants to have matters decided he believes that the Senate should make whatever time is available for him to express his views. Yet he believes that nobody else should be accorded the same courtesy. Under those circumstances I would not be prepared to take the opportunity of moving that the question be put, but rather I shall continue the remarks which I wish to make in support of Senator Crichton-Browne's amendment and in support of the ideas behind it. I think in any institution which has certain values those values tend to be reflected in structures and in forms. Sometimes those forms are particular verbal forms in which motions are put; sometimes they are the structures of the legal processes, such as whether judges dress in a particular fashion or whether cases are conducted in a particular fashion. One of the fundamental reflections of the operation and the underlying value of parliamentary institutions has been the physical presence which surrounds the debate and the way in which it takes place. What is currently proposed in the recommendations of the architects and designers would, I believe, lead to some fundamental changes which the majority of honourable senators would not believe to be desirable. I believe that the motion as moved by Senator Crichton-Browne is more likely to preserve the reflection of the traditions and values of a deliberative chamber and House of review. He mentioned in his motion the use of the traditional red colour, whatever description is given to it-I think it is Westminster red. For Senator Coates's edification, I take that to be the colour of the older leather chairs in this place- Senator Coates —What about your Leader's chair? Senator PUPLICK —I am not responsible for the avant-garde taste of my Leader. I am simply making some comment about the particular view. This is not a matter on which the Opposition has a party view, and when it comes to any vote on this, it will be a free vote. Mr Deputy President, may I seek leave to continue my remarks. The DEPUTY PRESIDENT —There is no need. The time allotted under sessional order for this debate has now expired. Senator Puplick —Is it possible under Standing Orders for me to move for the resumption of the debate? The DEPUTY PRESIDENT —The debate will automatically remain on the Notice Paper and will come up when ordered under General Business. Senator Puplick —Do the Standing Orders enable me to move that the resumption of the debate be made an order of the day for Friday of this week? The DEPUTY PRESIDENT —It is within Standing Orders if you wish to do so. Motion (by Senator Puplick) agreed to: That the resumption of the debate be made an order of the day for Friday, 6 December 1985. Senator TATE(Tasmania) —I present the final report of the Standing Committee for the Scrutiny of Bills for 1985. Ordered that the report be printed. Senator CHILDS(New South Wales) —I table further additional information received by Estimates Committee C and seek leave for it to be incorporated in the Hansard record of the Committee's proceedings. Leave granted. Debate resumed. Senator JESSOP(South Australia)(4.41) —Before the luncheon break and the ensuing debates I was referring to the effect of the Government's taxation package. At that time I was referring specifically to the motor industry. I now pose the question: How much revenue is the tax change expected to bring? There is no doubt that the losses resulting from reduced registration fees, sales taxes, comprehensive and third party insurance, not to mention losses in company profits and losses in personal income tax from those people who will lose jobs as a result of the tax package, will amount to a considerable sum. I referred to the growth in sales of motor vehicles from May until October this year. I referred to the fact that sales of luxury cars did not seem to be affected quite as much as the sales of cars in the cheaper range. I sought leave to incorporate in Hansard a small article from the Australian Financial Review of yesterday. I think Senator Coates and my dear friend Senator Georges thought I wanted to incorporate the entire Australian Financial Review simply because I did not have time to trim the article from the newspaper. I have the article here and I hope that I can now persuade honourable senators opposite to allow me to incorporate it in Hansard. I seek leave to do so. Leave granted. The article read as follows- KEATING'S TAX VICTIMS EMERGE IN CAR SALES By Lim Say Boom Taxes may come and (occasionally) go but the truly rich, it seems, keep putting small fortunes into four wheels. While those who have made it may regard the tax designs on their company cars by the Treasurer, Mr Keating, as little more than a cheeky attack on tradition and a minor irritant, things have not been looking so peachy for the middle management and yuppie end of the luxury car market since the tax debate started this year. The market performance of the different models vary considerably across the lower luxury end of the market, with some like the Mazda 929, Ford Fairlaine and Toyota Cressida bearing up better under the pressure than others. But the latest IDAPS motor registration figures for the 10 months to October suggest that the sportier imported Japanese cars and the more trendy European `yuppie-mobiles' have become the first victims of the decline in consumer confidence since the start of the tax debate. The biggest losers in the luxury car market so far are the Japanese, many of whom have brought down huge, devaluation-related price hikes over the year. On the other hand, the prestige marques like Mercedes Benz, BMW, Porsche and Saab have weathered the tax debate smoothly and with style. Here is the casualty list: Registrations for the Mitsubishi Starion have fallen for the year to October by a massive 36.8 per cent compared with the same period last year. Registrations for the Mazda RX7 are down 18 per cent on last year. The Peugeot 505 is down 5.9 per cent on last year. The Volvo 240 is down 19.7 per cent. The Nissan Skyline is down 15.2 per cent. The Honda Prelude is down 4.3 per cent. All this took place in a year in which the Australian car market has been booming. Although growth in the car market has slowed considerably in the past few months, the industry is still tipped to achieve a record volume of between 680,000 to 690,000 cars this year. The latest figures show that car registrations are still 9 per cent higher for the year to October compared with the same period last year. This compares with growth figures of 10.8 per cent for the year to September, 10.6 per cent for the year to August, and 12.4 per cent for the year to July. While some luxury car dealers have been complaining about an alleged downturn in business, the IDAPS registration figures still show a dizzy 33.7 per cent increase in volume in the upper luxury market for the year to October compared with the corresponding period last year. As the following figures indicate, the bottom appears to have indeed fallen out of the lower luxury car market. Growth in the lower luxury car market for the year to: Month...% March...29.7 April...28.6 May...22.8 June...18.7 July...14.5 August...10.2 September...8.4 October...5.9 However, the upper luxury market figures show up the difference between being rich and nouveau riche. Growth in the upper luxury car market for the year to: Month...% March...41.5 April...7.5 May...34.2 June...31.7 July...30.8 August...32.0 September...34.4 October...33.7 As BMW Australia's managing director, Mr Ron Meatchem, put it at the recent launding of his company's new model line-up for 1986: ``In times of stress, the luxury sector always bears up better than the mass market sector.'' Other BMW executives put it more bluntly in terms of senior management's perception of the company car as a ``right'' and a ``reward'' for excellence and performance rather than a ``privilege''. Mercedes-Benz Australia's managing director, Mr Bernt Schlickum, says that in harder times, those who can afford to buy luxury cars will be more ``selective'' and look for ``quality'' products as an investment. Mr Schlickum has much to be happy about this year. Even with the tax funk, Mercedes-Benz has enjoyed a 35 per cent lift in sales for the year to date. As one luxury car importer put it: ``The senior management guy is not going to cop the austerity drive in his company himself. He's obviously going to start by looking down the management chain. Senator JESSOP —I thank the Senate, particularly Senator Coates and, in his absence, Senator Georges. The article is headed `Keating's tax victims emerge in car sales'. That article contains a table illustrating what has happened since May this year. The motor vehicle industry has analysed the situation to date. It now believes that in a full year the extra tax on motor vehicles will result in a loss of 100,000 new motor vehicle sales each year. The car manufacturing firms know that this could mean a loss of tens of thousands of jobs. In addition to the losses of jobs of people employed directly in building those vehicles, there also will be a considerable loss of jobs in the support industries. In the case of the entertainment taxes the effect is even more widespread. That was detailed quite well earlier today by Senator Knowles in her speech. The entertainment tax will affect the whole spectrum of service jobs as well as the agricultural industries, such as the fishing industry and so on, associated with food production. Earlier in the debate the BIS-Shrapnel Pty Ltd study on the effects of ending tax deductions for entertainment was cited as proving beyond doubt that the adverse effect on various industries would be much worse than the Government has disclosed. I am aware that the Treasurer (Mr Keating) has had his Department produce a counter-attack to this report. I think Senator Maguire mentioned that Treasury report earlier. However, Senator Maguire forgot to say that the Treasury report failed to show how Government claims could be proved. Knowing Mr Keating's predilection for shouting `cheat, cheat, cheat!'-which I have heard him reported as saying in the past-it is my belief that his estimate reflects his own cheating. Senator Maguire did not spell out that anomaly in his speech; he did not show how the Government could prove its claim. The BIS-Shrapnel study concluded that the increase in tax revenue that the Government would gain from this particular impost would be closer to $79m than to the Treasurer's estimate of $310m. The report also predicted that there would be a loss of some 18,000 jobs, of which approximately 11,000 would be in the hospitality industry. The BIS-Shrapnel study assumed that business would cut its entertainment by 35 per cent to keep its outgoings on entertainment to pre-tax levels. I have it on good authority that many restaurant owners are keeping permanent staff intact until after the end of the year-we all realise that pre-Christmas festivities represent the peak time in the restaurant business-to see whether they can survive at their old staffing levels. After New Year's Eve trade in the entertainment industry always drops. I think, therefore, that early in 1986 we will see the demise of many restaurants throughout Australia. Senator Chipp and others have criticised high class restaurants and called them rip-off joints. I am surprised at that. Senator Messner —They are the topless ones, are they? Senator JESSOP —Senator Chipp may be able to tell the honourable senator about that; I am not sure. I do not believe that Senator Chipp is a noted businessman in this area. High class restaurants which draw trade from business entertainment are usually located in high rental premises with expensive furnishings, crockery and cutlery. Such restaurants also have to carry an extremely wide range and variety of wines. The interest that they must now pay on their overdrafts has increased dramatically and is causing them difficulties, even without the imposition of the tax we are dealing with now. It looks as though Senator Chipp has done a deal with the Treasurer. As Louise Dodson reported in the Australian Financial Review of 2 December, taxation analysts see few gains to taxpayers. Senator Chipp may feel that he is assisting the Government here but he is certainly not getting very much for the taxpayers of Australia. I believe the Taxation Laws Amendment Bill (No. 3) is disastrous. However, the people have voted the socialist Australian Labor Party into government for better or for worse. Senator Gareth Evans —And will again, starting this Saturday. Senator JESSOP —I would like to see what happens in 18 months or two years when we again go to the polls. The people by then will realise what we have suffered. Jobs and revenue have been lost. The increase in public borrowings has resulted in the public debt now being an all time record high. As Senator Townley often reminds us, we are paying in this Budget something in the order of $6.7 billion in interest on public debt. That will increase next year by at least 20 per cent, or I will be very much surprised. All of the people who are affected by this socialist Government's bad economic package will realise that the ALP Government was elected for the worse. They will realise that they were misled. They will realise that they were misled by the Prime Minister (Mr Hawke) in relation to the capital gains taxes and so on. As soon as the election was over he tore up his promises and introduced this tax. When our Party resumes government after the next election we will rescind that tax. That has been made perfectly clear. The taxation Bills we are dealing with will further reduce the number employed in the private sector by diverting the community's resources into unproductive areas. This is where the Government is destroying jobs in the private sector. Of the 711,000 additional jobs created in the past ten years, 517,000-or 73 per cent-are outside the private or market sector and are thus heavily dependent on government expenditure. A large number of the services produced by these government employees actually reduce expansion and development in the private sector. When the Liberal-National coalition resumes government we will put in place a package of tax legislation which is fair and equitable and which encourages a move towards the private sector. Senator Boswell —It won't be done by the ACTU. Senator JESSOP —We will not let it. Senator Lewis —The partners in government. Senator JESSOP —The Australian Council of Trade Unions dictates to honourable senators opposite all the time. It is important to realise that in 1969 51 Australians were employed and paid for by the public purse for every 100 employed in the private sector. In Australia today there are 100 people dependent on the public purse to every 100 in the private sector-and, of course, private enterprise is the sector that generates the revenue to sustain public servants in their jobs. My colleague Senator Dame Margaret Guilfoyle established a principle which I believe is important and relevant to these Bills. In October 1983, amongst other things, she said: I believe that it is accepted that a government is entitled to expect the passage of a normal Budget and budget type legislation and other legislation that is an essential part of its financial program. However, there will be rare occasions when an Opposition will feel compelled to reject or substantially amend such legislation, within the constitutional limitations of the Senate, where it is demonstrated to be capricious and arbitrary or vindictive legislation, or where it creates new tax burdens of a retrospective kind. I think that many of these tax changes are bordering on the capricious; many of the measures contemplated by the Government are bordering upon the arbitrary; and certainly they could be considered to be vindictive ideologically. But, as I said earlier, the people elected this Government and the Government has a right to the funds on which it governs. This Bill, like others, is bad. I only hope that the people will understand that the way to get rid of this and other offensive tax Bills is to vote the Hawke Labor Government out of power. I repeat what I said earlier in my speech that the Government should have been prepared to provide the people of Australia with an immediate private personal tax reduction and perhaps to provide the rest of it next year. Australia is one of the highest personal taxing countries in the Western world and we are one of the lowest in terms of indirect tax. Senator Townley today mentioned the subject of flat tax and some Labor senators tried to refute that concept, but it is a worthwhile alternative to examine. I noted that John Stone came out in support of it in an article not long ago. Senator Coates —What does that prove? Senator JESSOP —I think it proves that he knows a bit more about economics than does Senator Coates. I have carried out some research on this matter, although I have not completed it. There are a few little problems to be overcome. A 20 per cent tax is proposed. There is a problem in the $14,000 to $17,000 salary range but that can be overcome, and we must also look at the possibility of spreading the burden of indirect tax a little more profitably. Senator Maguire said that no undertakings had been given by the Opposition with respect to repealing the so-called free lunch. However, Senator Messner has indicated in an amendment that the Opposition is thinking on this question, and we will certainly be acting on it in government. He suggests an amendment which would foreshadow a Liberal-National Party Government policy in future, which is that the Commissioner of Taxation should be able to decide whether a luncheon with a business associate is contributing to assessable income. That is a policy forecast that I will support. I will continue to be in the forefront in encouraging that next Liberal-National Party Government to move quickly to repeal those thoughtless and damaging measures introduced by this big-spending, disastrous socialist Government as soon as possible after the next Federal election. Senator COATES(Tasmania)(4.54) —We have just heard Senator Jessop's justification for his vote on this package of tax Bills. Judging by some of the things he has said in the past, one would have expected him to have supported some of these measures, including the Taxation Laws Amendment Bill (No. 4), which I presume the Opposition will oppose. The Leader of the Opposition, Mr Howard, justifies the Opposition's position on these Bills by saying that Opposition members will vote for the good parts and oppose what they see as the parts with less popularity. In other words, he wants to support the tax cuts that will be introduced in legislation next year to take effect in the next financial year and the one after. He did this on the amazing justification that that was part of the Budget and that everything else in these tax measures is not. If he thought about the matter for more than a moment, he would appreciate that no one part of the tax measures is any more or less part of the Government's Budget than any other. He is grasping at straws with that justification for the messy position into which the Opposition has got itself in its attitude to these Bills. One could be forgiven for thinking that there was primarily only one tax measure in this package, judging by the comments made so far. They have tended to concentrate on the effect of restaurants of the abolition of tax deductibility of business lunches. However, I would point out that the Senate is dealing with six Bills together, five of them tax Bills and the other a social security Bill. They generally bring in some of the measures announced by the Government in the tax package in September, some other matters that were announced in the Budget in August, and several other less significant tax measures. Other parts of the tax package have already been passed, and other parts again will be in groups of Bills to be introduced next year to cover items such as the capital gains tax, negative gearing, and so forth. In dealing with these six Bills, I will concentrate mainly on two of them, the Social Security (Poverty Traps Reduction) Bill and one aspect of the Taxation Laws Amendment Bill (No. 4). There are relatively few government speakers in this debate, although not because of any lack of commitment to these Bills by the Government. In fact, these measures are among those that find us most wholehearted in our support. There are Government members who would have spoken in this debate if more time were available, but we are being reasonable about the matter and not dragging the legislative program nearer to Christmas. Unfortunately, following my contribution to this debate there will be six Opposition speakers in a row before the Minister for Finance (Senator Walsh) will sum up the debate. Much of the debate from the Oppositions has been unnecessary. There has been a lot of repetition, and some strident comments by speaker after speaker on one aspect of the tax package-that is, the business lunch. Before I get onto that issue in order to answer some of the assertions that have been made by the Opposition, let me deal with the Social Security (Poverty Traps Reduction) Bill, which was announced with other tax measures on 19 September by the Treasurer (Mr Keating). The proposals alleviate some of the problems caused by poverty traps and this is done in the overall tax context. People on pensions and benefits in certain parts of the income scale can be affected both by income tests on their benefits or pensions and by taxability, and they gain relatively small net amounts from increased amounts of income. So the separate income test on rent assistance is to be removed, and that will be of great benefit to something like a million Australians. Senator Peter Baume in his comments on this Bill said: `Yes, that is a good thing, but the Government is doing nothing about the other two poverty traps'. I acknowledge that despite the changes there will still be a trap affecting people higher up the income scale, but that hardly means that the Government is doing nothing about it. We have not said that we are abolishing poverty traps, as much as we might like to do that. But we are alleviating the poverty traps and ensuring that they are at a level of income at which they are of less significance. It is not as if Senator Baume came up with any solutions on this matter. He knows the difficulty of actually abolishing poverty traps because of the problems of the fading in and fading out of benefits. That is especially a problem, as we all know, with respect to entitlement to fringe benefits. There is, if you like, an absolute poverty trap at the point at which people with one extra dollar of income lose benefits which are of much greater value to them than that dollar, although, of course sometimes people penalise themselves unreasonably by attributing greater value to those fringe benefits than they really have. To answer Senator Baume, who pointed out that these poverty trap alleviation measures will not take effect until the end of next year, I point out that because they are part of the tax package they will take effect at the time that the tax rate changes come in. All these measures are linked and are designed to come into effect towards the end of next year. I would have preferred these charges to have come in earlier, but let me point out that it is the Opposition that insists on there being less expenditure by this Government and not more. Yet people such as Senator Baume come up with suggestions which would, if implemented, affect this year's deficit. While he accuses the Government, because of that time lag, of not having compassion, I point out that the Government of which he was a member for seven years did nothing about this problem at all. Senator Baume pointed to some other tax decisions which do take effect from the date of announcement but again, as he would well know, some measures have to take effect from the date of announcement because if they did not they would distort all sorts of investment decisions and other aspects of the economy by virtue of the fact that people actually had notice of them. I again refer briefly to the problem of the income test taper in the Social Security Act. Poverty traps exist because the taper comes into operation at a level of 50 per cent, but that is a reasonable percentage at which to withdraw benefits when other income is earned. If, for instance, the taper came in at the reduced level of, say, 25 per cent in order that the withdrawal plus the tax effect was smaller and therefore not an effective poverty trap, that would mean that the income level at which a part pension was still payable would be double what it is at present. We would have people still being entitled to a part pension when they were earning something like $400, $500 or $600 a week. It would ensure that we would be including many people who did not need such a part pension. So there are definitely pros and cons in this argument about the pension income test taper. I indicate my support for the Government's action in alleviating poverty traps and congratulate the Minister for Social Security, Brian Howe, for winning these very significant benefits for those particularly affected in this area. I now turn to the Taxation Laws Amendment Bill (No. 4), which deals with something like 15 or 20 different changes to the Income Tax Assessment Act, in particular the measure which requires substantiation of employment related expenses as from 1 July next year and even more importantly denies income tax deductions for entertainment expenses incurred after 19 September 1985. This is the aspect of the tax package which seems to have stirred up the Opposition most of all. In some ways Opposition members are even more upset about this than they are about the capital gains tax. Senator Boswell —This Bill doesn't cover capital gains tax. Senator COATES —I know it does not implement the capital gains tax. Senator Boswell —We are not debating it because the Bill does not cover it. Senator COATES —I am not talking only about this debate this afternoon; I am talking about the Opposition's general attitude to the tax package. I merely point out that perhaps Opposition members acknowledge that the capital gains tax proposal is so mild that they have very little with which to argue. But to deal with the denial of income tax deductions for entertainment expenses, apparently one needs to keep on saying that this measure is not the introduction of a tax; it is the removal of deductibility. The Opposition, the business community and the restaurateurs-those who have complained; not all of them have-talk about a new tax impost. It is not a new tax; it is the removal of deductibility. Some people deliberately make that misrepresentation rather than just use the term `tax on business lunches' as a shorthand term. The point is that tax deductibility in general is a concession. I do not believe it is an open-ended right for a taxpayer to self-define any expense as related to business just because the taxpayer says so. Business costs must be legitimate to be deductible. The Opposition suggests that it can define certain business costs as legitimate but, as is so widely recognised, the so-called business lunch is for purely personal social benefit as much as anything else. One has continually to ask the question: Why should the ordinary taxpayer have to foot half the bill for what are usually more expensive than necessary lunches? Even the supposedly legitimate claim is very borderline. It is not as if a business lunch is like the raw material for a production process or a business's stationery, which is something that is essential-- Senator Boswell —What about the telephone? Senator COATES —Of course a telephone is necessary to a business, but I am trying to distinguish between-- Senator Messner —You are not doing a very good job of it. Senator COATES —If Senator Messner just has patience he will be enlightened. The legitimate business lunch, I think, is very borderline. It is not essential to the sorts of business deals that are supposed to go on at such lunches. Someone claimed this morning in the debate that business deals worth millions of dollars can be sealed at business lunches. Is anyone seriously suggesting that just because a business lunch is not deductible such a deal will not occur? Of course they are not. Of course such deals will occur, but there is no reason for that entertainment aspect of the deal to be subsidised by the taxpayer. If restaurant lunches are as essential to business as the Opposition suggests, they will continue, whether or not they are tax deductible. If there is this downturn in the restaurant business, as the Opposition claims, I would suggest that some businesses have decided to use this change in the tax system as a convenient reason to blow the whistle themselves on some of the outlays of some of their employees for their half of all these unnecessary lunches. Then again, if there is such a downturn, as the Opposition claims, it just shows that a lot of business people just went out to lunch in order to gain the tax benefit and that they are too mean to take someone to lunch purely because they enjoy that person's company. I claim that the business lunch is not essential. I would go even further to suggest that it is an anti-business practice. Real business, if it cannot be interrupted for a meal, is best done around the boardroom table with some healthy sandwiches and fruit juice. I ask those who indulge in these business lunches whether they have ever tried shuffling papers and making notes on a restaurant table amongst the knives and forks or trying to hold a confidential conversation at a restaurant table, expecially when they are being continually interrupted by waiters. If Opposition senators are talking about real business and real negotiation they should consider doing it in the office and if it must be done over lunch, lunch can be taken in the office. I ask in passing how the alcohol, which Senator Messner is so concerned about from the point of view of the South Australian wine industry, is of benefit to business in the middle of the day. Senator Gietzelt —Businessmen probably drink whisky. Senator COATES —It has been suggested to me that they drink whisky, so perhaps they are not even helping the South Australian wine industry. The result of this Government's decision will be more efficient business and healthier business people. Alcoholism need no longer be an occupational hazard for the business community. In the debate before lunch Senator Knowles complained about the concession that has been given to seminars which are of more than four hours duration. They will be allowed to include deductible refreshments if necessary. She asked about twilight seminars which started at 4.30 pm and only lasted two hours. She wondered why food and drink could not be served after that. the point is that if such a seminar lasts only two hours, people can then go home for dinner. If they work for four hours after starting at 4.30 pm they can claim a tax deduction for refreshments. As far as trying to define legitimate expenses is concerned, if Opposition senators can guarantee that the conversations which occur at business lunches are confined to business and are not about the cricket or something else, they can have the job of trying to make the distinction. They are the ones who continually argue for fewer public servants, but in reality they are arguing for a lot more in order to help make what I believe is a spurious distinction between legitimate and non legitimate deductions. I turn to the effect on restaurants. Many of the complaints have come from the restaurants themselves. If restaurants have been affected, they are mainly those which had aimed their business at the tax deductible business lunch. By the very nature of their clientele, they had an incentive to charge fancy prices because they and their clients knew that the rest of the taxpaying community was paying half the price of the meal. Senators opposite cannot justify continuing such a backdoor government subsidy. If restaurants have a case for government assistance let them go to the Industries Assistance Commission and put up a case for a direct subsidy. Let us see how they would go. It is not as if lunch has been banned. People still go to eat and if a restaurant is good enough and adaptable enough it will adjust and survive. At present many restaurants are doing just that. Many will change their outlook and will concentrate on tourists, families and perhaps on providing less expensive fare. That is to be welcomed. Again, I do not accept that there has been the sort of downturn and threat to employment that has been claimed, but if there has been such a downturn a lot of it has been self-inflicted. Because of the excess publicity given to this part of the tax measures, restaurateurs have encouraged people to stop and think whether they really need an expensive lunch. There has been a bit of a bandwagon effect and it has become a bit of a self-fulfilling prophecy for those restaurants which have been affected. The job losses have not occurred, as has been pointed out by previous speakers. If such losses do occur after Christmas or in the new year, as an earlier speaker suggested, so much of that can be attributed to normal turnover. Everyone knows that the restaurant business is very volatile and there is a high turnover of staff. A lot of people are part time or casual and if there is a reduction-and I emphasise the `if'-it is only in relation to the high that that area of business has been on because of the benefits it has received from the economic recovery under this Government in much the same way as has the rest of the business community. Sure, there may be changes in the restaurant market, but I think it will shake itself out. In many ways the subsidy that did exist had distorted the market. The money will be spent elsewhere in the economy, probably even in other parts of the hospitality industry, and these areas will be enhanced because of it. The money will still produce other jobs. We want a fairer and simpler tax system-one which eliminates some of the rorts that have occurred over the years. We want a tax system that has the respect of the Australian people. Australians generally have come to have a low confidence in the tax system and if there has been one reason at the top of the list for this low confidence and lack of respect, it has been that business lunch. The vast majority of taxpayers are not able to deduct equivalent expenses themselves, yet they see others getting a tax deduction at their expense. Tax changes always have effects on industries-some minor and some major. If the action is right it must be done. For instance, presumably the insulation industry was boosted for the period when home insulation was a deduction. That benefit came and went. There have also been various changes in superannuation which have affected the insurance industry. Sales tax changes affect those industries concerned. It has been claimed that the car industry will be modified by the fringe benefits tax. If industry and commerce want to be thought of as enterprising and do not want government interference or subsidies, as they continuously claim, they will survive as they have survived in all those past cases. In fact they will probably come out of it stronger as a result. I point out that the tax adjustments that will occur in the personal income tax rates next year will put more spending power in people's pockets which will benefit industry and commerce generally, and the restaurant industry in particular, provided that it is willing to show that it can change to meet the new circumstances as other industries have done in other years. I wholeheartedly support this measure and the remainder of the Bills that we are debating this afternoon. Senator BOSWELL(Queensland)(5.20) —It is always interesting to listen to someone from the Australian Labor Party telling the business world how to run businesses when not one person on that side of the Parliament has ever been in business in his or her life. Yet honourable senators opposite are trying to tell everyone how to run his own business. That is how ridiculous this tax package is. I wish to address my remarks on the Taxation Amendment Bill (No. 4) to the outlawing of legitimate entertainment expenses and the effect that this will have on the restaurant industry, the limiting of tax deductions on water conservation and the imposition of a fringe benefits tax on company cars. Only a couple of weeks ago we saw employers in the restaurant industry arrive in Canberra-they should have stayed at home for all the good it did-to plead with this Government and the Australian Democrats for their jobs. They got absolutely nowhere. The rally was organised by the chefs, the waiters, the staff and all those employees in the restaurant industry who know, like everyone else involved in the industry, that many of their jobs will be lost and many small businesses will go broke-with the stigma that that entails for people going bankrupt-not because of any decision of theirs but because the Government changed direction. Many suppliers will be affected. I suspect that one of the biggest suppliers that will be affected is the South Australian wine industry. I know that all South Australian senators on the Liberal side of the House are absolutely frantic with worry about it, unlike Labor Party senators who could not care less what happened to the South Australian wine industry. By removing tax deductions on legitimate entertainment expenses the Government has been under the false impression-I emphasise the words `false impression'-that it will save $310m of taxable income. But what it will really save is only about $79m. Senator Maguire —Prove it. Senator BOSWELL —It is easy to prove because business men and women will not be able to afford to entertain or to talk business in restaurants as they have been used to doing. This has already happened. The results of a recent survey by American Express that came out only the other day have shown that trade in the restaurant industry is down by 31 per cent. Senator Siddons —Why would they be more right than the Treasurer? Senator BOSWELL —Senator Siddons knows all about small business. His father gave him a big business and he has been working towards making it small all his life. Senator Siddons has had his go. Senator Siddons —Mr Acting Deputy President, I take a point of order. I claim to have been completely misrepresented by Senator Boswell. He made statements which are absolutely incorrect and I believe that they should be withdrawn. The ACTING DEPUTY PRESIDENT(Senator Jessop) —Order! I do not think there is any point of order. Senator BOSWELL —I completely withdraw it if I have offended somebody. The Government has not thought this tax package through. This proves that it has not established exactly where it is going. The loss of jobs in the restaurant industry will total about 11,000. I maintain that 7,000 restaurants accept the use of credit cards; American Express, Diners Club and those types of cards. If every one of those restaurants put off at least two people I estimate that the job losses in the industry will be around 14,000. There are many examples of restaurants in Queensland that have already had to put off four or five people at the moment. I know that the Minister for Finance (Senator Walsh) gets served a Dorothy Dixer every day to allow him to tell people that there are vacancies in the restaurant industry, that people in the industry are whingers, that businesses will not go broke and there is no loss of jobs. Senator Maguire —There are 9,000 job vacancies. Senator BOSWELL —I will come to that, Senator. If Senator Walsh took the time to understand this he would realise that the restaurant industry has been trying to hold itself together until this piece of legislation goes through the Senate, hoping against hope that the Democrats or the Labor Party will have a deathbed repentance which will ensure that this industry will stay alive. Let me tell honourable senators about another thing that is happening in the restaurant industry. Over 1,000 people have been employed in Jupiter's Casino in Queensland, 1,000 people are employed in the Inter-continental Hotel in Sydney. These and a couple of other very big organisations have been opened and have taken up the slack. But because the restaurant and hospitality industry is big, because it is booming and because it is one of the growing industries in Australia this Labor Party taxes it. This Government finds an industry that is strong, that is able to build buildings and employ people and it taxes it out of existence. That is socialism at its very worst-the politics of envy. When an industry is healthy, providing new jobs, new building and encouraging initiatives, this Government taxes it out of existence. It does not give the person who works hard any reward at all. That is the policy of this Labor Government. This Government is all about killing incentive and killing jobs. It has been said a number of times that, after the Christmas boom-I believe it will be around February or March-there will be a massive fall in the industry. Jobs in the industry will be lost. It is worth noting that the hospitality industry is the largest employer of youth in Australia. It also provides many jobs for youths who are working their way through degrees and are trying to get a bit of money so that they can pay their own way. Only today the Minister for Education (Senator Ryan) was asked how a person could go through university when her parents could not afford to pay her board. Senator Ryan replied: `She will have to go and get a bit of part time work'. That is what many students do. They get a bit of part time work to pay their way through university. I am afraid that the lady from Tasmania will not be getting any part time work in the restaurant industry as none will be available. The restaurant industry provides jobs for mothers who are helping their children through universities and other tertiary institutions. It provides jobs for youths who would otherwise find it very difficult to get jobs. The Hawke Government's attack on this job-providing sector makes a mockery of the Government's commitment to its Priority One youth training scheme. At a time when Australia has one in four of its youth unemployed-which is a national disgrace-this Government attacks the very industry that employs them. That is how clever this Government is! This Bill is an attack not only on the restaurant industry and the youth of Australia but also on small businesses. Many small businesses depend on the personal contact between buyers and sellers to promote their product. Small businesses cannot afford massive advertising campaigns or a battalion of salesmen to promote their product. They cannot afford, like the big businesses and big national companies, staff dining rooms with special sections to entertain clients. Small businesses depend largely on personal contacts to target a market. I can speak from personal experience on this as I had a small business. I started out alone. I even used to sell to Senator Georges and his union co-operatives, and Senator Georges always paid his bills. My business grew not only because I had a very good product but also because I could write my legitimate entertainment expenses off my taxable income. Some people whom I took out were hard going-it was hard work-but it was a pleasure to enjoy the company of others. It was always hard work to gain their confidence and to get them to accept my product. My business grew from one to 10 people. My turnover grew from virtually nothing to $3m a year. Now this avenue which enabled people to obtain business has been shut off. All the personal advantages of being able to take clients out to dinner and gain their confidence have been lost. This Government is for big business, big unions and big government. This Government has sold out the hospitality industry and the small business sector. It never misses the opportunity to sink the boot into primary industry. This legislation is absolutely no exception. Senator Chipp —What did you do for the farmers? Senator BOSWELL —I welcome Senator Chipp's interjection. I accept it. What we did not do was vote for a capital gains tax, quarantining of farm losses, a reduction in water conservation measures, a fringe benefits tax and the abolition of negative gearing. That is exactly what the Australian Democrats will vote for. Yes, they have won one or two concessions. If they vote with this side of the chamber, as they do on rare occasions, the farmers will not be subjected to a capital gains tax and there will be no quarantining of farm losses, no reduction in water conservation measures, no fringe benefits tax and no abolition of negative gearing. It is all right for Senator Chipp to come in here like a white knight on a charger and tell everyone that he has saved them. If the Democrats vote against the taxes they will not go through. That is a fact of life. The rural sector has borne the brunt of Labor's Budget cuts. This package merely continues that attack. An attack has been going on ever since the Australian Labor Party was elected. This tax package has got the capital gains tax, the fringe benefits tax and the quarantining of farm losses. Once again, primary industry is right in the firing line. It copped it in the May expenditure cuts. In fact, primary industry bore something like $250m of the May Budget cuts and it is being attacked again. The worst thing that the rural industry inherited in this tax package was the capital gains tax. It is a tax that the rural industry has been frightened of for as long as rural industry has been in Australia. Rural people work hard on their farms. They do not enjoy a big income. When they sell their property they have time to move out and enjoy their retirement. I will quote the Prime Minister (Mr Hawke) on this every time I have an opportunity to do so: 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 is the biggest broken promise that any leader of any government has put before the people. It is a major boot in the ribs of rural Australia and it has come from this Government. The Bill has in it a provision that not only seriously damages the nation's farmers but also seriously damages the nation's environment. The Government has decided that capital expenditure incurred in conserving or conveying water for the business of primary production will be changed from a 100 per cent write-off in the year the money was spent to a 33 per cent deduction in the year of expenditure and a 33 per cent deduction in each year for the next two years. The revenue saved as a result of this action will be a mere $20m. The Government says that it is doing this to reduce the incentive of tax shelters. That is a very short-sighted approach. This approach on water conservation expenditure is another assault not only on primary industry, which once again cops it in the neck from this Government, but also on Australia's total conservation program. How can those Labor senators who make noises about being concerned about the environment support this move? It makes a complete mockery of the Government's much touted national conservation strategy with its taxpayer-funded consultative committee. How can this program be effective when the Government removes one of the cornerstones of this strategy to protect our national resources? It makes a farce out of it. The Government has spent thousands of dollars telling people that it is concerned about the environment. Yet it has removed the financial incentives to the group which can do something concrete to help the environment. Water conservation is still vitally important to Australia. In an arid Australia water is life, just as export earnings are life for the Australian economy. Plainly, if a crop is lost because of rainfall failure, export income is lost. Australia is hot, dry and drought-prone, with periods of unpredictable rainfall. Even Labor senators are aware of the ravages of drought and the effects it has on the overall economy. The decrease from a 100 per cent tax write-off to a 33 per cent, or three-year tax write-off, is an example, if ever an example were needed, that this Government does not understand primary industry and it does not even want to understand primary industry. The logical time to put in dams is when soil conservation takes place and when contours are put in. The dams must be put in at the time the tractors are on the farm doing the contour banks. The dams must follow the lines of the contour banks. That is another reason, apart from the obvious reasons, why soil and water conservation go hand in hand. We cannot have one without the other. The need for conservation is urgent and relevant. The coalition, which introduced full tax deductibility for both water and soil conservation measures, will immediately reinstate full deduction in the same year for all water conservation measures. We will not squib at the $20m or so that this will cost. There are a number of commissions which we can get rid of straight away. The Human Rights Commission would be the first on my hit list. Senator Missen —That is not our policy. Senator BOSWELL —It might not be Senator Missen's, but it is certainly mine. Rural Australia was told at the rural rally that the Government would give it a tax package which would allow the rural industry to expand. What did the Government bring down? It brought down a package which saved rural Australia $45m. Let us look at where that $45m came from. This was after the Government hit rural Australia to leg for $275m in the May mini-Budget. Let us look at what happened. There was a 15 per cent cut in the impost on grain harvesters which it had put on, and the failure to give a full excise rebate for diesel used on farms. The Government took back that rebate. The Government gave with one hand and took back with the other. Half way through it imposed $275m on rural Australia. This reform of the tax system makes it very difficult for the farmers of Australia to take individual advantage of putting water conservation measures in place. The imposing of an additional tax burden on an employer for providing cars to an employee is nothing short of a disgrace. The employer has to pay the tax on profit that provides the money to purchase a company car. He has to pay an additional tax to provide a car, which is an essential piece of equipment in order to run his business. It is absolutely ludicrous that there is this double tax. If this Government understood business it would realise that representatives who use company cars do not go into the office every day at 9 a.m. and go home at 5 p.m. Very few representatives in Australia go to the office, except perhaps on a Friday afternoon. Most sales managers keep them out. There is an old adage in business: `Salesman who covers chair does not cover territory'. Business people use their cars to get from home to the job. Many representatives leave early in the morning or on a Sunday afternoon to get into country territories, where they work the towns all day and then drive to the next town that night. There is no 40-hour week, flexitime or recreational leave for people who drive company cars. Company cars are given because they are essential. Yet this Government again taxes the private sector. Is the Government going to tax the public servants in Canberra who drive to and from work in government cars? I do not believe that it will. So why should it tax the private sector, which needs company cars to perform its duties? It has been estimated that 100,000 units a year will be lost, probably in South Australia where the car industry is biggest. The big loser will probably be the Ford Motor Co. of Australia Ltd and General Motors-Holden's Ltd, which share the biggest sales in Australia. Business cars will be rationed or shared, car purchases will be reduced and the already overburdened businessman will have to pay additional taxes on the cars that he gives his officers to do their job. The whole tax package has never been thought through. It will lose thousands of jobs, which will not worry this Government particularly; it will put the dismissed workers on a community employment program, a training program or some artificial job creation program to get its unemployment figures down. The action of the Democrats regarding this tax package has been a disgrace. They have proved that they have let down small business people. They could have helped the restaurant industry but they turned their backs on it. They could have helped the car industry in South Australia and they could have helped the rural industry. Thanks to the Democrats we will have a capital gains tax, a decrease in water conservation expenditure and the quarantining of farm losses. They have endorsed all of these moves and they will be held accountable for them by people in the bush. The ALP Government, through this tax package, has continued its assault on the productive sectors of the community-the business and rural sectors that produce the wealth of this nation. The tax package which is coming before this Parliament in dribs and drabs is an infringement of small business and the way in which small business operates. Firstly, the loss of entertainment expenses will adversely effect the level of effective communication between client and customer. Secondly, the loss of the right to give an employee a car so that he can perform his duties without paying additional tax on that car is a gross infringement of business efficiency. It has always been accepted in this country, and rightly so, that any expenses that occur in running a legitimate business are tax deductible. What will the Government attack next? Will it attack advertising or travelling? Will it put 10,000 advertisers out of business by not allowing advertising to be tax deductible? What about a business telephone at home? Will we have to register all our business calls, because this is the line the Government is going down? What will we do? Where will we stay when we go on an interstate business trip? The Government's senior partner-the Australian Council of Trade Unions-has an abysmal record of running business so it is no surprise that this Government has no idea about business. We have to look only at the ACTU's record on Bourkes store, ACTU-Solo Enterprises Pty Ltd and the ACTU travel agency, all of which have gone to the wall. Yet this Government, with the help of the ACTU, is trying to tell people how to run their businesses. The irony of the whole tax package is the hypocrisy of this Government. While it is bleeding the business sector white with unfair taxes it is giving its ACTU friends tax shelters. What is a $12 a week untaxed superannuation payment by an employer to the employee other than a tax shelter? That demonstrates the hypocrisy of the Government. On the one hand it is taking away legitimate business expenses as a tax deduction and on the other it is forming tax shelters for the ACTU. The whole package is two faced. It makes a complete mockery of the statement of the Treasurer (Mr Keating). He said: We invited debate, we have invited the people of Australia to express their view and we have listened clearly to what they have said. What the Treasurer did not say is: `And then we did exactly what our boss, the ACTU, told us to do'. The tax package clearly tells me that this Government has disallowed legitimate business expenses as a tax deduction; it has disallowed important conservation incentives as a tax deduction and it has crucified the fastest growing industry in Australia while at the same time setting up tax shelters and slush funds for its ACTU friends. It is nothing more than a farce, a sham and proves once again that the ACTU is the true government of this nation. Senator MISSEN(Victoria)(5.44) —I rise to speak on a number of tax Bills including the Taxation Laws Amendment Bill (No. 4) 1985. I do not propose to speak in detail about individual aspects of the Bills. I have already made a speech in which I indicated my attitude generally to the taxation package. It is set out on page 1973 of Hansard of 17 November 1985 in the Appropriation Bills debate. I stand firmly by the ideas and principles which I then expounded. Mr Acting Deputy President, earlier today I heard you read to the Senate a considered statement by Senator Dame Margaret Guilfoyle made in 1983 when we considered the possibilities of piecemeal amendment to financial legislation. Senator Dame Margaret Guilfoyle, speaking on a tax Bill, stated: I should say that this legislation is, coincidentally, brought before the Senate during the Budget session and, in some sense, there would be those who would describe it as Budget legislation. In general terms, I believe that it is accepted that a government is entitled to expect the passage of normal Budget and Budget-type legislation and other legislation that is an essential part of its financial program. However, there will be rare occasions when an opposition will feel compelled to reject or substantially amend such legislation, within the constitutional limitations of the Senate, where it is demonstrated to be capricious and arbitrary or vindictive legislation or where it creates new tax burdens of a retrospective kind. I ask honourable senators to particularly note the words `In general terms I believe that it is accepted that a government is entitled to expect the passage of normal Budget and Budget-type legislation and other legislation that is an essential part of its financial program'. I stand by those words. In the last election I was elected to this place on that basis. I see no reason to depart from it now. I understand that that declaration to the Senate was reaffirmed by the shadow Cabinet of the Opposition about three weeks ago. No doubt Senator Messner will correct me if I am wrong but this principle has been applied quite recently in regard to the child care legislation. It is good and sound reason for behaving as an opposition and not as a government in exile. Therefore I propose to continue to follow this principle. My views are known to my colleagues and to the public generally. For many years they have known that I have the greatest fear of this country returning to a 1975 situation. I would not do anything that would cause that not to happen. I will not vote against any part of the tax package. I do not believe it is the Opposition's role to do that. Today I have listened to very interesting speeches. Senator Peter Baume spoke of the inadequacies of the legislation in relation to poverty traps. Senator Knowles gave some very interesting facts about the problems that the entertainment industry will face because of this legislation. Senator Jessop spoke, among other things, about the motor car industry and the way in which it has been affected. I have no doubt that those things are true and they are reasons why an opposition should vehemently criticise proposals which the Government puts forward. This is not a very good tax package. I am sorry that some time ago the Government removed from consideration a more severe tax package which would have widened the range of tax liability which would have been imposed on people in this community and took a different course. I disagree with that. Some of my colleagues feel very strongly about these matters. It is possible for them to say that they would restore these provisions or change them when they get into government. I think that should be carefully considered because one does not know the economic situation that faces a government when it comes into government. I think that is the appropriate course; not necessarily of the same value are voting gestures in the Senate. I have believed very strongly over the years that the Senate must not overplay its role. The Opposition in the Senate should not act as a government in exile. It should set out quite clearly what it intends to do and from time to time make proper criticism of measures in any tax package. Making piecemeal objections and trying to vote out some parts of a measure is not a wise course. Senator Messner referred to throwing out the `nasties' but leaving in the `goodies'-the tax reductions and things of that sort. I think the people of this country will not be confused by that. Of course, it means that if we do not agree to throw out something, people will be at the Opposition at all times to know why we did not choose their particular objection and throw out. For these various reasons, I shall not be voting against the tax package. I understand that it will be supported by a majority, including the Australian Democrats in this case. I do not propose to vote at all on the amendments or on any substantive vote against the package. During this debate, the Democrats have been greatly criticised. They have affirmed strongly that they have had some successful ventures with the Government and have changed the package. I think that they are not very substantial changes. But I rather feel that the Democrats do not understand the place which they hold and which the Senate holds in the scheme of government. I want to read some things that have been said at various times. On 23 February 1982, for example, in the Senate Hansard is recorded a firm statement by Senator Mason, then the Deputy Leader of the Australian Democrats. Speaking of the sales tax legislation he said: We can legally reject Supply Bills but what would be the long term implications of such an action? A respectable view can be put forward that the right of any government, including a Labor government, to create a Budget and govern is inviolable. He then concluded: Listen to this, senators, it is my bottom line. Those on the Labor side in particular should listen to this. Undesirable though the sales tax increases are, damaging though their impact might be, the consequences of the Senate meddling in or unilaterally rewriting a Budget seem to us too horrifying to contemplate. They are admirable sentiments but, unfortunately, within six months the Democrats had changed their mind on that legislation. Earlier, the Democrats also swore statutory declarations as to what they would do. There was debate about this. In the 1980 election campaign, when they put down these declarations, they swore them on Bibles. I am always suspicious of people who swear things on a stack of Bibles and feel that they have to do that. I think that one's statement should be sufficient in itself. However, they gave an undertaking that they would not use their voting numbers `in such a way as to cause the blocking of Supply or money Bills in a manner which would prevent the majority party in the House of Representatives from governing'. Strangely enough, the Democrats had another expression in their declaration, which went on to say that each senator undertook thus: . . . shall never during my term of office as a Senator contribute to or cause a situation which through blocking of supply or money Bills might bring down the Government. Since then there has been quite a bit of talk about the blocking of Supply. I think that Senator Chipp has said at various stages that this is not a blocking of Supply. We know that `Supply' means the Appropriation Bills which cover about 40 per cent of the money which the Government receives, and, of course, other income is necessary for it to govern. One often hears, among various politicians, the reference, `Oh, this is not a Supply Bill', or, `This is a Budget Bill', or, `This is not a Budget Bill', or, `This is a tax Bill', or, `This is a money Bill'. Honourable senators will remember the carefully thought expressions in Senator Dame Margaret Guilfoyle's statement about matters which are part of the financial problem of the Government, the getting and spending of moneys, particularly the getting of moneys, which are all to be covered. It is not possible to differ in this pettifogging way with Supply Bills and make a principle based on that. I must query two recent Press statements issued by Senator Chipp. One was about capital gains tax, as a necessary part of the whole tax package. He pointed out with some feeling that he had received from a journalist an idea that certain coalition senators could still abstain or cross the floor to ensure the passage of a capital gains tax for the sole purpose of denying the Democrats the possibility of a double dissolution. Senator Chipp —That is a minute of your own Party's taxation committee meeting. Senator MISSEN —No, this is Senator Chipp's Press statement-- Senator Chipp —It is taken verbatim from a minute of your own taxation committee, chaired by Senator Messner. Senator MISSEN —Yes, I know the minute about which Senator Chipp is talking, an admirable minute-- Senator Chipp —A shameful minute. Senator MISSEN —No, on the contrary; it set out very sensible statements; that we should not act in any way to appear inconsistent in what we do and should not attack only `nasties'. I found the minute quite admirable. The problem is that it was not followed. Senator Chipp —I can't follow you, in view of that statement. Senator MISSEN —I am talking about Senator Chipp's statement. He said that he heard of this from a journalist. Senator Chipp —No. I have a copy of the minute. Senator MISSEN —I am sorry. I am reading from the honourable senator's Press statement, and that is what he said. Maybe it is not true, but the honourable senator said it. Senator Chipp —I said it all right. Senator MISSEN —Yes. The point I am making is that those of us who see principle involved in this do not see the only principle as being to stop the Democrats getting a double dissolution, much as I know the Democrats feel that they need it. We see a much more important principle than that. Senator Chipp went on to say: I now challenge Mr Howard to state categorically that under no circumstances will any Liberal Senator contribute to the passage of a capital gains tax by absenting themselves, abstaining from a vote, or crossing the floor. That is a very curious remark, especially as Senator Vigor has said this morning that he will vote independently, as he feels he must. Senator Chipp has probably forgotten the platform of the Liberal Party, of which he was once a member, which says that to carry out our principles we need members of parliament responsible to their electors alone and not subject to direction by people or organisations inside or outside Parliament. So I find it very strange that Senator Chipp should be criticising Mr Howard in this statement because some of his members were doing as their platform states. Senator Chipp —With his concurrence. Senator MISSEN —They were not doing it with his concurrence at all. Senator Chipp —Mr Howard is saying publicly that he is opposed to a capital gains tax, yet some of your senators are conspiring to vote for it. Senator MISSEN —No, Senator Chipp is quite wrong. There is no conspiracy about this. He knows very well that in our Party room we announced what we will do and there is no conspiracy whatsoever. If we feel in conscience bound to take a certain course, we take that course. But I must refer to another Press statement made by Senator Chipp on 10 November, in which he spoke about his firm pledge not to block Supply. Senator Chipp —You are giving the Democrats a lot of publicity in drive home time. Thank you, I am very grateful. Senator MISSEN —I am glad that we are all happy about this, Senator. In that statement, Senator Chipp said: In that significant position, we have never at any time threatened to block supply. We gave our word not to block supply and we will not, under any circumstances, break that promise. Then Senator Chipp went on to say: This does not mean that we will not amend any form of money Bill. We have amended tax legislation for instance, when we successfully prevented the Fraser Government from imposing taxes on necessities of life; clothing, footwear, shelter, books and newspapers. Senator Chipp —That's right; I am very proud that we did that. Senator MISSEN —Just a moment. I am trying to read it all, Senator, so that you cannot say that I am in any way distorting it. The ACTING DEPUTY PRESIDENT (Senator Jessop) Order! Senator Missen, I should like you to address your remarks through the Chair. Senator MISSEN —I am much happier to address my remarks to you, Mr Acting Deputy President. The statement continued: Amending tax legislation is fundamentally different from blocking supply. Examining tax legislation is part of our responsibility to scrutinise all legislation and amend it where appropriate. That is a complete misconception of the Senate's job. Supply is only a word. It is the significant financial legislation of the Government that is of concern and the same principles should apply. I do not regard what might almost be called a type of blackmail, standing over the Government and getting some concessions, as a desirable thing in the interests of parliamentary government as we know it. I turn from that to say that, finding that unsatisfactory, I listened with some interest today to the various remarks made about the Taxation Laws Amendment Bill (No. 4). I have indicated that I do not propose to vote on that. But so far as I am concerned, the removal of the-- Senator Chipp —So you are going to abstain? Senator MISSEN —Yes, I shall abstain and I shall not be alone in that. Many of my colleagues would like to do likewise, I think, but maybe they will not feel able to do so. The removal of the deduction for entertainment expenses is something which the Government has estimated will bring in $310m in the first full financial year. That is a very substantial amount. It is a balancing item for the Government in relation to the amounts given in the tax package. I do not see the logic of ignoring that balance that is a substantial figure. Whether there will be a great loss of jobs is, of course, not certain. An article in the Age of 22 November 1985 states: . . . job vacancies notified to Commonwealth Employment Services in October represented the highest number for any month since October 1984. It says that the number of vacancies in the entertainment industry was great. I know that this is a time when the entertainment industry gains a great deal. It is very busy before Christmas. The article goes on to suggest that the effects may be more considerable among the unskilled, who will lose jobs in restaurants. I can certainly say that I, along with many other people, feel that it is very unfortunate that the Government has not found a means whereby it can distinguish between a completely genuine entertainment deduction and what is, as various people have said, a rort. Undoubtedly, a lot of this money is paid by pay as you earn taxpayers. People on ordinary incomes are paying for the expense of the entertainment and the lunches that are provided. I notice that such a law does not exist in the United Kingdom. In any event, I am by no means certain that the expenditure in question is necessary for the gaining of income. In fact, a lunch of sandwiches might be better for the general health of the people concerned than the lunch which is at present consumed by some people. Nonetheless, I think it is a pity that the Government has not been able to find some means of distinguishing between what is a genuine expense and what is not. I do not think it is the role of the Opposition to find those means. It is the Opposition's role to criticise and it is for the Government to put forward legislation and, if necessary, correct it when it gets the chance to do so. I see some defects in this legislation. At the same time, I think it is a matter for which the Government must bear responsibility. It must face the people for it. If we as the Opposition re-write the Government's Bills we take on responsibility for its Bills and, if they fail, we may be blamed for it. I think it is misreading the role of the Opposition to expect it to do that. I think that overall many of the criticisms made today are justified. There are no justifications which I believe, in the words of Senator Dame Margaret Guilfoyle on behalf of the Opposition some two years ago, justify our voting against the package. I think the Government would be well advised to consider whether it ought to alter some of the regulations and some of the terms of the legislation before it is too late. Nonetheless, I believe that the Government has substantially the right to adopt its financial programs. That has been my view throughout my time in this Parliament. I will abstain from voting on this group of Bills. Senator CHIPP(Victoria-Leader of the Australian Democrats)(6.03) —I begin by paying the highest possible tribute to Prime Minister Hawke, Treasurer Keating and the Labor Government for the refreshing tax reform that is being brought down in Australia. It is crystal clear that unless real and massive tax reform is brought about in this country the economic fabric of our nation will not be the same. Because of inflation and because of the progressive, or regressive, rates of income taxation, the ordinary workers-girls in offices, men in factories, people in department stores-within two or three years will be paying in income tax exactly half of what they earn. Fifty cents out of every dollar that ordinary working people earn will be paid in income tax in the next few years unless there is tax reform. I suggest that a society in those circumstances is not one that can remain stable. That is the kind of situation that breeds tax cheats. It makes ordinary people look for ways of cheating. It is an intolerable situation. I give full marks to the Labor Government and all those associated with it who have brought this courageous and refreshing tax reform to this country. At the same time I pay a high tribute to my colleague Senator John Siddons, who has led the negotiations with Treasurer Keating on this issue. I pay a tribute to Treasurer Keating for being receptive and responsive and to the Labor Government for the way in which it has accepted the 16 amendments-substantial amendments-that the Australian Democrats have effected to the tax package. I am amused at the pathetic Liberal Party of Australia. It has gone from bad to worse since my resignation in 1977. It has not had one constructive thing to put up for tax reform in this debate, this year or since Mr Howard assumed leadership. I remind the Liberal Party and the National Party of Australia that they have been in government for 30 of the last 36 years. In 30 of those 36 years there has been not a semblance of tax reform. They allowed the situation to drift to the point where now, as I said, the situation is such that ordinary men or women in the street will be paying 50 per cent of their income in income taxation within the next few years. Therefore, we desperately need tax reform. One would have thought that the Liberal Party and the National Party could have made some contribution to the debate. Did they go to the National Taxation Summit? They will not disturb with facts any arguments that they might develop. They stayed away from the Tax Summit; yet now they are criticising this package. They are doing something even more pathetic. They are going to vote for the tax cuts and against the nasties. How in the name of God can we give tax cuts unless we get the money with which to give those tax cuts from the nasties, the impositions or, as this Government has done, by cutting out rorts? I do not know how members of the Liberal Party have the gall to say in this place: `You worker, you office girl, you store-keeper; keep on taking your lunch to work every day in a brown paper bag or buying it in the canteen, and with the taxes you pay you will continue to subsidise the restaurant industry and the wealthy through the near-free lunch'. I feel ashamed that I ever belonged to a Party that now espouses that kind of philosophy-the philosophy of making the little person pay and subsidise the wealthy. That was not Liberal Party philosophy when I joined it, but it certainly seems to be now. I could not understand Senator Missen's statement about justifying the lack of morality in the Liberal Party. I have in my hand what is purported to be the copy of a minute. It has never been denied that it is an accurate description of what went on at the meeting held on 19 September. Present were Jim Carlton, shadow Treasurer of the Opposition; Tony Messner, shadow Minister for finance and taxation; Ray Braithwaite, shadow Minister for trade and a member of the National Party-- Senator Brownhill —Yes; a good member too. Senator CHIPP —I have no doubt about that. Also present were Wilson Tuckey, shadow Minister for small business; and Charles Blunt, shadow Minister for social security. He is a member of the National Party as well. These worthy people met on 19 September and discussed what they might do with the tax package. One revealing part of that minute says: Senate party room. There is considerable concern amongst Liberal Senators- I seek your indulgence, Mr Acting Deputy President, to inform Senator Messner, who was at that meeting and who presumably chaired it or had a leading part in it, that, if he now wants to tell me that this is not a true document but a false document, I will stop commenting on it. I just wait, with your indulgence, Mr Acting Deputy President, to allow him to deny that this is a true document. Senator Messner —I have no comment. Senator CHIPP —I acknowledge Senator Messner's interjection, because it will be recorded in Hansard. I asked him that question twice. I gave him two opportunities of denying that this is a correct record. Clearly it must be assumed that this is an absolutely correct record of what went on at that meeting. The minute continues: The Committee has met twice to discuss the mooted changes. It also met with the Leadership Group at lunchtime today. I assume that is Mr Howard; the Deputy Leader of the Liberal Party, Mr N. A. Brown; Senator Chaney; and Senator Durack. I presume, therefore, that they knew all this. But this incredible minute goes on to say: There is considerable concern amongst 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. Here is an immoral, incredible statement: Some-- that means some of the Liberal senators-- will vote to support the capital gains tax if the bill appears to be in danger. Senator Missen says that is a good document, that it is a good thing to do. In other words, the suggestion is that if the nasty Democrats happen to vote against the Bill to make it look as if it might appear to be defeated, some good Liberals will change their votes and will vote against their conscience, against their Party policy, against their persuasions and vote with the Australian Labor Party to save the capital gains tax Bill. I feel that this is one of the most immoral acts which have come from the Liberal Party, from a political party in this place, in 25 years. Senator Messner —You are making a fool of yourself. Senator CHIPP —Mr Acting Deputy President, I give Senator Messner another opportunity and ask him: Is this a true record of what happened at that meeting or not? Senator Lewis —You know the principles. How can he? What absolute nonsense. Of course he cannot do that. Senator CHIPP —The Opposition is saying that that is abolute nonsense, but there is no denial-- Senator Lewis —You know the rules. There is no denial, no admission-nothing. The ACTING DEPUTY PRESIDENT(Senator Colston) —Order, Senator Lewis. Senator Lewis —Mr Acting Deputy President, I take a point of order. Senator Chipp has been in Parliament longer than I have. He knows what the rules are. The ACTING DEPUTY PRESIDENT —You have been in Parliament long enough to know that that is not a point of order. Senator CHIPP —I respect Senator Missen's point of view about money Bills, giving a government the right to govern and whatever. I do not agree with him, but I respect his view. I take the view that if one followed that to a logical conclusion it would limit the Senate in its activities to deal with every piece of legislation other than money Bills. In other words, as far as money Bills are concerned we may as well go along with everything the Government wants to do. I would have thought that was an intolerable situation. Senator Missen —That is part of the financial program. Senator CHIPP —I remember a loans Bill a few weeks ago-the Democrats joined with the Liberals, or the Liberals joined with us; we found out the error-which, if passed, would have allowed the government of the day virtually never to come back to parliament for loans. If Senator Missen is saying that the Senate has no right to interfere with money Bills such as that, I think that a strange argument. I repeat, I pay a tribute to the Government for this tax reform. However, while making sure that the thrust of the package would go through, right from the start Senator Siddons, I and other Democrat spokespersons said it needed fine tuning. On that fine tuning, on the reforms to the package the Government has been receptive to many visits from Senator Siddons and me, while the Opposition has done nothing except say: `We will accept the tax cuts and reject the nasties'. I think it is as well to mention the concessions the Democrats obtained. Before last week's negotiations-in other words, before the package even came down-we asked for and received a guarantee that the family home would be exempted from a capital gains tax; that gains would be indexed for inflation; that there would be no retrospectivity about the tax-that is, no tax on assets purchased before 19 September-that losses were to be allowed against capital gains; that there would be exemptions for small businesses and farmers; and that death duty provisions were to be removed. We are very proud of receiving those concessions and thankful to the Government. We believe, as Senator Siddons said in a remarkably fine speech this morning, that people should pay tax during their lifetime on what they earn in income. If the pay as you earn taxpayer pays tax on income, why should not the wealthy who indulge in capital transactions and make massive capital gains pay tax in the same way? I have not heard from the Opposition a reasonable, logical, moral and equitable reason why the wealthy should not pay tax. But the Democrats say that if a person during his lifetime has paid tax on his income and on his capital gains there should not, under any circumstances, be a death duty. Senator Brownhill —There is hidden death duty in it, though. Senator CHIPP —I accept the interjection of my honourable friend. The fact is that the Democrats had that hidden death duty removed. There is no hidden death duty in it now. There was to begin with, the honourable senator is quite right, but on our representations it was removed. After the negotiations the Democrats got the removal of the anomaly whereby some employees purchasing shares of the company they worked for would have been taxed on the unrealised capital gain on their shares. The Government accepted that. On goodwill the Government has agreed to exempt a goodwill component from the capital gains tax for small businesses, including farmers, who sell businesses worth under $1m. Senator Messner —They still are subject to that tax. Senator CHIPP —I have always had difficulty following what Senator Messner says. That difficulty increases as time goes on. I cannot answer the interjection because I do not understand it. The five-year averaging provisions will apply so that the capital gains tax paid when a business is sold will not attract punitive tax rates. In other words, if a person has a business for, say, five years and he makes a $10,000 capital gain after allowing for indexation, instead of the $10,000 capital gain being taxed in the year of receipt it will now be taxed at the lower tax rate. On sales taxes, solar panels and atlases were exempted. (Quorum formed) I will not name the person who just called for a quorum, whose only positive act since she has been in this Parliament has been to join with others in the destruction of the career of one of the finest Australians to come out of South Australia, Mary Beasley, who will have done, in one year, all that the senator who called the quorum will do in a lifetime. Yet that senator relentlessly pursued, on the pettiest of matters, the destruction of the career of that fine woman. The ACTING DEPUTY PRESIDENT —Senator Chipp, I suggest you speak to the Bills in front of us. Senator CHIPP —The Government has made real concessions in the area of quarantining of off-farm income. The quarantining shade-out will now be between $20,000 and $40,000. In the case of a partnership, which is typical of many farmers, the combined non-farm income able to be written off against farm losses will therefore be $40,000. A partnership earning $60,000 will still be able to write off $20,000 against farm losses. We believe that to be a remarkable achievement of the Democrats which the Government has conceded. We believe that these changes will give an excellent deal to the genuine farmers, while maintaining the Government's legitimate attempts to crack down on the Pitt Street and Collins Street farmers. I had people in my office weeping tears of blood and saying: `I earn $100,000 a year and I write off all that income against my pig farm'. Then they smile and say: `I have not paid 1c in income tax in the last 10 years but I have a property worth $2m'. That is the sort of proposition that the Liberal Party and National Party coalition is supporting. The Democrats say good luck to the Government for removing that rort. While that person on $100,000 a year is paying no tax and getting away with it, the ordinary worker will be paying more tax and subsidising that person. In the fringe benefits area the Government has committed itself to easing the plight of community welfare groups disadvantaged by the tax provisions and has agreed to a formula that allows relief from the taxing of company products and facilities which would otherwise not be used and given to employees. We have managed to have reduced from five years to three years the time in which expenditure on water conservation can be written off. I am amused at the way the coalition is saying that this is a bad thing. Of course conservation is a good thing. But this was one of the great rorts perpetrated by Collins Street and Pitt Street farmers. I invite Liberal and National Party senators on their next visit to Sydney on a sunny afternoon to look out the window and see the number of things that glisten. I am talking about dams and swimming pools which were able to be written off in one year. One of the greatest rorts of all time was that being done under the name of water conservation. We believed that forcing people to write off such expenditure over five years was a bit much and the Government agreed to reduce that period to three years. Of course, I concede that the entertainment question was difficult. The Democrats spent hours in discussions with representatives of the industry and the employees looking at the equity of this matter. Let me say this about the morality or the equity of the free lunch. I concede that in some circumstances providing a client with a meal or entertainment may be some assistance in establishing a contact, but not necessarily. Let me put this proposition: Let us assume that I am a manufacturer of refrigerators. Let us assume that Senator Messner is a retailer of white goods. I want to sell him 500 of my refrigerators at $500 each. So I am hoping to take $250,000 of Senator Messner's money and, in exchange, give him 500 refrigerators. That is a lot of money. Is Senator Messner going to tell me that he would be swayed in deciding whether to buy my refrigerators or someone else's because I take him to lunch? He might not enjoy the lunch with me. He might not like my company. He might not like the food. How absurd is it to say that to conclude or clinch a deal for a quarter of a million dollars I have to spend $100 on Senator Messner for a so-called free lunch? That claim is absolutely absurd. Therefore, I think the whole equity and morality of the free lunch has to be examined. However, the employees in the restaurant industry came to us with plaintive stories and real fears. The up-market restaurant, which had been charging $20 for a main course, in the business district of a capital city, of course had worries. I see the equity in phasing this provision in gently-not for the restaurateurs because most of them have been living on a subsidy for many years. The upshot of this in the long term will be that the market forces, about which the Liberal Party loves to talk so often, will finally iron out the matter. In other words, restaurants in Australia have only 55 per cent occupancy. They have been able to stay in business because of the subsidy given to them by people in factories and offices who pay pay as you earn tax and who have been subsidising them to the extent of $330m a year. Without that $330m a year, which will be saved by removing this rort, tax cuts will be available. The matter is as simple as that. If we gave the restaurateurs the opportunity to continue this subsidy there would be no tax cuts. I suggest to the Liberal Party that it should ask the ordinary people in the community-not members of these crummy lobby groups who have meetings on the lawns of Parliament House and shout abuse at us as we walk by, and not the wealthy few in the community but the majority of the people-whether they would rather continue to subsidise the free lunch or have a tax cut. However, we did press the Government very strongly on this matter of phasing out this subsidy. Finally, we said to Mr Keating: `We'll drop the two years phasing out. Why not just bring it in on 30 June next year-1986-and in the meantime allow only 50 per cent of the claims? Even then, you could go for substantiation and massive penalties'. So we put to Mr Keating that the Government should phase out the subidy within the next seven months, allow only 50 per cent of what is claimed and have a $10,000 or $20,000 penalty if someone was caught cheating. That seemed to us to be fair enough. We were surprised by and believed the figures provided by the Australian Taxation Office that that would have cost $120m as a minimum estimate. We had to make the judgment that we did not believe that was worth it. We believed that the tax cut to the ordinary person in Australia was far more important than that. But into the bargain, the figures put out by the Commonwealth Employment Service did not support the view being espoused in this chamber by members of the Liberal Party and the National Party that there were wholesale sackings in the restaurant industry. In fact, the figures of the Commonwealth Employment Service were quite different. The CES stated: While there are no doubt seasonal factors to take into account, it is clear that nation-wide the number of skilled vacancies in the restaurant industry, and particularly for chefs/cooks, have increased significantly since the 19 September. That was not Peter Walsh, a Minister with a vested interest-a politician-talking. It was not Paul Keating, Treasurer and politician, talking. It was the Commonwealth Employment Service-public servants with impeccable integrity, not to say that Peter Walsh and Paul Keating do not have impeccable integrity. I am saying that these people speak with a totally objective point of view. They say that since the package was announced the number of skilled vacancies in the restaurant industry has increased significantly. They go on to give figures. Generally speaking, we do not say that this is a perfect tax package. No tax package is ever perfect. All tax reform will hurt people. But surely the vision splendid must always be kept in mind-namely, tax cuts and tax reform. The rate of marginal tax for the average worker in this country has to be reduced significantly very soon, otherwise the whole economic fabric of our country will be rent asunder. Sitting suspended from 6.29 to 8 p.m. Senator SHORT(Victoria)(8.00) —The Bills now before the Senate form part of the Hawke Government's overall economic policies and, therefore, should be viewed in this overall context as well as for their specific content. These tax proposals are being introduced at a time of considerable uncertainty in the Australian economy. The proposals themselves have added to this uncertainty and have had a negative effect on confidence within the community, particularly business confidence. No wonder, because the tax proposals now before the Senate and the proposals to be brought forward by the Hawke Government next year, when taken together, constitute the greatest anti-business tax package introduced into this Parliament for a very long time. This attack on the business sector, on the productive sector of our nation, on large and small businesses alike, on miners, manufacturers, farmers, and service sector producers alike is totally at odds with what Australia needs. How is the Government able to get away with this? How can it so damage this nation? It can do so only because of the complicity of the Australian Democrats in supporting this further imposition of a whole range of new taxes on a tax weary Australian public. What the Government should be doing is encouraging productive activity, encouraging effort and enterprise and adopting policies to make our producers more competitive and export-oriented by reducing costs and other burdens on business. The thrust of the Government's policies, however, is in quite the opposite direction to this. If the Government does not take urgent stock of its economic policies the economy will be facing a very bleak outlook before too long in 1986. The warning signs are already with us. Failure to heed them now will simply make the necessary policy adjustments that much more difficult when the inevitable crunch comes in 1986. What are those warning signs? There are quite a few. The September quarter national accounts figures point to an unbalanced economy. The overall growth rate is slowing despite strong growth in private consumption. The rural sector is experiencing a severe downturn and private investment is at best sluggish and at worst falling. Inflation is on the rise again. The broadest measure of inflation, the gross domestic product price deflator, rose by no less than 2.9 per cent in the September quarter, the highest rate of increase for 3 1/2 years, an ominous lift in our inflation rate, which in any event is already twice as high and in some instances even higher than the rate of many of our major trading partners. This rate of inflation, if it continues unabated, will very rapidly wipe out the competitive edge which the massive devaluation of the Australian dollar has given us in 1985. We must never forget that devaluation in itself represents a fall in our standard of living. To take advantage of devaluation we have to adopt other policies which enable us to maintain the original competitive advantage. We are not pursuing these other necessary policies. The Government has continued to increase its own spending at a rate well above what our economic situation demands. It has continued to borrow heavily, therefore putting pressure on capital markets. It has capitulated to pressure from the trade union movement for ever-increasing wage and wage-related benefits for employees-full wage indexation, productivity cases and superannuation deals. Australia simply cannot afford these cost increases at a time when its standard of living is deteriorating as a result of devaluation. Senator Messner —The people feel it too. Senator SHORT —They certainly do. Through its accord with the Australian Council of Trade Unions the Hawke Labor Government has created a monster which will wreck this country if it is not tackled head on. The unbridled power of the trade union movement in Australia, aided and abetted by this Labor Government, is the largest single barrier to our nation achieving the rich potential for which we have long been recognised. The Government, because of its extravagant spending policies and its capitulation to the trade union movement, has been forced to push up domestic interest rates to their highest real level in at least 50 years. The prime bank rate is now almost 20 per cent-the highest in our history. That is an increase of some 7 percentage points, which is more than half, in the last 12 months alone at a time during which both the Prime Minister (Mr Hawke) and the Treasurer (Mr Keating) had predicted that interest rates would fall. Housing interest rates and all other rates have also shown savage increases under this Government. The Government has been forced into these dangerous and undesirable interest rate increases for two reasons: First, to try to put a brake on the growth of the money supply; second, to prop up the ailing Australian dollar. It has succeeded on neither of these counts. The money supply is growing at an annual rate of more that 16 per cent-far in excess of a desirable or responsible rate. The market for the Australian dollar is extremely nervous. The Australian dollar has fallen more than any other Western currency in 1985 and by more than the currencies of many of the struggling lesser developed nations. Despite this devaluation of the Australian dollar we are still running a frightening balance of payments deficit on our current account. That deficit could well be of the order of $12 billion in 1985-86. Senator Messner —That is a billion dollars a month. Senator SHORT —It is, and it could well be more. There is no sign as yet that our exports and imports are responding positively to the devaluation. There are reasons why they may not respond as readily as some forecasts have suggested. If they do not, we can expect to see the Australian dollar come in for a further hammering in the foreign exchange markets. This in turn would put pressure on the Government to increase interest rates still further. Indeed, further increases appear inevitable in the light of the latest damaging blow-out of the money supply figures. The only question is whether this interest rate increase will occur this week or whether the Government will be able to put it off until next week when the South Australian election will be out of the way. The interest rate situation is very serious. The consensus reached at the recent annual conference of Australia's leading business economists was that if interest rates remain at their record high levels for much longer, let alone increase, the Australian economy will plunge into recession and unemployment will soar. The Hawke Government alone is responsible for the serious situation that the Australian economy now faces. The Government's policies are dangerously unbalanced because the Government has had neither the courage nor the will to restrain its spending sprees and because it has completely abdicated wages policy to the trade union movement. Therefore, it has had to rely almost totally on monetary policy to try to keep the economy on the rails. It has placed too great a strain on monetary policy and we are now reaping the very serious consequences. What the Government has totally failed to recognise is the complete incompatibility of a floating exchange rate system and a wage fixation system which has no downside flexibility if the exchange rate falls. Had it not been for the deliberate mismanagement by the Hawke Government, the Australian dollar would have been much stronger and interest rates would have been considerably lower than those we have experienced to our cost over the past 12 months. Let there be no misunderstanding on this issue: Our present economic difficulties are due to no one other than this Government. The Government is trying to talk up the economy by pretending that everything in the garden is rosy. It quite patently is not, as the international community is telling us loud and clear through its making the Australian dollar one of the weakest currencies in the world. Senator Messner —It is a soft currency. Senator SHORT —It is one of the weakest in the world. Senator Grimes —Are you trying to talk the economy down? Senator SHORT —No, I am trying to be realistic about it in a way that the present Government is not doing. It is trying to talk up the economy in a way that is very dangerous for the future of this country. This brings me to the Government's tax proposals announced on 19 September, several of which are contained in the Bills now before the Senate. The reason why all the 19 September tax proposals are not yet before the Parliament is that they are such a dreadful hotchpotch that neither the Government nor the parliamentary draftsmen have been able to translate their broad nature into legislative detail. As the Leader of the Opposition, Mr Howard, said recently in the other place, the Hawke Government's tax proposals are seriously flawed. They fall well short of the goal of lasting reform and they represent the ad hoc remnants of the original tax reform proposals put forward by the Treasurer early in 1985. Senator Parer —Option ACTU. Senator SHORT —They are option ACTU, as Senator Parer says. The proposals in no way add up to a coherent package. They do not constitute reform. They are simply the leftovers from the National Taxation Summit that the Australian Council of Trade Unions and the left wing of the Australian Labor Party were prepared to see the Government proceed with. It is important that the Australian public know that the tax proposals do nothing to lighten the total tax burden in this nation. This is because the Government has been neither prepared nor, apparently, able to exercise responsible restraint over its own spending. Indeed, I argue that in the longer term, the Government's latest tax proposals will increase the tax burden on average taxpayers. This is because the proposals in total add up to a vicious attack on the productive sectors of this nation. This attack, which imposes a very heavy additional burden on all forms of business, will make these businesses less profitable and, therefore, less able to pay tax. The shortfall in tax will then inevitably be sought from the average taxpayer and, in particular, from the pay as you earn taxpayer, who already has been mercilessly savaged by the Hawke Labor Government in so many ways over almost the past three years. Let us look at some of the reactions of the business community to the Government's proposals. The Metal Trades Industry Association, for example, is concerned that the package as a whole will lead to a further erosion of Australia's competitiveness, fuel inflation and threaten jobs. The Confederation of Australian Industry says that business is appalled by the package and that business is clearly intended to carry the major burden of the tax changes. The Business Council of Australia has expressed similar concerns. The associations representing the three-quarters of a million small businesses throughout Australia have also reacted strongly to the proposals. The main concern of small business, although not the only concern, is with the proposed capital gains tax. That proposal is not part of the Bills now before the Senate. It is being stored up for next year when it will be opposed by the Liberal and National parties in the strongest possible terms. The National Farmers Federation has condemned most of the Government's tax proposals as imposing a further crippling and inequitable burden on farmers at a time when many of them are already experiencing crisis conditions. The Director of the Australian Taxpayers Association, Mr Risstrom, best summed up the general community feeling about the Government's proposals as a whole when, in describing the Government's decision on the non-deductibility of entertainment expenses for taxation purposes, he said: `This is a downright rotten law'. The package of Bills we are now debating contains many odious proposals. The proposal that has attracted most attention, and on which I will concentrate my remaining remarks, is the proposal to disallow income tax deductions for entertainment expenses incurred in the course of earning income after 19 September 1985. This proposal is contained in the Taxation Laws Amendment Bill (No. 4) 1985, one of the Bills in the package before us. The Bill has 54 pages. It also has an accompanying explanatory memorandum that runs to no fewer than 103 pages. Despite this wondrous welter of words, neither the Bill nor the explanatory memorandum contains any clear definition of the word `entertainment'. That is ludicrous. How can business be expected to know whether it is entertaining if neither the Treasurer nor the parliamentary draftsman can put into words what they mean? The best the Treasurer can do is to say, as he did in the other place: `Entertainment is about purpose and circumstance'. What on earth does that mean? The proposal discriminates against small business. The deductibility of dining facilities for use by employees will be available only when these are in-house. But what about small and medium sized businesses which cannot afford to provide their employees with similar facilities on their work premises? They will be penalised, as will all self-employed persons, including sole traders or partnerships. There are other unwarranted restrictions in this proposal. For example, expenditure on an `eligible seminar' is tax deductible. This is described as one that has a continuous duration of not less than four hours. Lunch and other breaks are excluded from the calculation of the four hours. Most normal seminars would not meet the eligibility criteria. There are other similar examples in the Bill. The Treasurer says that the Government has put this near blanket prohibition on the deductibility of business entertainment expenses otherwise it would be too difficult to police. But that is not a valid reason for this draconian measure. If a particular form of expenditure is a genuine cost incurred in earning income, it should be tax deductible. For many people, entertainment expenses fall quite clearly into this category. Administrative problems in ensuring compliance should not be a reason for making these legitimate business claims illegitimate for tax purposes. The substantiation of claims can be difficult, but it can be done. Indeed, the very same Bill, which refuses to countenance substantiation in the case of entertainment expenses, does so for car and travel expenses. If substantiation is satisfactory in one case, why not in the other? The Treasurer claims that the denial of tax deductibility for entertainment expenses will save the revenue $310m. A careful study by BIS-Shrapnel Pty Ltd, however, puts the figure at $61.5m. Whether this latter figure is correct, I do not know. However, it certainly sounds more plausible than the Government's figure of $310m, which in any case seems to have been arrived at with, at best, scanty research. The BIS-Shrapnel study also examined the employment effect of the Government's entertainment expenses proposal. It put the likely total employment loss at 18,600, of which 11,100 would be lost in the hospitality industry. Many of these lost jobs are now occupied by women and young people on a part time basis. Alternative employment opportunities for these people would be negligible. Another recent survey, this one by Yenn, Campbell, Hoare and Wheeler, has indicated that 80 per cent of all business expenses can be properly validated. The Opposition and the hospitality industry fully accept that abuses of the system must be eliminated. However, this can be done by the use of stricter substantiation provisions rather than through destroying a viable business by jackbooted draconian measures that completely overturn all the accepted principles of taxation law in this country. As Senator Messner has foreshadowed, the Opposition will be moving an amendment in the Committee stage. That amendment will require that deductible expenses must be directly attributable to earning taxable income. That wording, coupled with effective administration by the Taxation Office, should correct what abuses of the system may be occurring. I urge the Australian Democrats to support this amendment. To allow the Bill to pass in its present form would be a prostitution of acceptable taxation law; would be of dubious revenue gain; would lead to further distortions in the tax system; would set a very dangerous precedent and could put almost 20,000 people, particularly women and young people, out of work. Apart from all their other faults, these Bills are ideologically motivated by the left wing of the Labor Party. They impose what might well be called `taxes of envy'. They are anti-business in their philosophy, they are anti-growth-they smack of a moralism which seeks to reduce everyone to mediocrity and uniformity, which will stifle our country and our people if it continues to take root. It is about time that we encouraged people to strive, to achieve and to be able to reap reward for achievement, rather than being intent on cutting down anyone who looks as if he or she might develop into a tall poppy. That, in essence, is what these Bills are about. That is why I, and the Opposition, oppose their main provisions. That is why, on behalf of the Opposition, I move the following amendment to the motion for the second reading of the Taxation Laws Amendment Bill (No. 4) 1985: At end of motion add: `, but the Senate notes the deleterious effects of the Bill on small business, the restaurant trade and the tourist industry, and considers that it should be amended to provide that entertainment expenses directly attributable to gaining or producing assessable income continue to be a taxation deduction'. Senator WATSON(Tasmania)(8.21) —Much has been said in this place over the last 12 months about the problems facing our economy, particularly in relation to the current account deficit, the balance of trade and the devaluation of the dollar. For the last 20 years our economic sluggishness has whittled away our superiority in south-west Asia, so that now we are very much the poor cousins in the areas of dynamic growth and spectacular progress. In spite of our resources, our protection of uncompetitive industry, our stifling bureaucracy and our high labour costs have all reduced our economic viability to that of a struggling, debt-ridden Third World country. While we have floundered several of our Pacific neighbours-for example, Singapore, Taiwan, Hong Kong and South Korea-have moved into the economic miracle class. They have been able to achieve this by a number of measures. First, they have brought together skilled scientists, engineers, managers, entrepreneurs and skilled workers to exploit a whole generation of advanced techniques and innovative products which overindulged economies such as ours were too slow to absorb. Secondly, they were able to maintain a very high growth rate over many years without setting off a burst of uncontrollable inflation. Thirdly, they were not hampered by restrictive wage and management policies. Fourthly, their tremendous success was forged out of a successful partnership between governments, civil servants, financial institutions and innovative local and multinational businessmen. I cannot stress that point too much. They succeeded where we failed because of a successful marriage between government, finance and business. By comparison our Labor Party Government has prostituted itself to the unions for political gain-as is evidenced by the Bills we have before us tonight-has shouldered the needs of the business community aside and has proceeded to beat it to death. The results were inevitable. When one looks at the Labor rhetoric one can only be amazed at the two-faced nature of its priorities. Much of the Government's economic strategy has revolved around an expectation that the manufacturing industries would undergo a revival as a result of the devaluation of the dollar and that business would prosper, exports would increase and the negative balance of payments and deficit situation would turn around in response. Again the cry has been for deregulation in industry, for more incentives to rationalise in order to be more internationally competitive and for entrepreneurs to take a risk to establish businesses and industries, and to develop new markets overseas for our increased production. It has been agreed that the only way out of the economic doldrums is to increase exports and to encourage an improved business efficiency and competitiveness. Of late we have heard the cry coming from the Government benches. I applaud honourable senators opposite on their understanding of the realities of the economic problems facing this country, particularly the business community today. Therefore, I find it incomprehensible that they could come up with such a tax package, which is designed to squeeze the lifeblood out of the business community on which our very survival depends. How can one expect business to invest, to expand, to rationalise, to research and develop new markets if one takes away 49c in every dollar of profit they earn? How can one expect growth and development if one discriminates against such people to the extent that some genuine business expenses are no longer tax deductible? How can business progress when the Government has the power to dictate what are and what are not necessary expenses for that business to stay viable? How can one possibly encourage men and women to take up the challenge and to start new enterprises when, before they even start, they will need to employ four non-productive people. I refer to a lawyer to interpret government legislation, a taxation agent to cope with their own and their employees' taxation problems, a person permanently engaged in filling out government forms, and an investigator in order to meet the requirements of fringe benefits tax legislation. It is all these kinds of impositions on the small businessman and the self-employed in particular that are dampening enthusiasm and squashing enterprise-the very things we need to improve our prospects for the future. Few people now have the inclination or expertise to take the necessary risks in starting up something new. Senator Aulich —I raise a point of order. There is a problem here regarding Senator Watson who is now on his feet. He is abusing the Standing Orders of this House by reading his speech. Normally I would not worry about such a matter, but this is the second time tonight that people have read their speeches verbatim. They have not dared to lift their heads but in fact have read straight through. They have read badly; they have missed the commas and other appropriate punctuation. I am sure that this chamber should not be forced to listen to speeches that are read straight out of the efforts of some hack writer in the office somewhere. I would like to hear what the honourable senator himself has to say rather than what a speech writer has written for him. I point to standing order 406 and ask the Chair to ask the honourable senator to address the chamber rather than his notes. Senator Messner —On the point of order, I would say that Senator Aulich is being extremely sensitive about this matter. He knows of the number of senators on his side of the House who continually read their speeches. It is quite clear to me, listening to Senator Watson, that he is speaking most fluently and has a very clear understanding of the subject he is dealing with. What is more, those points are very telling and consequently Government senators are feeling the heat. I implore the Chair to overrule the point of order made by Senator Aulich, because obviously he has no understanding of the way in which Senator Watson operates. The ACTING DEPUTY PRESIDENT(Senator Jessop) —Order! I have observed that honourable senators on both sides of the chamber read from copious notes. In the interests of expediency at this time of the session with the need to get the Bills through, as I am sure the Government requires-and no doubt the Opposition is anxious to accommodate it-I rule that there is no point of order. I suggest that Senator Watson refer to copious notes in an appropriate manner. Senator WATSON —The Australian Democrats had the power to force changes in this draconian type legislation, but by agreeing to see it through the Senate unaltered, they have literally become partners in acts of discrimination against the business community. The Australian people could face price increases of up to 49 per cent on new cars by the end of next year. It must be recognised that the car manufacturing industry is already facing enormous cost pressures from the devaluation of the dollar, from impending sales tax increases and from the introduction of unleaded petrol regulations for all new cars after 1 January 1986. The devaluation of the dollar, by more than 30 per cent against most other currencies, has effectively increased tariffs on the landed costs of imported cars from 57.5 per cent to 93 per cent. The new technology involved in converting cars to run on unleaded petrol will add a further 5 per cent to the cost. An additional one per cent will be added because of the increase in sales tax. To add insult to injury the Labor Government, which has been aided and abetted by the Australian Democrats, has seen fit to throw the industry into further confusion by determining to add a further 10 per cent to retail prices because of the new fringe benefits tax. Some fleet owners have already withdrawn orders for new cars in 1986 and up to 40,000 new car sales a year could be lost because of this legislation. Most of the problems in the car industry, as in other industries, have originated from government departments and the Ministers making important decisions in total isolation without examining the effects on the industry or on the consumers. The company car is a well entrenched symbol of office for many employees, and with a significantly increased tax burden being placed on the employer by way of a fringe benefits tax it is likely that the increased costs will be taken up by the consumer rather than by the company itself or its employees. With employees having had the benefit of a company motor vehicle for some years and in view of the scarcity of particular employee skills, it may be virtually impossible for the employer to pass on the additional costs to the employee who has received this benefit. It is the consumer who will have to pay, and pay dearly. The valuation proposals on the fringe benefits tax for vehicles contains anomalies and potential policing problems. Mr Bob Ruddick, of the firm Coopers and Lybrand, has pointed out some of these anomalies. For example, under the valuation No. 2 proposal, where a specific percentage of the original purchase price of a vehicle is taken into consideration, the employee would be encouraged to travel more mileage, whether private or business, in order to achieve a lower tax rate for the employer. This is, in effect, almost opposite the intention under valulation method No. 1, whereby higher private mileage is discouraged. Under existing legislation, vehicles falling within the luxury bracket-that is, costing more than $26,000-can only be depreciated to a maximum of $26,000. The proposed fringe benefits taxation does not refer to the removal of this upper depreciation bracket nor does it suggest a cost limit when determining the fringe benefits tax. Accordingly, unless this area is addressed, an effective double taxation would occur on the costs of such vehicles in excess of the upper depreciation limit. Coopers and Lybrand give this example: Not only could an executive, driving a luxury imported model, find his firm excluded from claiming a deduction on that portion of his motor vehicle costing in excess of $26,000, but under the fringe benefits taxation the levy for taxation could be placed upon the full value of the $70,000. This could result in the additional taxation exceeding the tax savings of having the car owned by the business. Fleet sales make up about 60 per cent of all medium and large sedans sold in Australia, and if much of this market dries up there is not going to be much of a market left, particularly in light of increasing consumer resistance in response to increased prices. The car manufacturing industry must suffer from this new tax legislation, which could have been phased in over several years to soften the blow. So must the hospitality industry suffer. I must stress that I am not opposed to taxing entertainment expenses as such, but I am of the opinion that refusal to regard some business lunches as legitimate business expenditure incurred in the course of earning one's living is both discriminatory and contrary to the general rules of taxation. Over the years I have been made acutely aware of the tremendous growth in the tax avoidance industry and particularly the rapid rise in the use of fringe benefits as substitutes for wage increases as a means of avoiding excessively high marginal tax rates. In many cases perks, which have become accepted not as a benefit but as a right, make up as much as 40 per cent of a negotiated salary package. But what about the small businessman or self-employed person who uses the lunch time break to promote his business? He generally cannot afford expensive advertising and so arranges to sell his business and himself to prospective clients over a meal. This, after all, is perhaps the only time the businessman may have to spare for this kind of advertising. Advertising is still considered to be a legitimate business expense, but the business lunch is no longer a legitimate deduction, according to this legislation. The decision to deny deductions for all entertainment expenses is savage and inequitable, and blatantly discriminates against the small businessman and the self-employed. All expenses incurred in generating revenue for a business should be deductible. The Government has accepted the legitimacy of business entertainment expenses at seminars, in canteens and board rooms. It discriminates against the small businessman because he is denied deductibility for the same purpose. The deduction is available to the big businessman if he entertains in the boardroom or the company canteen, but if a small businessman goes next door to the restaurant he is denied that deduction. I cannot accept that any business enterprise should be taxed on expenditure legitimately made in the course of its business, just because it is too hard for the Government to police the action. The existing legislation, section 51 (1), could have been strengthened and it would have saved all the uncertainty and fear that pervades the hospitality industry at the moment. The mechanisms are already in place that allow deductions only to the extent to which the expense was incurred for the necessary purpose of carrying on a business or earning assessable income. It does not allow deductions for entertainment of a private or social nature, but it has been abused and the Taxation Office has not been able to police it for a variety of reasons. The Government has suggested that entertainment expense claims have been too difficult to police and that there has been a lack of objective assessment by taxpayers. There are a number of principles on which the fairness of a taxation system can be judged. These are equity, efficiency, neutrality, simplicity and whether it is non-inflationary. This tax legislation would score very poorly on all criteria. A tax that denies a legitimate business expense to one section of the business community is, I believe, quite discriminatory. A tax that will have an obvious inflationary impact is indefensible in the current climate. A tax that will result in a loss of business income tax, a loss of personal income tax, an increase in unemployment, and therefore in social security costs, and a considerable loss in various other Federal, State and local government taxes, is just plain stupid. The Government should have consulted with industry on the likely outcomes of these new taxes, and devised some other schemes, particularly in relation to entertainment expenses, whereby legitimate business expenses could be identified and documented for tax purposes. The strength of business in this country determines the strength of our economy. However, Labor's low calorie diet imposed on business has already led to nutritional problems, and in some cases death. I am unable to support the Bill in its present form. Senator BROWNHILL(New South Wales)(8.38) —First, I wish to congratulate Senator Messner on the way in which he has led the debate on the Taxation Laws Amendment Bill (No. 4) 1985 on behalf of the Opposition. Senator Ryan —Crawler! Senator Grimes —Oh, stop it! Senator BROWNHILL —Well you can carry on like a mob of chooks on the other side of the House. This was a hastily prepared response to-- Senator Walters —It is a hasty Bill. Senator BROWNHILL —Yes, it is very hasty Bill. It was prepared at the National Taxation Summit in acquiescence to the Australian Council of Trade Unions. It was an absolute sellout to the ACTU. As Senator Short said earlier tonight, this package has nothing to do with options A, B, C, D or E; it is option ACTU. What will this taxation reform package give us? In 1987 and 1988 it will give us $1.4 billion in extra tax revenue gained by this Australian Labor Party Government from the Australian people. How is this a tax reform package? Earlier in the debate today Senator Siddons said that he had done a great thing on behalf of the Australian taxpayer. What did Senator Siddons say? In his recent Press release he said: We have made real gains for small business and farmers, while retaining the significant income tax cuts the Government has promised. We can now call the package a genuine tax reform. We won the following concessions from the Government . . . But are these really concessions? A person on an income of $10,000 will receive 1.7 per cent more in take home pay. The person who earns $19,500 will receive 1.4 per cent more in take home pay. The person who earns $27,500 will receive 2.7 per cent more in take home pay. Is that really tax reform? Is that really something that will help the pay as you earn taxpayer? How many more changes will there be? Earlier in the debate tonight Senator Siddons said that he and the Australian Democrats would consult with the Government in the new year over further changes. How nice that will be! The Democrat senators are holding this country to ransom. I think even the Minister for Community Services (Senator Grimes) on the other side of the Senate would agree with that. Some of the items that this legislation covers are entertainment expenses and the substantiation of other costs, for example, the motor car. How in the world will this be achieved? People will have to hit the bundy every time they get into a motor car to see how many kilometres they travel and how many hours they travel, most probably, so that they can claim a percentage of the value of the car. How will this requirement be policed? Does this mean that more public servants will have to administer it? I believe that it does. The legislation also covers public unit trusts, the carer's pension and many other items. The item to which I will address my remarks is water conservation and soil conservation expenditure. Senator Grimes —I thought you were going to talk about the free lunch. Senator BROWNHILL —That is all right, Senator. This Government does not care a damn for the people who live in the country. The Minister should go into the country to see how the people out there receive him. Has he ever got a bit of dirt under his fingernails? I would say that he most probably has a bit of dirt under his fingernails but I do not think it would be the soil of this land. This Government has decided to replace the immediate write-offs for water conservation. It had decided, until it did a deal with the Democrats, that this would take place over five years. Australia is one of the driest continents in the world. It is crying out for water conservation. This Government, of which Senator Aulich is a part-he has come into the chamber tonight for the first time in quite a while and has started to interject-will save some $25m in 1986-87 and $20m in 1987-88 as a result of that measure. What a price the people of Australia and primary industry will have to pay for that. This Government has taken some $480m from the farmers since 1983. Let me just remind honourable senators of a few of the things that the Labor Party Government, led by the Prime Minister (Mr Hawke), has taken away. It has removed the taxation benefit of the income equalisation deposit scheme. It has removed the important aspects of the former tax averaging system. It has removed the important investment concessions that all the people in the rural community had. It has virtually removed the petroleum freight equalisation scheme. It has introduced indexation of fuel excises. That is only a little of what it has taken away. It will take away other things in the future as well. What about the quarantining of farm losses? What about those people who are trying to eke out a living on the land, who do some contract work, whether it be shearing or harvesting, to try to keep themselves viable in the hard times that the rural community is experiencing at the moment? Why has this Government tried to slug them as well? What about the additional capital gains tax that this Government will take from people in the rural community? Senator Boswell —What about Senator Walsh? He is a farmer. He has sold them out. Senator Messner —He wouldn't know. Senator BROWNHILL —That is quite correct, Senator Messner; he would not know. That is the sad thing about it. The Government does not understand the plight of the rural community in Australia at the moment. Senator Walsh —The Country Party represents the failures. Senator BROWNHILL —The National Party represents the people who live in the country and it will continue to do so. The previous coalition Government introduced the 100 per cent write-off to encourage farmers to be more responsible for water conservation. Irrigation practices, especially in the Murray-Darling region, have improved dramatically in recent years. Laser land levelling replaced flood irrigation, saved water and reduced chances of salinity, the major problems in the Murray basin. What about drip irrigation? Where does it stand with the legislation which the Government wants to bring in? Farmers are spending money on water conservation and they are not tax dodgers. I quote from Treasurer Keating regarding the deductibility of expenditure on soil conservation and on conveying of water: Providing 5-year write-off for expenditure on conserving or conveying water will significantly reduce the incentive to tax shelterers and is consistent with the concessional treatment more generally accorded assets of primary producers and other businesses. Is the Treasurer claiming that all farmers, all irrigators, all people in the rural community are tax shelterers or tax cheats? He has done it once already. Is he saying that again? Senator Aulich —He has never said that, and you know it. Senator BROWNHILL —It is contained in a paper which I have in front of me. I quote from a paper entitled `The Economic Impact of Irrigated Agriculture in New South Wales'. The paper deals with the importance of agriculture to the whole of the economy in Australia. It states: The estimated value of irrigated agriculture production . . . was $645m which amounted to 23 per cent of total agricultural production in NSW- a State which I am proud to represent as a senator. This paper, which was prepared by Dr Roy Powell, Rodney Jensen and Anne Gibson of the University of New England, continues: The measured economic effects of irrigated agriculture and associated activities . . . show that irrigated agriculture which generated production of $645m has a total impact of $2,059m and accounted for 52 per cent of the total effects from irrigated agriculture and associated activities. Surely that is a big point to make in any debate. The Government is taking incentives away from people who want to conserve water, want to irrigate and want to do the job properly. An intermanagement plan has just been announced regarding the Murray-Darling basin. We might ask ourselves: Why has this been announced at this time? Perhaps it is a bit of parish-pump stuff for the South Australian election, but really it means little. An amount of $1m is to be provided for research plus the States involved will provide $250,000 each. This is still short of the $25m that has been taken away by this Government. The thing that worries me-I have spoken about it before in this House-is soil conservation. Where does soil conservation stand? At present, expenditure on soil conservation is eligible for a total tax deductibility in the first year. If the Government has changed the arrangement regarding water, what does it intend to do regarding soil conservation in the years ahead? How does one define the difference between water conservation and soil conservation? What about a dam that is put in to stop soil erosion? Earlier in the evening Senator Boswell made this point: When does the person who is putting in a contour bank and a dam clock on and off with his bundy card in respect of each? Will somebody from the Government be there to check to see whether a contour bank is finished, the cost of which is fully deductible in the first year? Will that person then start to build his dam, the cost of which now, after a deal has been done with the Australian Democrats, is deductible only over three years? When does this happen? Do the Democrats understand? Does Senator Grimes, who has now left the chamber, not understand because he has never had any dirt under his fingernails? The write-off period over three years is the same as that which applies to office equipment. Of course, office equipment will be needed to administer some of the new measures that have been mentioned by the Government in this debate. Only 33 1/2 per cent tax deductibility, rather than total deductibility, will apply for water conservation measures in a continent as dry as ours. I summarise my remarks. I am concerned about the sloppy nature of the tax package. This legislation is no better than any other that has come before this place lately. I hope that the draftsmen are writing their drafts in pencil. The promises of this Government to support water and soil conservation are just hollow rhetoric. People who now want to do laser levelling, who want more efficient use of irrigation, control of salinity and better water management, will now not be given any incentive. This is of concern to all people in the rural community. I repeat: Australia is the driest continent on earth. We cannot afford governments being stingy with things that lead to productive agriculture. I repeat: This Government has a preoccupation with labelling farmers as tax cheats and tax evaders. I defend the rural community against that charge. The Australian Labor Party Victorian Minister for Agriculture and Rural Affairs claims that farmers have a pot-of-gold mentality. Obviously, the Federal Government has a similar opinion. I finish by quoting from today's Melbourne Herald. On the back page Barrie Dunstan stated: But what happens if the interest rates rise even further if, for example, the dollar fails to steady? Mr Keating said yesterday the Government wouldn't stand idly by and let monetary policy take the full brunt. An alternative policy would be required, Mr Keating said, echoing comments of his Secretary to the Treasury, Mr Bernie Fraser. And what would the economic policy alternative be? Mr Keating was too shrewd a politician to spell that out. His pat answer yesterday was: ``The Government remains confident that no such alternative policy response will be necessary.'' It looks like the Government front bench will need to be taught the easily-remembered acronym, NAPPIN, or No Alternative Policy Plan Is Needed. The article continued: Mr Keating will have to keep whistling his cheery tune of NAPPIN-but he'll need to keep a daily watch on the foreign exchange market. Otherwise he might need to consider another economic policy acronym-DEATH, or Don't Expect Any Tax Help. That is the way I review this tax package. The ACTING DEPUTY PRESIDENT(Senator Jessop) —I call Senator Georges. Senator Walters —Were you on the list? Senator GEORGES(Queensland)(8.54) —I am not on the speakers list, but I have a right to speak. A whole series of Opposition speakers have attacked the Government in a most exaggerated way. All I will do in the two or three minutes I will have available to me is answer Senator Brownhill, whom I had the opportunity of listening to. He was at the end of a line of speakers who seemed to be screaming about the disadvantages the Government has imposed upon the farmer. They were making quite unsubstantiated assertions. The problem that farmers face and the problem that Senator Brownhill faces, especially when he talks about soil erosion and associated matters-- Senator Boswell —The kangaroos are eating all the grass. Senator GEORGES —If you are talking about kangaroos eating all the grass, Senator, I suggest that you ought to get out of those areas, which are fringe areas that are not capable of reasonable economic development, and those areas ought to be left to the kangaroos. I have said that on many previous occasions. The farmers of this country have followed a policy of slash and burn, which has lead to gross degradation. Senator Boswell —You can't burn if you do not have enough water, though. Senator GEORGES —You have followed a policy that is similar to slash and burn. You have torn up huge areas of land. You have exploited them to the point that they are no longer economically productive, and you have moved to new areas. Senator Messner —We are not opposing soil degradation expenditure being deductible. Senator GEORGES —No, the real point is-- Senator Boswell —Why don't you do this in the adjournment debate? Senator GEORGES —No, you have had a fair go. All-- Senator Boswell —Talk about the Bill. Senator GEORGES —All that we have had for the last two hours is speaker after speaker from the Opposition side saying what they wished to say, in spite of the limitations which have been imposed upon us. They are the people who want the Senate to get up on Friday. So, what do we do? We accept the limitation. No one on this side of the chamber has entered into the debate, in spite of the provocation from speaker after speaker. Senator Walters —You were not willing to protect your Government, that is why. You are all running scared. Senator Siddons —Let's get on with it. Senator GEORGES —Exactly. Let us get on with it. Senator Messner —On a point of order, Mr Acting Deputy President: I take a point of order on the question of relevance. Senator Georges is entering into a debate about the Opposition's position, which is totally erroneous, because he is one of those senators who have not been prepared to come into the chamber and defend their Government in respect of these iniquitous issues that have been before the Parliament all day today, and yet every Opposition senator-- The ACTING DEPUTY PRESIDENT(Senator Jessop) —Order! That is not a point of order, Senator; you are debating the question. Senator GEORGES —That actually supports my position, because we have accepted the responsibility for the view that the program of this Parliament ought not to be extended, at considerable cost, just so that we can listen to the Opposition's idle chatter. Senator Boswell —If you sit down, we can get home. Senator GEORGES —You have had your go, Senator Boswell. You went for about 40 minutes, quite against the arrangement. You are entitled to have your say-- Senator Boswell —If you had listened, you would have learnt a lot. Senator GEORGES —Yes, I learnt quite a deal from what you had to say. It seemed to be just a muddle of a variety of ideas and opinions that had no relevance to the matters before us. Having listened to Senator Brownhill, all I can say is that honourable senators opposite will have to accept my right to say a few things now. Senator Peter Baume —When you were a guest of Her Majesty, was the Parliament on radio? Senator Brownhill —I should like to ask you, Senator, about your free accommodation. The ACTING DEPUTY PRESIDENT — Order! Senator Georges, I suggest that you direct your remarks through the Chair. Senator GEORGES —Incidentally, I have had a haircut since I was given the advice. Honourable senators might not have noticed it, but nevertheless, that is so. Getting back to the point, I think that it was necessary to interrupt that litany of gloom, that irresponsible attack upon a government that is endeavouring to sort out an economy that was in such disarray when it came to power. It is necessary that the interruption should have been made. I say with some sort of comfort that those who claim to be National Party representatives will have much with which to concern themselves in many areas in which I have an interest. One area in which I have an interest and in which Senator Boswell also has an interest is kangaroo management. When it comes to talking about tax relief for the rural community it needs to be remembered that there are certain areas where tax relief is absolutely necessary in order for members of that community to cope with what is a national responsibility. I have no complaints about that. Senator Crichton-Browne —Such as? Senator GEORGES —Such as soil erosion and the protection of certain vital areas. Senator Archer —Salinity? Senator Crichton-Browne —What about water conservation? Senator GEORGES —Salinity and water conservation. Senator Archer —Forests. Senator GEORGES —Forests and kangaroo management. Honourable senators can see what has happened. Immediately we get into certain areas where the inhumanity and the rather, shall we say, cruel approach of those who represent the National Party-- Senator Boswell —Oh, it is terrible to say that. Senator GEORGES —Senator Boswell would not deny that the approach of many of the people whom he represents is this: If it moves and eats grass, it is a pest and ought to be exterminated. The ACTING DEPUTY PRESIDENT(Senator Colston) —Senator Georges, are you speaking on the Bills before us? Senator GEORGES —Yes, Mr Acting Deputy President. The ACTING DEPUTY PRESIDENT —I would like you to make sure that you are. Senator GEORGES —I am quite, because- Senator Boswell —I raise a point of order, Mr Acting Deputy President. I cannot allow that remark to go unchallenged. Senator GEORGES —I have not finished it yet. The ACTING DEPUTY PRESIDENT —Senator Boswell, if you cannot allow a remark to go unchallenged, that is not a point of order. You can speak to it after Senator Georges has finished. Senator Boswell —I insist that you make him talk on the Bills. The ACTING DEPUTY PRESIDENT —You do not have to insist that I do anything. Senator Georges, I have asked you to make sure that you are speaking on the Bills before us. Senator GEORGES —Yes, Mr Acting Deputy President. I need to complete my remarks in order to impress upon you that that is quite the case. The philosophy is: If it eats grass and moves it ought to be exterminated, and if it grows and takes up moisture it ought to be ripped out. That is the approach, an irresponsible approach which can be countered only by a more enlightened attitude. That more enlightened attitude can be achieved only with support. Certain protections are a matter of national responsibility and for that reason they need national support. They can receive national support only by having some tax relief. I am back on the subject. There is no doubt that there are certain areas where certain tax relief needs to be given, and there are certain areas where it concerns, shall we say, the survival of associated species. That can be achieved only by the matters which Senator Brownhill raised, not so much in the interests of the farmers themselves but in the interests of the whole of the ecology. I am not opposed to what the honourable senator has been proposing; I am in support of it. Senator McKiernan —Do it quickly. Senator GEORGES —Yes, I will see to that. We have to approach the matter fully understanding the problem. The problem that I have brought to the surface tonight is that Senator Brownhill, Senator Boswell and the Party they represent have to accept much of the responsibility for the situation in which they find themselves. They cannot expect the taxpayer to meet their problems without their participating, in return, in solving those problems. Senator WALSH(Western Australia-Minister for Finance)(9.04) —One of the Bills with which we are now dealing is a Bill that ends the long free lunch. After sitting here for the last half hour or so, I think we should have one to end the long dinner as well. I have heard various snippets of the debate throughout the last day or so. When I first entered the chamber tonight I heard someone ranting and raving about having dirt under his fingernails in the context of being qualified to speak on behalf of the agriculural sector. I think I have had as much dirt under my fingernails as anybody else here, and certainly much more than those who strut around in moleskins and riding boots but who have never really had dirt under their fingernails at all. I had real dirt under my fingernails for 25 years and was actually a manual labourer, which a lot of those who claim to speak on behalf of the agricultural community have never been. Senator Brownhill —Mr Deputy President, I raise a point of order. I think a reflection was made that I had never worked as a labourer or earned a wage in that way. The DEPUTY PRESIDENT —Order! There is no point of order. The honourable senator may reply to that in many forms in the Senate, but this is not an appropriate occasion. Senator WALSH —Thank you, Mr Deputy President. When I came into the chamber tonight and heard Senator Brownhill ranting I thought that I was back in the 1960s and Black Jack McEwen was on the prowl again because we heard the same sort of cliches and crude appeals to prejudice and ignorance that characterised the then Country Party and now National Party in McEwen's heyday. The fact is that McEwen did more damage not only to the agricultural sector but to the Australian economy in general than any other politician in history. I regret that even in the 1980s there are indications the National Party has learned nothing and has no greater understanding and no greater sense of responsibility than it had in the days when Black Jack McEwen was wreaking havoc on the Australian economy, not only in his own time but for the decade or two which followed. I find it ironic also-- Senator Brownhill —Where do we have the standard of living now? Senator WALSH —The honourable senator asks about the standard of living. I will go back to the 1960s when Black Jack McEwen and the Country Party were telling all those poverty stricken dairy farmers who could have escaped from the manufacturing section of the dairy industry and got themselves decent jobs in an era of full employment to hold on, encouraging them to stay on the land at poverty levels of income, propping them up with a dairy industry subsidy in a form of agriculture just above subsistence peasantry. Senator Jessop —Mr Deputy President, I raise a point of order. I suggest, with due respect, that we do not need a history lesson. I think it is very important for the Minister to address the matter before the Chair concisely. Apparently the Government wants to get these Bills through and we do not want to listen to a history lesson from the Minister. The DEPUTY PRESIDENT —I call the Minister for Finance. Senator Michael Baume —The previous Government restructured the dairy industry. Senator WALSH —The restructuring of the dairy industry was carried out in 1974 under the previous Labor Government and the present attempts after another seven years of hopeless neglect-- Senator Michael Baume —Have a look at the figures in New South Wales. Senator WALSH —The honourable senator should stick to writing those prospectuses for Patrick Partners that he used to write for all those shonky companies he was underwriting, rather than getting involved in debates on agriculture. Attempts to restructure the dairy industry again have been resisted by the honourable senator's Party despite its professed commitment under its new leader to deregulation, the supremacy of market forces and so on. But I do find it ironic that the people opposite, who try to project an image of themselves as being some sort of economic spartans, have a concept of an economy based upon free lunches and Collins Street farmers. They would seek to construct an economy on that sort of foundation. According to my information, two second reading amendments have been moved, one to the Social Security (Poverty Traps Reduction) Bill and the other to the Taxation Laws Amendment Bill (No. 4). I will deal, firstly, with Senator Baume's amendment to the Social Security (Poverty Traps Reduction) Bill. The three changes to the taxation laws which affect poverty traps-Senator Peter Baume conceded one of them; that is, the removal of the separate income test on rental assistance-very substantially reduce the effective marginal tax rate for the people who are in receipt of that rent assistance benefit. He claimed that the other two do not make any difference to poverty traps. In a sense, that is correct-the effective marginal tax rate at some point remains unchanged, but the number of people affected by that high marginal tax rate is substantially reduced. I am sure that Senator Baume knows as well as anybody else the problems that are associated with reducing those high effective marginal tax rates caused by the compound effect of the income tax and the withdrawal rate of social security benefits. The problem of introducing a longer taper of withdrawal is that it inevitably brings a greater number of people into the social security system than would otherwise be there which, therefore, requires very considerable resources to be devoted to administration. But significant progress has been made in that area. To reduce the effective marginal tax rate to, say, 50 per cent, while leaving other things unchanged would entail not only very heavy expenditure but also very considerable bureaucratic resources in the administration of benefit payments to a very much larger group of people. The second amendment moved by the Opposition to the Taxation Laws Amendment Bill (No. 4) relates to the alleged deleterious effects of the Bill on small business, the restaurant trade, the tourist industry, and so on. It has now been very well demonstrated-Senator Chipp, among others, dealt with this matter when he spoke shortly before the suspension of the sitting for dinner-that despite the cries and the wild assertions of gloom and doom about job losses of up to 80,000, even though total industry employment is in the vicinity of 76,000, there were on the official record a greater number of unfilled vacancies in the catering and hospitality industry in October 1985 than there were in October 1984. Indeed, there was an increase in the order of 20 per cent in the number of unfilled vacancies. That fact having been placed on the public record, the Jeremiahs who predicted the destruction of 80,000 jobs now say, of course: `It has not shown up yet; it will show up after Christmas'. That rather reminds me of the same wild assertions which came from, in many cases, exactly the same people about the effects of the imposition of the wine tax. The objective evidence is that that taxation change has had very little effect on the industry concerned, except perhaps that some restaurants which exploited the tax loophole provided by the free lunch have had either to reduce their prices or go out of business because they were serving second-rate food anyway. There is also a reference in the same amendment to the desirability of deducting from the taxable income base expenditure incurred in the earning of income. That has been dealt with at some length both today and on previous occasions. Everybody in the Government has acknowledged that a very small component of the total deductions claimed for lunches and entertainment could genuinely be regarded as expenditure incurred in the earnings of income. The practical reality is that, short of having an army of bureaucrats prowling around business on a continuous basis, it is not practical administratively to separate that genuine component from the exploitive component which had been exploding in recent years. Moreover, that principle was applied very selectively by those who would defend the free lunch. It is beyond dispute that the great majority of wage and salary earners necessarily incur in the earning of income expenses in travelling to work. No Liberal government or Liberal opposition has ever suggested that those expenses should be deductible from taxable income. So on the question of the free lunch, the assertions about the effects on the industry have been shown to be wrong. The alleged principle of providing for the deduction from taxable income of all expenses incurred in the earnings of income has been applied extremely selectively. Senator Reid has also given notice, I understand, of her intention to move a number of amendments to the Australian Capital Territory Stamp Duty Amendment Bill. I shall not deal with those at this stage. Otherwise, I thank the Democrats for their forecast support and will not delay the Bills any longer, other than to say that these Bills are the first instalment of reforms long overdue in Australia, that is, an effective clean-up of the Australian taxation system. The DEPUTY PRESIDENT —The Senate is considering a group of six Bills on taxation matters. Second reading amendments have been moved in relation to two Bills. The first is the Social Security (Poverty Traps Reduction) Bill 1985. Question put: That the words proposed to be added (Senator Peter Baume's amendment) be added. The Senate divided. (The Deputy President-Senator D. J. Hamer) Ayes . . . . . . . . . . . 27 Noes . . . . . . . . . . . 35 —— Majority . . . . . . . . . 8 —— Archer, B. R. Lewis, A. W. R.Baume, Michael MacGibbon, D. J.Baume, Peter Messner, A. J.Boswell, R. L. D. Missen, A. J.Brownhill, D. G. C. Parer, W. R.Carrick, Sir John Puplick, C. J. G.Chaney, F. M. Reid, M. E. (Teller)Collard, S. J. Short, J. R.Crichton-Browne, N. A. Teague, B. C.Guilfoyle, Dame Margaret Vanstone, A. E.Hamer, D. J. Walters, M. S.Jessop, D. S. Watson, J. O. W.Kilgariff, B. F. Withers, R. G.Knowles, S. C. Aulich, T. Jones, G. N.Black, J. R. McIntosh, G. D.Bolkus, N. McKiernan, J. P.Childs, B. K. Macklin, M. J.Chipp, D. L. Maguire, G. R.Coates, J. Mason, C. V. J.Colston, M. A. Morris, J.Cook, P. F. S. Ray, RobertCooney, B. Reynolds, M.Crowley, R. A. Robertson, E. A. (Teller)Devlin, R. Ryan, S. M.Elstob, R. C. Sanders, N. K.Foreman, D. J. Siddons, J. R.Georges, G. Tate, M. C.Gietzelt, A. T. Vigor, D. B.Giles, P. J. Walsh, P. A.Grimes, D. J. Zakharov, A. O.Haines, J. Bjelke-Petersen, F. I. Coleman, R. N.Hill, R. McClelland, DouglasTownley, M. Evans, GarethDurack, P. D. Richardson, G. F.Sheil, G. Sibraa, K. W.Rae, Peter Button, J. N. Question so resolved in the negative. The DEPUTY PRESIDENT —The question is that the Social Security (Poverty Traps Reduction) Bill 1985 be now read a second time. Question resolved in the affirmative. The DEPUTY PRESIDENT —The second Bill in relation to which an amendment has been moved is the Taxation Laws Amendment Bill (No. 4) 1985. Question put: That the words proposed to be added (Senator Short's amendment) be added. The Senate divided. (The Deputy President-Senator D. J. Hamer) Ayes . . . . . . . . . . . 28 Noes . . . . . . . . . . . 34 —— Majority . . . . . . . . . 6 —— Archer, B. R. Lewis, A. W. R.Baume, Michael MacGibbon, D. J.Baume, Peter Messner, A. J.Boswell, R. L. D. Missen, A. J.Brownhill, D. G. C. Parer, W. R.Carrick, Sir John Puplick, C. J. G.Chaney, F. M. Reid, M.E. (Teller)Collard, S. J. Short, J. R.Crichton-Browne, N. A. Teague, B. C.Guilfoyle, Dame Margaret Vanstone, A. E.Hamer, D. J. Vigor, D. B.Jessop, D. S. Walters, M. S.Kilgariff, B. F. Watson, J. O. W.Knowles, S. C. Withers, R. G. Aulich, T. Haines, J.Black, J. R. Jones, G. N.Bolkus, N. McIntosh, G. D.Childs, B. K. McKiernan, J. P.Chipp, D. L. Macklin, M. J.Coates, J. Maguire, G. R.Colston, M. A. Mason, C. V. J.Cook, P. F. S. Morris, J.Cooney, B. Ray, RobertCrowley, R. A. Reynolds, M.Devlin, R. Robertson, E. A. (Teller)Elstob, R. C. Ryan, S. M.Foreman, D. J. Sanders, N. K.Georges, G. Siddons, J. R.Gietzelt, A. T. Tate, M. C.Giles, P. J. Walsh, P. A.Grimes, D. J. Zakharov, A. O. Bjelke-Petersen, F. I. Coleman, R. N.Hill, R. McClelland, DouglasTownley, M. Evans, GarethDurack, P. D. Richardson, G. F.Sheil, G. Sibraa, K. W.Rae, Peter Button, J. N. Question so resolved in the negative. The DEPUTY PRESIDENT —The question now is that the Taxation Laws Amendment Bill (No. 4) be now read a second time. Question resolved in the affirmative. The DEPUTY PRESIDENT —The question now is that the Taxation Laws Amendment Bill (No. 3) 1985, the Australian Capital Territory Stamp Duty Amendment Bill 1985, the Bank Account Debits Tax Amendment Bill 1985 and the Income Tax (Companies, Corporate Unit Trusts and Superannuation Funds) Amendment Bill 1985 be now read a second time. Question resolved in the affirmative. Bills read a second time. SOCIAL SECURITY (POVERTY TRAPS REDUCTION) BILL 1985 Bill-by leave-taken as a whole, and agreed to. BANK ACCOUNT DEBITS TAX AMENDMENT BILL 1985 Bill-by leave-taken as a whole, and agreed to. AUSTRALIAN CAPITAL TERRITORY STAMP DUTY AMENDMENT BILL 1985 Clauses 1 to 7-by leave-taken together, and agreed to. Clause 8 (Application). Senator REID(Australian Capital Territory)(9.33) —I move: Page 5, at the end of clause 8, add the following new sub-clause: `(2) The amendments made by sections 3, 6 and 7 do not apply to instruments executed before the date of commencement of this section.'. This amendment and other amendments that will be moved to another Bill relate to the point I made this morning as to the belief that the Australian Capital Territory Stamp Duty Act as drawn is possibly-unintentionally, I hasten to reassert-retrospective in its operation. This amendment and the others which have been circulated in relation to the Taxation Laws Amendment Bill (No. 3) 1985 need to be made in this way to make certain that the legislation is not capable of being interpreted as being retrospective in its operation. This morning I incorporated a paper submitted by the Law Council of Australia in support of this proposition. Perhaps the Minister for Finance (Senator Walsh) would care to respond to the proposal at this stage. Senator WALSH(Western Australia-Minister for Finance)(9.34) —The Government does not accept the amendment, for no particular reason except that we think it is redundant. Both the Bill and the amendment share these words: `The amendments made by sections 3, 6 and 7' and there they diverge. The Bill states: ` . . . apply to instruments executed on or after the date of commencement of this section'. Senator Reid's amendment states: ` . . . do not apply to instruments executed before the date of commencement of this section'. I suppose there is a trivial difference but, in fact, it is really a difference of words because in neither case can the amendments apply until the instruments have been executed. In the original Bill the words are `on or after' the date of commencement and in Senator Reid's amendment it is stated that the amendments cannot be executed `before the date of commencement of this section'. We will not go to the barricades on it. I think it is quite superfluous. Senator Siddons —We agree with you. Senator REID(Australian Capital Territory)(9.36) —There is a considerable body of legal opinion-lawyers who deal in this particular area have expressed this view to us-that the Bill, as it is presently drawn, is capable of being construed retrospectively. I am heartened to hear the Minister say that the amendment is redundant. It is certainly not the wish of the Opposition to hold up the Bill; the amendment has not been brought forward with a view to holding up the bringing into effect of the Bill. The Minister gave an assurance that the amendment is redundant. It would be helpful if the Minister gave an undertaking that if it became apparent at any time that there was any likelihood of its being interpreted in a way which meant that it was retrospective, the necessary legislation would be brought in to clarify the situation. Certainly, moving the amendment is not intended to delay the Bill as a whole. We would like an assurance that, if necessary, the amendment moved would be introduced if it became apparent that the legislation was being interpreted as some fear it will be. I think that would be of value. Senator WALSH(Western Australia-Minister for Finance)(9.37) —I have just checked with officials from the Australian Taxation Office. They have confirmed my understanding that the Bill-the Act as it will become-will become operative on the first day of the month following the royal assent. That refers to all sections of the Act apart from section 5, which apparently is different. Clause 2 (2) of the Bill states that section 5 of the Act shall be deemed to have come into operation on 1 July 1969. Clause 2 (1) states: . . . this Act shall come into operation on the first day of the month next following the month in which it receives the Royal Assent. Given that, in my layman's opinion, which has been confirmed by the Taxation Office officials, section 8 is wholly prospective. It will come into operation, assuming the Bill gets the royal assent within a week or so, on 1 January 1986. Senator REID(Australian Capital Territory)(9.38) —I will not persist with the amendment. I hope it will not be necessary for the matter to be raised again. I think it was better to raise it now, however, and present the proposition rather than run the risk of problems occurring. I seek leave to withdraw the amendment circulated in my name. Amendment-by leave-withdrawn. Clause agreed to. Remainder of Bill-by leave-taken as a whole, and agreed to. TAXATION LAWS AMENDMENT BILL (No. 3) 1985 Clauses 1 to 7-by leave-taken together, and agreed to. Clause 8. Senator REID(Australian Capital Territory)(9.39) —The circulated Opposition amendments to this Bill flow from the same proposition as I put previously. The arguments are the same as the arguments I used in relation to the Australian Capital Territory Stamp Duty Amendment Bill 1985. I ask whether the Minister for Finance (Senator Walsh) will give the same assurance in relation to this Bill. Senator WALSH(Western Australia-Minister for Finance)(9.40) —I am not sure whether Senator Reid has moved those amendments formally, but my advice is that this is different from her previous withdrawn amendment to clause 8. Senator REID(Australian Capital Territory)(9.40) —by leave-I move: (1) Page 9, clause 8, proposed new sub-section 58P (2), at the end of the sub-section, add the following words: `or was executed before the date of commencement of this section.'. (2) Page 10, clause 8, proposed new sub-section 58R (1), lines 1 and 2, leave out all words after ``debentures'' (last occurring), insert `issued in respect of any amount subscribed for in the Territory shall be deemed to be duly stamped and any such debentures issued in respect of any amount subscribed for outside the Territory shall not, subject to sub-section (6), be liable to duty under this Division.'. (3) Page 10, clause 8, proposed new paragraph 58R (2) (a), lines 9 and 10, leave out `issued during that month and are connected with the Territory', insert `subscribed for in the Territory during that month'. (4) Page 10, clause 8, proposed new paragraph 58R (2) (b), lines 14 and 15, leave out `issued during that month and are connected with the Territory', insert `subscribed for in the Territory during that month'. (5) Page 10, clause 8, proposed new paragraph 58R (2) (c), lines 19 and 20, leave out `issued during that month and are connected with the Territory', insert `subscribed for in the Territory during that month'. (6) Page 10, clause 8, at the end of proposed new section 58R , add the following new sub-section: `(6) Where a person resident or domiciled in the Territory becomes the holder of a debenture referred to in sub-section (1) which was subscribed for outside the Territory, that person is liable, on the day on which he becomes the holder of the debenture, to duty, as duty on a loan security, for an amount equal to the duty payable on a loan security for the amount to be repaid under the debenture except where ad valorem stamp duty has been paid or is payable in a State or another Territory in respect of the issue of, or subscription for, the debenture.'. Senator WALSH(Western Australia-Minister for Finance)(9.41) —The first proposal would free from stamp duty liability a collateral security executed after the commencement of the amendments, even though it is collateral to a primary security that was executed before the commencement date and so has not borne duty. It is true that the legislation provides that collateral securities are not ordinarily liable to duty but that is on the basis that duty would ordinarily have been paid on the primary security. The aim is to avoid the imposition of double duty, not to free collateral securities from duty regardless of the circumstances. Subjecting collateral securities to duty where the primary security has not been so subject is consistent with the treatment of collateral securities in New South Wales and is the right, proper and intended outcome. In all these Australian Capital Territory charges the intended outcome was to apply either the identical or comparable tax laws of New South Wales in the Territory. Therefore, the Government opposes that amendment. Amendments (2) to (6) apparently reflect the Law Council of Australia's suggestion that the option to pay duty by a monthly return procedure in the case of corporate debenture issues should provide for a more effective territorial connection and make it clear that a credit is available for duty paid in other jurisdictions. The proposition is of a complex technical nature and the Government has not yet had sufficient time to have the points examined in detail, the Law Council's submission having been made available to officials only last week. In the circumstances, the Government is clearly unable to accept the amendments now under consideration merely on the basis that the Law Council thinks they are a good idea, and the issues raised are not of such significance that the Government could consider not proceeding with the legislation in its present form. Nevertheless, the issues will be examined further and any appropriate action taken. The purpose of foreshadowed amendment (7) appears to be twofold: First, to ensure that a loan security executed before the legislation comes into operation does not have to be lodged for assessment of stamp duty; second, to ensure that a loan security executed before that date does not attract duty. The Government's view is that the amendment is not necessary. It is only those securities on which stamp duty is imposed that have to be lodged for assessment and the application provision for the Australian Capital Territory Stamp Duty Amendment Bill makes it clear that the only securities on which stamp duty is imposed are those executed on or after the date the Bill becomes law. Therefore, the Government opposes that amendment. In short, the Government is opposed to amendments (1) and (7) and, if I can draw this subtle distinction, it will not support amendments (2) to (6) but gives an undertaking to examine the technical points raised to see whether any subsequent review is justified. Senator REID(Australian Capital Territory)(9.45) —I note the words of the Minister that these matters will be looked into by the Government. I understand that in New South Wales the proposition works in reverse. It is for that reason that this matter has come forward. I accept the Minister's undertaking. I would like him perhaps to give an indication that a statement will be made by him on the matter early in the next session. If he would do that I would seek leave to withdraw those amendments and await the Government's response to these matters. Senator SIDDONS(Victoria)(9.46) —The Australian Democrats had a look at the amendments moved by Senator Reid but we felt no real concern about the matter she was raising; so we will not be supporting those amendments. Senator REID(Australian Capital Territory)(9.46) —I still ask the Government to adhere to the undertaking the Minister gave because it is a matter of concern. The principle behind the original Australian Capital Territory Stamp Duty Act and this Bill is that the Government is bringing the Australian Capital Territory into line with other States and, although it did not name New South Wales, the legislation clearly is based on the New South Wales legislation. It is on that basis that this set of amendments is drawn. The Bill seeks to bring us more into line with New South Wales, but it goes further than that in that we will be paying duty while not getting any of the concessions. I mentioned two other matters this morning in relation to which I have not brought forward amendments. A person who surrenders a lease for any reason, perhaps for a change of purposes clause or for a consolidation of several leases, may have to discharge the mortgage to allow a new lease to be issued and then get a new mortgage, which in fact involves the same amount but a different document. In New South Wales one can do this by having the change noted, without being charged twice. I believe that it would be possible to effect this change by an amendment to the Real Property Ordinance. I ask the Minister to undertake also to have that concession which operates in New South Wales brought into effect here. I have not brought forward any amendment in relation to that; I would just like the Minister to undertake that that would also be examined. Senator WALSH(Western Australia-Minister for Finance)(9.48) —I will undertake an examination of the last matter that Senator Reid raised. If I could just say something about amendments Nos (2) to (6), I gather that the fear, or suspicion, expressed by the Law Society of the Australia Capital Territory is that there is a possibility of double taxation being applied in both the Territory and in New South Wales. As I said earlier, even the professionals say it is a complex technical question. Senator Reid asked for an assurance that the Government would make a statement. I cannot absolutely commit the Treasurer (Mr Keating) to making a statement-it is his responsibility and not mine-but I am advised by the officials that prior to the Act, which we expect it to be soon, becoming operative on 1 January, the Australian Taxation Office expects that the question that Senator Reid has raised could be examined and a statement made. Senator REID(Australian Capital Territory)(9.49) —I seek leave to withdraw the amendments presently under discussion and in doing so accept the Minister's undertaking. Amendments-by leave-withdrawn. Clause agreed to. Clause 9 (Application). Amendment (by Senator Reid) negatived: (7) Page 12, at the end of clause 9, add the following new sub-clause: `(2) Nothing in the amendments made by section 8 shall be taken- (a) to require an instrument of loan security executed before the date of commencement of that section to be lodged with the Commissioner for assessment; or (b) to make liable to duty any loan security executed before the date of commencement of that section.'. Clause agreed to. Remainder of Bill-by leave-taken as a whole. Senator PUPLICK(New South Wales)(9.50) —I wish to address a few remarks to clauses 22 and 41 of the Taxation Laws Amendment Bill (No. 3) 1985. These clauses deal with the change in the exemptions being made for taxation relative to the Australian film industry. Clause 22 deals with the exemption of certain film income and clause 41 deals with deductions from certain withdrawals from film accounts. Honourable senators will recall that the deduction arrangements for the Australian film industry were introduced some years ago by the Fraser Government. That Government provided concessions on what was known as the 150:50 rule. This was later changed to 133:33 and it is now being changed again to 120:20. That is to say that there will be a deduction of 120 per cent for investment in the film industry and that the first 20 per cent of the profits of the film concerned-once it has been produced, granted a provisional certificate and then a final certificate, has been released and has started to make money-will be exempt from taxation. Over a number of years the Government has been progressively reducing the financial support given by way of taxation concessions to the film industry. I believe that this is the correct step to take. This industry has greatly profited from having the original 150 per cent concession introduced. That concession helped to restore the viability of the Australian film industry at a particularly critical time in its history. Since then it has had the opportunity to stand on its own feet and, rather than the whole of the taxation concession being withdrawn in one go, it has been progressively phased down from the 150:50 level to the 120:20 level proposed in this legislation. Nevertheless one should not think that the change in the arrangement will not have some impact on the film industry. In simple terms the effect of these changes will be to increase the investor's margin of risk after tax from 20 per cent to 28 per cent, assuming a 60 per cent marginal tax rate and 100 per cent eligibility. In practice the level of pre-tax return required to bridge the after-tax margin of risk will be greater because a proportion of the bridging return will now be taxable. The prima facie effect of the reduction is to put upward pressure on pre-sales requirements. This will lead to a downturn in the level of fund raising to the extent that such pre-sale requirements will be unable to be met, and ultimately to a downturn in production activity. While production activity as a whole will be affected by this change, perhaps more seriously, from the point of view of the film industry, there will be a further regrettable decline in the provision of money for experimental film makers. This Bill has the effect of increasing pressure on film makers to make purely commercial films. That may or may not be a good thing. I think that a commercial discipline needs to be applied to the Australian film industry, but I believe that the pressure that will be put on young and experimental film makers will not be in the best long term interests of the film industry as a whole. Under the new concession a pre-sale guarantee of up to a figure of around 68 per cent may be needed and it is extremely difficult to get such pre-sale guarantees, particularly in the film industry in Australia at the moment, as it is running out of steam somewhat and, indeed, running out of a degree of creativity which was previously around. Pat Lovell, the producer of such films as Picnic at Hanging Rock and Gallipoli, has recently lamented the fact that money will be harder to find for high quality film production. I think there is a real danger that the effect of this will be to depress further the quality of the film industry and, in particular, to increase the pressure on film makers to make films for television showing rather than theatrical distribution. I think that is a great shame because television films do not have the same long term investment in the Australian film industry that theatrical release films do. It is true however-the Government is to be congratulated for this-that Division 10BA will still remain virtually the only tax shelter in the Income Tax Assessment Act available to individual taxpayers. Certainly, it also ought to be conceded that the concession given under Division 10BA is probably the most generous film tax concession given anywhere in the world. I regret to say that we will continue to see the end of year financial rush. I noted in the Australian Financial Review of 25 June this year that it was anticipated that as much as $75m might be raised for investment in the film industry in the course of the last few weeks rush because the money has to be invested before the end of the financial year in order to fit in with the legislation. It turns out, when we look at the report which was given in the 26 September to 9 October issue of the authoritative film magazine Encore, that somewhere between $100m and $130m may well have been committed to the production of films in order to obtain the most generous level of taxation concessions. I think it is important to understand that some steam has been going out of the Australian film industry. Last year Australia released only 15 major feature films not one of which, it is my understanding, actually made any money, and I think that is regrettable. While the Division 10BA tax concessions were set up by the Government to give power back to individual film makers, the irony of the whole thing is that it has put a lot of the decisions into the hands of accountants and into the hands of those in the boardrooms. I must say-I have no doubt that the Minister for Finance (Senator Walsh) would agree with me-that there are still a large number of people in the film industry who are less than entirely reputable investors and operators and I think it is a pity that they continue to prosper in the way that they are. The way in which they prosper and take money out of the industry is harming the long term viability of the industry. There are only a couple of other very quick points that I want to make. One is that I think it is to be regretted that the Australian Broadcasting Corporation has not played a more constructive role in the production of Australian feature films. Secondly, I very much welcome the announcement made quite recently by the Australian Film Commission that it has established a co-productions program to permit up to seven international co-productions per annum for a trial two-year period beginning 1 January 1986. Provided the co-productions have a majority of Australian participation and financial equity of not less than 40 per cent from Australian sources that will be a step in the right direction. The final point is that I think the film industry needs seriously to address the question of continued investment in the script side of the industry. Australian films still suffer, to a very large extent, from a failure to produce enough creative writers to produce scripts which are of sufficient quality. One very much regrets-although it must be a subjective judgment-that a film which was as technically and artistically satisfying and pleasing as Burke and Wills was nevertheless marred by a very second-rate script. Finally, I drew attention to the fact that in the recently released report of the National Film and Sound Archive Advisory Committee-a most excellent report which was brought into the Senate last week-a number of recommendations are made regarding deposit arrangements in Australian film archives. The Advisory Committee, after discussing legislation which is in place in other countries dealing with the mandatory deposit of published moving images and sound recordings in a designated public archive, has ended up recording that instead of a mandatory system the Archive should continue to utilise, codify and extend comprehensive voluntary mechanisms for the deposit by donation of the national production in the Archive collection and that their effectiveness be kept under periodic review by the Collections Policy Advisory Panel. I hope that all Australian film makers will be depositing in the National Film and Sound Archive at least two copies-one a negative copy and one a release copy-of any film that is produced and that they will also be depositing in the Archive a final script and a finalised cast list. However, I think that the Government has the right and should have taken the opportunity to require the mandatory deposit of films in the National Archive. After all, I think that the makers of those films which are made using public moneys by way of taxation concessions do, in fact, have an obligation to assist in the building up of the national collection. I would very much have supported a move by this Government at this stage to include as one of the terms and conditions of the continuation of this very generous film tax concession the requirement for mandatory deposit of the various parts of the final production with the National Film and Sound Archive. On behalf of the Opposition, I say that we welcome the continuing investment which is going on in the film industry. We are grateful that the Government has not withdrawn the support entirely. Changes will occur as a result of the amendment to the legislation, including the introduction of what amounts to an incentive for the 120-20 investors to defer film income until the beginning of 1987-88, when the new 49 per cent marginal tax rate becomes applicable, or at least until September 1986, when the 55 per cent rate becomes applicable. This change will have some quite profound impact on the future shape and direction of the Australian film industry, but I believe it correct and proper that the concession should be wound down over a period. I hope that serious investors in the Australian film industry will continue to make use of this extremely generous concession. Senator MICHAEL BAUME(New South Wales)(10.03) —I wish to refer to several clauses relating to four particular matters. I start with petroleum and general mining group loss transfers, to which clauses 24, 25, 29, 31 and 35 refer. I can see no disadvantage to anyone in this sensible arrangement which, in fact, will cost the Government $70m next year and, I think, $65m the year after. My slight reservation is that I am concerned that in the arrangements involved which permit the transfer of losses within a company group-this enhances that capacity-there is an occasional difficulty, as I remember it, with those companies which are not 100 per cent owned as a result of difficulties involved in getting outstanding minority shareholders off their share registers as a result of failures of takeover bids to totally wipe out a distant shareholder or where there are estate problems. I think there are some instances of one per cent or 2 per cent shareholdings in such companies denying them the benefit, as I recall it, of the transfer of losses within a company group. The principle established here is a very sound one. It is a principle which the Government has totally rejected in relation to farmers. Yet it happily grants it in relation to big business. I happen to be in favour of the businesses involved having this principle applied to them, but it is quaint that the Government accepts the principle here but denies it to farmers, to whom the quarantining of losses is applied so that these kinds of transfers, when they apply to the man on the land, are not permitted to take place. What an extraordinary moral position. The Government is looking at a farming community which is in trouble, which has basic problems, stemming largely from the Government's own anti-rural policies. The Government applies a friendly approach to the transfer of losses within mining and oil companies-I am glad that it does-but it refuses to apply exactly the same principle to the man on the land. I hope that the rural voters of Australia keep that very much in mind. The next clause I want to refer to is clause 38, which relates to the rebate for moneys paid on petroleum mining shares. This rebate has been very little used and it seems reasonable that the Government should take this action. It has been taken in conjunction with the removal of tax deductibility of calls on afforestation shares. That is referred to in clauses 19, 26, 27 and 28. Together these two changes, which apply from 20 September 1985, will collect an extra $10m, I think, next year and $15m the year after. Those are not very substantial amounts. However, when the removal of calls on afforestation shares is taken in conjunction with the quarantining of losses one gets a serious assault on the forestry industry which will be damaging, if not destructive, to that industry. Many people may say: `Good thing; it has been a ramp'. For example, the Minister is overjoyed to see every bit of rural activity which has received some stimulus as simply a ramp. If governments seek to encourage activity by providing tax benefits it is only reasonable that those people who follow the rules at the time should expect those rules to persist throughout the time of the arrangement that they entered into. Even this Government recognises that trees take many years to grow-25 years or even longer. Certainly hardwood plantations take much longer before they will provide an adequate return. Yet the Government is once again changing the rules in mid-stream. People have entered into obligations because an incentive was provided-sure it was by previous governments-to enter into that kind of obligation. It seems quite improper that governments can in the midst of a project like this change the rules not simply to disadvantage or to remove a special advantage that people have but to destroy the viability of the operation. The chamber has to recognise that, taken in conjunction with quarantining, the removal of one third of the calls on afforestation shares, in effect, destroys the viability of the great bulk of the forestry industry in Australia. It has an effective retrospective impact because people are already locked into long term developments. What will happen to this industry now? Will people be able to afford to maintain the forests which are one-third, half or three-quarters developed but which will not be bringing in returns until they are thinned and timber is collected? The Government is now damaging the prospect of any future investors in Australia having any response whatsoever to any incentives any government may in the future seek to offer if it will involve some long term investment on which one would not get a return for a fair while and one which will have to depend on the continuation of that government incentive. If we are going to have in Australia a continual situation of an incentive being provided and later taken away before the project is completed, and when the Government is perfectly aware of the fact that it takes a long time for that project to be completed, private investors should not trust any government, particularly a Labor one. Even when the coalition is in office and we provide an incentive, the fear that one day there could be a Labor government may well be enough to discourage any sensible investor from putting his money in long term projects which are clearly in Australia's long term interests. This Government is clearly much more interested in the quick quid industries which do not take the same long term view. As I have said, even though the amount of money involved in this matter is relatively small, taken in conjunction with quarantining it is massively destructive. The honest, decent and honourable way for this Government to operate if it wished to remove this incentive-it is certainly not the way it does operate-would be for it to remove it from any projects starting from 20 September 1985, if it is so attracted to 20 September. But to make it apply to those that are under development now is improper. It involves a misleading of the people concerned, and I suggest that it is destructive to an industry which is of great benefit to Australia. Clause 40 relates to the prescribed payments system. It involves $105m in the first year, I think, and $45m in the second year, and it is to apply from 1 July 1986. I congratulate the Government on this matter. It is one of those on which it introduces the legislation before it takes effect. This is a change of pace for this Government. It is extraordinary. The Government is behaving decently for a change. A considerable number of items of legislation are introduced by this Government in a dishonest, improper and disgraceful manner. It involves the introduction of legislation six months after, in many cases, the non-existent law became operative. That is so in relation to the capital gains tax. We still do not know what the terms of the legislation are and yet people are being affected by it, sent broke by it, and have had to sell at losses as a result of it. Senator Walters —They cannot plan. Senator MICHAEL BAUME —They certainly cannot plan. They have no idea what will be in the legislation, and, depending on what sort of deal is done with the Democrats, that legislation-which does not exist-under which they have had to operate can be subject to changes before it is introduced, anyway. It is a most extraordinary and improper situation. We wonder what further deals the Labor Party will be obliged to do with the Democrats in the interim before this legislation comes up. Who knows? There may be other bits of legislation that the Government wants to sneak through, such as the petroleum legislation, on which it is keen to do any kind of deal that it can to buy a Democrat vote. We do not know what that legislation will be like, yet it has been operative since 20 September. As I said, the prescribed payments system will apply from 1 July 1986-and what a pleasant change that is. However, I simply say on that matter that the recent report of the Commissioner of Taxation outlines problems with the prescribed payments system, particularly with people who are claiming rebates. For a variety of reasons, I think, the Commissioner takes the view that some people are not filling in forms properly. It may well be that it is another example of where the enormous pressures on the Department as a result of the expansion of activities, such as this collection of so-called reforms, have meant that the Department is short of skilled workers. That lack of skill in the Department is dealt with in the annual report, where reference is made to how difficult it is to get people with experience. What intrigues me is to see that in the Forward Estimates of March of this year, I think, the Government indicated that the number of people in the Australian Taxation Office would increase substantially over the next two years. All of a sudden we found in the Forward Estimates published last month that that increase will not now take place. The Forward Estimates show, for example, a fall of 100 in employment in the Taxation Office next year, and in the year after that there is to be a reduction of about 6 per cent-because the numbers will remain steady-from the original Forward Estimates of the number of people to be employed in the Taxation Office. How on earth will the Taxation Office cope with this additional work when its numbers are being held down by this Government? I am not saying that I want to see a great expansion in the numbers in the Taxation Office. I do not want to see this enormous additional burden of work imposed on the Taxation Office. Many of the provisions of these taxation Bills, which are a pay-off to the Australian Council of Trade Unions, have no right to exist. But the Taxation Office has apparently been stabbed in the back by the Minister for Finance (Senator Walsh), because the additional numbers needed-and clearly needed in view of the muck-up in the prescribed payments system-to handle the additional work are not to be provided, if one can take any notice of the Forward Estimates produced last month. As I said, those Forward Estimates involve a massive revision downwards from the Forward Estimates that came out in May relating to the Taxation Office. Overall, while not opposing these matters in the Taxation Laws Amendment Bill (No 3), I say that there is no doubt that they indicate a lack of understanding by the Government of individual matters such as the impact on the forestry industry-the major impact comes from the quarantining provisions-and a certain lack of understanding in general of the proper requirements of the right way to conduct taxation legislation, which is to introduce legislation before it is operative. For members of the Government to pretend that they are simply following the lead of the previous Government is to delude themselves and to seek to deceive the Australian people. In every instance when the previous Government said that legislation would operate from the date of announcement, it was to close loopholes in existing legislation, the policy of which was clearly stated. It did not involve massive changes of direction. I remind the yawning Minister opposite, who obviously finds the matter of morals in the tax issue too much to handle, that when the previous Government sought to change basic principles of tax in 1981 it gave, in effect, six months notice. It introduced changes which involved the extending of tax to the so-called essentials, which the Australian Democrats chose to oppose, and gave the Senate the opportunity to defeat it, which it did, before the due date of operation. I just say in passing how quaint it was that the Democrats and the Australian Labor Party could take the view that clothing and footwear were essentials when they were parties to arrangements involving tariffs which imposed something like a 100 per cent tax on those items. The TEMPORARY CHAIRMAN(Senator Jessop) —Order! The honourable senator's time has expired. Remainder of Bill agreed to. INCOME TAX (COMPANIES, CORPORATE UNIT TRUSTS AND SUPERANNUATION FUNDS) AMENDMENT BILL 1985. Bill-by leave-taken as a whole, and agreed to. TAXATION LAWS AMENDMENT BILL (No. 4) 1985 Clauses 1 to 5-by leave-taken together, and agreed to. Clause 6 (Meals provided to clients, et cetera, in in house dining facilities). Senator MESSNER(South Australia)(10.19) —This is the first meaningful section of the Taxation Laws Amendment Bill (No. 4) which speaks of the disallowance of entertainment expenses for tax purposes, which is the main thrust of this legislation. I merely say that the Opposition will be opposing this clause, which refers to in-house dining facilities as it is part and parcel of the further substantive amendment that we will be moving in respect of clause 9. I hope that other senators will involve themselves at that stage of the debate on the substantive issues of the Bill. Senator SIDDONS(Victoria)(9.19) —On behalf of the Australian Democrats I indicate that we will be opposing the Opposition's stand on this clause. Senator VIGOR(South Australia)(10.20) —I will not be following my Party colleagues in this matter. I do not believe that there is such a thing as a free lunch. I believe that the so-called entertainment tax is a tax which falls disproportionately on small business. It is a tax on the hospitality industry; it is a tax which falls, to a larger extent, on the ethnic community, the restaurateurs, the taxi drivers and the small traders of this country. It is a tax which falls more heavily on these who are prepared to `give it a go,' to work irregular hours, to split shifts, to work on weekends and still be happy to work hard to make other people happy. In other words, it is a bad tax. I will support the Opposition's stand on in-house dinners. I wish to stop the rorts which are currently going on in these areas but still allow proper deductions for expenses incurred when they are necessary to earning an income. In 1983-84 the hospitality industry represented 4 per cent of gross domestic product and 7 per cent of total employment. The end result of the entertainment tax may be that many of the most successful, best value restaurants will be forced out of business, causing considerable personal pressure on restaurant owners and an overall decline in Australia's hospitality industry. A progressive phasing-in of the tax, which we suggested to the Government, would have gone a long way to allowing business to adjust to the effects of this tax and would have avoided the drastic effects which are now being felt in the restaurant, hotel and catering industry generally. We tried to negotiate this. The Government has pressed its argument that a public subsidy through the tax system for the hospitality industry is contrary to the notions of equity in the tax system and that the entertainment allowance is a benefit enjoyed by a small number of privileged people. However, those abusing the system are not the only people who will be affected by this change. The effects of the tax will spread much more widely and in my belief these effects have not been properly taken into account by the Government. The tax will impact on the tourist industry, which in the year to June 1985 earned $1.5 billion in foreign exchange. It will flow on to all the other small businesses which support the hospitality industry. For example, the wine industry, already weakened by the tax on wines and wine stocks depends mainly on the restaurants for sale of its high quality, specialty wines. This will have a particular bad effect in my State. This industry has already experienced a 35 per cent fall in bottled wine sales since September. The laundry industry, which is another small, family-based industry, will also be badly affected. The taxi industry-as the cost of taxi travel to and from restaurants is no longer deductible-will also be affected. We could go on and on. The anticipated decline in business resulting from the entertainment tax since September 1985 is as follows: In the seafood industry there is an 11 per cent decrease; the meat and poultry industry, 6 per cent; vegetables, 6 per cent; dairy produce, 3 per cent; laundry, 16 per cent; advertising, 17 per cent; wine, 9 per cent; and beer, 8 per cent. It will decrease employment overall within the community. The effects are already being felt, although Christmas is delaying the real impact. American Express reports a 30.6 per cent decline in card member revenue for October in the restaurant trade, and it has 6,500 members. The hospitality industry represents 7 per cent of total employment according to the 1983-84 Australian Bureau of Statistics' figures. The hospitality industry is one of the leading groups in the creation of new jobs. Last month 4,000 new jobs were created, which explains Senator Bolkus's problem with the CES figures. The opening of both the Intercontinental Hotel and the Jupiter Casino helped this job creation. I believe that we will hit the real problems after Christmas. The hospitality industry receives no subsidy from the taxpayer, although it is the backbone of our tourist industry which is a $1.5 billion export industry. One of our major earners of foreign exchange is the tourist industry. We must contrast this with the motor trade which is subsidised by taxpayers to the tune of nearly $15,000 per employee, yet it exports very little. I believe that the Government should be looking at where its money is spent. From the Government's point of view, the cost of collecting this tax is likely to be more than it has estimated, and the returns much less. One estimate is given in the executive summary of the BIS-Shrapnel Pty Ltd report. I seek leave to incorporate that executive summary in Hansard. Leave granted. The document read as follows- THE ECONOMIC IMPACT OF DISALLOWING BUSINESS ENTERTAINMENT EXPENSES AS TAX DEDUCTIONS Executive Summary BIS-Shrapnel Pty Ltd were commissioned by the Australian Tourism Industry Association to undertake a study to identify the likely economic costs of the Government's decision to disallow all `business entertainment' expenses as tax deductions. Using the Impact Project Input-Output model of the Australian economy it was estimated that the effects of the measure would be to: Reduce GDP by $434 million Reduce employment in the economy by 18,600 persons Reduce employment in the hospitality industry by 11,100 persons. Further, the net gain to Government revenue would be only $79 million and not $310 million as estimated by the Government. Business entertainment has long been widely recognised as a legitimate business expense. It has been seen as being a very effective marketing tool. In the past, business entertainment has played a vital role in the sale of goods and services, the gathering and dissemination of information, and the development and maintenance of business and professional relationships. Both the magnitude and distributional impact of the economic costs of disallowing business entertainment expenses as tax deductions will be partly determined by the legitimacy and importance of business entertainment in conducting business transactions. If the Treasurer has under-estimated the legitimacy and importance of business entertainment, it would seem reasonable to conclude that he has also under-estimated the full costs of disallowing business enertainment expenses as tax deductions. The non-quantifiable costs of the Government's measure include an adverse impact on economic efficiency. The sectors of the economy to be most severely affected by the Government's action include the hospitality industry and `supplier industries' to the hospitality industry.* Additionally, the disallowance of business entertainment expenses as tax deductions will particularly disadvantage those firms which rely extensively on this form of marketing. This would include many small businesses and firms competing in export industries. Total disallowance of business entertainment expenses as tax deductions on the grounds of `excessive' administrative costs must be evaluated on the basis of whether the costs imposed on society by this measure are less than the costs of administering an alternate sysem which could distinguish between legitimate expenses and abuses. The substantial magnitude of the probable economic costs to total disallowance of business entertainment expenses identified by BIS-Shrapnel in this study, would strongly suggest that a re-consideration by the Government of alternate systems would be appropriate. * The `Hospitality Industry' refers to Restaurants, Hotels and Clubs Senator VIGOR —The Government has stated that no employer will be exempt from this tax except churches. Yet the Federal and State public services are not now assessable by the Australian Taxation Office, nor are many other exempt employers such as schools and charitable bodies. These people will need to put in taxation forms and this will cause an enormous extra load on the Taxation Office. The concept of collecting taxes from such bodies and paying them back out of the taxpayers' purse to cover the cost is, I believe, laughable. It cannot be justified. It is an administrative nightmare. There is a lack of precise detail in the legislation. I take just one example-entertainment is not defined. There is no rationale for having a commencement date of 20 September 1985. It is not an issue like everybody rushing to buy liquor or something else that will be taxed at a later date, as with sales tax laws. The Taxation Board of Review has already a substantial backlog and these clauses will add to it. I believe that this tax is much more of a problem than it is worth in revenue. Thus the tax can be considered only to be a tax on business-on small business at that. The tax will bite hard long before there is any tax relief, as the Government claims. The flow-on of extra money into the economy will happen only a long time after the restaurants have been hit and possibly gone bankrupt. It is meaningless to consider that future tax relief will alleviate in any way the effects of this tax. The Taxation Office already has the right to collect tax from employees on benefits that they derive from their employers. The Taxation Office is not doing that. The reason is that the cost of collecting such taxes is much more than can be returned. I believe that this tax is all wrong. This situation will not be changed by moving the burden onto the employers, where already multitudinous schemes are arranged for disguising entertainment under other categories of allowable deductions. This, indeed, will be a very costly tax to administer. Already most large companies provide subsidised canteen facilities for their employees. They will be able to entertain as before, without any accounting entry distinguishing entertainment from normal running expenses. There is absolutely no way that the terms of this clause can be policed. We have no answers from the Government, and we have asked the Government for answers. It is the small businesses which depend on the restaurants to provide entertainment facilties which they cannot justify supporting permanently within their organisations that will be hit. It is actually a cost-effective method of doing business-to use restaurants as catering facilities. In this area the provisions of the next clause will bite. Thus small businesses will find it much more difficult to compete with large corporations in the marketing of their goods and services. Such small businesses are, in fact, the major employer group in Australia. Debate interrupted. The TEMPORARY CHAIRMAN —Order! It being 10.30 p.m., pursuant to sessional order I put the question: That the Temporary Chairman do leave the chair and report to the Senate. Question resolved in the affirmative. The Temporary Chairman having reported accordingly- The DEPUTY PRESIDENT —I propose the question: That the Senate do now adjourn. Senator WATSON(Tasmania)(10.30) —I wish to use the opportunity afforded by this adjournment debate to comment further on the text of a statement by the Minister for Foreign Affairs (Mr Hayden) which was made in the House of Representatives on 28 November 1985 and which concerned Australia's overseas aid program. Debates in this chamber on foreign aid issues are relatively infrequent because of their largely bipartisan nature. In fact the Public Accounts Committee report No. 201 on an efficiency audit of the administration of bilateral overseas aid recommended that the Minister for Foreign Affairs make a policy statement to the Parliament on overseas aid annually. I know that the statement was a response to a report of the Joint Committee on Foreign Affairs and Defence and to the report of the Jackson Committee to Review Australia's Overseas Aid Program. It is pleasing to have this document before the Senate. Australia's aid program is really a very complex network of elements which are designed to bring assistance to the Third World and to bring international credit to Australia. I think the statement recognises that Australia is a developed country in a region which is notable for high levels of poverty and related problems where many economies have been inhibited by inadequate standards of infrastructure and a shortage of administrative skills. Unfortunately aid alone will not answer all the problems, but at least it can point the way by feeding the hungry, by treating the sick, by improving administrative skills or even by just enabling fruit and vegetable produce to reach particular markets. The world's resources are distributed inequitably both internationally and within nations and societies, but social and political factors also exacerbate the problems which increase the gulfs between plenty and poverty. But assistance must be of such a nature that it will not perpetuate the present problems of gross inequity. In the relief of poverty, programs with the best of motives quite often exacerbate existing inequities and injustices rather than always alleviate them. Some programs in the past have often tended to serve a number of different and often incompatible purposes-for example, as diplomatic instruments for maintaining friendly relations, for countering influences from competing powers, and because of their usefulness to particular businesses-as well as responding to the needs of the poor and underprivileged. Rich nations have an obligation to assist poor nations. Australia's aid program is very worthwhile, and the assistance generally has been of a very high standard. Despite Australia's own economic problems, I believe there is a great reservoir of support for the provision of aid and the principles of its distribution as laid down by successive Australian governments. Australians by nature are a generous people giving freely in specific appeals to alleviate suffering. Our region, the Pacific Basin, particularly the small island states of the Pacific, receives the most aid per capita in the world, although compared with other areas the need is often marginal. However, their small size and the fragile nature of the island economies of the South Pacific and the Indian Ocean render such aid as is given very necessary. The largest recipient of our aid is, of course, Papua New Guinea, and that will remain so in the foreseeable future. Also the Indian Ocean states are of strategic importance to Australia given the continuing dependence on Gulf oil and the sea lanes of communication with Western Europe. Unfortunately the Jackson report on Australia's overseas aid did not adequately address the problems of confusion concerning the objectives of the current aid program. At times food aid can be a disincentive to local food production. An example of this is wheat aid to Egypt. Other African countries often have a greater need yet their allocations have been cut on a global basis. A controversial and perhaps discredited view on education assistance is based on the trickle down theory that assistance should be given to those near the top of the educational pyramid. Unfortunately, while this theory might be right, the practicalities of human nature provide too many examples where unfortunately the reverse has been true. The aid distribution must avoid an inbuilt tendency for the benefits of aid to flow to the more powerful and more affluent in our community. Mr Hayden says that there is no reason why industry should not take part in our aid program so long as equity and effectiveness remain primary considerations and so long as this guiding principle is strictly observed. In conclusion, I think it is pleasing that the Australian Development Assistance Bureau is being restructured to allow the delivery of aid to be carried out in a professional manner. Senator KILGARIFF(Northern Territory)(10.37) —As usual in the last week of the Budget sittings of the Senate-or we hope it is-we have a rush of reports coming in for consideration of the Senate and time does not permit us to give them scrutiny. One report that is before the Senate is the annual report of the Australian National Railways Commission. A motion was moved that the Senate take note of the paper which means that it cannot be discussed now but will be brought on for debate some time in the future. The only remark I make about it is that it is very pleasing to see that Australian National Railways, which in the previous financial year made a loss of some $9m, this year shows a surplus on operation profit of $10m. That is a tremendous turnaround and the report warrants closer attention. Looking at that report today reminded me that, as someone who to a degree represents the people of the outback, I should make some brief mention of Mr Des Smith. Mr Des Smith is an engineer with the Australian National Railways who, my notes tell me, has a reputation second to none within Australia and who is recognised overseas for his competence in planning, design and construction of new railways. Now that the standard gauge line from Tarcoola in South Australia to Alice Springs is completed-as I understand it, it is running economically-Des Smith has retired. The people of the outback, and indeed the people of Australia, certainly owe much to Des Smith because he has done much not only to develop the outback but also to bring railways into a more efficient operation than has been the case in the past. Des Smith has worked in Australia on the Marree line in northern South Australian, the Port Augusta to Whyalla line, the Tarcoola to Alice Springs line and the proposed Alice Springs to Darwin line. He has also established himself as a recognised authority on the maintenance of railways in a desert environment. His services to the railway industry have been recognised by the Australian Government through an Imperial Service Order and an Australian award. He has also been honoured by an Aboriginal council with an award relating to the protection of sacred sites. This indicates the type of man that he is and that he has been able to get on with all people in the construction of these lines. Des Smith joined the Commonwealth Railways on 3 October 1955 at Telford. He worked on construction of the standard gauge line to Marree. He became construction engineer in 1957 and completed construction of the track into Marree. In 1962 he was appointed maintenance engineer. This position covered the central Australian railway and the trans-Australian railway, some 3,100 kilometres of track. In the 1960s he was responsible for a 10-year rehabilitation program of the trans-Australian railway which involved the virtual rebuilding of 1,800 kilometres of track. In the early 1970s he planned and designed the Port Augusta to Tarcoola railway and the Tarcoola to Alice Springs railway. He was also responsible for the construction of the Tarcoola-Alice Springs track. He completed that project on time and within budget. After its completion he became civil engineer for the northern region and in November 1979 he became chief engineer in Adelaide for the Australian National Railways Commission. He was then placed on special duties to undertake the planning and design of the proposed Alice Springs-Darwin railway. This work was substantially completed in June 1984 when construction was deferred and funding withheld. I make this commendation on behalf of the people of the north and the outback. They would wholeheartedly support the comments I have made and would thank Des Smith for the work he has done. Des Smith is a most unusual character. He is a real bushman. He built the enormous line from Tarcoola to Alice Springs. I understand that it is one of the longest railways that has been built for many decades. The railway is a most efficient link and standard gauge line. Many of us hope to see the continuation of Des Smith's work with the construction of the line from Alice Springs to Darwin. I guess that he has walked over every kilometre of the line from Tarcoola to Alice Springs. It is my guess that he has almost done so between Alice Springs and Darwin on the line that he has surveyed, graded and marked for future construction. As I have indicated, it is quite a considerable achievement that Des has been able to work in conjunction with all the people of the outback. Station hands, railway gangers, pastoralists, Aborigines-all people-look upon Des Smith as their personal friend. He has that quality. Des has now retired from the construction of railways in Australia. It was he who designed the method of constructing modern railways in an efficient, mechanical operation which kept manual labour to a minimum. He was able to lay sections of line in this way, perhaps some 300 to 400 metres long. He was able to lay the concrete sleepers in Port Augusta mechanically. He was quite an incredible man. Senator Jessop and I have travelled with him on many occasions along the track through the bush. I hope that Australia will recognise the feat of this most remarkable man. We wish him all the best in his retirement. I do not wish to hold the Senate long, but I feel that I must comment tonight on a matter that arose during Question Time. It related to the education of Aboriginal children in the outback, particularly the Northern Territory. It is not my wish to dwell on the remarks that were made today. I believe that they are too controversial. Frankly, it is time that controversy was taken out of Aboriginal affairs, particularly Aboriginal education. Aboriginal education in the outback is going ahead apace and it is tremendous to see young Aboriginal people in the various areas of education, whether it be in a primary school, a high school or in the teacher training college in Batchelor in the northern part of the Northern Territory. They are coming on well. There is a tremendous future for them in education. I believe it is a matter that we must take much more seriously. We must take the controversy, the political point scoring or whatever, away from Aboriginal education for I believe it does not do the Aboriginal children any justice; nor does it give them encouragement. I was interested to see the other two Federal representatives of the Northern Territory, Senator Robertson and Paul Everingham, who is the member for the Northern Territory, both reported in the Press in the last two days indicating that while it is the nature of the beast that there be controversy between the Federal Government and State and Territory governments, there should be an endeavour to cut down on that controversy and not have it just for the sake of it for there is much to be done. I note there is to be an endeavour to bring about more liaison in carrying out these various developments quickly. I think it is necessary to assure people that Aboriginal education is going ahead. It certainly has difficulties, but they are not being ignored. We must look to these young Aboriginal people who are being educated now because many of them are going to be in the forefront of Aboriginal affairs in the future, and they are to be encouraged. The total number of Aboriginal schools in the Northern Territory is now 82. This represents 52.6 per cent of the total number of schools in the Northern Territory. Aboriginal schools are defined as those with more than 50 per cent of the students being Aboriginal students. Of the 82 Aboriginal schools, 75 are government schools and seven are non-government schools, I think the liaison between the Federal Government and the Northern Territory Government is working well in the Aboriginal schools. Of course there are differences of opinion at times but by and large there is this liaison which is bringing about this result. Twenty schools at outstations are planned for construction in 1985-86. The Commonwealth Government will provide most of the funding for these. Four post-primary facilities are planned for 1985-86. However, negotiations are still being held with the Federal Government as that Government has said it will not provide funds for housing. This is a difficult point. If further negotiations do not resolve this, the Northern Territory Government will have to provide the necessary funding and the planned facilities may not all go ahead at the one time. Two further post-primary facilities are planned for 1986-87. In the last couple of years two Aboriginal schools have been upgraded. Five of the 82 schools were constructed during the last few years. I have seen the senior Minister in the Senate tonight, the Minister for Community Services (Senator Grimes), regarding having two letters incorporated. One is a memorandum from the honourable member for the Northern Territory, Paul Everingham, regarding the attacks by the Minister for Aboriginal Affairs (Mr Holding) on Aboriginal education in the Northern Territory. This memorandum in effect gives information on that. The other is a letter addressed to Mr C. A. Blanchard, MP, Chairman of the Select Committee on Aboriginal Education, Parliament House. This letter was written by the Chief Minister of the Northern Territory, indicating his pleasure at having the opportunity of bringing before the Select Committee on Aboriginal Education matters relating to the Aboriginal people. I do not think it is necessary at this late hour to comment on those two letters because they are self-explanatory. I seek leave to have those two documents incorporated in Hansard. Leave granted. The documents read as follows- 27 November 1985 MEMORANDUM To: All Senators and Members. MINISTER FOR ABORIGINAL AFFAIRS ATTACKS ABORIGINAL EDUCATION IN THE NORTHERN TERRITORY In the current financial year, the Northern Territory has sustained funding cutbacks of $60 million at the hands of the Federal Government. Nevertheless, education in the Northern Territory gets 25% of the recurrent budget. As an economy measure this financial year, staffing of the Department of Education head office was cut back by 10%, and school staffing formulas are being enforced. Even so, 163 new positions were created to cater for expanded demand in urban and rural centres, and 43 new positions were specifically allocated for Aboriginal people. In the Northern Territory the staffing formula is applied across the board on a basis of average attendance +15%. The Schools Commission found, two years ago, that the numbers of teaching and staffing positions in schools in Aboriginal communities in the Territory, is three times the national average. Staffing of urban Territory schools is as good as any in Australia, and schools in Aboriginal communities are much better staffed than urban schools. Public service staff includes teaching assistants and other people involved in the bilingual program. Let me give some examples: Shepherdson College, Galiwinku (Aboriginal Community)-Enrolment 235; Average Attendance 157; Teaching Service staff 17 (1:9.2); Public Service staff 13 (1:12). Tennant Creek Primary School (Urban)-Enrolment 205; Average Attendance 174; Teaching Service staff 9 (1:19); Public Service staff 3 (1:58). Sanderson Primary School (Urban)-Enrolment 280; Average Attendance 250; Teaching Service staff 14 (1:17); Public Service staff 3 (1:83). Lajamanu (Aboriginal Community)-Enrolment 197; Average Attendance 140; Teaching Service staff 12 (1:12); Public Service staff 9 (1:15). I attach a copy of a letter from Chief Minister Ian Tuxworth, to the Chairman of the Aboriginal Education Committee, which I think gives some background to the matter. PAUL EVERINGHAM, M.P. Member for the Northern Territory 13 September 1985 The Hon. C. A. Blanchard, M.P. Chairman Select Committee on Aboriginal Education Parliament House Canberra, A.C.T. 2600 Dear Mr Blanchard I refer to your letter of 23 August 1985 seeking clarification of a number of issues relating to Aboriginal Education in the Northern Territory. While I appreciate that you have been contacted by a number of sources, I am pleased that you have raised the matter with me so that I may take the opportunity to put the record straight and to ensure that you receive accurate information, and not that based on self interest and misunderstanding. There has not been a review of the staffing formula in Aboriginal schools in the Northern Territory. Rather, in line with all Government Departments and as a result of the reductions in funding provided by the Commonwealth, the Education Department has found it necessary to review its overall expenditure and to ensure that schools are staffed strictly according to formula. Staffing entitlements are determined by a generous formula and the staffing formula for Aboriginal schools in the Northern Territory is the best in Australia. The position of Principal at Lajamanu has been reclassified according to the level to which the school is entitled. This is determined by the operation of a formula which has been in use for a number of years. As a result in 1986 the school will be classified at the Band III level. According to the formula Lajamanu is in fact extremely close to becoming a Band II school. Lajamanu school is currently staffed by one Band IV principal, one Band III assistant principal, two Band II senior teachers and four Band I teachers. Additional staff include a teacher held against a teacher librarians' position, a teacher linguist, six full time teacher assistants, four part time teacher assistants and three full time and two part time ancillary staff. The home liaison officer recently resigned. Overall the school has twice the number of staff which an urban school of similar attendance would have. You must agree that for a school with an enrolment of 171 students but an attendance average of only 124 students that the staffing allocation for 1985 is very generous. You should also be aware that for a school to be entitled to a Band IV Principal an average attendance by at least 255 students is usually required. You should also be aware that the changes mooted will not take effect until 1986. If the attendance rate improves then staff entitlement will be reassessed. In retaining the staff at the level accepted for a Band III school in 1986, the Northern Territory Government is more than adequately demonstrating its commitment to Aboriginal education. With respect to Aboriginal assistant teachers, adjustments are being made because of enrolment fluctuations. Some schools with falling enrolments are losing staff while others will be gaining staff. There is no attempt being made to reduce the overall number of assistant teachers. Indeed, this is likely to increase as attendance rates improve. I do not agree with your assertion that the RATE program will suffer. This program is currently conducted principally through the auspices of a lecturer who travels to the community from Batchelor College. This will continue. The same situation applies to the Bilingual program. It is true that the number of linguists has been reduced by two-one of these positions having been vacant for some time. This means that new work may have to be staged but existing programs will not be prejudiced. The Bilingual Unit within the Department of Education has not been disbanded. The Bilingual program has been operating for several years and has been an outstanding success as was stated to you during your time in the Northern Territory. It is continuing to operate. Overall, the Northern Territory Budget provides several major developments in Aboriginal education including provision for establishment grants for 43 Homeland Centres and the employment of the additional 43 assistant teachers. This is despite having had to absorb substantial reductions in Commonwealth funding. I feel sure you will agree that this information clarifies the issues to which you have drawn my attention, and confirms previous policies as stated to your committee by the Northern Territory Department of Education. Finally, I note with great disappointment that your government has again made only a token attempt to implement the recommendations of the CSC/NAEC report, `Funding Priorities in Aboriginal and Torres Strait Islander Education.' Officers in the Northern Territory spent a great deal of time and effort working with the Commonwealth on this report and once again the hopes of schools have not been realised. I trust your Committee will actively support the CSC/NAEC recommendations as they greatly benefit Northern Territory school children. Yours sincerely, I. TUXWORTH Senator KILGARIFF —I thank the Senate. Finally, as a further indication of what is happening and how encouragement can be given by people of all walks of life-people in industry and what have you-I refer to a report in the Northern Territory News of 30 November 1985 entitled `Executive plan to help Aborigines'. It is about a plan for an executive training course designed exclusively for Aborigines. The scheme will take young Aboriginal people from all walks of life and train them to a level which it is hoped will make them acceptable as executives to government, private enterprise and Aboriginal organisations. That is an indication of the steps being taken now. It is another step forward. As I said once before, if we could only take the controversy out of Aboriginal affairs and Aboriginal education I believe the problems which exist in this area could be put aside, perhaps more readily than they can now, more readily than if we continue to deal in confrontation. I seek leave of the House to incorporate in Hansard the news item I referred to. Leave granted. The article read as follows- Plans for an executive training course designed exclusively for Aborigines was revealed by the Chief Minister, Mr Ian Tuxworth yesterday. The radical scheme will take people from all walks of life and train them to a level which it is hoped will make them acceptable as executives to government, private enterprise and Aboriginal organisations. Mr Tuxworth sees the development of executive talent as an important step towards ending Aboriginal reliance on so-called white advisers. ``It's time to focus on developing Aboriginal executives,'' he said. Plans are far from finalised, but Mr Tuxworth hopes to implement the scheme early next year. Career path guidelines will be laid down by an Aboriginal working party. The working party met Mr Tuxworth and Public Service Commissioner, Dr Keith Fleming, this week. Individual Mr Tuxworth forsees an initial intake of about 25 trainees. Training will take from 18 months to four years depending on the individual. It is anticipated successful applicants will enter the training scheme on a contract basis. Educational qualifications will be no bar for acceptance to the scheme. ``They could be nursing sisters or truck drivers,'' Mr Tuxworth said. ``The sort of people we're looking for must have a desire to succeed, a will to win and the ability to do things most executives can do.'' Leadership qualities will be another sought after attribute. Mr Tuxworth said once they gained full-time employment the executives would provide important role models for other Aborigines. How candidates for the scheme will be selected is one of the matters still under consideration. ``We're happy to be guided by the working party on that,'' Mr Tuxworth said. Mr Tuxworth is confident those who complete the course will find employment. ``There is a demand in the private sector for Aboriginal executives,'' he said. Despite this, Mr Tuxworth acknowledges the Public Service will be the major employer. Senator SHORT(Victoria)(10.52) —I will be brief tonight. I want to raise the subject of a centre for the intellectually disabled in the city of Geelong in my State of Victoria which is made up of a training centre and various residential units. I have raised the matter with the Minister for Community Services, Senator Grimes, who I am pleased to see is in the chamber as he is the responsible Minister. The point I raise relates to the financial difficulties that Karingal finds itself in. Of course, being the type of centre it is its residential component is financed 50 per cent by the Federal Government and the remaining 50 per cent by residential fees, fund raising activities conducted by the centre itself and so on. At the moment Karingal has a significant current deficit. This financial year it is expected that the deficit will blow out further. The Karingal committee has, I am advised, been pursuing that matter with both the Federal and State governments. The Victorian Government, which under existing arrangements does not contribute to such centres, has said that it is not a matter for it. I understand that about a month ago the Karingal committee decided that it would have to reduce its residential accommodation drastically at the end of February 1986 unless it could obtain some additional funding. If it is unable to do so, of course some of the residents will face the problem of not being able to remain at the centre. In the Victorian Legislative Council on 26 November last week in reply to an adjournment speech by the Victorian shadow Minister for Community Services, the Minister for Community Services, Mrs Caroline Hogg, reported that she had met with Senator Grimes last week. She reported in the adjournment debate that Senator Grimes had given an assurance that he would send an officer of his Department to Geelong to look at the matter, as well as giving this undertaking: . . . resources would be found to alleviate the plight of Karingal and that interim provisions would be made until the proposed Commonwealth legislation is enacted next year that will take care of these situations of residence for intellectually disabled and the physically disabled residents. That statement has been taken very seriously in Victoria, given the significant problems facing Karingal. On behalf of the residents of Karingal and the committee I would welcome a public assurance from Senator Grimes that Mrs Hogg's report in the Legislative Council is a report with which the Minister agrees in terms of its content, and that the Federal Government will be providing additional resources this financial year to meet the problems facing Karingal as promised in the discussion as reported by Mrs Hogg. Obviously it is an important and vital matter for the residents and the committee of Karingal and a very important issue for the city of Geelong and for the whole area of the intellectually disabled in Victoria. I would welcome any assurances the Minister can give. Senator GRIMES(Tasmania-Minister for Community Services)(10.56) —I will refer the matters raised by Senator Watson to Mr Hayden, the Minister for Foreign Affairs, and those raised by Senator Kilgariff to my colleague Senator Ryan, the Minister for Education. I have no particular expertise in those areas and there is no point in indulging in polemics at this time of night. Senator Short raised a matter which he kindly mentioned to me earlier this evening, the matter of Karingal in Geelong, which is one of the residences for the intellectually handicapped which my Department assists in funding in Victoria. In fact, as Senator Short probably knows, there are, from memory, 50 such residences. None is finding life easy at the moment, because of economic difficulties in the past and the difficulties involved in organisations raising funds for this sort of project. It entered into a contract with the Federal Government that it would be funded 50 per cent by the Federal Government, and it now has, as Senator Short indicated, a significant deficit for two reasons-increasing costs and the difficulty of raising that 50 per cent which they need to contribute. I say to Senator Short-this is something he will remember from his days in the Treasury-that another problem in Victoria is that there is a separate parallel program run by the Victorian Government in which it funds 100 per cent of salaried staff, which makes life difficult for the Federal Government. As Senator Short said, Caroline Hogg, the Minister for Community Services in Victoria, came to see me about the specific problem of Karingal, though I must say that I think it will be a problem for other such residences. I told her, as was reported tonight, that I would send a senior officer to Karingal to see what assistance we can provide. It is my understanding that that senior officer has been down there this week, but I was not able to check up on that tonight. If he or she has not, then we will find out why there has been a delay, but I understand that the intent was that a senior officer would go to Karingal this week to see what sort of assistance we can give. I have every intention within my capacity as a Minister and within the capacities of my Department to assist Karingal or any other organisation that is in difficulties, but as Senator Short will also know, as an ex-Treasury official, my capacity is sometimes limited in this area. We have not the flexibility particularly at Federal level which sometimes the State governments have, but I feel sure that we will be able to provide assistance to Karingal-both in cash, I hope, as well as in kind in the form of advice and assistance on how that residence can be run within the budget with which it has been provided. We are faced with the difficulty that all Ministers for social security and community services are faced with at Federal or State level-namely that organisations which are providing good service and which receive assistance sometimes run into difficulties. Those organisations hope that they can get out of difficulties by appealing to the government that is assisting them to provide even more assistance. They are always assisted, as Karingal is being assisted in this case, by the local Press and by State and Federal members of parliament. That is the sort of pressure that we expect to get. I have taken note of that pressure, I have had consultations with Caroline Hogg and, as I have said, a senior official of my Department has been there and as soon as I get a report we will see how best we can assist Karingal and how best we can assist some other organisations in this situation. All I say is that this does not mean that every organisation funded by my Department that gets into difficulty will necessarily get assistance if it can raise sufficient noise and sufficient support from local Press and members of parliament. But I think that in the case of Karingal, which to my knowledge and to the knowledge of my Department is a very worthwhile organisation and a very worthwhile community facility, it is important that we do not see that facility get into too much difficulty, whatever the cause. For that reason we are taking the matter very seriously, and for that reason I hope to be able to report to the Senate, or if the Senate is not sitting at least to the local people in Geelong, on the action we will take to make sure we can assist Karingal on a pro tem basis before any improved disability legislation comes through next year. Question resolved in the affirmative. Senate adjourned at 11.02 p.m. The following paper was tabled: Defence Act-Determination 1985- No. 72-Insurance on Removal Overseas.