Thursday, 29 May 1986 The PRESIDENT (Senator the Hon. Douglas McClelland) took the chair at 10 a.m., and read prayers. The Clerk —Petitions have been lodged for presentation as follows: To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned shows: Graduated family allowances are of important assistance to families with more than one child. All family allowances, whether for one, two, three, or more children, have not kept pace with inflation. There are suggestions that all family allowances should be paid at the one flat rate. This would severely disadvantage families with more than one child. Your petitioners therefore pray that the Senate, in Parliament assembled, should reject any suggestion that family allowances be paid at a flat rate and instead should ask the Federal Government to increase the value of existing payments. And your petitioners as in duty bound will ever pray. by Senator Durack (from 104 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The petition of the undersigned citizens of Australia shows that: We are opposed to the Parliament imposing a Bill of Rights on the people of Australia and we ask that the Senate reject the Bill entirely. Your petitioners humbly pray: That should the Honourable House decide to pass the Bill in amended form it will retain the amendment applying the legislation to trade unions. And your petitioners as in duty bound will ever pray. by Senator Peter Baume (from 11 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That we the undersigned, having great concern because of the spread of moral pollution in our nation call upon the Government to introduce immediate legislation: 1. To provide strict controls over importation, production, sale, hire or mailing of video-cassettes with the open sale of only G, PG, and M rated video-cassettes; and the total prohibition of the sale of R rated video-cassettes so that R rated films can only be viewed in an adult theatre by persons over 18 years. We totally reject the concept of ``X'' rated video-cassettes which would allow the legal sale of hard-core pornographic films for screening in the homes of our nation, which endanger our children. 2. To dramatically improve the Federal Attorney-General's Guidelines for Classification of Video tapes/discs which restrict the importation, production, sale or hire, screening in private homes and mailing by Australia Post so as to include the total prohibition of any pornographic, obscene or blasphemous video cassette, or film containing child pornography, bestiality, sodomy, group sex, violent sex acts with women, such as rape and pack rape, sadism and torture, etc. Your petitioners therefore humbly pray that your Honourable House will protect our society, especially women and children from moral pollution and its harmful effects. And your petitioners as in duty bound will ever pray. by Senator Peter Baume (from 127 citizens). To the Honourable the President and members of the Senate in Parliament assembled. The humble petition of the undersigned citizens of Australia respectfully showeth: That numerous provisions exist in industrial legislation and awards which purport to provide special protection to women workers but which have been shown to be detrimental to their achievement of equality in employment. Noting the relevant provision in Article 11 of the United Nations Convention on the Elimination of All Forms of Discrimination against Women to which Australia is a party your petitioners request that urgent action be taken to ensure that these legal barriers to equality be removed. And your petitioners as in duty bound will ever pray. by Senator Giles (from 13 citizens). To the Honourable the President and the members of the Senate assembled. The humble petition of the undersigned citizens of Australia showeth that whereas: 1. The present Australian national flag is not distinctively and uniquely Australian and is confused with other national flags. 2. The people of Australia have never had an opportunity to express their views on an appropriate Australian national flag in a referendum. 3. The present Australian national flag does not properly represent Australia as a sovereign, independent nation. 4. The present Australian national flag falsely proclaims Australia as a colony, homeland, protectorate, dominion or government department of Great Britain. 5. The first condition in the flag competition of 1901 required that the design should show Australia's loyalty to the British Empire. The British Empire no longer exists. 6. A public opinion poll held in 1984 using the Gallup Method revealed that 52% of Australians surveyed wanted a competition for a new design for the Australian flag. 7. There is no inherent link between Australia proclaiming a unique and distinctive flag and the political issue of Australia moving to a republican form of government. 8. The adoption of a truly Australian national flag would serve as a focal point for Australia's bicentennial celebrations in 1988. Your petitioners therefore pray that your honourable house will: (a) Appoint a Committee of the Parliament with representatives from both Houses and all parties to invite and consider proposals for the design of a new Australian national flag, and (b) Require that Committee to make recommendations on the form of a minimum cost referendum at the time of the next general elections, in which the electors will be given the opportunity to vote for a flag from a selection of at least three designs which will include the present Australian national flag and the winner of the Ausflag-Bulletin-2MMM.FM competition of March 1985. And your petitioners as in duty bound will ever pray. by Senator Peter Baume (from nine citizens). Senator ROBERTSON(Northern Territory) —by leave-I present the following petition from 317 citizens of Christmas Island which is not in conformity with the Standing Orders as it is not in the correct form: We the undersigned, being residents of Christmas Island, hereby request the Christmas Island Assembly to convey to the Parliament (Government) of Australia our deep concern at: 1. the mounting threats to the viability of our community through delays in development of new industries in association with continuing reduction in phosphate mining 2. the denial of a democratic voice in matters of vital concern to our community. We appeal for greater participation in matters affecting Christmas Island. SURAT RAYUAN MENGENAI MASA DEPAN MASYARAKAT PULAU KRISMES Kita, yang menandatangani di bawah ini, adalah penduduk-penduduk Pulau Krismes, dengan ini meminta Majlis Pulau Krismes menyampaikan hal-hal yang sangat dipentingkan oleh kita ini kepada Parlimen (Kerajaan) Australia. 1. ancaman yang kian meningkat terhadap kehidupan masyarakat kita dengan menanggohkan perkembangan industri-industri baru, yang berkaitan dengan pengurangan terus-menerus dalam perlombongan fosfet. 2. permungkiran hak demokratik dalam perkara-perkara yang bersangkat-paut dengan masyarakat kita. Kita merayu supaya diberi lebih banyak hak dalam menimbang perkara-perkara yang verkaitan dangan Pulau Krismes. Senator NEWMAN(Tasmania) —by leave-I present the following petition from 24 citizens which is not in conformity with the Standing Orders as it is not in the correct form and does not contain a prayer at the end thereof: I want to urge you to oppose the legislation of the proposed ``Bill of Rights'', until it has been aired for public debate, on the grounds that the proposed Bill:- 1. Abrogates the rights of people as defined in the constitution. 2. Transfers interpretation of Legislative power from Parliament to the Courts (We do not elect the courts-we elect the Government). 3. Removes important existing police powers to the benefit of the offenders. 4. Gives no right to own private property. (This is a basic traditional right). 5. Will be administered by the Human Rights Commission with powers outside processes of law, closed hearings, no legal representation and no appeal, and no right to remain silent. 6. Threatens traditional family relationships. Does not give parents the right to object to the indoctrinating of their children which may undermine the religious and moral standards of the traditional family. 7. It is based upon a United Nations Covenant which has been rejected by the United States of America and Great Britain, but accepted by Warsaw pact nations. (This is the Eastern Bloc). I therefore ask you for your support by adding your signature to this petition. Petitions received. Senator GRIMES(Tasmania-Manager of Government Business) —I give notice that, on the next day of sitting, I shall move: (1) That, unless otherwise ordered, after 3 June 1986 the days and times of meeting of the Senate for the remainder of the Autumn sittings be as follows- (a) Wednesday, 4 June 1986- 10 a.m.-12.45 p.m. 2 p.m.- 6.30 p.m. 8 p.m.-10.30 p.m.; (b) Thursday, 5 June 1986- 10 a.m.- 6.30 p.m. 8 p.m.-10.30 p.m. (c) Friday, 6 June 1986- 9 a.m.-12.45 p.m. 2 p.m.- 4.15 p.m.; (d) Tuesday, 10 June 1986 and Wednesday, 11 June 1986- 10 a.m.-12.45 p.m. 2 p.m.- 6.30 p.m. 8 p.m.-10.30 p.m.; (e) Thursday, 12 June 1986- 10 a.m.- 6.30 p.m. 8 p.m.-10.30 p.m.; and (f) Friday, 13 June 1986- 9 a.m.-12.45 p.m. 2 p.m.- 4.15 p.m. (2) That the Sessional Order relating to the adjournment of the Senate have effect at 10.30 p.m. on 4, 5, 10, 11 and 12 June 1986 and at 4.15 p.m. on 6 and 13 June 1986. (3) That, on Friday, 6 June 1986 and the week commencing 10 June 1986, the Sessional Orders relating to the Routine of Business for Week 1 apply. Senator VIGOR(South Australia) —I give notice that it is my intention at the conclusion of Question Time today to withdraw Business of the Senate Notice of Motion No. 2 standing in my name and relating to the disallowance of section 11 of the Australian Capital Territory Health Authority Ordinance 1985. Senator MICHAEL BAUME(New South Wales) —I give notice that, on the next day of sitting, I shall move: That the Senate- (a) expresses its concern that official statistics now show a further 2.1 per cent fall in private sector new capital investment spending in the March 1986 quarter on top of the 3.3 per cent fall in the December 1985 quarter; (b) notes the recent statement of the Treasurer (Mr Keating) on 14 May 1986 that: `It is better to cut the Commonwealth deficit further than to cut private sector activity because it is private sector activity that will put the investment in place to give us a better level of local production against imports. So if we want to cure the problem, the thing not to do is to crush off private sector investment.'; and (c) calls on the Federal Government to take strong immediate action to implement Mr Keating's injunction to restore the level of private sector investment in Australia by introducing a mini-Budget that will substantially cut the deficit by reducing government spending, abandons the anti-business elements of the present tax package, opposes the productivity claim and other increases in labour costs and reduces the Government's dependence on its policy of record high interest rates. Senator COONEY(Victoria) —I give notice that at the giving of notices on the next day of sitting I shall withdraw Business of the Senate Notices of Motion Nos 1 to 3 standing in my name for the next day of sitting, for the disallowance of Fisheries Notices Nos 158 and 160 and Northern Prawn Fishery Management Plan No. 3. I seek leave to make a short statement. Senator COONEY —by leave-These notices of motion concerned two fishery notices in the Northern Prawn Fishery Management Plan. The Standing Committee on Regulations and Ordinances was concerned that certain discretionary decisions should be subject to review, that the power exercised in the notices and the plan were lawful and that retrospectivity did not prejudice anyone. The Committee wrote to the Minister for Primary Industry (Mr Kerin) seeking his advice. The Minister has replied to the Committee having obtained legal advice from the Attorney-General's Department. It appears in the light of this advice that retrospectivity does not prejudice anyone. The Minister will amend the legislation to make the exercise one of two discretions mentioned by the Committee subject to the Administrative Appeals Tribunal review. The Committee accepts the Minister's explanation for not making the exercise of second discretion, in connection with the suspension of licences, reviewable because of the practicalities of the matter. In the light of advice from the Attorney-General's Department the Minister is satisfied that the legislative package comprising the notices and the plan is a lawful exercise of his power and the Committee accepts his assurances on this matter. The Committee expresses its appreciation to the Minister for the consideration he has shown to it and for the detailed advice he has given, including his undertaking to extend a right of review. As is the Committee's usual practice with matters where its scrutiny has raised important issues of law or propriety, I seek leave to incorporate the Committee's correspondence in Hansard for the information of honourable senators and interested persons. Leave granted. The correspondence read as follows- PARLIAMENT OF AUSTRALIA-THE SENATE STANDING COMMITTEE ON REGULATIONS AND ORDINANCES 15 April 1986 The Hon. John Kerin, M.P. Minister for Primary Industry Parliament House Canberra, A.C.T. 2600 Dear Minister, At its meeting on 10 April 1986, the Committee considered Fisheries Notice No. 160 which prohibits the taking of prawns in certain areas off the Northern Australian coast. The Notice was made under the Fisheries Act 1952 and tabled in the Senate on 11 March 1986. The Committee seeks your advice in connection with retrospectivity in the Notice and review rights missing from it. Retrospectivity Notice No. 160 was made by you on 17 February 1986. Sub-paragraphs (b) (i), and (b) (ii) retrospectively prohibit the taking of prawns from the schedule areas ``during the period commencing on 1 December [or 15 December] 1985 and finishing on 7 April 1986''. Sub-section 8a (1) of the Fisheries Act provides for the tabling and disallowance of Fisheries Notices as if they are regulations to which section 48 of the acts Interpretation Act applied except for inter alia sub-section 48 (2). Sub-section 48 (2) voids any instrument expressed to take effect retrospectively where the retrospectivity is prejudicial to an individual. It appears therefore that the retrospectivity is lawful. However, the Committee noted that in the offence provisions of the Fisheries Act, namely paragraph 13 (1) (i), it is provided that a person shall not do an act prohibited by a Fisheries Notice. Under paragraph 18 (g) of the Act, penalties for a criminal offence can be fines of as much as $250,000. Given the terms of the Notice it makes possible the imposition of a fine of a quarter of a million dollars for commission of an innocent act made criminal by the retrospective operation of a relatively obscure instrument of delegated legislation. Notwithstanding its apparent validity under the Fisheries Act, the Committee would regard it as quite improper from the point of view of principle that such retrospective criminality should have been created for otherwise innocent acts done between 1 or 15 December 1985 and 17 February 1986, the date of your signature on the Notice. The Committee doubts that you intended to create such retrospective criminality. The Committee would be grateful if it could have your comments and advice on this matter, including your indication as to whether any person, natural or corporate, has been prosecuted, punished or otherwise adversely noted for any retrospectively criminal act committed between 1 or 15 December 1985 and 17 February 1986. Review Rights Sub-section 8 (2) of the Fisheries Act provides that a Fisheries Notice may provide exemptions from fishing prohibitions. These prohibitions make certain fishing activities a criminal offence. Paragraph (d) of the Notice exempts certain fishing boats from a prohibition on carrying certain fishing equipment between December 1985 and April 1986 provided that the master of the boat: ``(i) obtains the approval of the officer stationed at Karumba, to undertake fishing gear trials with the use of the boat . . . not less than 24 hours before undertaking the trials.'' As of the date of this letter, the period during which this exemption might have been obtained has expired. Nevertheless, the Committee wishes to draw to your attention for the future the absence of any right to have a denial of approval by the Karumba officer, or any other officer with similar responsibilities, reconsidered or reviewed in some way. On the Committee's reading of the paragraph in the light of the decision of the Federal Court in Mudginberri v Longhorne and Duthie (unreported, 19 December 1985, No. N.S.W. G246 of 1985) the Karumba officer appears to have a discretion, rather than a duty, to approve trials. The adverse exercise of that discretion could result in financial loss to the master and crew of a boat. Where such loss might occur it should not be borne without the opportunity urgently to have the merits of the exemption decision at least reconsidered by another officer, or at best reviewed by an independent Tribunal. An unreviewable exemption discretion which is adversely exercised without reference to binding criteria can result in the loss of competitive equality of opportunity to earn a reasonable livelihood. This appears to place the exemption discretions under scrutiny here in a different category to those described at paragraph 41 of the Eighth Report of the Administrative Review Council, 1983-84. If the Committee has misinterpreted paragraph (i) and the Mudginberri decision, then the Karumba officer (and other officers in areas operating under similar provisions) had a duty to approve trials subject only to the 24 hour notice proviso. This would be by far the happier outcome. The Committee would be grateful if you could comment and advise on the foregoing, in particular indicating whether, if the Karumba officer is in fact vested with a discretion, that discretion was exercised adversely to any relevant fishing master. The Committee is concerned about the matters raised by its scrutiny of this and other Fisheries Notices. This is essentially because the kinds of problems discussed above have arisen in a type of delegated instrument that is an obscure and easily overlooked source of legislative authority affecting the exercise of rights to a livelihood. The Committee looks forward to hearing from you on these matters. Yours sincerely BARNEY COONEY Chairman PARLIAMENT OF AUSTRALIA: THE SENATE STANDING COMMITTEE ON REGULATIONS AND ORDINANCES 15 April 1986 The Hon. John Kerin, M.P. Minister for Primary Industry Parliament House Canberra ACT 2600 Dear Minister, At its meeting on 10 April 1986, the Committee considered the Northern Prawn Fishery Management Plan being Plan of Management No. 3-Northern Prawn Fishery, made under sub-section 7b (i) of the Fisheries Act 1952 and tabled in the Senate on 11 March 1986. The Committee's security has given rise to a number of queries on which you might be able to advise. 1. Retrospectivity Paragraph 3 of the Plan is a saving provision in relation to acts done between 1 January 1986 and 1 March 1986 when the Plan came into force. The paragraph provides that: ``Acts or things done on or after 1 January 1986 for the purposes of, or in relation to compliance with this plan in anticipation of its coming into force may be regarded as having been done under this Plan if done in accordance with its provisions'' Thus, the paragraph retrospectively validates acts done since 1 January 1986. If the acts done were merely internal preliminary administrative arrangements it is unlikely that anyone will have been prejudiced by this retrospectivity in delegated legislation. However, if the acts or things done ``in relation to compliance with this Plan'' were, for example, to suspend or cancel a licence under paragraphs 35 or 36 then such retrospective validation will have prejudiced individuals. The Committee would be grateful if you could comment on this matter and advise whether any individuals might have been prejudiced by the effects of the retrospectivity. 2. Review Rights As you know, Principle (c) of the Committee's terms of reference provide that the Committee scrutinises delegated legislation to ensure that it does not unduly make the rights and liberties of citizens dependent upon administrative decisions which are not subject to review of their merits by a judicial or other independent Tribunal. The Committee notes firstly that reconsideration and A.A.T. review of certain discretionary decisions is provided for by the drafting device in paragraph 41. However, it appears that review of the discretion exercised under paragraph 10.4 has been overlooked. Paragraph 10.4 provides that: ``Subject to paragraph 10.7. if the Secretary is satisfied that an application under paragraph 10.2 satisfied a criteria in that paragraph, the Secretary shall cause that application to be granted . . .'' The criteria described in sub-paragraphs (a) and (b) of paragraph 10.2 involve subjective matters of opinion and potentially disputatious questions of fact (``is entitled to be granted a boat licence''; ``a boat which the person has used for taking prawns at a certain place and time''; ``the person has . . . a substantial financial commitment to build a boat or to purchase a boat''; ``with the intention of using that boat in the fishery''). There is indeed a greater justification for merits review of the discretion in paragraph 10.4 than for that in paragraph 10.3 which is made subject to review. Secondly, the discretion reflected in sub-paragraph 35.1 (a) is not exercised subject to any criteria, nor is there any right of review to challenge it on the merits. The paragraph provides that: ``Where the Minister or the Secretary has reasonable grounds to believe that the holder of a licence or a person acting on behalf of a holder of a boat licence has contravened, or failed to comply with, a condition to which the licence is subject . . . or has done an act . . . that the person is prohibited from doing by a [fisheries] Notice, the Minister or the Secretary may suspend the licence [depending on whether the holder has previously been convicted of fishing offences]''. Obviously this discretion is to be exercised on the basis of potentially disputatious questions of fact and opinion which are amenable to A.A.T. review. This paragraph is to be distinguished from paragraph 36.1 where the fact of a first conviction can be relatively easily established. The Committee may have overlooked the existence in other related legislation of a right of review for the discretion in paragraph 35. The Committee would welcome your comments and advice on this matter. 3. Subordinate Fettering of Primary Discretions Principle (a) of the Committee's terms of reference provides that the Committee shall scrutinise delegated legislation to ensure that it is in accordance with the Statute. The Committee notes that there are several provisions in the Plan couched in mandatory terms which appear to fetter a discretion conferred upon the Minister by the Fisheries Act. Paragraphs 9, 13 and 17 provide that ``it shall be a requirement made pursuant to a notice under sub-section 8 (1) of the (Fisheries) Act'' that certain boat use be prohibited. However sub-section 8 (1) of the Act provides that: ``The Minister may by notice published in the Gazette . . . prohibit etc. . . . While the paragraphs may have intended to refer to Fisheries Notices already made in bona fide exercise of the discretion, their effect is not limited to existing Notices. It appears therefore that these provisions of a delegated legislative Plan are designed to fetter the exercise of a discretion conferred by the Act under which the Plan was made. Likewise paragraphs 35 and 36 give rise to similar problems. In this case the Committee notes that sub-section 9a (1) of the Act provides that the Minister or the Secretary may by notice suspend a master fisherman's licence or a boat licence if there are reasonable grounds to believe that: there has been a contravention of a licence condition; a licence holder or his or her agent has done a prohibited act; or a licence application contains knowingly false or misleading information. Paragraph 7b (2) (b) provides that a Plan of Management shall set out measures by which the objective of the Plan is to be attained. Sub-paragraph 35.1 (b) of the Plan provides that where the Minister or Secretary has reasonable grounds to believe that a licence holder or agent has contravened a condition or done a prohibited act then, if the licence holder has a previous conviction for fisheries offence, the Minister or Secretary ``shall suspend the licence in accordance with sub-section 9a (1) of the Act''. As noted above, sub-section 9a (1) of the Act confers a discretion to suspend a licence. The exercise of such a discretion is subject both at common law and under the A.D.J.R. Act to judicial and administrative review in keeping with the impact which its adverse exercise may have on a person's right to earn a livelihood. It appears therefore that the terms of sub-paragraph 35.1 (b) of the delegated legislative Plan are designed to fetter the exercise of a discretion conferred by the Act under which the Plan was made. The Committee notes that the terms of section 7b of the Fisheries Act do not override the discretion in section 9a. Although sub-section 7b (8) provides that while a plan is in force ``the Minister and the Secretary shall perform their functions and exercise their powers under this Act . . . in accordance with the plan . . . and not otherwise,'' power to fetter a discretion is not a ``power under this Act''. The Committee would be grateful if you could comment and advise on these aspects of the Plan and the possibility that it may have infringed Principle (a) of the Committee's terms of reference. Yours sincerely BARNEY COONEY Chairman PARLIAMENT OF AUSTRALIA-THE SENATE STANDING COMMITTEE ON REGULATIONS AND ORDINANCES 15 April 1986 The Hon. John Kerin, M.P. Minister for Primary Industry Parliament House CANBERRA ACT 2600 Dear Minister, At its meeting on 10 April 1986, the Committee considered Fisheries Notices Nos. 158 and 162 made under the Fisheries Act 1952 and tabled in the Senate on 11 March 1986. The Committee seeks your advice on certain aspects of the Notices. Sub-section 8a (1) of the Fisheries Act provides for the tabling and disallowance of Fisheries Notices. Paragraph 8 (1) (a) enables the Minister to prohibit the taking of classes of fish without references to times or periods. Paragraph (b) and sub-paragraph (b) (ii) of Notice No. 158 prohibit the taking of certain prawns unless the applicable number of units of fishing capacity have been assigned to the relevant fishing boat. Paragraph (c) of the Notice states that pursuant to paragraph 8 (3c) (a) of the Act, the Minister thereby specifies ``the period commencing on 1 March 1987 as the period during which'' (my emphasis) the prohibitions in paragraph (b) and sub-paragraph b (ii) have effect. It may be that, in law, specification of a commencement date is not specification of a period. Sub-section 36 (2) of the Acts Interpretation Act 1901 suggests that a period of time has an identifiable expiry date or ``last day''. Sub-section 8 (4c) of the Fisheries Act provides that a prohibition contained in a Fisheries Notice ``has effect'': ``(a) if a period is specified in the Notice during which the prohibition is to have effect-during that period; or (b) in any other case-at all times''. If the specification of a commencement date only, is not viewed as the specification of a ``period during which'' the prohibition is operative, then paragraph 8 (4c) (b) of the Act may apply, resulting in the prohibition having effect ``at all times''. This would of course be contrary to your obvious wishes. It may be that the purpose and object provisions of section 15aa of the Acts Interpretation Act could result in the expression ``period'' being read down to include a segment of time commencing on a specified future date without reference to any expiry date. On the other hand such a construction may do violence to the meaning of the word ``period'' as it is otherwise used in legislation. The Committee would be grateful to have your comments and advice on these matters which are drawn to your attention in order to discover if Fisheries Notice No. 158 has in fact been made in accordance with your wishes. Fisheries Notice No. 162 Paragraph (a) of this Notice revoke Fisheries Notices No. 65 ``OR'' 65a. The Committee is puzzled by this alternative form of revocation and seeks your advice on it. Yours sincerely, BARNEY COONEY Chairman Parliament House, Canberra A.C.T. 2600 Telephone (062) 73 1711 Telex 62308 Facsimile (062) 73 2194 Minister for Primary Industry the Hon. JOHN KERIN, M.P. Senator B. Cooney Chairman Standing Committee on Regulations and Ordinances The Senate Parliament House CANBERRA ACT 2600 Dear Senator Cooney I refer to your two letters dated 15 April 1986 concerning various aspects of the Northern Prawn Fishery Management Plan (the plan) and Fisheries Notice No. 158. On the same day, you wrote concerning aspects of Fisheries Notice No. 160. I set out below my comments on all the matters you have raised in the three letters. In one of those letters, you have drawn my attention to paragraph (a) of Fisheries Notice No. 162 concerning the alternative expression of revocation. I agree that ``and'' would have been a more appropriate conjunction. Plan of Management No. 3-Northern Prawn Fishery The plan and Fisheries Notice No. 158, together with Fisheries Notice No. 159, comprise a co-ordinated package of subordinate legislation for regulating fishing capacity in the northern prawn fishery (the managed fishery). I note that your Committee has neither raised any questions in relation to Fisheries Notice No. 159 nor commented about the provisions of the plan insofar as it regulates the managed fishery. The purpose of the savings provision (which has now expired through the effluxion of time) in paragraph 3 of the plan was to validate any action taken by prospective unit holders who wished to comply with the plan before it came into force; for example, by applying for registration of units. Any decision to suspend or cancel a licence can be given effect only by exercise of a power in s.9a of the Act, regardless of what the plan provides by way of guidelines to be taken account of in reaching that decision. In the event, no such decisions were made during the pre-commencement period. I refer to cancellation and suspension of licences in more detail below. With reference to your comments on review of a decision of the Secretary under paragraph 10.4 of the plan, I agree that such a decision should be subject to review and have approved an appropriate amendment to the plan, to come into force in the near future. Section 16a of the Fisheries Act 1952 (the Act) provides for review of a decision under sub-section 9a (3a) to cancel a licence. In Scrutiny of Bills Digest No. 4 of 1985, the Senate Standing Committee on Scrutiny of Bills drew attention to the absence from the Fishing Legislation Amendment Bill 1985 of provision for a decision to suspend a licence to be similarly reviewable. A motion by Senator Archer to amend the Bill in that regard was lost. I fully endorse the remarks of the Minister for Industry, Technology and Commerce when speaking against the motion (Hansard, 14 May 1985, pp.1894/5). Paragraphs 35.1 and 36.1 of the plan set out the criteria to which the Minister is to have regard when making decisions to suspend a master-fisherman's or a boat licence or to cancel a master-fisherman's licence. Those criteria reflect the decision-making powers provided by sub-sections 9a (1) and (3a) respectively of the Act but do not of themselves provide the powers. If the plan did not contain paragraphs 35.1 and 36.1, the Minister would still have the powers in section 9a but without guidelines on which to make decisions about their exercise and to which a review tribunal could have reference. The Attorney-General's Department has advised that those paragraphs are valid if they are measures for the attainment of the objectives in paragraph 7 of the plan. I am satisfied that the paragraphs accurately describe the desired policy in relation to exercise of the powers in section 9a and are measures for attaining the objectives of the plan. They specify the manner of exercising those powers when a person is suspected of doing, or has been convicted for having done, an act in relation to the managed fishery that is detrimental to the objectives specified in the plan of conserving the prawn stocks in the area of the managed fishery and reducing the fishing pressure on those stocks. In relation to the Committee's concern that paragraphs 9, 13 and 17 of the plan fetter the Minister's discretion under section 8 of the Act, the combined purpose of those paragraphs is to foreshadow the link between the purpose of assigning units of fishing capacity to boats and the provisions of the Statute that make it an offence to do an act prohibited by a notice under section 8. The Act does not empower the Minister to establish offences and penalties in plans of management. These are matters for the Act itself to deal with. By paragraphs 9, 13 and 17 of the plan, I have indicated, as an exercise of the discretionary power vested in the Minister by paragraph 7C (2) (a) of the Act, the action I propose to take under the Act to ensure that only boats to which units are assigned in accordance with the plan may validly operate in the managed fishery. By publishing Fisheries Notice No. 158, I have sought to give effect under the same Act to that intention so indicated. I therefore do not consider that paragraphs 9, 13 and 17 of the plan, which paragraph 7C (2) (a) of the Act expressly authorises, fetter the discretion under sub-section 8 (1) of the Act. Fisheries Notice No. 158 would have been made to give effect to that intention even if those paragraphs did not exist. Without the notice, the plan would have no practical effect in controlling the amount of fishing capacity in the fishery. It is consistent with sub-section 7B (8) of the Act for me to make a notice which I had, in the plan, indicated my intention to make. The opinion of the Attorney-General's Department is that, because the discretions under the Act which could be affected by a mandatory provision of the plan are exercised by the same person (i.e., the Minister) who has determined the plan and because they are measures by which the objectives of the plan can be attained, paragraphs 9, 13 and 17 are valid. Fisheries Notice No. 158 I turn now specifically to your comments in relation to Fisheries Notice No. 158, which gives effect to the intention expressed in paragraphs 9, 13 and 17 of the plan. My intention was that paragraph (b) (ii) of the notice (forecast by paragraph 17) should operate after 1 March 1987 for so long as the notice remained in force. To meet your Committee's concern and consistently with the advice of the Attorney-General's Department, I have approved the replacement of Fisheries Notice No. 158 by two notices, one applicable in sub-area 1 to have immediate effect and the other applicable in sub-area 2, to have effect from 1 March 1987. I am satisfied that the plan, Fisheries Notices No. 158 and 159 and the Act constitute a total legislative package for managing the managed fishery and that both the plan and the notices have been prepared in accordance with the Statute to give effect to management policies developed in consultation with the State Governments and industry and approved by the Australian Fisheries Council. Fisheries Notice No. 160 In relation to Fisheries Notice No. 160, I point out that the prohibitions in sub-paragraphs (b) (i) and (b) (ii) are expressed to expire on 7 April 1986 and thus are no longer in force. In addition, neither the review nor retrospectivity aspects of the notice that are of concern to your Committee have effect in relation to sub-paragraph (b) (iii). With respect to the apparent retrospective operation of Fisheries Notice No. 160, the Committee will note that paragraph (a) revokes Fisheries Notice No. 154, gazetted on 7 November 1985. I enclose a copy of Fisheries Notice No. 154 for your information. In effect, Fisheries Notice No. 160 remakes No. 154 with additional exemptions from the prohibitions therein. No additional prohibitions are retrospectively created. I have recently adopted the practice of revoking and remaking when amending Fisheries Notices so that the position in relation to any prohibition at any time may be ascertained by reference to a single instrument complete of itself rather than to a principal notice and one or more amendments to which the principal notice makes no reference. It is only when endorsements of licences currently in force refer to particular notices that it may not be appropriate to do this, in which case, a principal notice and amendments continue to be necessary. No person was prosecuted or otherwise punished for any retrospective criminal act in relation to Fisheries Notice No. 160 between 15 December 1985 and 17 February 1986. Had any person been detected during that period in the area of the general prohibition in possession or charge of unstowed or unsecured trawling gear on a boat, the prosecution would have been for breach of Fisheries Notice No. 154, which was in force during that period. I would also point out that the maximum penalty that a court may order on convicting a person for breach of a fisheries notice with the use of an Australian boat is $5,000, not, as your letter suggests, $250,000 which is the penalty on conviction on indictment of the master of a foreign boat only. I acknowledge that Fisheries Notice No. 160 would have been better expressed if the prohibition had applied from its coming into force and have noted this in relation to future amendments of notices. I have approved a notice revoking Fisheries Notice No. 160 and re-making the prohibition in sub-paragraph (b) (iii) applying at all times. The Committee has also raised the question of review rights in the event of a fisheries officer at Karumba refusing approval for the performance of gear trials. Paragraph (d) of Fisheries Notice No. 160 constituted a significant concession by providing a mechanism for exempting trawler masters wishing to test their gear in waters where Fisheries Notice No. 160 would otherwise prohibit them from having possession of unstowed or unsecured trawling gear on the boat. As is often the case in fisheries management, it is necessary to qualify such exemptions with measures to prevent abuse of the concession and consequent damage to the fishery. For this reason, sub-paragraph (d) (i) of Fisheries No. 160 required the obtaining of approval in the manner specified before a trawler master might take the benefit of the exemption. The paragraph was not intended to vest the fisheries officer with a discretion. The concession was available for any trawler master who wished to take the benefit of it. Fisheries officers at Karumba did approve all applications of which they had the specified period of notice. `An obscure and easily overlooked source of legislative authority' While I understand the Committee's concern about matters coming to its attention in its scrutiny of delegated legislation such as Fisheries Notices and plans of management, I also point out that whenever I publish such instruments, I or my Department also issue media statements explaining them. All such statements are published in the magazine ``Australian Fisheries'' which my Department sends free to all holders of Commonwealth fishing boat licences in Australia. In addition, the media in the areas where notices have effect, have a good record of publishing the statements. Commercial fishermen are thus able quickly to become aware of what delegated legislation provides. More importantly, the consultative processes that take place between government and fishing industry representatives, often over extended periods, mean that fishermen usually become aware of the provisions of delegated legislation in advance of their publication. For these reasons, I cannot agree with your contention that Fisheries Notices (or any other items of delegated legislation under the Commonwealth's fishery laws) are ``an obscure and easily overlooked source of legislative authority . . .''. Nevertheless, you have my assurance that I and my Department are fully aware of the importance of protecting the rights of individuals when developing delegated legislation, of making the provisions of such legislation widely known and of conforming with Commonwealth legal policy generally in such matters. At the same time, we have a duty to protect the rights of fishermen who conform with the rules, by creating those rules in a climate of practical enforceability. Yours sincerely JOHN KERIN Senator COONEY(Victoria) —I give notice that, on the next day of sitting, I shall move: That, notwithstanding anything contained in the Standing Orders, the Standing Committee on Regulations and Ordinances shall be empowered to meet with a quorum of 3 members until such time as a Senator has been appointed to fill the vacancy caused by the resignation of Senator Tate. Senator COONEY —by leave-The Standing Orders provide that the Committee shall have seven members and a quorum is to be four members. Pursuant to sessional order of 14 November 1985 the number of members was reduced to six until the vacancy was filled. However, the quorum requirement was not correspondingly reduced. The Committee considers it would be appropriate and would facilitate its business if the Senate were to order that a quorum be three members until the vacancy is filled. 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 Button) read a first time. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(10.10) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- This Bill seeks interim appropriations to meet expenditures by the parliamentary departments during the period 1 July 1986 to 30 November 1986. They total some $21.3 million which is $1.8 million or about 1.9 per cent greater than the amount provided for the same functions in the supply period 1985-86. The increase is necessary to maintain the on-going operations of the Parliament, and to meet unavoidable salary and other cost increases. I commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Button) read a first time. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(10.11) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- This Bill, together with its companion Bills, Supply Bill (No. 2) 1986-87 and Supply (Parliamentary Departments) Bill 1986-87, seeks interim appropriations for the services of the Government for the period 1 July 1986 to 30 November 1986, by which date it is expected that the equivalent Appropriation Bills, which will form part of the Budget for 1986-87, will have been enacted. Supply Bill (No. 1) seeks appropriations totalling some $7,996.8 million for the ordinary annual services of the Government. This is $807.2 million, or about 11.2 per cent, greater than the equivalent amounts provided in the Supply Act (No. 1) 1985-86. A significant part of the increase reflects the flow-through of staffing approvals in 1985-86 and salary and other cost increases. The increase also includes: $107.2 million reflecting major contractual Defence payments which fall due before end November 1986 in respect of the purchase of new, and the replacement, repair and overhaul of, defence equipment and stores. $60.6 million for defence buildings and works required because of a greater number of major works with significant expenditure in 1986-87 compared with 1985-86 of which some will have a disproportionate impact in the supply period. $36.5 million to cover increases in education allowance levels approved for 1986 and increased participation levels in both secondary and tertiary education. $35.5 million for the carry-over effects of new employment training programs begun in 1985-86 and their continuation in 1986-87. $32.8 million for property services, to cover the flow-through effects of new leases entered into in 1985-86 and the renewal of existing leases at higher rates. $23.7 million reflecting the additional requirements of the Australian Bureau of Statistics during the supply period for the conduct of the 1986 census of population and housing. I wish to emphasise that this Bill seeks interim provision only in respect of approved on-going policies of the Government. It does not anticipate decisions yet to be taken in the 1986-87 Budget context for which provision will be sought in the Appropriation Bills. I commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Button) read a first time. Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(10.13) —I move: That the Bill be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- This Bill seeks interim appropriations, totalling $2,116.5 million, for expenditure on capital works and services, payments to or for the States and the Northern Territory and certain other services for the period 1 July 1986 to 30 November 1986. The amount sought is $363.8 million, or about 20.8 per cent, greater than that provided in the Supply Act (No. 2) 1985-86. The main increases relate to: $59.8 million in payments to the States and the Northern Territory reflecting higher estimated payments under Medicare reflecting finalisation of Base Year Hospital Utilisation Data; indexation of grants; and provision for an additional monthly payment during this supply period, as compared with 1985-86. $21.0 million in assistance to the sugar industry comprising $20 million for price support and $1 million for adjustment assistance. $12.4 million in increased assistance to rural producers during the supply period following the Government's recent economic and rural policy statement, comprising $10 million in increased payments to the States and the Northern Territory for rural adjustment assistance; $2.1 million for agricultural marketing innovation; and $0.3 million for the establishment of a rural counselling service. $65.1 million for payment to eligible savings banks reflecting the estimated July and October 1987 instalments under the deposit interest subsidy arrangements to be implemented following the Government's decision on housing finance. $31.5 million to the National Capital Development Commission in respect of funding for approved on-going construction programs in the first five months of 1986-87. $66.0 million for the Parliament House Construction Authority reflecting the stage reached in construction of the new Parliament House, consistent with completion of the building in 1988. Certain new provisions in respect of which government decisions have been taken, some of which I have just outlined, have been separately itemised in the Bill in accordance with convention. As indicated with respect to the Supply Bill (No. 1), the provisions in this Bill do not anticipate decisions yet to be taken in the 1986-87 Budget context. I commend the Bill to the Senate. Debate (on motion by Senator Reid) adjourned. Bills received from the House of Representatives. Motion (by Senator Button) 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 Button) read a first time. Second Readings Senator BUTTON(Victoria-Minister for Industry, Technology and Commerce)(10.14) —I move: That the Bills be now read a second time. I seek leave to have the second reading speech incorporated in Hansard. Leave granted. The speech read as follows- Purpose of the Bills Mr President, these Bills are complementary and are to be considered concurrently. The first is for an Act which will, in effect convert the Australian Institute of Sport from a public company to a commonwealth statutory authority. The second is for an Act to provide for the dissolution of the company known as Australian Institute of Sport, in consequence of the establishment of a Statutory Authority by that name and for related purposes, including the transfer of assets to, and the assumption of liabilities by, the Authority. The main Bill sets out the objects, functions and powers of the Institute and covers a wide range of issues relating to its management and operation. The Bill defines the relationship between the Institute and the Commonwealth within which the Institute will undertake its tasks. The complementary Bill ensures that there is administrative continuity between the Company and the Authority on the date of the effect of the legislation and ensures that the interests and entitlements of staff are protected. Background Mr President, I do not intend to give a detailed address on the background, achievements and future of the Institute. That level of detail is provided in a supplementary statement on the Institute which will be provided to honourable senators in due course. It is important, however, to reflect briefly on the Institute's development and progress over the last five years. In that relatively short time, the Institute has become the focus for top-level sports development in Australia and has earned international recognition as a leading Institution for the training and preparation of high performance sportsmen and sportswomen. It is timely now to review the Institute's objectives and direction after a period of sustained growth, to ensure that its future operations continue to reflect the aspirations and meet the needs of the Australian sporting community. In assessing the Institute's performance to date and canvassing options for its future development, it is important to review its origins. Mr President, the Institute bears testimony to the vision of the Whitlam Labor Government, and particularly Australia's first Commonwealth Minister for Tourism and Recreation, the late Frank Stewart. It was that Government, and that man in particular, who conceived and nurtured the Institute concept to the stage where it could be introduced to serve the interests and needs of the Australian sporting community. As part of its general commitment to improving the quality of life of all Australians, the Whitlam Government was keen to encourage men, women and children throughout Australian to enjoy and enrich their growing hours of leisure. In that context Frank Stewart asked Professor John Bloomfield, of the University of Western Australia, to review the role, scope and development of sport and recreation in Australia. Professor Bloomfield's report, which became the platform for many Federal initiatives in sport and recreation, recommended-as one of many proposals-the establishment of a National Institute of Sport and Recreation to provide leadership for and co-ordination of National Sport and Recreation programs, services and research. (I should add here, that it is most appropriate that Professor Bloomfield is still involved closely with the Institute, and is currently Chairman of its Board of Management.) To develop the institute proposal further, Frank Stewart asked Dr Allan Coles, then from the University of Queensland, to lead a study group which would examine the feasibility of a national sports institute in the context of provisions existing in Australia for the adequate preparation and training of sportsmen, sportswomen, coaches and sports medicine personnel, and make recommendations as to the need for a national sports institute. After extensive consultation in Australia and an inspection of sports institutes overseas, the study group strongly recommended the establishment of such an institute as a major step towards meeting the needs of sport in Australia, with respect to both mass participation and excellence. Unfortunately for Australian sport, the study group's report was published in November 1975. The political situation at that time meant that it was never formally adopted by government. Nonetheless, the report was the most significant literary contribution to Australian sport of its time and many of its recommendations have subsequently been put into practice by Federal, State and Territory governments. The momentum generated by the study group's report was dissipated over the following years by the incoming government's initial lack of interest in the Australian Institute of Sport concept. It was not until 1980 that the then Minister for Home Affairs, Bob Ellicott, to his great credit, took up the proposal and was able to persuade the then government to pursue it. The Institute was incorporated as a public company, the most expeditious way of commencing the enterprise, on 24 September 1980 and commenced operations on Australia Day 1981. In its first year, 151 athletes in 8 residential sports-athletics, basketball, gymnastics, netball, soccer, swimming, tennis and weightlifting- attended the Institute. The responsibilities and functions of the Institute have grown considerably since, in keeping with the enhanced level of support and assistance provided by the present government. For instance, whereas $4.5m was made available for the Institute's operation and programs in 1982-83, $13.944m was provided by this Government in 1985-86 including $2.944m for the management of what has in the past been known as the national sports centre-transferred to the portfolio of the Minister for Sport, Recreation and Tourism in December 1984. In 1985-86, 297 athletes in 13 residential sports participated in the Institute's programs, and over 2200 athletes in 52 sports attended the institute under the auspices of the national training centre program introduced in 1982. In addition to fulfilling its own charter as a centre of sports excellence, the Institute has played an important catalytic role in the establishment of similar institutes by State governments in New South Wales, South Australia, Western Australia and Tasmania-all of which have become important components of the national sports development network. The rapid expansion of the institute's services has placed considerable pressure on the institute. It is seen in some parts of Australia as being all things to all sportspeople. Despite its considerable facilities and resources it is not, and can never aspire to being, such a broad and all-encompassing, enterprise. Government Announcement By 1985-86 the Institute had grown further, into an enterprise that employed about 150 staff (28 in 1980-81), had a budget of $13.944m and managed facilities costing $77.5m. In this situation, the government felt it was appropriate to consider alternative modes of management and administration to carry the Institute into the future. As a result, on 18 November 1985 the Government announced its intention to convert the Australian Institute of Sport to a statutory authority. This move will enable the AIS to operate with, overall, fewer constraints than in the past. At present the Institute, as a company, is subject to two sets of constraints-those normally applicable to a statutory authority which have been imposed by governmental decisions and practices, and those legally imposed by companies legislation, which can involve, for example, additional reporting and special meeting requirements. The legislation will ensure appropriate accountability to the government of the day and, through it, to the Parliament. Within this framework, it is-and will remain, under clauses 10 and 25-the responsibility of the Institute's Board to ensure the proper and efficient performance of the functions of the institute, determine its policies and direct the conduct of the affairs of the institute by its director. The new arrangements will bring the institute into line with other national institutions, such as the Australian Sports Commission, the National Library and the Australian National Gallery, which are also largely government-funded. Under the new arrangements we propose formally transferring ownership of the facilities at the Bruce complex to the institute. However, the community will continue to have substantial access to those facilities, compatible with institute use, including for appropriate non-sporting purposes. Major features of the Bills The main Bill, which builds on the experience of the Institute's operations over the last five years, outlines the Institute's objects, which are to provide resources, services and facilities to enable Australians to pursue excellence in sport, to improve sports coaching standards and to foster co-operation in sport between Australia and other countries. It is intended, in pursuance of clause 5 (b), that there be an added thrust to the institute's coaching efforts-it being widely recognised in sporting circles that broad developments in coaching standards are essential to improving our performance in top-grade sport and in engendering the right attitudes at all levels of sport. In that regard, it is worthwhile reflecting upon the following comments by one of the world's greatest-ever sportsmen, Sir Donald Bradman, when he was the first inductee to the hall of fame at the Australian gallery of sport in Melbourne. ``The Don'' said that the role of coaches ``. . . is not only to encourage and improve athletic skill, but also to mould citizens who will be a credit to society and who will add to our nation's standing and reputation in all parts of the world''. The Bill also recognises, in clause 5 (a), not only the original concept of achieving excellence in sport while also furthering educational and vocational skills, but also specifically mentions the furthering of a participating sportsperson's personal development. In that regard, it is again worthwhile recounting the thoughts expressed by Sir Donald Bradman, when he said: . . . whilst I applaud our government's new-found encouragement for the sporting fraternity, I hope nobody gets carried away by the mistaken notion that financial help and good facilities guarantee success. They merely open the door. Success must still be motivated from within. Hard work and dedication remain essential for all individuals who must embrace with equal fervour, opportunity and responsibility. The Bill defines the functions of the Institute, which include program implementation, facility management, the provision of sports medicine and sports science services, and fund raising for Institute purposes. In performing these functions the Institute will consult widely with national and state sporting bodies and persons in the Australian sporting community, as appropriate. Appropriate consultation will also occur between governmental interests at the Federal and State/Territorial levels. It also specifies the powers that the institute will have to undertake its work. These include the provision of scholarships, the ability to pursue commercial sponsorship of the institute's activities and the distribution of articles bearing the institute's logo. The institute may also charge fees in respect of access to its resources and facilities. It is important to note that the Bill makes special mention of community access to the Institute's facilities. This has been a feature of the institute's services to date and, as I mentioned earlier, will continue to be so. Mr President, I would draw the attention of honourable senators to those aspects of the Bill that define the powers and responsibilities of the Minister. The government is anxious to ensure that the Institute operates both within the framework of overall government sports development objectives and policies-in accordance with a strategic plan to be prepared by the Institute for consideration by the minister-and also in the broader context of government objectives concerning the role of statutory authorities. These provisions make it clear that the Institute will be directly responsible to the government. Together with the provisions that allow the Minister to issue directions to the Institute and review its financial estimates, they will ensure a due and proper degree of ministerial overview and responsibility in harmony with the increased size and importance of the Institute. The Bill contains the usual sorts of provisions related to a range of administrative and operational issues, including the appointment of members to the board, remuneration and financial management. The members of the board will be appointed by the Governor- General. The board itself will appoint the director. I reiterate that the Institute will be required to submit estimates in respect of its proposed budget, will be subject to the scrutiny of the Auditor-General and will be required to publish an annual report, which will be presented to parliament. The consequential provisions Bill is, as the title implies, required to cover all the ``once-only'' matters that are associated with the conversion of the company to the statutory authority. Its main effect is to dissolve the company on the commencement of the act. I am advised that this is the most appropriate method of winding up the affairs of the company, in the context of simultaneously establishing the statutory authority. Honourable senators will note that the statutory authority automatically assumes responsibility for the assets and liabilities of the company, so there will be administrative continuity between the two bodies. Particular attention is drawn to the various clauses which relate to protection of interests and rights of institute staff. In effect, terms and conditions for transferred staff will be those which exist under the company. The Statutory Authority will be also required to fulfil the normal financial reporting requirements for 1985-86, on behalf of the company, and the standard arrangements for audit of the Institute's affairs for that year will be effected. Financial Impact Statement It is intended that the Statutory Authority be established on 1 July 1986, which is a particularly convenient date in terms of administrative arrangements and financial appropriations. At this stage the Government's allocation to the Institute for 1986-87, its first full year of operation as a statutory authority, is still being considered in the Budget context, and also in the context of a comprehensive review of the Institute's funding and staffing arrangements which is being carried out by the Department of Finance and the Institute. While it is the Government's concern that the Institute has sufficient funds available to continue its present level of activity, and over time to pursue a number of new sports development initiatives, such issues also need to be considered in the light of the Government's overall economic policy and the allocation of funds for the Australian Sports Commission and the Department of Sport, Recreation and Tourism, each of which have clear and specific responsibilities in the sector of sports development appropriate to their proper roles and structures. With the formal transfer to the AIS of responsibility for facilities management allied with the establishment of the Institute as a statutory authority, we look to general improvements in management and operational effectiveness including the areas of maintenance and cleaning; purchasing; security; concessions and catering; facility usage and public relations, promotion and marketing activities. These improvements will be reflected, primarily, in better quality services to the public, AIS athletes and coaches, and commercial entrepreneurs. They should manifest themselves quantitatively in the medium term (2-3 years) through increased revenue resulting from greater usage of the facilities. To give the AIS the flexibility it needs in the management of the complex, it is proposed that the AIS be funded in a single line appropriation, although the facilities' operating costs will be separately identified for accounting and management purposes. Mr President, this Bill places the Australian Institute of Sport clearly within the ambit of the Government's commitment to overall management improvement within the public sector. I am confident that the proposed arrangements will enhance the quality of the Institute's functions without themselves leading to extra costs, and have a consequential impact on the standards of sports performance and coaching in this country. The Future Honourable senators will note that the Bill provides for the Board of the Institute to prepare a strategic plan, initially for 3 years and then updated regularly. The initial plan, and any variations to it, will need to be approved by the Minister for Sport, Recreation and Tourism. Work on the first plan is currently being done. As mentioned earlier, a separate statement of the history achievements and possible future directions of the Institute shall be provided. At this stage I wish to say, however, that the Government has been committed to the consolidation and, subsequently, the extension of Institute programs and activities to ensure that the maximum number of Australians can benefit from them over time. I am sure that the growing bond between the Institute and State Institutes of Sport will be strengthened over time. Such cooperative arrangements can only enhance the range of opportunities available to our sportspeople and further develop Australian sport. It is likely that there will be greater opportunities for non-resident athletes to use the Institute's resources through such measures as the National Training Centre program and the Satellite Coaches program. Although the Institute is located in Canberra we see it servicing the needs of Australia and, as a consequence, will be looking to ensure that its advice, services and resources are readily available to those needing them through the decentralisation program already commenced in Perth and Brisbane. Mr President, this short overview of the Institute's origins, development and future is intended to demonstrate to honourable senators the significance of its role in Australian sport and sports development. The Government remains committed to providing the optimum training environment and technical support for our leading athletes. It remains committed to the provision of increased opportunities for Australian sportspeople to reach their potential. It remains committed to the role of the Institute in achieving those objectives. However, I would remind honourable senators that the Institute does not stand alone as the vehicle for the development of sport in this country. Programs administered by the Australian Sports Commission, which was conceived and developed by the current Government, and established as a statutory authority on 1 July 1985 extend assistance to all levels of the Australian sporting structure and balance the top-level orientation of the Institute. These initiatives complement and balance the functions of the Department of Sport, Recreation and Tourism which will continue to provide policy advice on sport and recreation matters, as well as administer major facility development programs and sport and recreation programs for the disabled, and implement recreation, fitness and safety initiatives which will enhance the leisure environment for all Australians. Mr President, the record of this Government in providing assistance for sport in Australia is unique. Our support has enhanced the capacity and capability of the Australian sporting infrastructure to cope better with the increasing demands placed on it. The Government firmly believes that the Australian Institute of Sport is vital to sports development in Australia and to Australia's re-emergence on the world's sporting fields. The Government is dedicated to ensuring that its significance and status will not be diminished. I commend the Bills to the Senate. Debate (on motion by Senator Reid) adjourned. Motion (by Senator Vigor) agreed to: That Business of the Senate, Notices of Motion Nos 1 and 2, standing in the name of Senator Vigor, relating to the disallowance of sections 63, I and II of the Health Authority Ordinance 1985, be postponed to a later hour this day. Consideration of House of Representatives message resumed from 28 May. Schedule of the amendments made by the Senate to which the House of Representatives has agreed with consequential amendments- No. 1-Page 7, clause 25, lines 15 to 17, leave out the clause. No. 2-Page 7, clause 26, lines 18 to 21, leave out the clause. No. 3-Page 7, clause 27, lines 22 and 23, leave out the clause. Consequential amendments made by the House of Representatives (1) Clause 2, page 2, line 8, omit sub-clause (6). (2) Part VI, page 7, line 14, omit the heading. (3) Title, page 1, omit ``, the Spirits Act 1906''. Motion (by Senator Button) proposed: That the Committee agrees to the consequential amendments made by the House of Representatives. Senator PETER BAUME(New South Wales)(10.16) —The Opposition is grateful for the action which the Government has taken. Question resolved in the affirmative. Bill agreed to with the consequential amendments made by the House of Representatives. Resolution reported; report adopted. Debate resumed from 28 May, on motion by Senator Grimes: That the Bill be now read a second time. upon which Senator Peter Baume had moved by way of amendment: At the end of the motion, add ``, but the Senate condemns the Government for- (a) implementing the amnesty for the clients of the Department of Social Security who have received overpayments as the proposal: (i) establishes a double standard, (ii) disadvantages honest clients, (iii) undermines the work of Departmental field officers, (iv) sabotages field investigators' morale, and (v) provides no guarantee that overpayment and fraud will not occur in the future; and (b) its economic policies such as the capital gains tax and the prohibition on negative gearing which have increased the cost of housing and rent necessitating extending the rent subsidy to the long term unemployed''. Senator HAINES(South Australia)(10.18) —Yesterday I raised the fact that a number of problems had been brought to my attention regarding this legislation-problems that related in particular to clauses 28 and 33 of the Social Security Amendment Bill 1986 before us today. Clause 28 relates to what is known as the young homeless allowance, and the problems that have been brought to my attention deal with the rather loose definition of what makes up a young person who is defined as being homeless, who decides whether that person is in fact homeless, what proof is required, and what qualifications the people who decide the proof must possess. The problems with regard to the young homeless allowance were, as I said, with the definition of homelessness-the wide range of things, including things such as incestuous harassment at home, domestic violence and so on; who decides what proof is required, and what sort of counselling is going to be provided to those young people who are already suffering from significant psychological and emotional problems. Issues of this sort are vital, considering the potential loss of income and/or income through benefits that some young people are likely to face as a consequence of the legislation. Certainly the people who have come to me and been concerned do not believe that they have been given adequate or appropriate responses from the Ministers or the departmental people they have seen. I hope that the Minister will give assurances that the concerns raised are unfounded. The other area of concern brought to our attention relates to clause 33 which is headed `Benefit not payable to full-time students'. As I said yesterday, there has been considerable difficulty in establishing with the Department of Education and with other departments involved in this legislation exactly what the definition of `full-time study' or `full-time student' is. Eligibility for benefits depends on the students' study program and whether they are full time or part time. This will affect not only those who receive some of the benefits we mentioned yesterday but also those, I presume, on supporting parent benefits since the provision talks about benefits not being payable. Senator Grimes —No, it will not. Senator HAINES —The Minister says `No', and I am pleased that items such as supporting benefits will not be picked up. It reinforces the fact that there is some lack of clarity in the legislation which is causing considerable concern among students and young people generally. The Democrats will not support the Opposition's amendment to the second reading motion, for some of the reasons I mentioned yesterday. We do not believe that the amnesty in any way is being directed at people who deliberately defraud the system, and that it is being aimed only at assisting those who have got themselves caught up, unwittingly, in overpayments. They have got themselves on a treadmill and have been too afraid to go to the Department, have stayed in that position and have got beyond the point of no return. Given that many such people are elderly and easily upset, they need the sort of assistance that this kind of amnesty will provide. Frankly, I do not believe that the amnesty undermines the work of departmental field officers or sabotages field investigators' morale. What undermines the work of departmental field officers and the morale of officers in the Department of Social Security is simply that there are not enough of them. In some States field officers are being brought out of the field and placed behind desks because the amount of desk work is increasing. Such officers feel that the work they were originally employed to do is simply not being done and, furthermore, that the work they are now doing is not appropriate to their qualifications or to the value they believe they could have to the Department and indeed to the community generally. The Opposition argues that the amnesty will give no guarantee that overpayment and fraud will not occur in the future. I do not suppose it will, but I cannot think of too many solutions that will ensure that problems of this kind will not recur. As I pointed out yesterday, the Government has a staffing problem. The very people who complain that there is a certain amount of cheating in areas such as the Department of Social Security or some unintentional overpayments are the same people who raise Cain if the Department's staff ceilings are raised because they are the same people who believe that Government expenditure should be cut. One suggested way of cutting government expenditure is to cut back on the number of public servants, regardless of the departments they are in and regardless of the value that they have to the community. The final point that the Opposition makes is that the Government's economic policies, such as the capital gains tax and the prohibition on negative gearing, have increased the cost of housing and rent, necessitating extending the rent subsidy to the long term unemployed. Firstly, it was long past time that the rent subsidy was extended to the long term unemployed. Secondly, from the figures that I quoted yesterday, which I obtained from the Real Estate Institute of Australia, there appears to have been no significant cut in monthly vacancy rates in January, February and March of this year as compared to January, February and March of last year in cities other than Perth. I said yesterday that the changes there were more likely to have been due to the run up to the America's Cup and the trials that were going on there than to negative gearing. The Australian Democrats have supported the principles behind the Government's tax reform package simply because they introduced equity into a system which had previously been highly inequitable, where some people, mostly those on high incomes, were able to avoid tax by certain artificial measures, including negative gearing and getting part of their remuneration package in things such as cars and overseas trips. As far as the principle of that is concerned, the Democrats believe that the principle of equity is an overriding one. We support it and do not agree with the criticism which the Opposition is putting in this attachment to the second reading motion, that the processes of introducing tax equity have had some other sort of deleterious effect on the community generally. Certainly, that is not yet apparent as far as negative gearing is concerned. As to the bleating that is going on in the community about the low number of cars that have been sold this year, I suggest that Opposition members do the sort of graph work which I have done in the last couple of days on car registrations for the last five years. They will find that the variations in car registrations, and hence in new car sales, is a significant one across all years, under all governments that have been in office since I have been in this place. It is highly unlikely that the drop in registrations in the last couple of months has had anything at all to do with the fringe benefits tax and far more to do with the fact that last year there was a massive increase in sales of new cars. Overall, the Democrats are supporting the Government's social security legislation. I repeat the comment I made yesterday in regard to clause 33. We will oppose that clause if we cannot get some satisfactory answer from the Government on what a full time student is and what full time study means. At the moment, a lot of the students who have come to see us are floundering around in the dark about that, and are unnecessarily being made anxious at a time of year when they ought to be putting most of their energies into study and not into worrying about the contents of a piece of legislation. Senator GRIMES(Tasmania-Minister for Community Services)(10.29) —I thank honourable senators for their contribution to this debate and for not opposing this legislation. It will be no surprise to anybody that the Government does not agree with the amendment moved by Senator Peter Baume. The first matter I will deal with is the matter of the amnesty, which is the matter referred to by Senator Peter Baume in the first part of his amendment. I think the amendment itself demonstrates the lack of understanding about what the amnesty is about, a lack of understanding which became prominent on the first day that the amnesty was announced with the almost hysterical reaction from the Australian Federal Police spokesman on this matter. The amnesty came about-it was something we were looking at when I was Minister for Social Security-because there are several groups of people who get caught up in the business of overpayments. First, there are those people who deliberately defraud the Department of Social Security, who set out to do so from day one, the sorts of people referred to by Senator Peter Baume, the sort of person who is getting benefit under 35 different names, the sort of person who is working and still receives a benefit because he or she gives false information. Those people who are deliberately defrauding the Department do not come under the amnesty. They are not supported by anyone in this place. This Government will detect them and prosecute them with as much vigour as would any other government. However, there is a group of people who get caught up in overpayments for other reasons. The first group is those who initially do not declare changes in circumstances because they do not understand the system. My colleague the Minister for Social Security, Mr Howe, has been helping them by changing the nature of the letters that we send to social security recipients in these circumstances. They are letters which in future will be more easily understood, letters that are less formal and less stilted in their language so that people will understand them. Another group of people get on what has been described as a treadmill. They receive benefits and sometimes receive small amounts of other income but for all sorts of reasons do not declare it. Gradually this situation gets worse and worse and they get to the stage that, because of a fear of bureaucracy, a fear of facing bureaucracy or a fear of the consequences, they do not declare it. It is that group of people who the amnesty will pick up and is picking up and it is that group of people who departmental field officers and field investigators believe should be specially treated by the Department. They are not the same group of people who deliberately defraud the Department. I can assure Senator Baume and members of the Opposition that in no way do field officers or field investigators feel that their role has been undermined by this amnesty. In fact the majority of them, if not all of them, believe that the amnesty is reasonable. It is a similar amnesty to the amnesty which has been given in the past to illegal immigrants. It is not the sort of thing one has over and over again. In fact I do not think the Government would ever intend to have it again. The amnesty was conducted to provide a circuit breaker to see whether we can get out of the system that group of people who were stuck there. I think we will find that it will probably succeed. Of course it will not be successful in completely eliminating that group of people but it is a useful attempt to get out of the system that group of people who have received overpayments and who would be quite happy to be out of the system but who, for all sorts of reasons, particularly fear of the bureaucracy, et cetera, are now stuck in it. I do not think it is fair to say that we are trying to establish double standards and disadvantage honest clients. We are dealing with a grey area rather than a black and white area. I will be interested to see how successful the amnesty is. Senator Baume's and Senator Haines's contributions on the new youth allowance demonstrate very clearly the sorts of dilemmas that all governments face. Senator Baume expressed the very real concern that we do not want to do something which will encourage young people to leave home. We do not want to do something which will encourage emotionally turbulent young people who are having a blue with their parents, like mine always do, to leave home and immediately get benefits and immediately get on another treadmill of receiving a benefit and perhaps even aggravating a situation. We are very conscious of that; I think anyone who has dealt with this area is always very conscious of that. On the other hand Senator Haines pointed out quite correctly that we do not want to be too tough on those young people who leave home because they are chucked out or who leave home for reasons stated in the legislation-domestic violence, incestuous harassment or other such exceptional circumstances. It is for that reason that the six weeks limit is put on. The reason that the legislation apparently worries some people and some of the people who have approached Senator Haines and others is that they find it not specific enough. They think that in some way we should be able to spell out in very specific terms exactly the circumstances under which someone should receive this allowance. Senator Haines —Are you actually saying that the six weeks waiting period is not an absolute one, if there are reasons? Senator GRIMES —No. What I am saying is that that is why the six weeks was put in. Some people will say that six weeks is too short; others will say that six weeks is far too long. Senator Haines —But it depends on the circumstances. Senator GRIMES —Yes, but what I am getting to is that, if rigid guidelines had been written into this, the criticism would have been that we are far too rigid and too inflexible. So in this area of payments of social security benefits of this kind, of necessity they must be flexible and I am afraid that of necessity there will always be an element of discretion in deciding who will receive an allowance and who will not. The basis of the assessment will inevitably have to be individual assessment. It will come down to individual judgments by individual officers of the Department of Social Security. Therefore training, sensitivity and counselling are absolutely essential. The Department is establishing the administrative structures to deal with this now. Quite clearly we have to have proof of the fact that the person has not been living at home. We need some proof that the parents are unwilling to or will not continue to support the young person. We have to ensure that the person is not receiving continuous support of other types. I suggest that that will involve a whole series of different forms of investigation in different places. As was quite rightly suggested by the young people's group that wrote to Senator Haines, it would be ludicrous if either the Department of Social Security or the Department of Education just wrote to parents and asked: `Are you supporting this person or not?'. Quite clearly it will involve field officer work, investigations and inquiries not only of parents but also of the young people and of anyone else who can give information. Those administrative structures are being drawn up. It will be difficult and it is a sensitive area. But, as soon as the guidelines are out, I am sure that Senator Haines, Senator Baume and others will be able to look at them. Senator Peter Baume —In the first six weeks is there a capacity to pay special benefit? Senator GRIMES —No, I understand that it will be removed altogether. So in some circumstances there will have to be other sources of support through the emergency relief system. People may say that that is hard. I remember well that I was involved in the debate on this. I was not sure what we had come down with finally. But, if there is to be such a benefit which has the potential to do the sorts of things to which Senator Baume referred, one has to be hard and to be pretty rigid. People talk about our system being difficult and hard. But, if Senator Haines goes overseas and talks to Ministers in the large social democracies of western Europe, she will find that they are quite amused at our unique unemployment benefit system. Our system pays a benefit which is not generous by international standards. But we pay it for much longer than in any other country. We pay it initially without a waiting period in a way that I believe no other country does. People in the Scandinavian countries, in West Germany and elsewhere are always amazed that we will pay unemployment benefits to someone who leaves school and has no history in the work force. They are quite fascinated and shattered by this and wonder how on earth we do it. We do it by paying that unemployment benefit at a relatively low rate and paying it for much longer. We have to make hard choices. One hard choice is that there has to be a six-week waiting period. People have to stay out of the system for that six weeks. There are alternative means of support through State governments and emergency relief. They are not satisfactory. I do not pretend that they are. But that is the sort of decision that has to be made. There will be discretions; there will be administrative difficulties. This matter will require sensitivity and considerable skill. It may require some modification in the future; but it is the sensible way to approach this matter. Senator Haines expresses concern about clause 33 and the problem of the full time student. When I was Minister for Social Security, a phenomenon which was noticeable then and is noticeable now is the number of unemployment benefits paid by social security offices near universities and colleges of advanced education. When I was Minister, one year at Armidale 350 students suddenly applied for the unemployment benefit. Those students make up that group of people who do not qualify for the tertiary education assistance scheme allowance because of the means test and who use the unemployment benefit as an alternative. Those people were assisted-one might even say that they were aided and abetted-by counsellors and others in the CAEs and universities who were very good at adjusting courses and hours of study to enable students in these circumstances to apply for and to get the unemployment benefit as a substitute for TEAS. We have a system which provides unemployment benefits or TEAS allowance, and students who do not qualify for TEAS because they or their families are better off than other students-that is not making a judgment about whether family income should be included, because it is-are using the social security system, the unemployment benefits system, as an alternative to TEAS. In some cases, I understand, they are supplementing TEAS with the unemployment benefit. Parliament and society have made a judgment that one is either a student or one is not. A full time student is defined in the education legislation for the purposes of applying for TEAS and the other benefits that are described in the legislation before us. Senator Haines —Which education legislation? Senator GRIMES —The tertiary education assistance scheme, the adult secondary education assistance scheme, the Aboriginal study grants scheme, the post-graduate award scheme, and the secondary allowance scheme. Senator Macklin —Which legislation? Senator GRIMES —I don't know which Act. Senator Haines —Neither does anybody else, that is the trouble. Nobody can find that definition. Senator GRIMES —I will find a definition for the honourable senator. For our purposes and for the purposes of the Department of Social Security, a full time student who cannot make himself available for work because of studies does not qualify for unemployment benefits. I understand the sympathy of honourable senators for students who have managed to work the system so that they get an educational allowance from the social security system. Senator Haines —That is not fair, and you know it. Senator GRIMES —It is fair. It is absolutely accurate. Senator Puplick —It may not be fair but it is true. Senator GRIMES —It is certainly true. What we are trying to do and, I believe, what we are doing successfully, is what Senator Haines says we should do-get the unemployment benefits and tertiary allowances into kilter and get down the track towards an allowance which provides support for students and others. We are certainly tidying up a situation which everyone agrees is unsatisfactory. Senator Haines has an urgent need to tidy up everything, believing that in a social security system one can get everything tied down with tight definitions, so that everyone knows where he is, but what one ends up with-- Senator Haines —Just a definition would do. It does not have to be tight. Something that is a definition would be an improvement. Senator GRIMES —I understand that a person who qualifies for the tertiary education assistance scheme has to be a full time student. There is a definition there somewhere. Senator Macklin —No, there is not. There is one in the manual. Senator GRIMES —There is a definition in the manual; that is in the legislation. The manuals and the guidelines are associated with the legislation. If one wants a rigid and strict definition in this area, one will end up making the system so rigid and inflexible that Senator Haines and Senator Macklin will be the first two honourable senators to get up in the Senate and read us a lecture on inflexibility in the system, saying that we are too heartless and too cruel. We have been through this a million times in regard to the social security system and the education system, and Senator Haines and Senator Macklin know it. It is a very good point to make for people such as Senator Haines and Senator Macklin who can get up and advocate what they like in the absolute certainty that they will never be in government and have to fulfil what they advocate. Senator Macklin —Will we do that on the fringe benefits tax? Senator GRIMES —I am sorry that I have upset the Democrats. It is early in the morning and I know that they are a sensitive little group. I know that they are sensitive little souls and I do not want to upset them so early in the morning, but-- Senator Macklin —Don't upset the Cabinet. The Bill has not passed yet. Senator GRIMES —The Democrats will pass the legislation because, as Senator Haines has said, it is very fair, it is very good and it is introducing a reform into the system which everyone accepts should be introduced. For that reason, I thank honourable senators for supporting the legislation. I am sorry that I cannot accept the extraordinary amendment put forward by Senator Peter Baume, but I used to put up amendments like that all the time when I was in opposition and governments did not accept them then. I think the amnesty has been a sensible move, acting as a circuit breaker. I hope that it will be as successful as we thought it might have been when I was the Minister for Social Security. However, even if it is not, it will enable many people to get out of the treadmill of the system. If the new youth allowance, as tight and as difficult as the definition in this case may be, is administered with sensitivity, compassion and skill by the officers of the Department of Social Security, as I know it will be, it will enable us to support a group of people in our community who are not being supported now and who are at risk. The change brought about by clause 33 to limit the capacity of certain people in universities and colleges of advanced education to manipulate the system is, despite the problems of Senator Haines and Senator Macklin, a change which has been inevitable because I do not think it is a sensible system if it leaves a loophole which enables people who are better off than others to have a choice between the education system and the social security system as to where they get their income support. For that reason it was important to introduce that change. I thank honourable senators for their contribution and for their support. Amendment negatived. Original question resolved in the affirmative. Bill read a second time. The Bill. Senator HAINES(South Australia)(10.50) —Clause 20 contains one of the statements defining a student as homeless. It reads: (A) the parents of the person do not have, or, where the parents of the person are not living at the same home, neither of the parents of the person has, a home at which the parents are, or the parent is, as the case may be, prepared to allow the person to live; When we plough our way through all of those qualifying clauses we get to the basic point that if the parents do not want their kid in the house the child is defined as homeless. The Minister for Community Services (Senator Grimes) was talking about dealing with all this sort of thing sensitively, compassionately and with understanding, which brought a tear to the eyes of most of the honourable senators in the chamber at the time. I wonder, however, what will happen if there is some discrepancy between the parents' version of why the child is not living at home and the child's or student's version of why he or she is not living at home. We all know of instances where parents lay down criteria under which a student or child may live under their roof. Sometimes they are unreasonable criteria; sometimes they only appear to be unreasonable to the child. I just wonder whether the Minister can say under those circumstances what attitude the departmental officials are likely to take if there is some dispute between the parents and the students concerned and some discrepancy in the evidence that is brought before the departmental officers, as to whether the parents are prepared to have the young person living at home. Senator PETER BAUME(New South Wales)(10.52) —I follow up the point that has been made by Senator Haines. Having listened to her speech and having listened to the Minister for Community Services (Senator Grimes), it is obvious that there is going to be some administrative difficulty in this area. For example, it seems to me that, if I were a potential applicant of 16 or 17 years of age, the Department of Social Security would first have to ask me to make a declaration of some kind to the effect that I came under one of the categories referred to. The Minister said that there would have to be some administrative procedures, but what procedures will be used to check the declaration? To change roles, if I were a parent who fell into one of the relevant classes, I might be disposed to deny-- Senator Haines —Particularly if incest has been mentioned. Senator PETER BAUME —Particularly so; but, whatever the circumstances, I might be inclined to deny them. There is a question as to how on earth the Department will test these matters. It is very likely that statements made will be in conflict one with the other. There will be certain circumstances in which the youth can call upon independent evidence. That is fine, but often there will be cases where the student cannot do so. I am intrigued to know, in light of what Senator Haines has raised, how on earth we are to determine where the facts of any particular matter lie, particularly where a parent may have a vested interest in putting forward a contrary view, at least in public. Senator WALTERS(Tasmania)(10.54) —I wish to deal with the same issue. As the Minister for Community Services (Senator Grimes) will know, we have both been in the thick of this matter on previous committee hearings. On many occasions both sides have been correct in their approach. As viewers of the evidence from both sides, we could not possibly tell which is correct. The parents may say: `There is a bed here; I want the child to come home but the child will not come'. It is really a matter, first, of who we believe and, secondly, of our own feelings-perhaps even moral feelings-on the issue itself. I will give an example. At the tender age of 14 or 15 a child has a right to live his life exactly as he pleases while living at home. What will be the attitude of the officer making the decision- Senator Grimes —It has to be 16 or 17. Senator WALTERS —So there is no allowance under the age of 16, is that correct? Senator Grimes —Only the special benefits available now; but that does not come under this homeless youth scheme. Senator WALTERS —Fine. When a child reaches the age of 16 and wants to live his own life completely, but at home, he may consider it very unjust if the parent demands that a certain standard should be kept in the home. How does the officer possibly then make a decision because it then relates back to the officer's own sense of moral code of standards that he sees as being applicable? The area is going to be very difficult for the Department. Senator HAINES(South Australia)(10.57) —On the same issue, the Minister for Community Services (Senator Grimes) will be aware that most State governments have laws requiring notification of things such as child abuse, and incest, of course, falls into that area. I would like to know first of all whether those laws, to the Minister's knowledge, cover welfare officers in Federal Government departments who presumably will be dealing with the students who claims homelessness on the grounds of domestic violence or incestuous harassment. Senator Peter Baume —You are saying they would be required to declare it to the State authorities? Senator HAINES —Yes. There are a number of States where there is a requirement that certain professional groups which become aware of child abuse, and that would include sexual abuse, must notify the authorities that this is happening. This leaves the parents open, and quite rightly so, to legal sanctions. I want to know whether the Federal officers dealing with these young people will be covered by those State requirements or some similar Federal requirements. If they are and if they believe the student who claims that he is homeless because of those unfortunate circumstances will this be taken as prima facie evidence that the activities within the home have taken place? Where does that leave the family as a whole? I think that the Government is right in allowing students the right not to suffer additional penalties if the home environment is appalling, but the student may be rather loath to come forward if in doing so he is going to find suddenly that his parents are subject to all sorts of penalties even though they may deserve it. The relationship between the parent and the child is such that they may feel rather unhappy about it, as has occurred in cases of domestic violence where wives have not wanted to lay charges. They want to be protected, but they do not necessarily want the full force of the law brought in. Senator GRIMES(Tasmania-Minister for Community Services)(10.58) —On the last matter, most of the State laws do refer to children under the age of 16 and this legislation refers to children under the age of 16 and 17. Secondly, section 17 of the Social Security Act, the secrecy provisions, protects our Federal people under those circumstances. I can appreciate the questions raised by Senator Walters and others and the Government does not run away from the very considerable difficulties that arise here, but I think honourable senators should realise how tough this legislation is. In a situation where parents are prepared and say that they are prepared to have those young people back home then the second situation applies-domestic violence or the incestuous harassment applies. It is difficult. This is a very difficult set of criteria that people have got to overcome to get this allowance. It is deliberately difficult for the reasons that Senator Peter Baume spoke about earlier. It fills a gap for a relatively small group of people in the community. There will inevitably be in some situations discrepancies between the story put by the young person and the story put by the parents. No one is running away from that. There are certain things which will assist us. The first is that obviously that six-week waiting period in most cases will eliminate the vexatious or turbulent young person. My experience of my children is that most of it does not last anywhere near six weeks-it recurs all the time, but it does not last six weeks. Secondly, when we have this discrepancy I say no more than that what we must do is use people who have skills. I know this brings tears to the eyes of Senator Haines, but it is a fact: We need skilled social workers, skilled counsellors, who will have to make judgments. They will make these judgments not necessarily by themselves but with others, as they have to do in this area all over the place. They will have to make judgments about taking and using evidence. In many cases there will be obvious evidence, and they will have to make certain judgments in certain groups of cases. Sometimes they will make wrong judgments. But at the moment there is nothing for this group of kids. In most cases it will be pretty clear. In the more difficult cases it will not be clear, and we will certainly have to modify the manuals and the guidelines as we progress. We may even have to modify the legislation, and modify the toughness of this definition. But that is the nature of this area of work. We have people who are trained and who are skilled. If someone here can suggest how we can put into legislation a set of rules and guidelines, or a definition which will cover all cases and which will not leave grey areas, I and others in the Government and the bureaucracy will be very happy to see such a suggestion. I do not think it is possible. We are in a situation in which some very difficult judgments will have to be made. There will be the odd case, as Senator Walters has correctly pointed out, where people will try the system on. We have thought for a long time about the alternatives available for young people, as I am sure the previous Government did. There have been a couple of cases in Australia already where young people have sued their parents for support. That is very difficult under our system, but it has happened; it has been done successfully. An alternative is to have a system of the type that exists in some western European countries, where the parent is liable no matter what the circumstances. A child literally can decide to leave home but the parent is liable to support that child, and wages are actually garnisheed for that purpose. Under those circumstances a judgment is made by the courts as to how much the parent should use to support the young person. It is taken and given to the young person under supervision by the state. I do not think this country is at that stage; in fact, I think we are a fair way from that. In the circumstances of community attitudes in this country, I think our legislation is a fair enough approach. I think it will be successful in the vast majority of cases. In the difficult cases there will be problems and we may have to modify things. I do not get away from the fact that it will not be easy, and there will be some difficult decisions to be made, but I do not think that is a reason not to do something like this. Senator Haines correctly pointed out that there is a youth group here in Canberra, particularly, that has considerable complaint about the toughness and difficulty of the legislation. This group is doing what lobby groups always do-a reform is introduced and they talk about the reform as though it has always existed; they say it is not good enough and that it is restricting their capacity to operate. In fact, this is a reform that is being introduced where absolutely nothing worth while now exists. Whatever there is in this legislation is better than the system we have now. If it is not as good as they would like, fair enough. One point that Senator Haines raised last night which I meant to answer today concerns the complaint of this group in Canberra that we have not consulted them. I assure Senator Haines that in fact the present Minister for Social Security (Mr Howe), the Minister for Social Security before him-which was me-and the Minister for Social Security before me, Senator Chaney, have spent a considerable time discussing with the various youth representatives in this country this problem and many other problems. The difficulty is that there is a plethora of groups and all these groups, and sometimes all the individuals in these groups, want to be consulted every week. We cannot do it. In this area, in the women's refuge area and in the child care area there has been plenty of consultation by people on both sides of the Parliament for a very long time. To suggest that we have not been willing to talk and consult is unfair. Senator WALTERS(Tasmania)(11.05) —I certainly agree with Senator Grimes that the provisions in this legislation are a lot better than nothing at all, as is presently the case, particularly for students, because with a little bit of luck we might encourage them to stay at school-something that was virtually impossible under the previous system, as they had to be unemployed to get any assistance. I ask the Minister what sort of appeal mechanism there would be for the parents if they considered that a completely unjust decision had been made against them and their child had been, in effect, lured away from home as a result of being given financial independence. I am sure that is how it will be described. Senator GRIMES(Tasmania-Minister for Community Services)(11.06) —Parents will be able to appeal through the existing administrative appeals system and through the courts. There is no specific appeals provision built into the legislation. Senator MACKLIN(Queensland)(11.07) —I refer to clause 33 of the Bill. The problem here is not that it is the intention of the Government to avoid a double dipping operation-let us take it for granted that everybody is opposed to that-but the problem that student bodies find with the clause in the breadth of its drafting. It may in many ways pick up unintended consequences that the Government has not thought about, or has not thought through correctly. I refer the Minister to the tertiary education assistance scheme as an example. If a person becomes ill and remains ill for more than eight weeks, the assistance will continue only up to the point that the person cannot show that he is able to remain enrolled in the course. The difficulty arising with the drafting of this is that if a student has a three-year course and a TEAS allowance is paid on a monthly basis, that includes vacation periods. On my reading of it, the person would be ineligible for any benefit during those holiday periods, no matter what happened to him. I will be interested to see whether or not the person is actively excluded from sickness benefits during that time. I refer to a second example. Paragraph 15.741 of the Unemployment and Special Benefits Manual, which contains an interminable discussion with regard to what anybody might require to be a full time student, states: Where the time spent in employment exceeds 25 hours a week, it is not normally accepted that the child is a full time student unless it can be established that the work being performed is not a bar to full time studies . . . I take the Minister's point but I would be interested to know of the types of abuses the Department of Social Security has picked up, because in paragraph 2.922 it appears that the Department is already applying these criteria-that a person be unemployed, be capable of undertaking suitable paid work, be willing to undertake suitable paid work and have taken reasonable steps to obtain such work. I refer to that because paragraph 15.741 then goes on to give a very interesting example. That example is: . . . unless it can be established that the work being performed is not a bar to full time studies, e.g. a student works from 5 p.m. to 10 p.m. four days a week and then more than five hours on a weekend. Nevertheless, each case should be treated on its merits as the `25 hours' guideline is not a hard and fast rule. It is not only people who receive TEAS who are affected by this but also people who are ruled ineligible to receive TEAS for two reasons. The first reason is that their parents have sufficient income to exclude them from receiving TEAS-that is, income starting at $14,000-odd going up to $24,000, or up to $30,000 if the person is living away from home. Under those types of circumstances a person may be ruled out for TEAS but not ruled out for unemployment benefit. In a move to try to make sure that the person is eligible for unemployment benefit the Government has managed to say that the person has actually to sit at home and do nothing, then it knows he is eligible for unemployment benefit. I should have thought a better way would be to encourage people to study. I should have thought that a better expenditure of government money all round, and the community's money, would be to have no bar on people trying to better or improve themselves in some way. I am only interested in those legitimate cases where there is not a double dipping and where the second reason for exclusion occurs-that is, a person is actually ruled out because his parents' income is above the level and he is now trying to support himself through studies. The Minister knows that there are plenty of people in those circumstances, difficult though it is in our community to do that. Secondly, a person may be barred because he has failed the previous year and decided to keep going and study. Such persons may have a job during the day and rearrange their full time study. But they cannot under the Minister's application of the rules up to now, by the way. It does not have to be full time because, if one takes the other definition that the Commonwealth is currently using of full time studies, it only has to be 75 per cent of the amount of work prescribed by the institution as a year's work. That is in the definition given of the statistics that the Department of Education uses to allocate money to universities, which is different from the 25-hour rule. Under those circumstances I give the example of a person who is working, who has arranged for his full time studies to take place in the evenings and who falls into unemployment. He was employed and he was a full time student. There are plenty of people in our community who have two full time jobs. That person now has to give up his studies because he cannot get unemployment benefit during the day. He can work and be a full time student but he cannot be unemployed and be a full time student. That is what the Government is now saying. That person who wished to work and put himself through the full time course at night is deprived of doing so, under my reading of this provision, if he becomes unemployed. What the Government is saying is that if that person sits at home, that is fine. Senator Peter Baume —How would you propose fixing it? Senator MACKLIN —If one looks at the rules that the Department is already applying under its unemployment and special benefits manual, one finds that it is in fact employing the case by case situation that the Minister was lauding before as being the way to deal with these matters. There is a very explicit operation in the manual as to how this whole thing takes place. It goes into a very detailed operation in terms of the verification of full time status-that is, that the case is looked at first of all, the institution is approached as to what is its classification of the course that the person is undertaking and the institution is approached as to when that particular operation takes place and whether it is a full evening course. If that is not successful in determining the status of the dependant, the officer who is using this manual has to go to the Commonwealth Department of Education to see whether that course is registered as a full time course for the purposes of TEAS. Before people even get to there the officer has to apply those four previous criteria. Two of those criteria are that a person has to be available for full employment and has to be able to be seeking work. He has to fulfil all of those criteria. I am just wondering whether this is another one of those excesses of caution on the part of the Department to make sure that the person is sitting at home and not doing anything so that the Government can be assured that that person really is eligible for unemployment benefit. I would have thought that it is far better to proceed in the way that the Department already has proceeded. I am interested in the types of abuses that the Minister raised in terms of numbers and why the particular procedures set out in the manual have not succeeded in stopping those abuses, where precisely those abuses are, and whether clause 33 is drafted in such a way as to be so wide as to run foul of problems in terms of sickness and supporting benefits. The Minister shook his head during the second reading stage and indicated that that was not the case. I would be interested to know why that is so. Lastly, I make a comment on the gratuitous comment that the Minister made. If his comment holds up and we are about populist causes, I presume it means we can vote against the fringe benefits tax. The Minister was saying before that we do not have to take any responsibility for our vote, in which case there is really no problem with regard to the discussions that are currently going on elsewhere. Senator GRIMES(Tasmania-Minister for Community Services)(11.16) —I do not think I used the word `populist' at all. In fact, I remember hearing part of a debate yesterday afternoon when Senator Robert Ray, I think, pointed out that Senator Haines, for instance, does not just follow populist causes; that if she did, she would have supported the plastic Australia Card. Senator Haines —What you said was that he made a mistake because he thought we did. Senator GRIMES —He thought the honour-able senator did. I am not saying that the Australian Democrats accept populist causes. I just made the comment that it is sometimes easy for one to advocate things in the certainty that one will not have to introduce them or to administer them. Senator Macklin made some point about people who are no longer eligible for the tertiary education assistance scheme because of sickness. They are not affected by this and they are not affected by anything else. They are certainly eligible for sickness benefit. That is the situation that exists now and that situation will continue to exist. I can understand the problems that Senator Macklin sees or that particularly the student bodies see in this sort of legislation. I can even understand Senator Macklin's suspicion that what the Department of Social Security is about is trying to take a broad brush to overcome some difficulties that have faced it in the past. I think it is fair enough to be suspicious in that way. He asked me for some details of the numbers and the situations where this occurs. I am afraid that I do not have them here now but I will certainly try to get some. I can give him some anecdotal evidence about what has happened in the past and, I am sure, what happens now. This came up frequently when I was Minister for Social Security. I do not think Senator Macklin would deny for a minute that the brotherhood and sisterhood of student counsellors in tertiary ins-titutions in this country in fact kept themselves very well informed on the best ways to fix courses and to fix hours of courses to enable people to qualify for unemployment benefit when they could not qualify for TEAS because of the income test on TEAS. That may be fair enough from their point of view but it is not fair enough from the point of view of what this Parliament and what governments in this place have decided about the differences between the social security systems and the method of supporting the education system. Honourable senators opposite may disagree with it. In fact, in many ways I disagree with it. I would like to see the situation where we did not make the distinctions that we make now. But we do and we make them for economic and social reasons and for other sorts of reasons. We do make those distinctions and I believe we should not allow people to get round the system in the way that people have tried to do so. I mentioned the case at Armidale where, I think, 350 students-it may have been more-led by the President of the students' union, all registered for unemployment benefit and got very annoyed when we did not allow them to have unemployment benefit, especially the President of the students' union at the time, who, it turned out, had a full time job anyhow. Some of the situations Senator Macklin put forward, if I understood him correctly, clearly will not apply. A student who has a full-time job and takes a full-time course at night, clearly will not qualify for unemployment benefit. If he then becomes unemployed, one wonders why he is not on TEAS. Senator Macklin —Because the example I gave was where he failed the previous year. Senator GRIMES —So Senator Macklin is suggesting that somebody who does not qualify for TEAS because he has failed the previous year should then be able to be picked up as a full time student by the social security system. That is a judgment Senator Macklin makes. It is a judgment I cannot make as a Minister in the Government administering the system as it now exists. Senator Macklin —In the system that is there now the Government has not been able to provide for the types of problems this is supposed to be addressing. Senator GRIMES —The system that is there now enables people who otherwise would fail to get TEAS because of income tests and everything else to get around that by getting into the social security system. That is what this exercise is aimed at. I think that is a fair aim of the exercise and a fair aim of the Department-to overcome the difficulty which exists now administratively, in terms of the man hours or person hours, however one likes to put it, spent by officers of the Department and by counsellors in tertiary institutions trying to manipulate the system as it exists now. That difficulty had to be overcome and this is an attempt to overcome it. I dare say that people will try to work out methods of overcoming this system. I, like Senator Macklin, think that eventually we will get to a stage-we are moving towards it now-where we have youth allowances which are dependent on the young person doing something, be it training or whatever. We are not there yet; it is a fair way down the track. Senator PETER BAUME(New South Wales)(11.22) —Following Senator Macklin's intervention, will the Minister clarify one point? Clause 33 seeks to insert a new section 133 into Part VII of the principal Act. Part VII deals not only with unemployment benefit but also with sickness and special benefits. Am I correct that the main thrust of the Minister's argument and his main justification for it relate to the inappropriate use of the unemployment benefit by students? If one looks at the wording on page 13 of the Bill, one sees that it merely says that `a benefit' will not be payable. Am I correct that that says that an unemployment benefit will not be payable, a sickness benefit will not be payable and a special benefit will not be payable? Is that the Government's intention? If the argument is that unemployment benefit has been gained inappropriately, is it not a fact that the special benefit is discretionary and a benefit that the Director-General has available to cover special circumstances? Would it not have been more appropriate to say that unemployment benefit will not be payable in respect of all these conditions? Some of Senator Macklin's argument might still stand, but it would not be quite as sweeping in the exclusions it seems to place which seem also to cover sickness and special benefits. It is the special benefit provision that gives me some concern. Senator GRIMES(Tasmania-Minister for Community Services)(11.24) —It does not cover supporting parents benefit. I said that the supporting parents benefit is excluded. That is not in the legislation. It certainly covers sickness and special benefits. Special benefit at the moment is not supposed to be available for full time students. If it is being argued that it should be, that is an argument. Senator Macklin —The AAT did. Presumably this is why you have the secondary allowances. Senator GRIMES —The AAT did in one case certainly. Senator Macklin —Not one case, but for a number of students. Senator GRIMES —The AAT said that if something was to be done about it, there would have to be legislation. That is one of the things that are being legislated for here. It becomes an argument, Senator Macklin: Should one use the social security system, be it through sickness benefit, special benefit or anything else, to apply to a special group of people different rules than one applies in the income support system in the education system? We say no, and that is what this legislation is about. Senator Macklin may say that judgment is wrong, and there are good and valid arguments why he may consider that judgment is wrong. But if we are to use special benefit as a discretion in these circumstances, one may well, to take a ridiculous example, justify using special benefit to support people in a business that is not making money, and one may use it in all sorts of circumstances like that. It is a judgment we have to make. We may not be very popular in making it, but I think that it is a fair judgment. Senator MACKLIN(Queensland)(11.25) —May I go back to the first example. It was not based on the TEAS proposition, but on those people who do not get TEAS and who are now being said to operate under the same rules. I am talking about somebody who falls sick during the vacation period and who is not getting TEAS. Presumably, the Minister is now saying that, by virtue of the fact he is a full time student, he will not be able to get sickness benefit. Senator GRIMES(Tasmania-Minister for Community Services)(11.26) —If the person has lost TEAS-- Senator Macklin —In my first example they did not even have TEAS. It is people who, for a number of other reasons, are not eligible. To clarify the example, it might be the income test operation. They may not be eligible, for whatever reasons. I am talking about the sickness benefit operation, which is not means tested. Senator GRIMES —Their situation does not change. They are precluded from getting sickness benefit in the vacation now. I think I see what Senator Macklin is saying-that somebody who would otherwise qualify for TEAS but who does not qualify because of parental income and who falls ill in a university vacation, will not be eligible for sickness benefit. That is the case now. In fact, such a person will not be eligible under this legislation. Senator WALTERS(Tasmania)(11.27) —I turn to Part III of the Bill dealing with the amnesty. Yesterday I asked the Minister for some figures which he assured me that he would obtain for me. I was wondering whether they are available. The question I asked was: To date how much has the amnesty brought back to the Government, and, secondly, what advertising costs have been incurred for the amnesty to date or are expected to be incurred under the additional amnesty period proposed by the Bill? Senator GRIMES(Tasmania-Minister for Community Services)(11.27) —As for the advertising costs, I have asked Mr Howe's office for that information. I was hoping to provide it in Question Time today. I will certainly obtain it. As for the figures on the amnesty, I heard a figure of $10m, which I think was brought up in the Estimates Committee when the officers of the Department thought it might be that. Mr Howe has said that, rather than making any predictions at the moment, as soon as the amnesty is over, which will be very soon, he will make a statement to the Parliament about what has happened and how much the Department has gained from this exercise. He is not willing to make estimates or guesstimates now. As for the advertising figures, I will get those for Senator Walters. Senator WALTERS(Tasmania)(11.28) —I thank the Minister for that answer. Will the amnesty provision be advertised further-the fact it is to be extended-and to what extent will that advertising go on? Can the Minister give me an estimate? Senator GRIMES(Tasmania-Minister for Community Services)(11.28) —No. Yesterday I was asked whether the amnesty is to be extended. It is not. It finishes on 31 May, so there will be no more advertising. Senator MACKLIN(Queensland)(11.29) —I want to indicate that the Australian Democrats do not believe clause 33 should be included, because we believe there has not been sufficient information provided to the Committee with regard to that matter. Since we do not have support we do not intend to press that point, but we want to register our opposition to clause 33. Bill agreed to. Bill reported without amendment; report adopted. Bill (on motion by Senator Grimes) read a third time. Debate resumed from 27 May, on motion by Senator Grimes: That the Bills be now read a second time. Senator MESSNER(South Australia)(11.31) —The Taxation Laws Amendment Bill 1986 and the Taxation (Interest on Underpayments) Bill 1986 which we are addressing today are the start of the journey through the major part of the Government's tax package which was announced on 19 September 1985. These Bills put into legislative form the details of the enactment of the so-called negative gearing legislation and certain other matters that touch particularly on self-assessment, the new procedure which the Government is introducing in the Australian Taxation Office. Before addressing that aspect and because this is part of a rather long debate, which will probably go into the next week or so in this chamber, on various matters such as the capital gains tax and the fringe benefits tax, I would like, for the record, to set down at the outset a few fundamental tests which the Go-vernment itself set when it moved down the road of taxation reform some 13 months ago; at each stage along the way the Opposition will be testing the Government's performance against those criteria. I refer, of course, to the so-called nine commandments on taxation reform which were laid down by the Prime Minister (Mr Hawke) when he called the so-called National Taxation Summit about a year ago, something, no doubt, which he has regretted doing ever since. With your concurrence, Mr Deputy President, I read into the record those nine so-called commandments: 1: THERE must be no increase during Labor's term of office of the overall tax burden as measured by the share of the gross domestic product taken by the Government in tax revenues. 2: ANY tax reform must continue the process of providing cuts in personal income tax. 3: CHANGES must help smash tax avoidance and evasion. 4: ANY reform must simplify the system so that all Australians can understand it more easily, and therefore make avoidance and evasion more difficult. 5: A REFORMED system must be fairer and progressive, so that Australians are only required to pay tax according to their capacity. 6: ANY reform must not disadvantage welfare recipients and should reduce and remove poverty traps. 7: ANY changes in indirect taxation must be acceptable to community groups whose response will determine whether the Government can maintain moderation in wage movements. 8: ANY reform must provide the best possible climate for investment, growth and employment. 9: ANY reform package must have widespread community support at a widely representative national tax summit of economic organisations and community groups. They are the nine commandments on which we will be calling in the course of the debate over the next several days in respect of the Government's performance on its tax package. The Taxation Laws Amendment Bill 1986 covers a number of matters, two of which I have already mentioned. I will deal with several of the matters with which the Opposition has no complaint. Firstly, there is the anti-avoidance measure in the Bill which seeks to overcome the decision in the Myer case and which seeks to tax as a lump sum any payments for rights to income forgone. We concur with the decision of the Government to enact legislation against that particular decision, and we have no objection to it. There is a clause in this Bill which provides for an airline profits agreement with the People's Republic of China. So, as I understand it, airline profits earned by the Chinese airline in Australia will not be subject to Australian tax. In return for that, and by agreement with the Chinese Government, the reverse will occur with Australian airlines earning profits in China. We have no objection to that. The next item is the adjustment and amendments to the Pay-roll Tax (Territories) Assessment Act which seeks to outlaw the avoidance device of grouping parts of various subsidiaries and other legal entities of one particular company, wholly owned or partly owned groups for that matter, in such a way as maximum exemptions can be obtained for the payroll tax legislation which applies in the Australian Capital Territory. We have no objection to that anti-avoidance device. I turn to perhaps the major part of the legislation which attempts to outlaw and abolish for taxation purposes the practice of negative gearing. At the outset I make the point that it seems to me that there is in the Government ranks a basic misunderstanding of what negative gearing is all about. That misunderstanding is based on the assumption that there is no economic benefit which stems from people applying income earned from sources other than that which might be attributable to real estate in order to further develop real estate investment. Quite clearly, if a person who earns money from normal trading profits and allocates some part of that profit to pay for the interest which might be necessarily incurred in respect of borrowings in order to erect new premises or a new set of flats, for instance, there is no reason on earth why that does not suit an economic objective which should be well and truly recognised by the Government. I do not blame the Australian Taxation Office for advising the Government that it sees that as some kind of tax shelter-that is a reasonable point for the department to put. But it is for the Government to see that there are other reasons why it should not accept that advice, that, in fact, there are economic objectives involved in developing the capacity of the country to house its people, to provide low cost housing to the population of Australia, and that this is one way of doing it. So it is the Government's fault that it has seen fit to implement advice which basically was given, I take it, on the grounds of avoidance or anti-avoidance measures but which, of course, it has seen fit not to accept on the grounds of wider advice that that advice was wrong in the context of the economic needs of the country. If we now start to examine what is actually happening in the real estate development and in the housing industry, we can see quite clearly what a silly decision the Government has made. I picked up today the insert in the Australian Financial Review which is the so-called `Property Review'. On the front page of that insert it says: `Building bubble to burst'. It says that all kinds of changes are occurring in the housing industry at present. On page 8 of this publication I read that property consultants, known as Property and Building Advisory Services Pty Ltd, believe that a slump in the residential building sector has started. I do not think one has to be Mandrake to work that out at present. Senator Brownhill —Only because Bob's bubble has burst. Senator MESSNER —Exactly. Bob's bubble will burst faster. The article goes on to state that there were only 2,044 approvals of residential dwellings, other than houses, in February. This is the lowest February figure since 1979, when the figure was 2,077. Senator Maguire —Who was in office then? Senator MESSNER —What has that got to do with it? The point is that the number of approvals has declined to the same level as it was in 1979. This comes at a time when the Government is now imposing a taxation restriction which will drive down that number even further. Obviously, there will continue to be a growing demand for low income housing in the community. We have to turn only to the public housing list figures for the last few years to demonstrate that point. Let us look at-Senator Maguire might be able to answer his own question in a moment-the number of applications outstanding for public rental housing on 31 December 1982 which was just some eight or nine weeks before the Hawke Government was elected in 1983. Something like 109,000 people were on public housing lists. What was the figure at the end of December 1985 under this magnificent Hawke Labor Government? The figure was 156,000. The number of people who are waiting for cheap public housing has grown by nearly 50 per cent under the Hawke Labor Government. There are 50,000 people more on the lists now than there were under the Fraser Government and this has occurred as a direct result of the policies of this Hawke Labor Government. One has only to survey other factors. Think about interest rates. At this time, under this Government, we have the highest interest rates that this country has seen since the Depression in the 1930s. Is it any wonder that there is a restriction on low cost housing in this country and that people are flocking to State housing commissions in order to seek cheap rental housing. No wonder 50,000 people more are waiting for that kind of housing. Let me look at some of the States. Senator Maguire might be very interested to find out that in South Australia-his State and mine-at 31 December 1982, under the then Tonkin State Liberal Government and the Fraser Federal Li-beral Government, the number of people waiting for housing was 24,000. Today, under the Bannon State Labor Government and under the Hawke Federal Labor Government, the figure is 36,000, a 50 per cent increase. Let me look at the socialist Utopia of Victoria. At the same time 15,000 people were waiting for housing from the State Housing Commission of Victoria. That figure is now 29,000. Through the list of States one can find the same kinds of conditions applying. Why is it that this Government has sought to take such a harsh tax measure, to make it even harder for Australians generally to be able to get cheaper housing? It seems incredible that the Government should have accepted that advice from the Australian Taxation Office because clearly it is not the time to be implementing that kind of proposal. I mentioned earlier that interest rates in real terms are the highest that they have been since the Depression. Automatically, if anybody is looking at developing a new property, developing a new residential property, by definition almost it is impossible-because of high interest rates-to do other than to negatively gear that property. If one has to borrow money at an interest rate of 18, 19 or 20 per cent-the pro-perty will yield only 6 per cent by virtue of the rent one can charge because that is all the market will be able to pay-it is impossible not to negatively gear under the definition of the tax Bill that is before us. Again it is absolute nonsense to put this legislation into place at this time. This Government will deserve everything that it gets from the electors when they find out what it is doing to the housing market in this country as a result. Senator Brownhill —The electors don't deserve getting what they are getting from this Government. Senator MESSNER —They certainly do not and in the not too distant future they will have an opportunity to express their view on that. The other side I would like to mention is that this measure must drive rents higher and we have already seen this happen in Sydney and Melbourne. Senator Maguire —What about Adelaide? Senator MESSNER —And in Adelaide too. We are seeing a great growth in rentals all over the Sydney metropolitan area. There are huge rises, such as 25, 30 and 40 per cent, in rentals. This is occurring because of the shortage that is developing in the unit market and in residential dwellings generally. This is also being heightened by the Government's stupid capital gains tax which is restricting development as well. Obviously people are suffering because they cannot get housing in the first place and now they will pay far more for it. This is incredible and this Government seems to think that it is a great idea. Let us look at what the Government will get out of this legislation. It will raise $55m in the first year in which it applies. It says that this figure will rise to $100m in a couple of year's time. We have to wait until 1991 before the figure gets anywhere near $200m, so the Government says. The first question I would like to ask the Government is: `Please tell us how you calculated those figures?' Did the Government take into account the drop in income for property developers as a result of this measure? Did it take into account other factors in the market-place that will have an impact? The fact I bet the Government did not take into account is what this measure will cost in social security payments by its being forced to meet increased supplementary rent assistance for those pensioners and low income earners who will have to go to the Department of Social Security to find extra rental assistance to pay the increased rents that this legislation will drive up. One does not have to be too clever to work it out. When half a million people are on social security rental assistance now all one needs is another $5 a week increase in rents on average-that is all-and that means that the total cost of welfare for that group will go up by $136m a year compared with what this Government expects to get from negative gearing-the abolition of something like $55m. The Government will lose money if this measure is introduced. It is absolutely crazy that it is adopting such a silly measure at this time. However, I guess it is just typical of the rest of the package which the Government has in train to implement. There are lots of details in the legislation which I will come to in the Committee stage of the debate but let me turn to other clauses of the Bill which deal with the amendment of assessments. First of all let me outline to honourable senators the present system which applies to the amendment of assessments. As all honourable senators will know, the Government is proposing to introduce a system of self-assessment by taxpayers and follow up orders. Of course we have very little information about what that actually entails. However, let us look at the present system. Firstly, if a taxpayer has not made a full and true disclosure of all material facts necessary to make an assessment, if any tax has been avoided and if the Commissioner of Taxation considers the avoidance to be due to fraud or to evasion, he may amend the assessment at any time by making such alterations or additions as he considers necessary to correct an error in calculation, a mistake in fact or to prevent the avoidance of tax. Even where there has been an avoidance of tax due to fraud or evasion, the Commissioner's power to amend, although unlimited in time, is limited in extent. It is not a general power of amendment. For example, he could not amend an assessment to reflect a changed interpretation of the law but is limited to correction of errors of calculation and mistakes of fact and prevention of loss of revenue through tax avoidance. Secondly, when there has been an avoidance of tax not due to fraud or evasion, an amended assessment increasing liability can be validly made to correct an error of calculation or mistake of fact or to prevent the tax being avoided, at any time within six years from the due date of payment of tax under the assessment which is the subject of amendment. However, as in the case of avoidance through fraud or evasion, no amendment increasing liability can be made unless at the time of its making there has not been full and true disclosure of all the material facts necessary for the taxpayer's proper assessment. Thirdly, where a full and true disclosure of all the material facts necessary for his assessment has been made by the taxpayer at any time before an assessment, original or amended, is issued to him, any subsequent amended assessment increasing his liability is competent only if it is made to correct an error in calculation or a mistake in fact and, of course, if it comes out within three years from the due date for payment of the tax under the original or previous amended assessment. Fourthly, ordinarily an amendment reducing liability may be made only within three years of the due date for payment of the tax under the assessment being amended. Moreover, only an amendment by way of correction of an error in calculation or mistake of fact is permitted. In addition, a taxpayer may make application for an amendment to his assessment. Such an application would have to be made within three years from the due date for payment of the tax due under the assessment. Any information necessary for deciding the application must be supplied to the Commissioner within that time. If these conditions are satisfied, the Commissioner may amend the assessment at any time. The Commissioner's power to amend an assessment to reduce liability, and particularly his power to amend on the taxpayer's application, is discretionary and not mandatory. There is no power to amend to reduce liability in order to correct a mistake of law as such. Basically, it seems to us that the changes that are proposed in this Bill apply within those same time frames. The Commissioner is to have the power to amend an assessment for any reason, which appears to include the correction of an error in law. Considerable disquiet has been expressed at the extension of the powers of the Commissioner in this regard. Most of this criticism concerns the lack of certainty that will result from not knowing, even if a full and true disclosure has been made in the return, the taxpayer's final tax liability. A fundamental aspect of our assessment procedure until now has been that, if a full and true disclosure has been made, no amendment to increase the tax liability can be made to reflect a changed interpretation of the law-only to correct an error of calculation or a mistake of fact. It appears that the changes could well empower the Commissioner of Taxation to amend assessments to increase a tax liability due to a change in the interpretation of the law. The Liberal and National parties take strong exception to this point. We believe that what has been brought upon people is a major change in the way in which they will have their taxation liabilities incurred, with very little public debate or exposure of the issues. We have seen nothing of this until the Taxation Laws Amendment Bill was brought into the House of Representatives only about a fortnight ago. Concern and disquiet has been expressed on a wide front across industrial and professional areas. Indeed, we are very concerned about it, basically for the reason that, simply, we do not know enough about the self-assessment procedures that are being introduced by the Tax Commissioner from 1 July 1986. That is another area that deserves a major review in the public arena so that people can properly understand what is about to occur. I am sure that the Minister for Veterans' Affairs (Senator Gietzelt), who is in the chamber, knows that already in the community there is very widespread concern at the actions of the Taxation Commissioner in dealing with taxpayers and assessing penalties, and at the so-called harshness of the Taxation Commissioner in hearing out disputes and dealing with them. That is before us in the background of this particular matter, and we believe that this matter requires the widest exposure to the community for public debate. For that reason we intend at the Committee stage to move that this matter and those parts of the Bill relevant to this matter be referred to the Senate Standing Committee on Finance and Government Operations so that it can undertake a full review of that part of the legislation, bring before the Committee officers of the Department of the Treasury and of the Australian Taxation Office to give evidence and to demonstrate to us what these measures are really all about and what safeguards, if any, should be written into the law in order to protect the rights of taxpayers, and, of course, to find out in far greater detail what the Government has in mind with regard to the new system of self-assessment and audit and in what way that will affect the day to day operations of business and of the community generally. Certainly, the new system of audit has a lot of thorny questions attached to it to which we would like to have answers. For that reason we will appeal to the Australian Democrats to support us in seeking to take this matter to the Senate Standing Committee on Finance and Government Operations for a thorough review. It seems to me that this is quite reasonable in the circumstances since the Government has failed adequately to demonstrate its arguments for this and certainly has given us no time for public debate on the matter. In the light of that, we feel quite justified on this point in delaying the passage of this Government's legislation. We will come more to that in the course of the Committee stage debate. Finally, I would like just to refer to the one other matter that I forgot to mention earlier-that of gifts being allowable as donations to the Australian Sports Aid Foundation under clause 10 of the Bill. That will be dealt with by my colleague Senator Collard in his capacity as our Senate spokesman on sport and recreation. Senator MAGUIRE(South Australia)(11.59) —Today we are debating the Taxation Laws Amendment Bill 1986 and the Taxation (Interest on Underpayments) Bill 1986. In addressing the issue of taxation reform, the basic proposition that we put is that the Opposition has no credibility on tax reform. Despite its eight years in office, it did not deliver any major tax reforms in our country. Despite all of those years in office, it squibbed taxation reform. In the five Budgets from 1978 to 1982 brought down by Mr Howard, the present Opposition Leader who was then Treasurer, there was no major reform of the pressing problems of the Australian taxation system. The only legacy left to the Australian people in the taxation field from Mr Howard's five Budgets was a 66 per cent rise in sales tax collections. The only thing that can be said to have been a major taxation aspect of Mr Howard's five Budgets was a massive shift in the taxation burden in this country towards sales tax. The Liberal Party and its National Party allies for years protected tax avoidance and tax avoiders whenever possible. They did nothing to reform the tax system to boost the economic efficiency of the Australian economy or to improve resource allocation. The Opposition has absolutely no credibility on taxation matters following its position on the so-called business lunches. Last year, in November and December, the Australian people and this chamber were barraged by claims by Opposition spokespersons about the likely impact on the restaurant industry of removing subsidies for business lunches. There were claims of losses of jobs in that industry which varied from 11,000 to 80,000 jobs. In view of those sorts of claims and misleading arguments about the impact of this Government's tax reform measures, we simply cannot accept the sorts of claims made today by Senator Messner. I will address one specific point on public housing that was made this morning by Senator Messner. He made all kinds of claims about public housing in my State of South Australia and in other States. He claimed that the public housing system was not working properly. The point remains that the Liberals for years and years when in office starved public housing of funds. They gave it a low priority. Looking at their record nationally, it can be said that the Liberals do not support public housing as a proposition when we consider the money voted by them for it. I point out that in the last financial year for which information is available South Australia, which is the fifth State of Australia in terms of population, spent the second largest amount in dollar terms on public housing. It was second only to New South Wales in total outlays on public housing despite having the fifth largest population. It is on the record that, while nationally about $54 per head of population is spent on public rental assistance, expenditure in South Australia is well over $100 a year per head. Our expenditure on public rental housing is twice the national average and compares favourably with the very meagre $29 per head in Queensland. The Hawke Government's tax package announced on 19 September last year is a far-reaching reform of the taxation system. The Prime Minister (Mr Hawke) has made it clear repeatedly that overall there is to be no tax rise as a result of this package. The proportion of taxation in relation to gross domestic product will not rise. The tax reforms contained in the package will create a fairer and more equitable tax system and will reduce the tax burden on ordinary taxpayers. I am pleased to say that the tax system, following the tax package, will be based more on the very important principle of the ability to pay. Those who have the ability should pay more tax. Not only that but the tax system will help to make the economy more efficient. It will result in better resource allocation by removing artificial schemes which inflate the value of particular assets. It will help reduce over-investment in property. As a result of this tax reform package a typical taxpayer will receive an income tax cut of about $6 a week from later this year and a further reduction from July next year. It has to be borne in mind that that is an addition to the average tax reduction of $7.60 a week from November 1984. All marginal income tax rates will be reduced as a result of this package. The top rate will be reduced from 60c in the dollar to 49c in the dollar. That will be the same rate as the company tax rate. The result will be that no Australian will have to pay more than half his extra income in income tax. The double taxation of company dividends will be largely eliminated. Poverty traps for social welfare recipients will be eased so that they will be able to earn more outside income if they choose without losing part of their social welfare payment. The tax free threshold will be increased. Sales taxes will be rationalised so that they will be fairer and simpler. Provisional taxpayers will be able to pay their tax in quarterly instalments so that the burden of seasonal interest rate fluctuations will even out over the year. A mild capital gains tax will ensure that those who choose to increase their wealth through increased asset values rather than extra income will pay their fair share of tax. On the great majority of Australian taxpayers the capital gains tax will have no impact. By introducing a capital gains tax this Government has helped drag Australian taxation law into the twentieth century. We will now have a taxation system more in line with that of the other developed countries which are members of the Organisation for Economic Co-operation and Development. Following this move of all the developed countries only the Netherlands will not have a capital gains tax. This tax package also will levy tax on non-cash fringe benefits to ensure that the proliferation of remuneration packages with substantial fringe benefits will be brought under control and no longer be a means to escape tax. The rate of company tax will be lifted to the same level as the top rate of personal income tax to eliminate the incentive for tax avoidance. When fully implemented the Government's tax package will raise an extra $1,500m annually but will return $4,500m annually to taxpayers. Marginal tax rates will be cut across the board. I have mentioned the reduction in the top rate from 60c in the dollar to 49c. It is very important to note that these rate reductions clearly demonstrate that the Australian Labor Party is the low tax Party. The bottom marginal tax rate under this Government will be reduced to 24c in the dollar. The best that the Liberals under Mr Howard as Treasurer could do in five Budgets was leave Australia with a bottom marginal tax rate of 30c in the dollar. All Australians should pay their fair share of tax. Under the old system some high income earners were able to minimise or avoid paying tax. This meant that pay as you earn taxpayers, low income earners and honest taxpayers were forced to shoulder an ever-increasing tax burden. No responsible government could tolerate a tax system which forced low and average income earners to subsidise the lurks and perks of the well to do. By closing loopholes and broadening the income tax base the Government's tax reform package will ensure that those high income earners-- Senator Messner —I take a point of order, Madam Acting Deputy President. I ask you to rule on the matter of relevance. The honourable senator is talking about everything but the Bill before us. There is certainly no reference in the Bill, as I read it, to anything like fringe benefits, perks or whatever. The Bill concerns negative gearing of property and some other matters. The ACTING DEPUTY PRESIDENT(Senator Haines) —I draw to the attention of the honourable senator that it is a good idea from time to time at least in a second reading debate to acknowledge the matters within the ambit of the legislation. I ask the honourable senator not to draw on his imagination too much. Senator MAGUIRE —Thank you for that advice, Madam Acting Deputy President. Unfortunately, Senator Messner does not have the patience to wait for the delivery I am about to proceed with on the impact of negative gearing. I simply go back to my original point that Senator Messner, in purporting to debate negative gearing, got on to the subject of the waiting lists for public housing authorities. He spoke for five minutes about public housing. I fail to see the relevance of that to this debate on negative gearing for rental properties. It was a very far removed subject, indeed. By closing loopholes and broadening the income tax base, the Government's tax reform package will ensure that high income earners who receive considerable tax free income in the form of fringe benefits and various allowances will now meet their proper tax obligations. Under the previous coalition Government the Australian tax system was nearing the point of collapse. The Fraser Government lacked the determination or the will to reform an increasingly unjust tax system. Mr Howard and Mr Fraser were prepared to license the great Australian tax rip off. Tax avoidance and tax evasion were among the few growth industries under that Government. Through various rorts, evasion schemes and tax shelters, tens of thousands of high income earners were able to avoid paying their fair share of tax. The old tax system cultivated a petty criminal mentality instead of rewarding effort and achievement. When Mr Howard was Treasurer, income tax was a voluntary tax for the wealthy. The criterion for a fair and equitable tax system should be the capacity to pay rather than the propensity to cheat. This legislation implements two of the Government's tax reform measures. It removes the income tax advantage associated with the negative gearing of rental property investments and provides for a new depreciation allowance of 4 per cent per annum in respect of residential income producing buildings. Negative gearing has been a popular form of tax minimisation. It occurs when interest payments on borrowings used to finance rental property investments exceed net rental income from that property. It has been done deliberately. It is a contrived arrangement. Under the old tax law the taxpayer was able to offset these losses against income from other sources, thereby sheltering that income from tax. In fact, many Australians use negative gearing to shelter their main incomes-their incomes from exertion-from income tax by using the negative gearing device in regard to rental properties. High income earners have exploited this feature of the tax law to minimise their tax liability while increasing their wealth by accruing tax free, capital gains. This Government does not intend to tolerate a situation where ordinary taxpayers effectively subsidise property speculation and tax minimisation by a number of high income earners. The amendments proposed by this legislation will place a limit on the income tax deduction allowed for interest on borrowings used to finance rental investments made after 17 July 1985. The deduction limit will now be an amount equal to the net rental income from those investments. Net rental income is defined as the aggregate of gross rental income from all such investments, less related deductions other than building depreciation and interest. Interest payments in excess of the deduction limit in any year will be carried forward and treated as expenses incurred in the next income year. It can then be offset against the net rental income of that year or of later years. The legislation will apply to rental investments made after 17 July 1985 and will include land and buildings acquired under contracts entered into after that date. That means that assets previously owned will not be affected by this measure. Any assets owned before 18 July will not be affected by the negative gearing arrangements for rental properties. The annual revenue yield from this measure will be negligible this financial year, rising to some $55m next financial year and an estimated $100m in 1987-88. So in revenue terms, the negative gearing arrangements are significant. They are an important part of the Government's tax package and a significant way in which the Government is financing income tax cuts for other Australians. They are a very important part of the revenue side of the tax package. At present, negative gearing is a significant tax concession to the wealthy. Ordinary pay as you earn taxpayers cannot take advantage of negative gearing because they do not have sufficient income for a second property loan. In our type of society, the ability to borrow is a key advantage of the wealthy. Ordinary taxpayers were forced to shoulder an increasing tax burden to make up for the subsidy gained by wealthy property investors from the tax system. The Government's move against negative gearing is far from draconian. Existing negative gearing arrangements, as I have pointed out, are in no way affected. People who entered into arrangements before 18 July are not affected by the measure. The new rules continue to allow investors to negatively gear property, but their losses will have to be stored up and set off against future profits from property investments. It will not prevent them from entering into these arrangements; it just determines when they can make the deductions against their incomes. The legislation will also amend the income tax law to allow depreciation deductions on residential buildings used for the purpose of producing assessable income. This is a new arrangement. A fixed annual deduction of 4 per cent of capital expenditure on the construction of an eligible building, extension, alteration or improvement will be available over a 25-year period. The depreciation allowance will apply where construction commenced or commences after 17 July 1985-the date on which the proposal was announced. The Government believes that this measure will help stimulate new building for rental housing purposes, thus increasing the supply of rental accommodation. The cost to revenue of the 4 per cent annual depreciation allowance is estimated at some $7m in 1987-88. The Opposition's hysterical reaction to the Government's move against negative gearing is all too predictable. As I pointed out initially, Opposition members have no credibility on taxation measures. They have no credibility after the outrageous claims they made about the impact of removing the subsidy for business lunches. They have no credibility after the outrageous claims made about the impact of fringe benefits taxation on the car industry. The coalition's bleatings that the capital gains tax and the removal of the negative gearing tax shelter will curtail new investment in property and real estate are, as usual, at variance with expert opinion. I quote Mr Richard Bird, the New South Wales sales manager of what is perhaps the largest real estate company in Australia, L. J. Hooker. In the Sydney Morning Herald of 26 September last year he said that, generally speaking, his company was not concerned by the impact on prices in the Sydney market-place of the removal of the negative gearing arrangements. I quote in more detail Mr Frank Charnock, the Federal President of the Building Owners and Managers Association, from the Australian Financial Review of 31 October last. He said: . . . so far as the upper levels of the commercial, industrial and retail property markets are concerned, the proposed tax changes only impact in a peripheral way, if at all, upon the main participants in the market. Hence there is no reason to assume tax-induced change in investment strategy or behaviour. That was the Federal President of the Building Owners and Managers Association, not a member of the Australian Labor Party or a trade union official, but the President of the largest building owners association in this country. Mr Charnock also went on to say that, even with the abolition of the negative gearing tax shelter, property investment would still remain attractive to the small investor. He said: So far as further investment is concerned, investors will tend initially to think there is less future in property for them. More accurately, the extreme tax attraction previously held by property will be brought more into line with most other avenues of investment. He continued: In due course they will realise that while the special taxation advantages may have gone, the fundamentals of property-approached on its merits and not just for the perceived tax advantage-is still the best medium for investment at this level. That was the Federal President of the Building Owners and Managers Association, quoted in the Australian Financial Review of 31 October 1985. Among the more specious of the Opposition claims about the impact of the removal of negative gearing arrangements are Mr Howard's claims that the end of negative gearing and the tax subsidy for it will somehow force up rents and hurt low income earners. I would like to quote from this week's Adelaide Advertiser. Madam Acting Deputy President, you may have seen it yourself. Mr Don Howell, the new President of the Real Estate Institute of South Australia Inc., was quoted in the Adelaide Advertiser of Tuesday of this week as saying: Surprisingly, the rental market had not been squeezed and there was plenty of rental accommodation available. That was the State President of the Real Estate Institute of South Australia speaking as recently as this week. I point out to the Senate that people should not be fooled for one moment by Mr Howard's crocodile tears about the alleged impact of removal of negative gearing arrangements on public housing and private housing rents. What Mr Howard is really saying and trying to convince the community is that the poor and the less well off in this country can be best helped by giving tax concessions to the rich. That is really what the argument boils down to. The Liberal attitude is that the wealthy should be allowed to hang on to their assets because in that way they may do something to help the needy in Australia. This is the so-called trickle-down effect allowing the wealthy to hang on to their assets because they may just feel motivated in some way to pass on some of their benefits to help lower and middle income earners in our country. The fact is that the negative gearing arrangements as they apply in Australia were not designed to help increase the availability of rental housing. They were simply designed to reduce the tax liabilities of a select group in the community. They had absolutely no linkage to the availability of rental accommodation. They were simply taxation devices designed to reduce the tax liabilities of the most well off sections of the community. The exploitation of negative gearing as a tax shelter has had explosive growth in the past few years, but this has not produced a strong supply of rental accommodation for low income families. It has had rapid growth as a tax avoidance device, but it really has not created a massive increase in the supply of rental housing for low income earners. In fact, negative gearing arrangements have not been associated with the low end of the property market, they have been associated with the luxury end of the property market where the prospect of capital gains in respect of those properties seemed greatest. Furthermore, as negative gearing arrangements made before 18 July this year are unaffected by this legislation, landlords and the Opposition cannot use the Government's tax changes to justify claims about increased rents. It should be pointed out that the Government's new 4 per cent depreciation allowance for residential accommodation will encourage investors to build new dwellings for rent, adding to the supply of accommodation. In contrast, negative gearing arrangements-this is a very important point-which encourage investors to compete with each other, simply have the economic effect of bidding up the price of existing dwellings. Under these kinds of tax arrangements, one simply encourages potential investors to go out into the market-place, to bid against each other and in that way force up property values and, therefore, force up rents. I think that really does nail the lie being put around by Opposition spokespersons about these particular measures. The fact is that under present tax arrangements in Australia the value of a number of assets, including rental properties, probably has reflected their value as a tax avoidance mechanism to some extent and not their true value as income-producing assets. The values have been artificially increased because of the tax minimisation advantages of those properties. I have canvassed the arguments in favour of the Government's tax package generally. I have canvassed the arguments in favour of the Government's moves in regard to the negative gearing of rental properties. I have pointed out the many claimed disadvantages, drawbacks and economic side effects of such proposals as claimed by the Opposition and shown that they have absolutely no foundation. Basically what is happening in this country at present in regard to tax reform is that the wealthy and the well to do want to have a reduction in the top marginal tax rates from 60c in the dollar to 49c in the dollar, and they want to have the other major reforms in the tax package, but they do not want to be affected by the measures which generate the revenue to provide for those reductions in tax rates. The Government's tax reform package is based on the principles of fairness and equity. No truly progressive tax system can allow a minority to avoid paying taxes at the expense of the majority of taxpayers. The tax changes contained in these Bills before us are part of the Government's policy to redistribute the burden of taxation and to ensure that all Australians pay their fair share of tax. As a result of these Bills and others to come before this place shortly the tax system in Australia will be based more on the principle of ability to pay. I am very pleased to say that as a result of these particular tax measures income tax in Australia will no longer be a voluntary tax for the rich in our society. Senator SIDDONS(Victoria)(12.25) —We are debating the Taxation Laws Amendment Bill 1986. This Bill relates to two very important areas: Firstly, it relates to the banning of negative gearing for property developments which was part of the Government's tax package and which was discussed at some length at the National Taxation Summit. The Australian Democrats have indicated that it is a principle we are prepared to support. As compensation, the Government has allowed a 4 per cent depreciation allowance on income-producing residential properties. There was a lot of discussion at the Tax Summit and subsequently, that the elimination of negative gearing on property developments would have a disastrous effect on home building and welfare housing. If honourable senators look at the figures, this has not occurred and we believe that it is right and proper for the Government to move in on this area because there is no doubt that negative gearing of property development had developed into a tax rort. We believe it is proper that the Government should clamp down on it. However, the Government has not clamped down on an even larger tax rort; that is, it is allowing negative gearing for corporate raiders and billions of dollars are going into stock market speculation rather than into developing our productive capacity. I will talk more about that matter later. Secondly, the Bill introduces necessary changes for the adoption of self-assessment. Self-assessment essentially means that each taxpayer works out his or her own position each year. The Department will take the taxpayer's return on face value and will issue a refund or a bill on the basis of the taxpayer's return. Scrupulous checking of every return will be replaced by a random audit. People caught carrying out tax fraud will be penalised. Of course self-assessment achieves one significant thing: It relieves staff of mundane clerical duties and allows investigative areas to be beefed up. We can only say that this is a good thing. Trying to assess every tax return routinely, every year, must be a soul destroying task. Senator Messner indicated in his speech that the Liberals are unhappy about this aspect of self-assessment and that they would like the Bill to go to the Senate Standing Committee on Finance and Government Operations. Senator Messner —We are unhappy about the amendment to the assessments part of it. We want to see how that relates to it. Senator SIDDONS —I may have misunderstood the honourable senator. I can only say that the Democrats feel that to delay this legislation unduly would be to create uncertainty in the community. There has been great uncertainty in the community about the whole of the tax legislation. They are dramatic changes to the tax law. As I have said before, they are probably the most dramatic changes for 40 years. The legislation has created great community uncertainty and the sooner we get it through the Senate and the Parliament the better for all concerned. It will at least lift the great veil of uncertainty in the community at the moment. So we are not in principle sympathetic to putting this legislation to a committee, or even a part of it, because that would delay it. However, we will be moving an amendment and I will speak on that shortly. The controversial area of the legislation is this: The Commissioner of Taxation has always had the right to amend assessments already issued. In the past his right has been restricted to the correction of errors in calculations, mistakes of fact and deliberate avoidance. This right is to be extended to all situations. This is significant because the Commissioner will now be able to amend assessments to account for errors in law. In other words, if we make a mistake in the application of the tax law and pay less tax than we otherwise should and this is picked up later on, we will be made to pay the back tax. Where a taxpayer is engaged in wilful evasion, a penalty is to be levied on the back tax payment. The Bill also allows for interest payments to be levied where a person makes a mistake in calculations, either in fact or in law. The Commission has discretion as to whether he will levy interest. Under the Bill the Commissioner must pay interest if the taxpayer has in fact made an overpayment. The Democrats believe there is a grave danger here. The responsibility is on the taxpayer to interpret the tax law, to put in his return. This may not be audited for some years-five years or even longer-and it may then be drawn to the taxpayer's attention that he has made a mistake and will be up for a considerable amount of back tax, when, in all fairness, he has attempted to fill in a return as he or she understood the law. We believe that there should be some requirement on the Commissioner to answer genuine queries. I have discussed this at some length with the Taxation Office. The Democrats were originally hoping to move an amendment to make it necessary for the Commissioner on receiving a query from a taxpayer to give a ruling on the matter, and that ruling would then be binding. We looked into this in a little depth and the Taxation Office indicated that it is often difficult for the Commissioner to give a firm ruling because frequently he is not in possession of all the facts. Often, also, the facts that he is given are deliberately put in a way that makes his ruling very difficult. He may also have to make a ruling on incorrect or insufficient information. The tax law operates at the moment on a case by case basis. When the law is transgressed the matter goes before the courts and the case is assessed and ruled on on its particular merits. We agree that if we were to turn that system upside down at this stage we would be asking too much of the Taxation Office. It would be difficult for the Commissioner to give a definitive ruling on cases brought to his attention. However, we have an assurance that the Taxation Office is prepared to answer genuine queries from taxpayers and to indicate the principle involved in that particular query. This means that there will not be a definitive ruling but there will certainly be a response from the Taxation Office to clarify areas of uncertainty. We believe that this is probably as far as we can go with this piece of legislation, so in the Committee stage we will be moving an amendment which simply says that the Taxation Office will be required to reply in principle to the queries of taxpayers, but we will not attempt to incorporate in our amendment anything along the lines that the Taxation Office's response will be in any way in the nature of a ruling on that particular case. It will reply in principle only; a decision on the merits or otherwise of the case would have to come from the courts. We believe that with that requirement this legislation achieves what it sets out to do. It does introduce the adoption of self-assessment and it does ban negative gearing for property developments. But we cannot let the opportunity pass without criticising the Government strongly for again introducing legislation that is inconsistent. The Government has steadfastly refused to move on the question of the negative gearing of corporate raiders. The Government wants to abolish negative gearing for developers but it refuses to tackle the problem of negative gearing for takeovers. The amount of money involved in successful takeovers in 1984 was a mere $1.9 billion. That jumped to $4.2 billion in 1985, and already this year in excess of $4 billion has been put into Broken Hill Proprietary Co. Ltd alone in bids for the control and defence of that company. We have also seen the Repco company, an important company in the automotive parts supply business, raided, taken over and then split up and sold off, no doubt to the great benefit of the raider. Investment is being subverted. Figures released today show that real productive investment is falling. During the March quarter it fell by no less than 2.1 per cent. We cannot create jobs and overcome balance of payments problems unless the incentive to invest in productive activities, in productive capacity, within this country is restored. As I have said before, total new fixed capital expenditure in March totalled $2.7 billion. If half the money invested in the takeover of BHP had gone into fixed capital, this figure would have rocketed from $2.7 billion to $4.7 billion and that would have created an enormous number of additional jobs. Takeovers are increasingly being successfully undertaken by small raiding companies, which take over large and successful companies with partial takeovers and the like purely to get access to the cash flow of the larger companies. This is not increasing our productive capacity. Companies can engage in takeovers simply because of a tax rort which the Treasurer (Mr Keating) so far has refused to address. The facts are that tax laws presently exist which could control this. Section 50 of the Income Tax Assessment Act, if it were applied, would overcome the negative gearing of corporate raiders, but the Treasurer has refused to act. He recently released a White Paper on the tax effect of takeovers which was nothing but an enormous whitewash. He did not address the problem at all. The facts on tax and takeovers are very simple. Dividends are tax free in the hands of companies. If a company borrows money to buy shares it must offset its interest payments against the tax free dividend income. This naturally assures that there is no double dipping in the tax system by getting tax free dividends before writing off the interest rate against other income. The facts of the matter are that companies are circumventing this law. By being allowed to do that it means that a company raider is in a better position than a legitimate company which is trying to develop its assets base and its productive capacity. A company which borrows money to buy real assets gets a tax write-off on the interest but the income produced by the assets is taxable. A raider, on the other hand, gets a tax write-off on interest and a tax free income from the shares it buys. therefore, it can afford to pay a higher price for the shares than the market value. So legitimate companies that are developing their productive resources are always at risk while the negative gearing of corporate raiders is allowed to persist. The Treasurer has said: `Do not worry, imputation will cure this problem'. Incidentally, he says it will cure this problem but he steadfastly denies that a problem exists. The fact of the matter is that imputation will not cure the problem. Company tax will still be levied on retained earnings under imputation so that companies will seek to minimise their tax and, therefore, takeovers will still be advantaged over productive investment. It will continue unless the Government applies section 50 of the Income Tax Assessment Act. Some years ago tax frauds in relation to personal income tax became a very hot political issue. In this place some years ago we debated bottom of the harbour schemes and so on and so forth. I put it to the Senate that the tax rorts that are taking place right now in respect of company raids and stock market speculation are every bit of the magnitude of the tax rorts we had to face up to some years ago in the personal income tax area. If the Government continues to refuse to act on this, it certainly will not be able to control the economy as the economy should be controlled and it certainly will not be able to encourage the export oriented industries that should be encouraged right now. But, apart from that, it is putting enormous tax free profits into the pockets of company raiders. In the case of the Holmes a Court raid on Broken Hill Proprietary Co. Ltd, he was offered a profit on the value of the shares he bought on the stock market of no less than $400m. What right has an individual-he is essentially an individual because he controls the Bell Resources group of companies-to make a $400m tax free profit in a period of some months? That is essentially what we have seen happen. It is happening because the Government refuses to make the existing company tax laws work. It is allowing the most blatant rorts to continue so that, first of all, the raiders are able to write off their interest charges over a whole variety of companies and are able to make interest free loans of billions of dollars from one company to another. This simply means that section 50 of the Income Tax Assessment Act, which is supposed to stop this happening, is not being applied. It is very difficult for the Democrats to support a Bill which bans negative gearing in one area of the economy but not in another. There is a grave inconsistency here and we again say that if the Government does not act on this, it will be subject to the criticism of the community in no less a way than the previous Government was over the income tax rorts that applied during its term in government. I seek leave to continue my remarks later. Leave granted; debate adjourned. Motion (by Senator Button) agreed to: That, unless otherwise ordered, till 2 p.m. this day, matters of public interest may be discussed by senators, provided that no senator shall speak for more than 15 minutes. Senator MACKLIN(Queensland)(12.46) —I wish to raise a matter in this public interest debate with regard to the problems of food irradiation. Over recent weeks it has come to light that the Federal Government has been involved in confidential meetings with various State and Federal departments, including the Departments of Health and Primary Industry, and with various commercial interests and nuclear energy authorities to discuss the prospects of irradiation of certain foodstuffs in Australia. As part of this process the National Health and Medical Research Council has drawn up a document entitled `Model Food Standards Regulation for the Irradiation of Foods', dated March 1986. Discussions at the State level, notably in Queensland, my own State, have also been held between the Queensland Government authorities and certain United States companies, among them a company called Radiation Technology, incorporated in New Jersey. Briefly, the irradiation process involves the treatment of certain foodstuffs. The model food standard regulation produced by the National Health and Medical Research Council restricts food irradiation to the following: Cereals, fruit and dried fruits, poultry, herbs and spices and vegetables and dehydrated vegetables. We should note that most of these foods-for example, cereals, fruit and vegetables and white meats-are those which nutritionists are constantly telling us are necessary for good health and diet. The purpose of food irradiation, we are told, is to increase the shelf life of food and to destroy bacteria and insects which can cause disease or food spoilage. Let us look at what else food irradiation can do for our food and our health. A March 1984 report prepared for the United States Department of Agriculture showed that mice fed irradiated foods showed an increase in testicle tumours, lesions and kidney disease and had a remarkably reduced lifespan. In another study there was found to be an increase in deaths in the tested animals, again fed irradiated food. In a further test there was a marked decrease in the weight of the animals and in the number of offspring of the animals being tested. Studies have also showed that vitamins A, C and E, and especially vitamin B, may be destroyed by the irradiation of food. With the loss of vitamins and nutritional value in food, the potential also certainly seems to be there for genetic damage and cancer resulting from eating irradiated food. There seems to be also a possibility of increased growth of naturally occurring alpha toxins, which are very potent cancer-causing agents. Some of the latest research seems to have produced some evidence pointing to the creation of new chemicals in the food which is irradiated called radiolytic products, and in recent times some evidence has been produced of increased risk of food poisoning because of radiation-resistant bacteria. Since certain bacteria have been killed off by the radiation, other bacteria are allowed to reproduce at a much greater rate than they would normally. Further studies have found bruising and spotting in citrus fruit in particular, abnormal ripening and browning of fruit. The process is one which is fairly obviously involved with the rural products area, and it is interesting that in a current publication there is some disquiet being felt in rural circles in Australia about the type of damage it may do to our rural products if we proceed down this line. I refer to our trade with other countries and allowing an Australian market to open up if, in fact, we accept irradiated foods. These types of damages, of course, concentrate on the food itself. Setting up such mechanisms would provide-outside a further increase in terms of the types of companies and establishments concerned-an increase in the transport of radioactive materials and further possibilities of exposure to radiation for food processing workers. For example, the Health and Energy Institute in the United States of America states that one average-sized United States food irradiation plant could generate as much low level radioactive waste in a year as the total volume of such waste produced in the United States from all other sources. The National Health and Medical Research Council's model regulations have recommended that the radiation doses be limited to a maximum of one million rads. However, this is 10 times more than allowed under regulations which recently came into effect in the United States. Further, Australia's own research establishment-the Commonwealth Scientific and Industrial Research Organisation-which has involved itself in this matter to a considerable extent, has found marked changes in cell membranes where red blood cells have been irradiated at not the 10-kilograys, or the one million rads level, but 0.1 kilograys, and changes in taste and smell at the level of 2.5 to 3 kilograys. It would seem-at least on that material-that the National Health and Medical Research Council's recommendations would seem to be extreme. Something which causes me in particular great concern with the model regulations is paragraph 9, which deals with the labelling of irradiated food. In an earlier draft, in December 1985, the NHMRC recommended that irradiated food be labelled clearly as such. For some reason, this has been altered in the March recommendations to the following: There shall be written in the label the words `treated with ionised radiation' or `radiated' (here insert the name of the food), or words having the same or similar effect to clearly indicate to the consumer that the food has been irradiated. I would have thought that the first two descriptions spelt out clearly that the food was irradiated. Why include `or words having the same or similar effect'? What has happened in some other countries is that new words and symbols have been invented-for example, in the United States the word `peco-wave', and the use of the Netherlands' Year of the Flower symbol. These are supposed to indicate that the food has been irradiated. If indeed there is no problem, if people feel quite relaxed about the matter, there would seem to be no reason to go for these euphemisms and symbols. I think they in themselves indicate the concerns that people in the community have about this matter and hence the fact that people obviously feel they may affect the commercial viability of the products involved. Another aspect of the labelling process is also of concern to me. This is the practicality of labelling fruit and vegetables. Does one, for example, label the individual orange, pumpkin or passionfruit, or do we rely on the fruiterer to ensure that the correctly labelled fruit and vegetable boxes are clearly visible to customers? I would have thought the commodity with which we are dealing is one which in fact is rarely packaged and only packaged in the supermarket context. It would seem that in the normal way in which these foods are sold, within the Australian context at least, most customers would probably not find out what in fact is occurring. Turning now to the company which wishes to operate a food irradiation plant in Queensland, Radiation Technology Inc. of New Jersey, we find that this company has been before the United States Nuclear Regulatory Commission for a number of violations. Among these violations are the following: In September 1975, Radiation Technology failed to advise the Commissioner of contamination of the plant's research and development pool water; secondly, the company failed to notify the Commission of a shut-down of its research and development pool; thirdly, the company failed to comply with an NRC regulation which requires that all individuals working within a restricted area be instructed in the precautions used to minimise radioactive expose; fourthly, when NRC inspectors monitored radiation levels in unrestricted areas of the plant in October 1976, levels in excess of those permitted were discovered; fifthly, the company violated an NRC regulation which requires that licensed materials, stored in an unrestricted area, be secured against unauthorised removal from the place of storage; sixthly, the company failed to signpost areas of radiation; seventhly, Radiation Technology did not label the containers of radioactive materials located in the receiving pool room and the containers material located in the unrestricted area in order to identify their radioactive content; eighthly, the company failed to make certain surveys or evaluations relating to the contaminated water incident, as is required by the Nuclear Regulatory Commission; and, ninthly, Radiation Technology failed to comply with an NRC regulation which restricts the use of by-product material to designated individuals only. This is the very same company that wants to set up a food irradiation plant in my own State of Queensland, a company whose President has been quoted as saying that he was `very impressed with the gung-ho, can-do Queenslanders who are able to cut through the red tape'. In dealing with bureaucratic controls over radioactive materials, I believe that the action of red tape is supported by all senators and an area about which we are all greatly concerned. I think it is an area where there cannot be any cutting through of red tape. I suppose it is the new version of `better red than dead'. Radiation Technology's abandoned waste dump at Rockaway township in New Jersey was in 1985 added to the United States Environmental Protection Agency's list of 133 hazardous waste sites and the company has been fined thousands of dollars for questionable chemical disposal practices and severe groundwater contamination. It worries me that such a company is proposing to operate such a type of plant in my State. Senator Button —What is the name of the company again? Senator MACKLIN —It is Radiation Technology of New Jersey. There are a large number of questions on the practice of fruit irradiation which I believe need to be answered. I have mentioned some of those concerns, for example, health issues, transport and storage issues and incidents involving radioactive material. More questions have been placed on notice and asked of the Minister for Health (Dr Blewett) by a member of the other place. These include the critical questions relating to the importation of radioactive cobalt 60 and caesium 137. The DEPUTY PRESIDENT —Order! The honourable senator's time has expired. Senator Sir JOHN CARRICK(New South Wales)(1.01) —I rise to talk on a very important matter. It concerns the question whether there are in Australia nazi war criminals who have as yet escaped justice. In recent weeks the Australian Jewish Board of Deputies has asked the Federal Government to set up an independent inquiry, free of partisanship, to look at this question. The matter has come before the Jewish Board of Deputies primarily because in February last year the Canadian Government set up the Canadian Commission of Inquiry on War Criminals, the terms of reference for which I have before me. Equally, the Jewish Board of Deputies is concerned because of evidence that is coming out of the United States of America, where individual case are dealt with episodically. There have been assertions in these inquiries that Australia was, to use a phrase, a dumping ground for nazi war criminals. Those assertions, if true of course, ought to be identified and the people concerned brought to justice. In two other directions, the Australian Broadcasting Corporation, twice in the past six years, has run a series of programs making a series of allegations; and the Minister for Housing in the Wran Labor Government has made a series of very serious allegations in the Parliament calling for a specific kind of investigation. If any of these allegations are true, they should be investigated. I want to make it clear that members of the Opposition-the Liberal Party and the National Party-are firm in their minds that we have an absolute abhorrence of the holocaust. We are determined that the world shall never forget it, that it must never occur again and that anyone who is clearly identified and proven to be a nazi war criminal should be brought to justice no matter how long it is since the end of the war. I want to make it equally clear that it would be utterly wrong and detestable if we undertook unjustified witch hunts. The Australian Jewish Board of Deputies has protested about that kind of partisanship and stressed that any investigation must be completely non-partisan. There has also been a request by the chief Israeli delegate to the United Nations that the secret files compiled by the United Nations War Crimes Commission for 1943 to 1948 be released for scrutiny, and that is a matter that I invite the Federal Government to look at. I emphasise that we in the Liberal and National parties want to bring to justice any persons who can be properly identified against whom accurate evidence has been collated and who have been given a fair trial. We have gone much further than that. Over the years a number of our members, including senior members, have searched the world to get evidence in this regard. A number of times our members have called upon the Jewish Documentation Centre in Vienna where that very distinguished investigator, Simon Wiesenthal, holds responsibility. We have invited a search of the files to let us have any information. We are eager to pursue investigations in this regard. The fact of the matter is, though, that so far, whilst we have ample evidence of numbers of people who have come to Australia who are, however much we detest it, strongly anti-semitic and have written anti-semitic words and articles, we have no evidence of our own, and nor, I think, does the Federal Government at this moment, of nazi criminality. We must differentiate between criminality and statements that are abhorrent to us. Above everything else, we must never repeat what happened in this place in, I think, 1973 when a whole ethnic group-the Croatian people-was condemned and some 2,000 names were publicised without the slightest indication at all that there was any evidence against them. That must never happen again. It is, indeed, to some extent happening in the kinds of allegations that Mr Walker has made. I welcomed very much the statement made in this chamber several days ago by Senator Grimes representing the Minister for Immigration and Ethnic Affairs (Mr Hurford). He was asked by Senator Chipp about the progress of an inter- departmental committee on this matter and said that it had not yet finalised its report. He went on to say: I can say, however, that to date the Department has uncovered no evidence to support allegations that there was a conspiracy to admit, as migrants to Australia, known war criminals, nor has an examination of the records of the Department unearthed any evidence of war criminality of persons who figured prominently in recent media programs. The Department is not aware of any Australian material held overseas which relates to this matter. I commend Senator Grimes for his moderation. He went on to say that we must not witch hunt. Indeed the whole substance of his answer is one that the Opposition would accept totally. But, of course, we cannot leave the matter here. If it is left here and if an interdepartmental committee simply finds something in similar words, there will always be the chance that somebody or some media organisation such as the Australian Broadcasting Corporation, or some Minister of some political party wanting a cheap trick, will pursue it again, and that great damage will be done to individuals and to races of people. A number of people were named by Mr Walker in the New South Wales Parliament. He made very grave statements indeed. I am not in a position to adjudicate in this regard. It is true that, like members of the Labor Party, I have met these people a number of times. But let me just take the following simple statement by Mr Walker: Constandin Untarou migrated to Australia in 1950. He was a member of the Iron Guard of Romania and Treasurer of the Romanian National Government in Vienna from 1944 to the end of the war. Members of the Iron Guard participated in murderous attacks on the Jewish community in Bucharest in 1941. I have asked the Government to agree to the incorporation of a number of documents. That, I understand, has been agreed to. It so happens that one of the documents, unless forged, is a certificate of incarceration of Dr Untaru in Buchenwald Concentration Camp from 1 January 1943. How can a Labor Minister, a member of the Party to which this Government belongs, put this label on a person when that documentation must be known? I also seek to have incorporated a statement and two letters from the Romanian National Council. I take it that the Government and Mr Walker do not say that the Romanian National Council is a nazi organisation and is hiding nazis. It says that nothing that Mr Walker says is true, that Dr Untaru was never a member of the Iron Guard, never a nazi, never a war criminal, and, indeed-in case Mr Walker wants another epithet, having said that Dr Untaru was a member of the Liberal Party-never a member of the Liberal Party. One of the two letters is directed by that Council to Mr Wran as Premier and the other to Mr Greiner as Opposition Leader. I also seek to incorporate a statement in Dr Untaru's own words, which he invited me to edit. That I have not done, and honourable senators will note the footnote. I seek leave to have those documents incorporated in Hansard. Leave granted. The documents read as follows- INTERNATIONAL REFUGEE ORGANIZATION International Tracing Service Headquarters APO 171 US Army CERTIFICATE OF INCARCERATION No. 16236 CI15531 1. Reference your enquiry for certificate of incarceration for: Name UNTARU, Dr, rer. pol. First names Constantin, Iancu. Nationality Romanian. Date of birth 16 March 1907. Place of birth Braila/Roumania. Prisoner's no. not given. 2. It is hereby certified that the following information is available in documentary evidence held by the International Tracing Service. Name UNTARU, Dr. First names Constantin. Date of birth 16 March 1907. Place of birth Braila. Nationality Roumanian. Last permanent residence: ``Berlin, Berlinerstrasse 146/I''-has entered concentration camp Buchenwald. Prisoner's No. not given-on 30 January 1943 coming from ``rum. (*rumanische) legion''. Category, or reasons given for incarceration: not given. Transferred not given. Liberated/Released on not given, in not given. Remarks: Discrepancy: + The ``Haftlingspersonalkarte'' gives 10 March 1907 as birthdate. 3. References of documents: ``Haftlingspersonalkarte'' and ``Zugangsliste'' of the Buchenwald Concentration Camp. Arolsen, 7th February 1951. M. THUDICHUM Director of the International Tracing Service (*) Added fy the I.T.S as explanation, does not appear on the original document. THE ROMANIAN AUSTRALIAN CULTURAL SOCIETY Societatea Culturala Romana Australiana (Box 2022 G.P.O. Sydney 2001) Mr. Neville Wran Q.C. Premier of New South Wales Parliament House Sydney, 2000 22nd April, 1986 Sir, Our Society views with grave concern the declarations made by Mr. Frank Walker, Minister for Housing, on 16.04.86 in the N.S.W. Parliament, against Dr. Constantin Untaru. Our concern springs from the fact that we know Dr. Untaru as a great man, ever ready to help anyone in distress and we know the truth to be that: he never was a member of the Iron Guard he never was a member of the Liberal Party of Australia he never was a nazi or a fascist since 1941 to the present day he was away from Romania his concern for the welfare of the migrants generally and the Romanian community in particular have brought him in contact with successive political personalities both in Government and in Opposition of all political persuasions including R. Menzies, Arthur Calwell, Holt, Gorton, McMahon, Gough Whitlam and the present Government in Canberra he could not accept the injustice whereby his native country as well as other countries were invaded and remain under the dominion of the Soviet Union due to his activities, as a former President of the Captive Nations Week Committee and President of the Antibolshevik Bloc of Nations in Australia he is and had been under attack originating from Moscow and Bucharest. We view the attacks made against Dr. Constantin Untaru as an attempt not only to discredit his good fame and character but also as an attack against the good name of the whole Romanian Ethnic Community in Australia. Accordingly we deplore any spurious attacks against this venerable 79 years Australian from whatever source they may come. President...Stefan Verisan Vice-President...Michael Vincenz ROMANIAN NATIONAL COUNCIL Paris, France Australian Branch G.P.O. Box 2022 Sydney 2001 22 April, 1986 The Right Honourable Nick Greiner mp, Leader of the Opposition, Parliament House, Sydney, 2000 Sir, This Council takes the strongest objection to the campaign of character assassination conducted by Mr Frank Walker New South Wales Minister for Housing against, inter allios, Doctor Constantin Ion Untaru, our Australian Branch President. We join our voices to those of Mr Michael Danby of the Australia Israel Review who is quoted (SMH 18.4.86) as saying, ``That the Jewish Community was disquieted by the way Parliamentary Privilege had been used to make unproven allegations against individuals''. We urge Mr Walker to reveal publicly the source of his information and the evidence, if any, supporting it so that the Australian Public may gauge the veracity both of the persons making the allegations and of the allegations themselves. We assert that Doctor Untaru was never a member of the Iron Guard or a Nazi and that on the contrary he was himself an inmate of The Buchenwald Concentration Camp. During the events which occurred in Romania in the late 1940 and early 1941 years Doctor Untaru was doing his military service in the Royal Romania Army and on his discharge he was sent abroad by the Romanian Government to undertake a survey and study in economics on its behalf. Since that time he was never to return to Romania. Doctor Untaru had as much to do with the events which occurred in Bucharest at that time as Mr Walker. To be a Member of the Liberal Party of Australia is as much an honour as to be a Member of the Labor Party. Doctor Untaru however cannot claim the honour of having been a member of either. A search of the membership records of both parties will confirm this. It is true however that during his activity on behalf of immigrants Doctor Untaru had met personally a succession of Prime Ministers including Sir Robert Menzies, Holt, Gorton, McMahon and Gough Whitlam. He had met personally Ministers and other distinguished parliamentarians both Labor and Liberal not least of which was Arthur Calwell, the initiator of the Post War Migration. Why was Mr Walker silent about Doctor Untaru's contacts with the Labor personalities. We know Doctor Untaru as a former President of the Captive Nations Week Committee and as a President of the United Council of Immigrants, the forerunner of the Ethnic Communities Council. He appeared in the latter capacity on the same platform as Mr Gough Whitlam MP in trying to convince the Government to adopt the principle of portability of pensions, Doctor Untaru's idea, since then implemented. We known Doctor Untaru as President of the Anti-Bolshevik Bloc of Nations and as Member of the Romanian American Academy of Arts and Sciences. He was and is, in spite of his age, a tireless worker for people in distress mostly migrants bewildered by problems. The fact that he was in the forefront of those protesting against the iniquities besetting the countries lost to the Soviet Union is due also to his concern that Australia should be spared the same fate. It comes as no surprise to him and to us that he was congratulated for his work and at one time he was accorded the accolade of ``Migrant of the Month''. His activities have targeted him for attacks prompted both by the Soviet and the Romanian Communist Governments who would dearly love to silence this 79 year old Australian for Doctor Untaru had been and is fearless and articulate in denouncing those Governments' contemptuous disregard for human rights. We know Doctor Constantin Ion Untaru for his selfless unstinted and long activity of intercession on behalf of generations of migrants, have the greatest admiration and affection for him and feel that the Order of Australia would be a proper recognition for his contributions to Australia's Post War Immigration efforts. Yours faithfully, T. SILVAS Vice-president COMMENTS AND ADDITIONAL INFORMATION TO THE DOCUMENTS ATTACHED CONCERNING THE WAR YEARS (1) From 1926-1941, I was for the most time, studying overseas, and during the short periods, in between, spent in Romania, I was professionally engaged in activities, having no time for domestic politics. My father and his friends were all members of the Liberal Party of Romania, and close associates of the Bratianus' family, who were the architects of modern Romania. I did not meet, nor been associated with Romanian National Movement, known firstly under the name of ``Iron Guard''; then disbanded and reformed under the name of ``Legionary Movement''. As a legal political party, with representatives in Parliament, it was very popular especially among young people, peasants and workers, its programme having a rather religious character, based on a) Christianity, b) Monarchism, c) Anti-communism, d) Honesty and Public Affairs, e) The right of the overwhelming Romanian population to have a decisive say in the affairs and destiny of the country. The first time, I came face to face with members of the Legionary Movement, it was in the Concentration Camp Buchenwald, Germany; but I did not become a member of their organization. (2) The motive of my incarceration in Buchenwald is not given by the Gestapo, but I assume that it was requested by Marshal Antonescu of Romania. I believe that the reason for it, might have been the following fact. When I arrived in Germany, February 1941, on my mission to study the economic organization of Germany, on a war footing-some newspapers in Vienna published short articles about my mission. This drew the attention of the son-in-law of Alfred Krupp, the well-known German armaments manufacturer, who invited me to a private dinner in Berlin, at which were also present the Romanian Minister Pleni potentiary to Germany, Raoul Bossi, and the German Ambassador, Chef of the Romanian Desk, in the German Department of Foreign Affairs. The main discussion by the Germans was to convince me, not to recommend to the Romanian Government the introduction of a similar legislation as in Germany, for the mobilisation of Romanian heavy industry on a war footing, because it would be not good for business, as the dividends for the capital investers would be drastically curtailed. Among other items of discussion concerning the conduct of the war, I expressed the view, that Romania should not march into Russia, after reconquering the lost territories in the East (Bassarabia and North Bucovina), but should stop at the frontier, the river Dniester, consolidating their defences. So did also the Finns, under Marshal Mannerheim, after defeating the invading Soviet troops, and throwing them out of their country, but not following them inside Russia. Such views at that time were not only mine, but also shared also by veteran Romanian politicians as Maniu and Bratianu. I believe that such views in this matter, which were not in accord neither with Hitler's nor Antonescu's war plans-were brought to the attention of the Gestapo, who sent me to the Buchenwald concentration camp, and allocated me to the Romanian Legionary's group, who were already there, before my arrival. (3) It is true, that we were not incancerated in the same compound with the other common criminals or political prisoners, mostly communists, but had a separate accommodation behind barbed wire, consisting of primitive wooden barracks. In the same quarter of the Buchenwald concentration camp, but in better housing, were accommodated other VIPs, as the former Prime Minister of France, Leon Blum, or a daughter of King Emmanuel of Italy, married to a German Aristocrat, who politically disagreed with Hitler; and many others, whose names I did not know. (4) On 23 August, 1944, when Romania capitulated to the Russians, we had a terrible air bombardment by the Americans, our barracks being totally destroyed and some of us killed. Consequently, we were transported by the Germans to Vienna, where a Romanian National Government was in the making. This was a coalition Government, in which participated, besides Legionaries, also Romanian personalities, at that time, refugees in Germany, as e.g. the former Metropolitan Puiu Visarien of Bucovina and Bassarabia; an active General Chirnoaga; Cristis, a former member of the Bassarabian State Council, who voted in 1918, for the re-union of that province to Romania, etc. I was also invited to participate, as an economist, in the post of treasurer, the Finance Minister being a Legionary, by the name of Cenger. We all accepted to take part in this coalition Government, out of a patriotic duty, as our country was invaded by foreign troops, and the Head of State, King Michael could not act, being a prisoner of the Soviets. It was rather an academic gesture on our part, because we knew that we would not be able to change the course of a war, which was already lost and in which our country never fought against the Western Allies. (5) After getting in touch with Lord Dalton, he helped me to get a job with a ``Displaced Persons Assembly Centre'' in Germany, which was an Agency of the British Military Forces of Occupation. With other words, I was a former British Public Servant, not a ``nazi'', a war criminal before emigrating to Australia (see attached document). (6) Actually, the term ``nazi'' did not exist before or during the war; it was cooked up afterwards, in order to smear people. In Europe at that time, there were: ``National Socialism'' in Germany; ``Fascisme'' in Italy; ``Falangisme'' in Spain, and similar nationalist movements in Great Britain, Norway, Belgium and France. The Romanian Legionary Movement was none of these; it did not participate in any Government in the last war, and as such it was completely exonerated of any political responsibility, by the Nuremberg War Crimes Tribunal in November, 1945. (7) Not later than 4 years ago, I won a Defamation process in the Supreme Court of N.S.W. against a defendant, who accused me of being a Communist Agent! (see Document attached) I would advise my detractors to make up their minds, before smearing me, because I can't be a ``communist'' and a ``nazi'' at the same time! (Dr C. I. Untaru) P.S. Kindly retype this in good English, as my memory of the English language is no more good-before presenting my notes to Senator Carrick. Senator Sir JOHN CARRICK —I cannot adjudicate on this matter, but if this kind of information is being traipsed around it has to be nailed down. If there is anything wrong with it let it be proven and let it come out. I can only say that the man Dr Untaru whom I and many members of the Australian Labor Party have known, because he was very active in good neighbour councils and migrant councils over the years, is held in very high respect indeed and, until we can prove otherwise, we are here to defend him. Let me take another case, although I do not want to take them all. Mr Walker, who uses a tar brush with great effect, in an attempt to talk of nazi war criminals, the subject of a motion in the New South Wales Parliament, said: Fabijan Lovokovic is a name well known in New South Wales ethnic circles. He was a subject of lengthy investigations by ASIO concerning his activities with Croatian terrorist groups particularly the Croatian Liberation Movement or HOP. He went on to comment. I happen to know Mr Lovokovic. I happen to have had a lot of information about him during the time that a Labor Attorney-General wickedly raided the Australian Security Intelligence Organisation and then produced a pile of names but did not attempt in any way to support the allegations. But when Mr Walker said this Mr Lovokovic, rightly or wrongly, said: `I was 14 years of age at the end of the war'. Now, was he or was he not? That question is easy enough to answer. In any case, everybody knows the basic background of Mr Lovokovic. Mr Lovokovic is one of those people who believe that a communist Yugoslavia is wrong and who want a non-communist Yugoslavia. He wants that, but not as a nazi. He is entitled to his views, but he is not entitled to use vigorous actions in that regard. But what we have done is terrible. We have put a taint on the Croatian people, a people who wanted to be free. Croatians had a dreadful choice during the war years. They could either be the chetniks with Mihailovich, the royalists, the non-communists, the King Peter people that Britain supported for quite a while, communists under Tito, pro-German or Ustashi without being nazi war criminals. They were entitled to be anyone of those things. Indeed, if we are looking for blame, it was the allies who, having looked towards the King Peter group, turned towards Tito and watched Tito slaughter some hundreds of thousands of Mihailovich's chetniks and execute Mihailovich. Is there not a case for Croats to feel a taste for freedom? I just hope that we will never taint people with a tar brush like that. It is an outrageous kind of situation. It was easy for Mr Walker, who perpetually brings up a man named Lyenko Urbanchich whom I oppose in virtually every view he has. He certainly is anti-semitic. The whole aim is to say that the Menzies Government brought him into Australia. I say, and I do not say it invidiously, that the Chifley Government had Mr Urbanchich screened, as it did so many of these people. Indeed, they came in in the 1950s and 1951 in particular. It is the duty of this Government either to hold an independent inquiry to the last degree and put these people out of their misery, or get up and say to governments and to broadcasting corporations: `You are committing a terrible crime if you continue to make these accusations against people and races when you have no proof'. I invite the Government, with all the force I can command, to hold an independent inquiry, completely non-partisan, completely free of tit-for-tat. Every political party will have within it remnants of displaced people. Every party will have within it people whose names could be bandied around like that of Mr Urbanchich. There will be none that we support, but indeed it is wrong if we go on a witch hunt. Senator PETER BAUME(New South Wales)(1.15) —The nazi regime was defeated and officially ended in May 1945 and suddenly no one was a nazi and no one had ever been a nazi. No one had ever supported the nazis from that day on. The issues have been raised, as my colleague Senator Sir John Carrick says, not only by the Australian Broadcasting Corporation, and not only by the Hon. Frank Walker under the protection of parliamentary privilege in New South Wales. We also have the issue of Dr Kurt Waldheim, who is now a candidate for the most senior position in Austria. Senator Sir John Carrick has already referred to some of the accusations made in the Australian Broadcasting Corporation programs and, indeed, has had incorporated the letters from the Romanian Australian Cultural Society over the signatures of its President Stefan Verisan and its Vice-President, Micheal Vincenz, which deal with the matter of Dr Untaru. He has also cleared up the position of Mr Lovokovic and has made the point that Mr Lovokovic was 14 years old at the end of the war. If people wish to accuse him of having been a war criminal, they will have to do it against the background that he was 14 years old at that time. I refer again to Mr Walker. Senator Sir John Carrick mentioned the name of Lyenko Urbanchich. I make no bones about where I stand on the position of Mr Urbanchich. I sought with others to have Mr Urbanchich expelled from the Liberal Party of Australia. I would vote again for his expulsion. Senator Sir John Carrick —And I. Senator PETER BAUME —And Senator Sir John Carrick would vote for his expulsion. I have no evidence that he was a nazi war criminal, but I believe that he was a nazi collaborator. They are very different matters. I believe that Lyenko Urbanchich was a nazi collaborator and for that reason I do not want to be in a political party with him, but we have not succeeded in having him expelled from the Party. That does not mean that our desire is any less; it does not mean that we endorse or accept anything that he stands for, I will not, in fact, endorse anything he stands for. In relation to Dr Waldheim, we have a problem of a different kind. Its resolution, of course, rests with the people of Austria, but it has been revealed now that there are a number of questions in his own background. It is clear that he did serve in the German Army in a way which he had not made clear in his biographies. It is clear that he had served in the Balkans, when he said that he had not. It is clear that he has served in units which undertook some very doubtful activities and units which were probably involved in some atrocities. It is clear that Dr Waldheim has lied to the people of Austria in the run-up to the election, and he must stand branded as a liar. I do not know whether Dr Waldheim was a nazi or a nazi war criminal, although I know he belonged to nazi youth groups. Anyway, the more that seems to be revealed about him, the more his support on popularity polls seems to increase. I have no doubt that he will be elected President of his country and all I can say is that, with the background he has, it is a pity, but it is a matter not for my concern but for the people of that country. I was concerned when this matter was first publicised that I should find some of the old documents about which much was being said in the Press. For example, did the British Government approach the Government of Australia, that is, the Chifley Government, asking it to go easy on nazi war criminals? What was the response of the Chifley Government? What other documents existed? I accordingly sought, under the provisions of the Freedom of Information Act, the release to me of certain documents. I sought this from the Department of Foreign Affairs and from the Department of Immigration and Ethnic Affairs. I also made approaches to the Australian Archives. The initial advice I received from the Department of Immigration and Ethnic Affairs was that it did hold some documents but that they were prior documents in terms of the Freedom of Information Act and it therefore proposed to deny access to them. We phoned the Department, pointed out to it that that was a perfectly legal course of action and asked whether we were then free to announce publicly that it did not wish to reveal these documents because of a loophole in the FOI law. The position was rethought and the Department of Foreign Affairs has made certain material available to me. I must say that it is available as a result of the FOI requests. It is clear from these documents that the Australian Government was approached by the British Government in 1948. I have here a rather poor copy of a document dated 13 July 1948, deciphered from the British Secretary of State for Commonwealth Relations in London and received in Australia on 14 July 1948. It was declassified in Australia on 10 April 1986, just over one month ago. The document, which appears to bear a file number which I think reads HN0295, reads as follows: Trials of Suspected War Criminals. We have been considering the question of final date for completing trials in the United Kingdom zone of Germans who are suspected of war crimes. 2. It is now proposed that: (a) As many as possible of cases which are still awaiting trial should be disposed of by 31 August 1948 (uncompleted trials which began before that date would continue). (b) In general no fresh trials should be started after 31 August 1948. The British Government is suggesting that no fresh war trials should be contemplated after 31 August 1948. I take it that is irrespective of the crimes which were the subject of the charge. The document continues: This would particularly affect cases of alleged war criminals not now in custody who might subsequently come into our hands. I take it that that would include people such as Adolph Eichmann, Klaus Barbie and a whole range of people who subsequently were discovered. The document goes on: 3. In our view punishment of war criminals is more a matter of discouraging future generations than of meting out retribution to every guilty individual. Moreover, in view of future political developments in Germany envisaged by recent Tripartite talks we are convinced that it is now necessary to dispose of the past as soon as possible. 4. If Commonwealth Governments have any comments on arrangements proposed we should be glad to receive these by 28 of July. Then follow some official abbreviations which I cannot read. Just to ensure that I have that accurate, I seek leave to have the full text of that document incorporated in the Hansard. Leave granted. The document read as follows- 1.11312 Dated: 13th July 1948 DECIPHER FROM SECRETARY OF STATE FOR COMMONWEALTH RELATIONS LONDON 1355 Rec'd: 14th July 1948 HNO 295 1. Trials of suspected German War criminals. We have been considering question of final date for completing trials in United Kingdom Zone of Germans who are suspected of war crimes. 2. It is now proposed that (a) As many as possible of cases which are still awaiting trial should be disposed of by 31st August 1948 (uncompleted trials which began before the date would continue). (b) In general no fresh trials should be started after 31st August 1948. This would particularly effect cases of alleged war criminals not now in custody who might subsequently come into our hands. 3. In our view punishment of war criminals is more a matter of discouraging future generations than of meting our retribution to every guilty individual. Moreover in view of future political developments in Germany envisaged by recent Tripartite talks we are convinced that it is now necessary to dispose of the past as soon as possible. 4. If Commonwealth Governments have any comments on arrangements proposed we should be glad to receive these by 28 July. Min & Dept E.A. (att) Min & Dept Defence A.G.'s Dept. 14th July 1948 Senator PETER BAUME —To the best of my knowledge and from the documents I have received, it appears that no reply was ever sent by the Commonwealth of Australia to that request from the British Government-the Labour Government in Britain-to the Labor Government in Australia, asking it to cease all prosecutions of war criminals after a date in 1948. One of the documents released to me under FOI is a hand-written note, which I take it is an internal file document, saying that no response has been discovered. The matter does not end there, because the question of Klaus Barbie comes up. Klaus Barbie is, I believe, a Frenchman who is at present awaiting trial on certain charges relating to his activities during the war. It appears that there was some question of Klaus Barbie coming to Australia, and some of the documents which have been released to me suggest that this is so. I refer first to a document from the Department of the Army, Office of the Assistant Chief of Staff for Intelligence, Washington, DC-that is, the United States Army-received on 15 August 1983. It was addressed to the Office of the Army Attache, Embassy of Australia, and it reads as follows: 1. In processing the Army-orginated records concerned Klaus Barbie, the attached classified document information originating with the Australian Government, was located. 2. Request you review the Australian Government information contained in the document and determine whether there is any objection to the release of this information to the general public. It goes on to say that any questions are to be referred to certain people. The document, which apparently refers to Barbie, talks about a new form of processing of German nationals who may wish to come to Australia. I have in my possession as well a Department of Foreign Affairs minute dated 25 October 1983 which carries the heading `War Crimes-Klaus Barbie'. It refers to the attached letter dated 7 October from Washington concerning the United States Army inquiry and is over the signature of Brian Matthews of the General Legal Section. It says: I agree with Washington that on its own the letter appears innocuous. Seen in the context of its existence on a US Army Intelligence file on Klaus Barbie, however, the letter suggests the Australian Government was, at the request of the United States, giving consideration to the re-settlement of Klaus Barbie in Australia. Paragraph 6, set out below, is quite specific on this point. Paragraph 6 reads as follows: Cases such as those you proposed in our discussion would come under a special category. this is the document talking about a new way of processing migrants to Australia-- In this connection, representations have been made to Australia, the special conditions mentioned by you being placed before them. I will now await a decision and you will be informed when it is known. The minute then goes on to say: The use of the plural `cases such as those . . .' implies that the inquiry was not restricted to just Klaus Barbie. It appears that the Australian Government has indicated that it did not agree to the public release of these documents to the United States Army. I believe they should be released and, in if they were not public, they certainly are now. Anyone who wants them can get them from me. I come back to the points made by Senate Sir John Carrick. I believe that Australian governments-whether it was the Chiefly Government or the Liberal governments that followed-acted in good faith to try to resettle people in this country. I believe that they tried to screen people. I believe that it is outrageous that the British Government should have sought to impose upon the Commonwealth countries in 1948 the proposal that they should cease any pursuit or prosecution of war criminals. It displays a selective kind of morality which I find it impossible to understand or to accept. I suppose it is the same kind of morality which caused the chetniks to be sent back to Marshal Tito after the war, after we had supported King Peter while it was in our interests so to do. I do not support for one moment that the search for nazis should ever end and that those who were war criminals should not be brought to justice if there is evidence against them, and for as long as they live. In saying that, I know that I echo the views of many people who share my sense of right and wrong. I put on record the fact that we are appalled that the British Government should have acted this way. We are not saying that the Australian Government responded inappropriately, because I do not know that it did, but I know that many of the approvals for people who entered this country were made in those years from 1945 to 1950, including approval for Mr Urbanchich. For that approval, of course, we still have to bear the consequences. I hope that this country will try to get the facts clear to avoid witch hunts of different communities, and that if we do find any war criminals in this country they will be dealt with firmly and appropriately. Senator COLSTON(Queensland)(1.31) —I wish to make some comments about an article in today's Courier-Mail headed `Phone taps save drug addicts' lives-police'. In this article the Vice-President of the Queensland Police Union, Detective Sergeant John O'Gorman, was quoted as saying that he was disgusted by Australian Labor Party Caucus moves to block plans to give telephone tapping powers to State police forces. I believe that Sergeant O'Gorman has every right in a democratic country to be disgusted. Whether he has a reason to be disgusted is another matter. But his disgust will not sway those who also have a strong belief that civil liberties in Australian society are worth preserving. Sergeant O'Gorman should not be surprised to know that there are still some people who do not want to see our country become a police State. Quite frankly, I would find it difficult to trust some police officers with telephone tapping powers. The abortive, and in some ways frightening, raid on a rural property in Queensland in real swat style, as outlined in the National Times last week is an indication of how inept the police organisation can be in Queensland. I spent three years in the Queensland Police Department as a public servant. During that time I met many fine police officers whose professional judgment I would trust. I have met similar officers in the visits that I have had to provincial cities and rural areas in Queensland since I have been a member of this place. But in my time as a public servant in the Queensland Police Department, I saw some things that almost made my hair curl. I do not think it would be proper for me to go any further than that, but suffice it to say that I do not want to see phone tapping powers given to State police. The dangers to our liberties are far too high. The Queensland Police Department should have the investigative skill to track down drug dealers, drug pushers and addicts without listening to the telephone conversations of the State citizens. When everything is fair and above board in the Queensland Police Department Sergeant O'Gorman may have reason to be disgusted, but things are not fair and above board. For example, just how long has an illegal casino been operating in Wickham Street, Fortitude Valley, in Brisbane? Perhaps the police force does not know about it. Perhaps it does know and someone or some people are on the take. I presume it is the latter. Senator REID(Australian Capital Territory)(1.33) —For a young person these days, attempting to obtain employment can be quite traumatic, especially for a young person with some form of a problem which makes it more difficult than average. It has been difficult for young people to obtain jobs, and I wish to refer to two in my electorate who have had particular difficulties, each with different areas of the Public Service, which I would ask to be looked into. One concerns a young man who applied to the Public Service Board for an opportunity to take part in the examination system on 4 November 1985. The letter which I will seek to have incorporated indicates that he made phone calls to try to find out what was happening. He then sent another copy in February 1986 and made phone calls. He subsequently sent a third similar letter on 21 March 1986, and the Public Service Board in a letter which has the reference 86/3649 indicates that it received the letter `late last month'. That letter was dated 23 April 1986 and would undoubtedly refer to the third letter sent in March. I do not really know what happened, but it would seem that the phone calls that this young man made to the Board were not adequately followed up. It may well be that both the previous letters did not get there for some reason. But surely the phone calls would have prompted somebody with some diligence to follow up what had occurred. It seems that just nothing was done until the date in March 1986 to which I have referred. In the letter to which I have referred it was said that he would be able to sit for the examination as speedily as possible. It is traumatic looking for a job, especially when one has a handicap, and this lack of apparent interest is discouraging indeed. I seek leave to have incorporated in Hansard a copy of a letter which I have received and which sets out in more detail the story that I have briefly referred to. Leave granted. The document reads as follows- 26 March 1986 Senator Margaret Reid Parliament House Canberra, A.C.T. 2600 Dear Senator Reid, I am writing to you to seek your assistance in the case of my son, , who is trying to obtain permanent employment in the Australian Public Service. Briefly, the history of the case is that during October 1985, my son heard through a third person that there were special testing facilities available in the Public Service for applicants with recognised disabilities and other special groups. He therefore contacted the Special Placements Officer in the Office of the Public Service Board by telephone, and was advised to submit an application in writing, together with a medical certificate. This he did on 4 November 1985. Because he had not received an acknowledgement of receipt of his application, he phoned the Special Placements Officer after about a month had elapsed. He was advised that his letter had been received and was being processed. It was expected that a test would be held about the end of January 1986. About the middle of January 1986 when he had received no advice, either written or by phone, he again contacted the Special Placements Officer by telephone, who reaffirmed that the next test was to be held at the end of January, 1986 and that he would be advised in writing of the necessary details. When an advertisement appeared in ``The Canberra Times'' towards the end of January 1986, advising that a Clerical Assistants Test was to be held on 8 February 1986, my son, having heard nothing from the Board, again contacted the Special Placements Officer, and was advised that a special test would be held on a different date in February, and that he would be advised accordingly. By the middle of February, when Michael had not been contacted by the Board, he again wrote to the Special Placements Officer. When he received no acknowledgement of his letter by the end of February 1986, he telephoned the Special Placements Officer once again. This officer advised him that neither his original application, nor his February letter could be located. However, every effort would be made to find the two letters and he would be contacted. No contact was made. After more phone calls and more fobbing off, Michael was advised by the Special Placements Officer on 14 March 1986 that the search for the letters had been unsuccessful, and to submit a fresh application together with another medical certificate, and to bring them to him at 9.30 a.m. on Friday, 21 March 1986. Michael kept the appointment, armed with the new application and medical certificate. To his surprise the Special Placements Officer said he had found the original application and the February letter. The Medical Certificate was still missing. The Officer advised Michael that he ``thought'' that a Test would be held in April, but could not give any definite date. You will agree, I am sure, that this situation is most unsatisfactory, and is an example of bureaucratic incompetence at its worst. I am therefore seeking your assistance in obtaining written acknowledgement of his application, and his eligibility to avail himself of the Board's special testing facilities. Also I would like assurance that the original medical certificate has been sighted only by those entitled to see it in the course of their duties, and that a thorough search of the Board's records has been undertaken. The ``missing'' Medical Certificate contained information of a highly confidential nature, and I am most concerned that this information does not fall into the hands of anyone, who may use it against Michael at some future date. Yours sincerely Senator REID —The other, a young lady, applied to the Department of Territories for a job in one of the hospitals. Again I will seek leave to incorporate the history of what had occurred. It is a similar type of story of a young person having great difficulty in getting an answer as to what was occurring, of being told that things were being posted and not receiving them when she expected them. I say to those who are responsible for the administration of the Public Service: Please try to see that these areas function smoothly and with great compassion because it is important. It is all very well to spend vast sums of money in what might be called `self-promotion' with the Priority One scheme, but where young people are actually interfacing with the Public Service it is important, as I said, that compassion and some diligence apply. I seek leave to have incorporated in Hansard a letter to the Minister for Territories (Mr Scholes) and a summary of the submission to which referred. Leave granted. The documents read as follows- 4 May 1986 The Minister for Territories Parliament House Canberra A.C.T. 2600. Dear Minister, I wish to protest most strongly at the apathy shown by the School of Nursing at Royal Canberra Hospital, to my daughter Elizabeth, aged 17, who was an unsuccessful candidate for the current Enrolled Nurses course being conducted by the above School. I must emphasise at the outset that the fact that Elizabeth was an unsuccessful is not the basis of this complaint. The total lack of professionalism is evidenced by the administrative bungling, which appears to be endemic in the Canberra Health system, and is borne out by the facts appended herewith, in chronological order at Appendix A. All too often there are those of my generation who hasten to label the unemployed young people of this country as `Dole Bludgers', `Layabouts', etc. If other young people seeking a career have been treated with the same insensitivity and apathy encountered by my daughter, then not only are the labels attached to these people unfair to say the least, but I can well understand why so many people throw themselves upon the Social Security system in order to avoid further disillusionment, brought on by shattered expectations by incompetent and impassive prospective employers. Surely it is not asking too much to expect a prospective employer to notify an applicant of their application being unsuccessful in order that that person may at least, without undue delay, look to new horizons. I will not labour the points which are appended, but I pose the following questions and await your reply: 1. If an inexperienced person of 17 years can competently administer the requirements of recruitment, why cannot the staff of the School of Nursing at the Royal Canberra Hospital do likewise. 2. Why was not Elizabeth informed of the requirement to sit an examination in order that she could have been prepared. NB:-A recent advertisement for a similar course conducted by the Queanbeyan and Cooma hospitals clearly set out this requirement in their advertisement. 3. When might Elizabeth expect to receive the letter, and requested documents which she was told over one week ago, were `being posted' 4. What steps will you take to ensure that future applicants will not be treated with the same apathy encountered in this case. I await your reply. Yours sincerely MINISTERIAL SUBMISSION-MALADMINISTRATION, SCHOOL OF NURSING, ROYAL CANBERRA HOSPITAL (1) Applications for an Enrolled Nurses Course were called for by advertisement in the Canberra Times on 15.2.86. (2) On 20.2.86 my daughter, Elizabeth, handed in her application having completed the requirement for her to have a dental examination prior to application. (3) On 21.3.86 RCH advised of date of interview, i.e. 26.3.86. (4) Immediately prior to interview Elizabeth was asked to complete some questions, which turned out to be an English Comprehension examination, with no apparent time limit, and no forewarning of this requirement. (5) At interview Elizabeth asked whether she would be informed if her application was unsuccessful, and she was advised that she would be informed by telephone either way. (6) In the subsequent weeks from 26.3.86 there ensued a period of absolute silence on the part of RCH, and a period of confinement to the home for Elizabeth awaiting the expected phone call. (The expected phone call, as you may well have guessed did not and has not to date of writing, arrived). (7) On 18.4.86 (5 working days before Course starting date) Elizabeth phoned RCH and was told she had been unsuccessful. She queried which part of the Selection Criteria she had failed to meet and was advised to ring RCH on the following Monday and speak to someone from the School of Nursing. (8) On 21.4.86 Elizabeth phone RCH and was asked to ring the next day to speak with a Mrs Walters. (9) On 22.4.86 Elizabeth again phoned RCH to be told Mrs Walters was in conference and to phone back. This she did. Mrs Walters was again in conference and the employee asked if she could be of any help. When the query was raised as to the Selection Criteria Elizabeth was miraculously connected with Mrs Walters who advised her: (i) she had not met the communication requirements; (ii) she was on the reserve list; (iii) she would be notified by letter, which was being posted; and (iv) in reply to a request, that her curriculum vitae, etc. would be returned. (10) On 30.4.86 I rang to speak with Mrs Walters and was advised she was unavailable. I then: (a) enquired as to the whereabouts of the expected letter said by Mrs Walters to have been `being posted'; (b) indicated my intention to protest at Ministerial level over the apathy and inefficiency shown; (c) pointed out the difficulties associated with young people endeavouring to establish their careers, and the necessity to inform them promptly of interview results in order that they may seek alternative employment; (d) was asked to: (i) `put this in writing'; (ii) phone back to speak with the elusive Mrs Walters; (iii) give my phone number in order that Walters may contact me. (in the light of previously detailed facts, I felt (iii) above would have been futile), and was advised that: (e) 160 letters had to be sent out to unsuccessful applicants and there was only one person to carry out this task. As previously mentioned in the covering letter hereto, the letter advising Elizabeth she had been unsuccessful is still awaited. Sitting suspended from 1.38 to 2 p.m. Senator BUTTON(Victoria-Leader of the Government in the Senate) —by leave-I inform the Senate that the Minister for Trade, Mr Dawkins, leaves for official duty in the Republic of Korea, Canada and the United States of America today. He will return to Australia on 8 June. During his absence the Minister for Primary Industry, Mr Kerin, will be Acting Minister for Trade. I also inform the Senate that the Deputy Leader in the Senate, Senator Grimes, will be a few minutes late for Question Time today. Will those senators who, for some reason that I cannot for the life of me understand, are anxious to pursue welfare matters today hold those questions for a little while until Senator Grimes returns? Senator CHANEY —My question, to the Leader of the Government in the Senate, concerns the economic mess disclosed by the national accounts which have just been issued. I remind the Minister that some time ago he indicated that he was quite happy to accept the credit for the good things that happen in the economy and he understood that that would mean that he would have to take the blame for the bad things that happen. I refer him to the national accounts which show negative real growth in the economy for the second quarter in succession and a significant drop in real private investment for the third quarter in succession. I refer also to yesterday's statistics which showed no evidence of a production pick-up last month and the fact that the national accounts confirm the depressed level of private investment and expectations revealed in yesterday's Australian Bureau of Statistics survey. In light of all this evidence, will the Minister now acknowledge the need for fundamental change to Government economic policy settings, and in particular will the Government alter its policies to get interest rates down so that investment and economic growth can resume? Senator BUTTON —I take on board Senator Chaney's angst displayed in the question and the concern about the national accounts figures and the investment figures published yesterday. I remind Senator Chaney of two things. The terms of trade turned very sharply against Australia, particularly in the December quarter last year and in the March quarter this year. That has been a significant factor in itself. Senator Michael Baume —It was all forecast in the Budget; look at page 73 of the Budget Papers. Senator BUTTON —Senator Michael Baume is on the Waste Watch Committee. He should look at his own waste sometimes, instead of interjecting here with silly comments. The terms of trade figures for the two quarters are of course very bad and the Government has acknowledged that fact. The second point is one about which honourable senators do not need to be reminded because they have been reminding us for six months, but in October the Government took a quite deliberate decision to slow down the rate of growth in the Australian economy. It is a matter of which the Opposition has been complaining for the last six months and trying to make hay about. That was a deliberate decision which has clearly taken effect in the two quarters in question. Senator Chaney rightly said that the figures for the quarter show a negative growth rate. I would remind him in respect of these two quarters, having regard to the very strong performance in the September quarter, that if the June quarter is the same as March-that is, a weak quarter-we will still record a 4.5 per cent GDP growth for the financial year. I was asked whether the Government would change its policies in respect of interest rates in particular. I do not know whether there is any other aspect of that part of the question. Senator Chaney —Will you alter all those policies which will then enable you to get interest rates down? Senator BUTTON —We are asked to alter all those polices which will enable us to get interest rates down. I remind Senator Chaney again that monetary policy has been eased slightly and interest rates are coming down. Compared with two months ago, when Opposition senators were making complaints, interest rates have come down considerably. There are of course other factors relating to interest rates which concern fiscal policy particularly, which the Government will be addressing in the context of the forthcoming Budget. I summarise by saying that the figures are disappointing. They look disappointing and they look bad, particularly in the light of the national account figures which have been published in every quarter since the end of 1983 after this Government came to power. Senator CHANEY —I ask a supplementary question. I thank the Leader of the Government for his answer and refer to his comment that in October the Government took a deliberate decision to slow down the rate of economic growth. Is it still the Government's intention to slow down the rate of economic growth? Senator BUTTON —The answer to that question is, in terms of the application of rigorous monetary policies as applied earlier, no. Senator CROWLEY —My question is addressed to the Leader of the Government in the Senate. I draw the Minister's attention to an advertisement in a recent issue of the Australian Financial Review. The advertisement features Sir Joh Bjelke-Petersen and his wife blatantly promoting the services of a real estate company. What does the Minister make of this obvious abuse by the Premier and his good wife of their positions? Does the Minister see any similarity between being found between the pages of the Financial Review and being found between the sheets of the Australian Women's Weekly? Senator BUTTON —I personally would be quite incapable of commenting on the last part of Senator Crowley's question; I have no expertise in those matters, and I will not make any comment. The advertisement in question has been drawn to my attention and anything I say is said more in sorrow than in anger. It is a source of great regret to see prominent Australians in positions of public life taking part in advertisements for private concerns. The advertisement in question is for Jones Lang Wootton, the real estate agents. I thought that in public life we had disposed of the notion that politicians should lend themselves to advertising campaigns for private companies at the time of the extraordinary incident with the Sheridan sheets, which involved the former leader of the Liberal Party some years ago. I very much regret that the Premier of Queensland and his wife have participated in advertisements of this kind, because I regard it as a departure from the appropriate standards of public life. It is to me in sharp contrast with the Premier's persistent attempts to cajole or incite people to break the law in respect of taxation measures introduced in this Parliament. I find the double standard associated with that unusual and extraordinary. I also find the advertisement itself extraordinary. The heading of the advertisement is `Great teams of our time' and the text reads: Parents of four children, grandparents of eight, the Bjelke-Petersens epitomise teamwork in its purest form, practised to perfection to produce outstanding results. I do not know what all that means, but it seems to suggest that perhaps it is a beautiful thing after all. I find it extraordinary that the Bjelke-Petersens should have lent themselves to that advertisement without at least having perused the text and understanding what they were being put in for. I am sorry about the advertisement, but it is not for me to pass judgment about other people's conduct. Senator MESSNER —I refer the Leader of the Government in the Senate to repeated claims by the Treasurer that despite the serious current account situation the domestic economy has remained healthy. In the light of today's national accounts, and in particular the fact that for two successive quarters there has been a decline in real non-farm product, does the Minister agree that Australia is now on the brink of recession? Senator BUTTON —No, I do not. This is clearly one of those questions which have been put forward and prepared by what I euphemistically call the `Liberal Party think tank' before Question Time. Having regard to the answer which I gave to Senator Chaney's question I find it surprising that it is asked. Of course, the Treasurer has been correct in saying that on the basis of all published figures, the broad range of economic indicators, growth rates, et cetera, the domestic economy in Australia has been very healthy since this Government came to office, particularly in regard to the bits we had to pick up after the Opposition's mess of seven years in government. Senator Chaney —Where are you now? Senator BUTTON —The honourable member asks where are we now. I do not know what he would do if he were in government. I suppose he would send the Prime Minister off to a royal wedding or something in order that the wages policy could collapse while he was away. That would be a brilliant suggestion which would emanate from the Liberals no doubt. Yes, the domestic economy has remained healthy, but the downturn in the terms of trade has been very significant in the domestic economy effects. As Senator Messner knows, and as I answered Senator Chaney, the effect of high interest rates which has been designed to decelerate the rate of growth in the Australian economy was a quite deliberate decision of the Government and, of course, that will have adverse effects on many of those economic indicators. We recognised that at the time and we do not retreat from that in any way. I have been given a variety of fairly mindless interjections such as: `Where are you now'. My answer to `where are you now' is, in a period of some difficulty which is a matter of national importance. I have absolute confidence that this Government with the economic management skills it has displayed will be able to resolve those difficulties over time. Wait and see. Senator MESSNER —I ask a supplementary question, Mr President. Was it part of the Government's deliberate intention to bring the economy to the brink of recession? Senator BUTTON —I do not really regard that as a supplementary question. These flamboyant phrases do not mean anything. I would think that Senator Messner has been bordering on the brink of depression for a very long time. Anything this Government does might make him topple over. I ask him to wait a while. Senator DEVLIN —The Minister for Veterans' Affairs would be aware of a Press release by the Opposition spokesman on veterans' affairs, Mr Tim Fischer, alleging that the Minister improperly used the Australian War Memorial for a ceremony associated with the proclamation of the Veterans' Entitlements Act. Is there any substance to this claim? Senator GIETZELT —Yes, I am aware of the Press statement put out by Mr Tim Fischer, my shadow opponent. I am very surprised and disgusted at the statement which he issued and also at the tenor of the question that he asked of my representative Mr Clyde Holding in the House of Represenatives last Thursday. The fact is that the passage of the Veterans' Entitlements Bill in the Parliament, now known as the Veterans' Entitlements Act, was the most significant piece of repatriation legislation in post-war years. As such, it was determined in a discussion with my Department that there should be a ceremony for the actual proclamation of the legislation with invitations extended to the veteran community. The Department, therefore, took steps to itemise suitable venues for the holding of such a function. The Department then made the decision that the suitable place for the proclamation ceremony would be the Australian War Memorial. That event took place last Thursday. The reasons advanced were that it was significant legislation, that it was a matter of some importance to the veteran community, and that the War Memorial had the facilities and the venue suitable for such a function. However, the function was a non-political function, and it causes me some concern that a member of the Opposition parties would take the position which Mr Tim Fischer took. The function was opened by the Director of the Memorial. The Chairperson of the Memorial then spoke, followed by the President of the Repatriation Commission, Mr Derek Volker. I then spoke as the Minister and I was then supported by Sir William Keys on behalf of the veteran community. The only reference to politics which was expressed at the function was made by Sir William Keys when he thanked the Parliament and the Government. He thanked the Opposition parties and the Australian Democrats for their co-operation, following extensive consultations for the passage of the legislation. That was the only time there were any sorts of party-political references made. This is not the first time that Mr Tim Fischer has departed from what I regard as the normal behaviour between Government and Opposition. For example, he requested information from my Department some time ago, and due to a typographical error on the assets test, he was given a figure of 4.3 per cent instead of 3.4 per cent. That error was discovered within 24 hours and he was subsequently advised. Nevertheless, he circularised a great number of organisations and persons with the original figure and not the amended figure, causing a greater degree of concern than was otherwise occasioned. He also claimed credit for 40 of the 42 amendments which the Government accepted in the Senate arising from the debate in the Senate. As he knows, and as we well know, many of those amendments were put forward by the Government, by the Democrats, as well as by the Opposition. Again, he got very very close to misconstruing and misrepresenting the Opposition's political position. One then has to wonder whether the facilities which are normally available to shadow Ministers should be continued if Mr Tim Fischer is going to play politics the hard way as he did in respect of this particular matter. Senator MACKLIN —Is the Minister for Veterans' Affairs aware of a report in this month's issues of Vetaffairs noting that a nation-wide training campaign is currently being held for departmental staff to familiarise them with the new guide to assessment of rates of veterans' pensions? Can the Minister confirm that under the recently passed Veterans' Entitlements Act, this guide must be tabled in Parliament and is subject to disallowance. Can the Minister explain why copies of the guide have not been laid before Parliament, whereas they have already been given to departmental officers and are being widely distributed in the community? Senator GIETZELT —I have not seen the particular article to which Senator Macklin refers, but I will certainly check out that information and give him a very early reply. Senator MACKLIN —I ask a supplementary question, Mr President. Can the Minister answer the second part of my question which is that this guide must be tabled and why it is now available widely within the community and to departmental officers when it has not been tabled in this place? Senator GIETZELT —I have nothing further to add. Senator RICHARDSON —I direct my question to the Minister for Finance. Has he seen an article in this morning's Canberra Times reporting that an Australian Capital Territory solicitor, Mr Gary Humphries, who is apparently also a vice-president of the Australian Capital Territory division of the Liberal Party, had received a cheque from the Department of Finance for $2,929 and a computer print-out showing various deductions from 34 New South Wales Federal Labor parliamentarians' salaries adding up to that figure, which he imputed was an attempt to bribe him? Can he advise the Senate of the circumstances in which Mr Humphries received the cheque? Will the Minister consider setting up a royal commission into these allegations to give all of those New South Wales parliamentarians an attempt to clear their name? Senator WALSH —I am not in charge of royal commissions but I certainly would not recommend that a royal commission investigate this matter, although I would recommend an investigation by the relevant law society into the unprofessional behaviour of Mr Humphries. However, that is not a matter which the Government per se can take up. The cheque in question was mistakenly posted to a firm of solicitors, Elringtons, instead of to the New South Wales Branch of the Australian Labor Party. My office was told yesterday afternoon by a journalist from Capital 7 that this had happened. The matter was then investigated and the journalist was advised according to the Press release which was issued later yesterday. It explained that a coding error had caused the cheque to be misdirected. The Press release is already a public document. Mr Humphries had apparently taken the cheque to the television station rather than returning it to the Department of Finance, as one would have expected any honest person to do. I was surprised by the allegations of bribery in the release distributed by Mr Humphries in the Press Gallery last night. It is a silly political stunt of the type that should qualify him for membership of the Liberal Party's Waste Watch Committee. It seems that there is a clear case of libel against some senior Cabinet Ministers in Mr Humphies's Press statement. I do not know whether they want to take up the matter. Finally, Mr Humphries' behaviour was certainly questionable and, in my view, unethical. I would hope that the Law Society and Mr Humphries' colleagues at Elringtons will advise him that his conduct was unprofessional and take action accordingly. Senator DURACK —My question, which is directed to the Leader of the Government in the Senate, relates to the management skills of the Government which he has recently claimed. I refer the Leader to the recent Organisation for Economic Co-operation and Development report on labour market flexibility, which argues in favour of a tripartite approach to economic and labour market policy formulation. Does he support the view expressed in that report that full automatic wage indexation should be halted, or at least modified, as in all other countries? Will the Government seek to extract increased flexibility from the trade union movement at next week's mini-summit? Senator BUTTON —I am not aware of the particular OECD report to which Senator Durack referred; he did not identify it. I do know that several OECD reports have commented very favourably on the success of this Government in producing a prices and incomes policy in Australia which worked. There is no doubt that some OECD reports have stated that a greater degree of flexibility in that system would be more desirable. They have also stated, I repeat, that we have been successful in providing a prices and incomes policy which worked. That has been the essential comment contained in the OECD reports. I do not know the particular reference to which Senator Durack referred. He asked me whether, on the basis of some OECD recommendation, full automatic wage indexation should be halted. I think that was the expression that he used. He went on to ask what the Government would be putting to the trade unions at the Advisory Committee on Prices and Incomes meeting next week. All I am able to say at this stage-it is public knowledge-is that the question of wages will be on the agenda. I suppose curiosity is a great thing, but the process of discussion and negotiation about these issues is not helped by my saying publicly in the Senate what approach the Government will be taking on those issues. Let me say that the issue of wages will be on the agenda. As for Senator Durack's gratuitous piece of sarcasm at the beginning of his question about this Government's management skills, I find it extraordinary that the suggestion should be made by an Attorney-General in a former Liberal government whose management skills were displayed when he left files in drawers at the bottom of his desk for several years. It is a matter of public knowledge that I do not agree with the Treasurer in the present Government on everything. Nobody would with any Minister in any government. But one thing on which I do agree with him to the utmost is that members of the Opposition could not manage a tart shop. Senator COLEMAN —My question is directed to the Minister representing the Minister for Foreign Affairs. I refer to Press reports today that the Reagan Administration has served notice that it tends to end observance of the provisions of the SALT II Treaty in the near future. Inasmuch as the Australian Government's position on nuclear weapons is based on support for arms control measures and that the SALT II Treaty, despite not being ratified by the United States of America, is commonly recognised as the most effective arms control agreement existing, will the Government express its complete rejection of this unilateral action by the United States? Senator GARETH EVANS —The Government's position on this matter is in the following terms: In a recent exchange of letters with President Reagan, the Prime Minister informed him of the Australian Government's views on the issues of United States and Soviet compliance with the SALT II Treaty. The Australian Government attaches great importance to the existing regime of nuclear arms control, including the SALT II Treaty, because of the important degree of predictability it establishes and because it provides a basis for negotiating new agreements to reduce the level of armaments, both nuclear and conventional. The Government understands the United States concerns about Soviet compliance with particular provisions of the SALT agreements. It has made clear Australia's view that the Soviets have a case to answer on specific issues and this view was conveyed directly to the Soviet Government in a recent letter from the Prime Minister to General Secretary Gorbachev. President Reagan's decision, announced a couple of days ago, that the United States will, in future, no longer necessarily be bound by SALT II limits underlines the grave situation which has now arisen for the arms control process. The situation demands close and careful analysis, which the Government is undertaking as a matter of urgency. Senator WATSON —My question is directed to the Minister representing the Minister for Territories. Given the importance of establishing within the new and permanent Parliament House significant national identification of the Australian way of life, its history and its resources, I ask: Why was Australian produced wool carpet excluded in favour of a product from New Zealand? Could not at least a portion of the contract have been reserved for Australian industry? Senator GIETZELT —I have no advice on that matter from the Department of Territories. I will seek an early response for Senator Watson. Senator MORRIS —The Minister for Veterans' Affairs will be aware of often repeated criticisms of the Department of Veterans' Affairs that delays in the processing of claims are unsatisfactory and that the situation in recent times has worsened. Would the Minister care to comment on these allegations, particularly as he is on public record as having defended these delays? Senator GIETZELT —On several occasions I have answered questions in respect of outstanding applications for pensions and variations of pensions. The most recent information I have is that the number of entitlement applications has decreased as a result of the improved system that has been operating since 1 January 1985. It decreased from 28,000 to 20,000 in round figures. Similarly, the number of assessment cases dropped from about 13,700 to about 8,500 over the same period, which would be a drop of approximately 41,000 to 28,000. Several days ago my Department advised me that there has been a steady reduction in the number of cases outstanding. The only State in which a peak position is still to be reached is Western Australia. Special steps have been taken in my State of New South Wales to maintain the very improved position that has taken place, in South Australia, Victoria and Tasmania. We are hopeful that we will be on target by about the end of this year. Senator PARER —My question is directed to the Leader of the Government in the Senate. Is the Minister aware of the leaked confidential Treasury forecasts which claim that by June 1987 Australia's gross external debt could total $100 billion or $6,330 for every man, woman and child in Australia? Do the April balance of payments figures confirm to the Government that our ability to pay our way in the world is decreasing rather than increasing? Does the Minister believe that the introduction of new taxes such as the capital gains tax and the fringe benefits tax, the Australian Council of Trade Unions-Government sponsored 3 per cent productivity claim and the maintenance of the inflexible accord will help to reduce our growing debt problem? Senator BUTTON —The answer to the first part of the question is no. The second part of the question relates to the April balance of trade figures and whether they indicate a decreasing rather than a rising standard of living. If one were to leap to conclusions based on a month's figures the answer to that part of the question would be yes. Then Senator Parer cranked up his old ideological machine and asked me about the fringe benefits tax, the capital gains tax and all that stuff. We have been through that before. When he can come into the chamber and tell me why the Opposition has compared for many years the growth rates and economic performance of this country with other countries of the Organisation for Economic Co-operation and Development, all of which have had a more stringent capital gains tax than has Australia, and when he can cite some respectable arguments as to why they have been so successful and we have not-- Senator Elstob —They are friends of the tax dodgers; that is why. Senator BUTTON —As Senator Elstob points out, that is largely because the Opposition has been dedicated to supporting tax avoidance. When Senator Parer can put some respectable arguments about those things, I will endeavour to answer that part of his question more seriously. When he can work out some alternative policies on some of these issues, again I will be prepared to answer those questions more seriously. Senator ROBERTSON —I direct my question to the Minister for Community Services. Has the Minister's attention been drawn to media reports that claim that the Northern Territory is not receiving its appropriate share of Commonwealth children's services and is suffering because of its remoteness and isolation? If so, will the Minister comment on these reports? Senator GRIMES —Yes, I have seen such reports. They usually emanate from a couple of groups in the Northern Territory which have vested interests, namely, the people who are running and those who are employed by two of the child care centres in the Northern Territory who seem to believe that the rest of the community has a duty to support them. In the main, the main centres of population in the Northern Territory-Alice Springs, Katherine, Gove, Tennant Creek and Darwin-have funding programs for children's services comparable with those in all the States. In fact the Northern Territory is pretty well off in those centres for children's services when compared with the other States. However, in remote areas and remote communities there are problems that create planning difficulties and this means that we have to take a different approach. While I was in the Territory last week I offered the Northern Territory Minister for Community Development a plan whereby, if he would contribute $120,000 on a dollar for dollar basis, we could provide a remote area children's services program. Over a three-year period we would be able to provide funds to assist people in remote areas where there are small numbers of children and in which there are very special and particular problems such as isolation, a high percentage of Aboriginals, et cetera. We could assist them in determining what their needs are and how best to fulfil them. This follows a pilot program which was run in the Northern Territory in 1983 and 1984 and which was directed primarily towards the needs of Aboriginal children. Under the proposed program that I have put forward we would look after the needs of both Aboriginal and white children. During the pilot program we put funds into a range of projects, including community recreation programs and the construction of things like basketball courts and playgrounds. These assisted very much in meeting the recreational needs of children in those areas. We also confirmed the wisdom of employing Aboriginal staff wherever possible to deliver these services to Aboriginal children. If we can develop a program which benefits both communities in the Northern Territory, through a joint Territory-Commonwealth program of this type, we will have a better planning method and we will ensure that the needs of the community and the very special needs of those remote areas are best met. But in the large population areas of the Northern Territory the services provided are on the same basis as for the rest of the community and at a level equal to the rest of the community. In fact the Northern Territory, with some very efficient and innovative children's services programs, is doing very well in this regard. Senator TOWNLEY —My question is directed to the Minister for Education. Did the Minister see the article in today's Australian headed `Up to 14,000 students barred from uni places'? It states: Between 9,000 and 14,000 Australian students eligible for entry and willing to accept an offer of a place were unable to start studies in higher education at the beginning of this year. That number represents a medium-sized university. Does the Minister agree with those figures? What action is to be taken to correct the situation and so utilise the abilities of our young and not so young people who wish to pursue university studies? Senator RYAN —Yes, I am aware of the newspaper report. More to the point, I am aware of the survey which was carried out by the Australian Vice-Chancellors Committee and the Australian Committee of Directors and Principals in Advanced Education to try to measure the extent of unmet demand in the higher education sector. I have that report available to me. If Senator Townley would like to see it he is welcome to do so. It qualifies very heavily the range of 9,000 to 14,000 places because it is very difficult to take into account things like students applying to more than one institution, students deciding to defer so that they can go into the work force and so on. However, there is a level of unmet demand and it is probably in the vicinity of 9,000 to 10,000, which is similar to what it was last year. However, there are some factors explaining it and I will draw Senator Townley's attention to the quotation of the Chairman of the New South Wales Universities and Colleges Admissions Centre which was quoted in today's Sydney Morning Herald. New South Wales is a State which has shown an increase in the number of people unable to get places. The Chairman, Mr Schroder, said: I'd guess in the main they-- that is, those who did not get offers- did not perform very highly. Then there are a certain number who have performed well and not applied at all . . . Mr Schroder said the unmet demand did not mean all places at institutions were filled. He said that in NSW there were more places available in nursing courses in CAEs and the same might apply to education courses at CAEs. That sort of comment demonstrates that some students apply for particular courses and, when they cannot get into those courses, they make other arrangements such as returning to school in order to try to get a higher pass or they get some work experience and intend to apply again. So the situation is better than the growth statistics suggest, although it is not a satisfactory situation; I agree with that. The Tertiary Education Commission has pointed in the same article to the growth of higher education enrolments which increased from 265,000 in 1983 to 292,000 in 1986. So certainly there has been a significant growth in places available, partly because of our success in getting students to complete secondary schooling, partly because of the increased student allowances and, of course, because of the increased funding available to higher education institutions. The Government is intent on continuing to build up the number of places available. At the same time, we recognise that not all students will be successful in gaining places. We hope that many who do apply will reapply next year in a stronger position and will be successful. Senator ELSTOB —My question, which is directed to the Minister representing the Minister Assisting the Prime Minister for Youth Affairs, refers to the national drug offensive. Can the Minister say where the offensive's anti-drug information campaign is likely to include a more direct and hard-hitting exposure of the dreadful effects of drug abuse? Is the Minister able to say whether the Government is satisfied with the present coverage given to drug abuse in schools' health education programs? Senator BUTTON —I am not able to give a meticulously detailed answer. It requires an answer at two levels. One is related to the drug offensive which is a joint initiative of State and Federal governments. There is significant evidence that the level of debate and discussion about the danger of drug abuse generated by that campaign has been very substantial. That is particularly seen in responses to surveys about the recall of television-provided information and so on. That level of recall is considerably higher than it normally is for transmitted television information. The drug offensive has had more than 5.4 million booklets distributed to Australian households. Senator Lewis —Just getting yourselves re-elected. Senator BUTTON —A great number of information kits have been distributed and there have been hours of electronic media coverage. Senator Lewis —And advertising of the Labor Party. Was there anything else? There was television advertising selling you and your Government. Senator BUTTON —In spite of all that campaigning, Senator Lewis still interjects as if he has been smoking pot for a week-silly, pot-headed interjections from Senator Lewis in spite of that campaign conducted in Australian households. The only real hop-head it has missed is Senator Lewis. There has been general exposure of the information which has been sought to be purveyed in the drug offensive. The second part of Senator Elstob's question relates to the schools program on drug abuse. A number of projects have been set under way in various schools by Commonwealth and State governments. Many millions of dollars have been spent. About 138 on-the-ground programs have been placed in line at a cost of $24m. One million dollars has been devoted to educative programs in Western Australia, $5.6m in New South Wales and $360,000 is Tasmania. All are school-based projects. In Victoria, $3m has been allocated and in South Australia, Senator Elstob's State, $800,000 has been allocated. This education funding is organised through a variety of mechanisms not school-based alone but spreading into the community. Of course, there can never be satisfaction with the results of a campaign of this kind because no such campaign can be successful in eradicating abuses of drugs or perhaps in making more than a reasonable impression on the abuse of drugs. Senator Lewis —You are trying to sell yourselves to the kids of Australia. You should do something decent about it. Senator BUTTON —The process has been going very well so far. To that extent, the Government is pleased with the program. I say again that the only progress that has not been made is by Senator Lewis who is mumbling away-perhaps I was unkind to him-under the influence of alcohol probably. Senator Chaney —I take a point of order. I ask the Leader of the Government in the Senate to withdraw the comment which he made about Senator Lewis at the end of his answer. The comment was thoroughly objectionable and should be withdrawn. The PRESIDENT —Order! I did not hear the statement. If Senator Button said something that was offensive, I am sure that he will withdraw it. Senator Button —Perhaps it should be repeated, Mr President. Senator Chaney —I take a point of order. The Leader of the Government's desire to amuse the Press Gallery is no doubt very noble but I suggest that he ought to show a little dignity and a little respect for senators. He ought to withdraw the remark without any further messing about. The PRESIDENT —Order! Again I say that the Chair did not hear the remarks of Senator Button at the end of his answer. If he said something outside the Standing Orders I ask him to withdraw it. Senator Button —Mr President, I made about five remarks which might be regarded as being offensive to Senator Lewis. He was interjecting repeatedly throughout my answer. Senator Chaney took a point of order about the last part of my answer, but I withdraw all those remarks. I wish that Senator Lewis would withdraw his interjections at the same time. Senator BJELKE-PETERSEN —My question is to the Minister representing the Minister for Aviation. It concerns changes to the calculation of air navigation charges which will become effective as at 1 July 1986. Is the Minister aware that one airline operating in regional Queensland will face an increase in charges of about $310,000? Can the Minister appreciate that regional airlines should not be compared with the major airlines for these charges as they do not require long runways, primary control zones and fire services for their operation? What is the Minister's reaction to the fact that any increases in air navigation charges will have to be passed on to the travelling public-in this instance, the regional commuters of Queensland-probably resulting in a significant decline in passenger numbers and, more worrying, in employment? Is the Minister prepared to look at regional services in a more sympathetic light, taking into account their dissimilarities with major airlines and the fact that they provide a much needed communication service for people already disadvantaged by isolation? Senator GIETZELT —Senator Bjelke- Petersen has raised a specific problem dealing with regional commuter services in Queensland. I imagine that this would have the same application in some of the other large States. As the honourable senator understands and accepts, the charges will commence on 1 July. It is a part of the cost recovery program that has been approved and agreed to by the Parliament and will continue the substantial progress towards cost recovery which has been synonymous with that of previous governments and of this Government. The honourable senator raised some specific concerns about some of the smaller airlines in the more outlying areas. She asks whether the Minister for Aviation is aware of the implications. I only represent the Minister in this place and cannot say whether he is aware, but I imagine that he would be aware, of the difficulties created by the cost recovery program. I will take steps to draw the Minister's attention to that matter to see whether there is any discretionary power in the legislation that may temporarily at least alleviate some of the concerns expressed by the honourable senator. I will ask for an early response to her question. Senator REYNOLDS —Is the Minister for Education aware of the lack of progress in transferring nurse education to colleges of advanced education in Queensland? What steps can be taken to give Queensland nurses the same professional opportunities as are being developed in other States? Does the Minister consider that the latest 7 per cent drop in the Queensland Premier's already low approval rating is related in any way to his Government's persistent refusal to negotiate and co-operate with the Federal Government on this important issue and so many other issues? Senator RYAN —Our Government is very concerned that the Queensland Government refuses to act and co-operate in respect of the transfer of nurse education to colleges of advanced education in Queensland. I am sure that our concern is shared and perhaps felt even more keenly by the nurses of Queensland. The policy of transferring nurse education to colleges of advanced education, and thus giving nurses professional qualifications equivalent to those of many other professionals working in the health area, was very energetically supported for many years by nurses throughout Australia, including nurse organisations of Queensland. Their disappointment is very great that the Queensland Government has refused to take up the Commonwealth's offer of making 450 places available in higher education institutions. I should add that the Queensland Minister for Education often likes to complain that Queensland is being badly done by in terms of higher education places. The Commonwealth is now offering 450 places to Queensland which the colleges wish to implement and which nurses and the nursing profession generally wish to see transferred but which the Queensland Government, for reasons best know to itself, refuses to act on. However, in terms of what the Commonwealth can do, we can make clear to the Queensland Government and to the public in Queensland, who I know are also very interested in this matter, that our offer still stands. We are making the same offer we have made to other States throughout Australia which is that we will add to the nurse training funds, already made available to the States through the States health grants, additional funds which will provide an additional $1,500 for each student going into a college place. We will pay a tertiary education assistance scheme allowance to all eligible students and we have also made several million dollars available for the retraining of nurses who wish to re-enter the profession, to ease the shortage which may come about partly as a result of the reduction in hospital-based training. I remind honourable senators that nurse training has always been the responsibility of the States. They have received funds for that function through the States health grants. We are making no deduction in those grants to the States. Instead, we are providing the additional per capita amount of $1,500, the TEAS payment to eligible students and the retraining amount. As a result of this package the States have a net gain in the funds available to them for nurse training. In those States where transfers have taken place-every other State except Tasmania-the health authorities have facilities and resources freed up to use for health purposes. So the deal is a fair one. It was painstakingly worked out in co-operation with nurses throughout Australia. If it is carried through by the States it will mean that the transfer will be complete by 1990, a goal which, as I said, has long been sought by nurses and their supporters throughout Australia. The delay in Queensland is entirely the fault of the Queensland Government but, should the Queensland Government decide, as a result of Senator Reynolds's representations and the representations of nurses throughout the States, to take a more constructive view, our offer still stands, and I certainly hope that that will happen. Senator CRICHTON-BROWNE —I direct a question to the Minister representing the Minister for Primary Industry. Has the Minister seen reports indicating that the United States intends to sell 500,000 tonnes of barley to Saudi Arabia? Is the Minister aware that such a sale represents a loss equivalent to one-quarter of our market in Saudi Arabia and approximately one-tenth of Australia's total barley exports-about $48m? What information does the Government have on the matter and what action does it intend to take? Finally, as Australian farmers are now facing possible United States competition for wheat in North Yemen, rice in Papua New Guinea and now barley in Saudi Arabia, does the Government still stand by the view put by its Prime Minister that the Government has the `wholehearted co-operation of the United States Administration' in relation to agriculture? Senator WALSH —I have with me a note from Mr Kerin on this matter. I do not know whether I should do a deal with Senator Crichton-Browne and offer to supply him with this information if he will tell me what is going on inside the Liberal Party in Western Australia and the power struggle-- The PRESIDENT —Order! The Minister will answer the question. Senator WALSH —Anyway, we do know that Senator Chaney and Senator Crichton-Browne are on opposite sides of the power struggle. I am told that Saudi Arabia is the most important export market for Australian barley and that traditionally the United States has supplied only very small quantities to Saudi Arabia. The United States move to sell under concessional terms up to half a million tonnes is viewed with great concern by Mr Kerin who will be taking up that concern with the United States through all the appropriate avenues. Consistent with the assurances received from the United States during the Prime Minister's visit, we expect Australian sales to the Saudi market to continue at normal levels of around two million tonnes per annum. Senator COLSTON —Is the Minister for Education aware of concern about the level of tertiary education assistance and of the criticism of the recent Government decision that full time students ineligible for TEAS should not receive alternative forms of assistance from the Department of Social Security? If so, does the Minister consider that these concerns and criticisms are justified? Senator RYAN —I am aware that there has been some criticism from student organisations recently arising from the decision to clarify what has always been the position, namely that full time students are entitled to student allowances and not to welfare allowances. That was always the intention of the program but there has been some departure from it over the years. There have been cases where students who were judged ineligible for TEAS were able to draw on other welfare benefits. That is not appropriate in the view of the Government and there will be a clarification of the position in legislation. I do not think complaints about that are justified. It is our Government's intention to treat students fairly as a group. We have taken a number of steps to improve the allowances available to students. However, for students who fail to meet the TEAS requirement to be able to go off and take a welfare benefit certainly undermines the intention of the TEAS scheme which is to assist needy students in their tertiary studies and is unfair in its effects on welfare beneficiaries who are generally not in a position to avail themselves of the benefits of full time tertiary study. I notice that in the students' comments there has been some misunderstanding of the Priority One package for increasing student allowances. Students also seem not to be aware of the fact that there has been a growth in the number of students receiving TEAS, for example, from 74,691 in 1982 to an estimated 101,600 this year. This represents an increase from 36.7 per cent of full time enrolments to something over 40 per cent. So, over 40 per cent of full time enrolled students are now eligible for TEAS. Senator Macklin —Full TEAS? Senator RYAN —Not for full TEAS, but for part of TEAS. In 1985, 37 per cent of TEAS beneficiaries received allowances at the independent rate. The Government's initiatives for income support arrangements across the tertiary and secondary sectors will involve considerable additional expenditure. The costs are being estimated at $35m in 1985-86, $86m in 1986-87, $170m in 1987-88 and $251m in 1988-89. These figures will represent an increase in the individual allowances until they all reach the equivalent unemployment benefit rate for the age group and will also involve indexation of the allowances. I stress that, because there was a criticism from student groups that the package did not include indexation. It does include indexation and is a considerable improvement on any previous student allowance scheme. It will enable more students to take advantage of the scheme, as the statistics show is already happening. It is on line with our Government's intention to increase participation in higher education and tertiary studies, particularly by low income groups. Senator TEAGUE —I direct my question to the Minister for Education. It follows the question of Senator Townley to her earlier in Question Time. Why was the Minister so complacent in her answer earlier today about the 9,000 to 14,000 Australian students refused entry this year to higher education courses? Will she acknowledge that the figures have the authority of the Australian Vice-Chancellors Committee and the Australian Committee of Directors and Principals in Advanced Education? Will she acknowledge that they are determined after duplicate applications and withdrawals have been accounted for? The Minister should be aware that, in total, the gross figure of applicants refused is 33,000-that is, 22.7 per cent of all applicants were refused entry to higher education this year, a figure that is 4,000 greater than that of last year. When these increasing figures in higher education are added to refusals for technical and further education courses, does this not amount to a massive failure of Government policy? What is the Government proposing as an answer to this failure? Senator RYAN —If Senator Teague had listened to the answer that I gave to Senator Townley, he could have saved himself a lot of breath. I not only acknowledged the source of the statistics; I offered to make available to Senator Townley the full report which I had had made available to me from the vice-chancellors and the college principals. Senator Teague would do well to pay attention to answers that are given at Question Time if he wants to try to score points off them. I am not complacent about this situation, but I am satisfied that our Government has made significant progress in increasing the number of higher education places available, in increasing the number of technical and further education places available-- Senator Boswell —What about Queensland? Senator RYAN —Oh, what about Queensland! This must be a dorothy dixer. Queensland is the State which has benefited most from the growth in higher education implemented by our Government. Queensland is experiencing a growth in higher education places of 9 per cent, whereas the national average figure is between 5 per cent and 6 per cent. We have been positively discriminating in favour of Queensland in higher education growth-- Senator Walsh —Why? Senator RYAN —Why? To rectify the past neglect by a series of State governments in Queensland and by the Fraser Government. When we came to office the disproportion in relation to Queensland was very much worse than it is now. We are assisting Queensland to catch up by positively discriminating in favour of Queensland. It is about time the Queensland Government and Queensland Opposition senators acknowledged the very good deal that Queensland higher education is getting from our Government. To return to Senator Teague's question, of course we regret the fact that there is significant unmet demand. Of course we wish that we could make faster progress towards overcoming the backlog in tertiary education funding that we inherited from the Fraser Government. In the period of the Fraser Government there was a real decline-not just a decline in dollar terms but a real decline-in funds made available to higher education institutions. There was a recession, so to speak, in higher education institutions. Funding was cut; staff were put off; and students lost confidence in the higher education system. There were empty place in universities and colleges during the late 1970s and early 1980s because students were so despondent about the state of the economy under the Fraser Government that they did not even bother to seek places. As a result of our success in creating jobs-over a half a million in three years-in stimulating the economy, and in boosting morale in universities and colleges by enrolment growth and growth in capital funds, there has been a renewed enthusiasm for higher education studies by young people. As a result, many young people who under the Fraser regime would have just gone on to the dole and waited for something to turn up are now trying very hard to get into higher education and are taking their studies very seriously. We have dramatically increased secondary participation rates. We have many more students working to qualify themselves for higher education places. As a result, the competition for higher education places is very fierce, and we expect that it will continue to be so. But, at the same time, there has been significant growth, as I cited to Senator Townley in my previous answer, in the number of places available for higher education throughout Australia, particularly in Queensland but in all States and Territories, and that growth will continue in a sustained and steady way, so that students who perhaps did not achieve the required entry standards this year may have another opportunity to do so. I conclude by saying that our record stands absolutely in contrast with the record of despair and depression that was the case under the Fraser Administration. Senator TEAGUE —Mr President, I ask a supplementary question. I refer the Minister to the second part of my question. Does she acknowledge that 33,000 Australian students were turned away from universities and colleges of advanced education this year? That is, 22.7 per cent of all applicants were, in the first instance, turned away from universities and colleges this year. Senator RYAN —I made clear to Senator Teague that I had the report available to me. It refers to 33,000, but not in the way that he has just suggested. The gross number of rejections was not 33,000. Senator Teague does not understand it. In that 33,000, as the report acknowledged, there are many cases of students applying to five or six institutions, many cases of students withdrawing applications, and many cases of students applying but not having a sufficient score to be eligible for the course for which they have applied. So that is a gross figure and it is acknowledged as such, and it is of very little statistical use, as the report makes clear. Even the estimate of 9,000 to 14,000 has been qualified by the vice-chancellors and college principals as needing further modification in terms of multiple applications and so forth. Our data collection processes are as yet not precise enough for us to arrive at a precise figure, but I agree with the report's conclusion that unmet demand is in the vicinity of what it was last year, which is about 10,000. Senator GIETZELT —During the early part of Question Time today Senator Macklin asked me about an article that appears in the current issue of Vetaffairs. First, I have to inform him that the publication Vetaffairs is a publication from the Department of Veterans' Affairs but has no input by the Minister, except his own personal column in each of its issues. I had not seen the article referred to by Senator Macklin at the time of his question. I have subsequently looked at the article, and I understand his reason for raising the matter. Obviously, Senator Macklin had an earlier opportunity to look at the paper than I did. However, the facts are that next Tuesday I shall be presenting the guide to assessment to the Parliament for its ratification or otherwise. Disallowance opportunities will be available. The guide to assessment has been in draft form until very recently and it is very much related to the passage of the Veterans' Entitlements Act. The legislation provides that the guide will stand until such time as it is set aside, if at all, and the Parliament may amend it as it so desires. Consequently, because it is an integral part of the operation of the Veterans' Entitlements Act, the Department, naturally, has taken steps to inform its officers as to how that guide will operate. It stands until such time as decisions of the Parliament amend it or otherwise. I am expecting that it will be tabled in the Parliament early next week. However, I remind Senator Macklin that until it is amended in any way it exists as a working document. After a great deal of consultation with the veterans' community, a final document has now been determined, and it is on that basis that it will be presented to the Senate and to the House of Representatives next week. Senator VIGOR(South Australia) —In accordance with the notice of intention I gave earlier today, I now withdraw Business of the Senate Notice of Motion No. 2, standing in my name. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Gareth Evans) read a first time. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(3.10) —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 amendments contained in this Bill are consequent upon the Australian Citizenship Amendment Bill 1986. The Citizenship Bill, which was passed by the House on 13 March 1986, proposed amongst other things that children born in Australia to visitors, temporary residents and illegal immigrants would no longer automatically acquire citizenship by birth unless they would otherwise be stateless. I said during my second reading speech to the Citizenship Bill that an amendment to the Migration Act would be introduced to regularise the immigration status of these children by conferring upon them the same immigration status as their parents. If their parents' immigrant status differs, the children would be given the status of the parent with the longer non-expired period of permitted stay in Australia. The amendments proposed in this Bill will give effect to that undertaking. This Bill will insert a new section 6aaa into the Migration Act which will determine the status of children born in Australia who, once the Australian Citizenship Amendment Act 1986 commences, will not be Australian citizens because neither of their parents is an Australian citizen or permanent resident. Under the amendment these children will be deemed to be included in the entry permit or to have the same immigration status as their parents or, if the entry permits or status of the parents differs, the children will be deemed to be included in the entry permit of the parent that is authorised to stay here the longest. The amendment carries with it no financial impact. I commend the Bill to the Senate. Debate (on motion by Senator Messner) adjourned. Bill received from the House of Representatives. Ordered that the Bill may be taken through all its stages without delay. Bill (on motion by Senator Gareth Evans) read a first time. Senator GARETH EVANS(Victoria-Minister for Resources and Energy)(3.11) —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 I am introducing today is to amend the Copyright Act 1968 to significantly strengthen the `anti-piracy' provisions of the Act; increase access to copyright materials for the handicapped, and for libraries, archives and their clients; extend fair dealing; make clear that broadcasts via satellite are subject to the Act; and provide for costs in Copyright Tribunal matters to be taxed on the Federal Court scale. Background Most of the amendments are the outcome of a review by the Attorney-General's Department of the provisions of the Act dealing with audiovisual items. This term means sound recordings, including compact discs and audio cassettes, as well as vinyl records; cinematograph films, including videos; and radio and television broadcasts. Audiovisual items contain works, such as lyrics, music and scripts, which are also subject to copyright. Copyright owners submit that their rights are threatened by new communication technologies, in particular readily available, low cost equipment, much of which can also copy at high speed. New technologies have made audiovisual items an increasingly important part of entertainment and education in the community. Extensive consultations took place in the course of the review, not only with record, film and broadcasting interests, and representatives of writers and publishers, but also with representatives of users of audiovisual items, including consumers, schools, universities, institutions assisting the handicapped, libraries and archives. As a result of continuing technological innovations in Australia, there is a need to review and update copyright law to ensure the benefits of this technology are fully realized. In so doing it is necessary to have regard to the laws of other countries, and to the Berne and the Universal Copyright Conventions which govern copyright internationally. It is important to remember, when considering the laws in other countries, that Australia-unlike, for example, the US or the UK-tends to be a net importer of audiovisual materials. For example, during the review it was estimated that the sale of Australian records (by which I mean recordings by Australians or of Australian material) was, on average, 20% or less of all retail sales. That situation is gradually changing, not the least in part because of the support the Government gives to the Australian arts, through measures such as the Australian content requirement in broadcasting, and tax assistance to film makers. Clearly we need copyright laws which support Australian artists and producers and which take account of the significant position of overseas materials in the market, consistent with our international convention commitments. CONTENT OF BILL Anti-Piracy Provisions The unauthorised copying of records and videos for commercial purposes, more commonly known as `piracy', appears to be a growing problem worldwide for the legitimate record and film industries. Australia is clearly not one of those countries in which pirate products represent the majority of the material available on the market. Nevertheless, industry representatives inform me that piracy, particularly of video material, is increasing in Australia, and could represent as much as 10%-20% of material available. When the audiovisual review was commenced in 1981, copyright piracy was not one of the major issues. It only became important towards the end of the review largely because the spread of home videos resulted in a huge demand for new titles; and new technology enabled unauthorised commercial copying to meet that demand. I refer now to the specific anti-piracy amendments in the Bill, which will combat this growing and serious problem. As many copyright owners have said, the proof of subsistence and ownership of copyright is an expensive and technical procedure. Some defendants unfairly take advantage of this. Suggestions have been made that subsistence and ownership of copyright should, in all cases, be presumed to exist as claimed by the plaintiff or prosecution in affidavit evidence. This would, in effect, place the burden of proof on the defendant in these issues. Suggestions have also been made for introduction of a copyright registration system to enable the relevant proof by certified copy of the registration record. There is an argument that such a registration system may, technically, breach our commitments under the Berne Copyright Convention. In any case, it would seem to undermine a basic principle of the Convention that the effective operation of copyright should not require any formality. Another proposal for an amendment to give `full faith and credit' to certificates of registration from countries which do have registration systems, would clearly discriminate against Australian copyright owners. The solution in clause 18 of the Bill is proof by affidavit of subsistence and ownership of copyright, with discretion remaining with the court as to whether or not the deponent to the affidavit should be called to be cross-examined before the affidavit becomes admissible. This provision should make copyright proceedings easier, without the disadvantages of the alternative proposals. Copyright owners have also submitted, with some justification, that the current `knowledge' element in copyright offences is too difficult to prove, as it requires a court to be satisfied, beyond reasonable doubt, that the accused knew he was dealing with infringing copies. It has been suggested that accused persons should be presumed to have known they were dealing in infringing copies, unless they could prove they did not. This would involve a shift of the burden of proof to the accused, which cannot be justified in offences of this nature, particularly given the proposed new high penalties. In circumstances where pirates are making copies which look very much like the real thing, so that even those who are experienced in dealing with the product are not easily able to recognise a pirate copy, it would be unfair to require a lay accused to prove he or she did not know it was a pirate copy. Nevertheless, the Government wishes to ensure that unscrupulous dealers are not able to rely upon technical arguments to avoid proper liability. The proposed introduction of the words `or ought reasonably to know' is intended to make clear that a person will not escape criminal liability by disregarding circumstances which would lead any reasonable person to conclude that the copies with which he or she is dealing are pirate copies. The new knowledge test will also apply in the new offences created by the amendments: clauses 15 and 18. The Government has been concerned that the Copyright Act offences do not afford owners protection at each point at which they are vulnerable to commercial piracy. The new offence of possession of an infringing copy for commercial purposes, and the new and restructured offences of causing infringing public performances of copyright material, are intended to meet this deficiency: clause 15. Finally, on the topic of the anti-piracy amendments, I refer to the proposed significant increases in penalties. The penalty structure set out in clause 16 of the Bill is summarised in the Explanatory Memorandum. Those penalties have the following important features: a person who commits an offence involving video piracy runs the risk of going to goal for a period of up to 2 years for a first offence; the same person, on a subsequent offence, could go to gaol for up to 5 years; the maximum penalty payable per offence involving more than one infringing copy is significantly increased from $1500, in a court other than the Federal Court, to $10,000 in the case of a natural person, and $50,000 in a case of a body corporate; a body corporate could pay up to $7500 per infringing copy when films are involved and $2500 otherwise; it will be possible to charge a body corporate in the Federal Court and obtain a maximum penalty, in relation to a single offence comprising the appropriate number of infringing copies, of $250,000; and the current uncertainty as to when maximum penalties are payable will be removed, and clear provision will be made that the maximum penalty is payable, as is usual, per offence and not in relation to a group of offences. The amendments do not alter the position in the Act that penalties are paid per infringing copy, not per title copied. In deciding upon the new penalty structure, the numerous submissions of the video industry, in particular, were carefully considered. The penalties proposed in the Bill were determined having regard to: the nature of these offences under the Copyright Act; penalties for like offences in other countries; penalties payable for other `commercial practice' offences in Australia, such as those under the Trade Practices legislation; the need to limit penalties which can be imposed by lower summary courts; the desirability of structuring penalties so as to reflect the status of the defendant as a natural person or a body corporate, and whether there are any prior convictions; and the fact that a gaol sentence is more likely to be a meaningful deterrent where the primary threat of monetary loss through civil action apparently is not. Taking into account the range of penalties proposed, the new rates will be up to 33 times higher than those introduced in 1981. Although it is difficult to make any direct comparisons with rates in other countries because of the different penalty structures applying, the new penalties are, on the whole, more than comparable with other countries, including the US. In addition to the loss suffered by the copyright owner, piracy activities cause harm to the community by undermining the work of creators and innovators. There is also lost tax revenue when copyright material is traded in an underground market. Further, it is often not in consumers' interests to obtain pirate copies-the pirate is unlikely to be willing to comply with normal commercial rules concerning warranties and so on. I should draw attention to one implication which could be seen to arise from the introduction of these amendments at this stage. In September 1983, the Copyright Law Review Committee, chaired by His Honour Mr Justice Sheppard of the Federal Court, was established. One of the matters which the Committee was asked to enquire into is the prohibition in the Act against `parallel importing'. This term refers to the importation for commercial purposes of legitimate copies of, for example, books or records, by someone other than the Australian `territory' exclusive licensee. Under the civil remedy provisions of the Act which are being considered by the Committee, a copyright owner or the exclusive licensee of an owner may take legal action against unlicensed importers, and against people who sell or otherwise deal in parallel imports, as well as against unlicensed copying and dealing in unlicensed copies. The importers and dealers may also be liable under section 132 of the Act for a criminal offence. Parallel importing is treated, under the Act, in the same way as importing a copy made without the copyright owner's permission-the so called pirate copy. Parallel imports are, however, clearly very different from pirate copies. In the case of parallel imports the copyright owner has received royalty payments from the licensed manufacturer and dealer in the territory from which the copies are imported. In the case of pirate copies, imported or made in Australia, of course the owner has not received such a royalty. The Committee was asked to look at parallel importing because of this difference, and because it had been submitted that some local licensees do not exercise their exclusive rights, and so deprive the Australian public of overseas material which others would be willing to import. These and other issues were set out by the Committee in its paper on this topic, released earlier this year. The Government has not adopted any position in relation to those issues and will only do so after the Committee has completed its report. The Committee recently conducted public hearings in Sydney and Melbourne on this issue and expects to complete its report by late this year. In order not to cut across the Committee's work, none of the civil remedy provisions which it is examining will be amended by this Bill. However, the Government is concerned to take action quickly to stem the recent growth in illegal commercial copying and trading in pirate copies. For this reason it was decided to proceed with amendments to the criminal offences, and reforms on proof of subsistence and ownership of copyright, without drawing any new distinction between parallel imports and pirate copies. These amendments do not change the provisions now being considered by the Committee. The amendments will result in it being easier to prove in a criminal than in a civil case, that the person knew he was dealing in infringing copies. The higher standard of proof required in criminal cases will still make civil actions preferable. Nevertheless, I emphasize that as soon as the Committee's parallel importation report has been received, urgent consideration will be given to it. Subject to any overall reforms which the Government may decide are necessary as a result of the Committee's report, it is intended to take early action to bring the knowledge test in the civil infringement sections, so far as they relate to piracy, into line with the criminal offence amendments in this Bill. I emphasize that the central issue before the Committee does not relate to the issue of knowledge but, as I have mentioned, only to the question whether the prohibition against importation of otherwise legitimate material should be relaxed for the benefit of Australian consumers. From what I have said about the Committee's reference it should be clear that, whilst the parallel importing issue remains unresolved, copyright licensees should not take the amendments in this Bill directed at piracy as an endorsement for prosecution action in relation to parallel imports. INCREASED ACCESS TO COPYRIGHT MATERIALS FOR THE HANDICAPPED The United Nations Educational Scientific and Cultural Organisation (UNESCO) and the World Intellectual Property Organisation (WIPO) have been concerned with the issue of access by handicapped persons to copyright materials since 1981. The new statutory licences proposed in the Bill for operators of radio stations for the print-handicapped and for institutions assisting the intellectually handicapped are consistent with this concern, which the Government shares. The new statutory licences set out in clauses 6 and 26 of the Bill are based, to the extent appropriate, on existing statutory licences introduced in the Copyright Act in 1980. These licences already enable educational institutions to photocopy works (section 53B of the Act) and institutions assisting the print-handicapped to make braille, large-print copies, and `talking book' versions of works (section 53D of the Act). In order to take advantage of the statutory licences, the beneficiaries need to make certain records of copies taken and to comply with other regulatory requirements in the legislation. Some educational representatives have complained that the record-keeping requirements they must meet under the existing section 53B statutory licence are onerous, particularly given that copyright owners have not, to date, in some cases, inspected the records kept. It would seem that the requirements to inspect may be a costly burden for copyright owners. These complaints are a matter of concern, although it should be noted that the existing provisions of the Act allow owners and users to agree on less onerous terms and conditions, and provide for the sending of records to a central authority, so avoiding the burden of retaining records for the prescribed period of 4 years. Representatives of the handicapped institutions have indicated that, in return for the access they will acquire, they do not mind keeping records. In addition, given the very limited market for the materials which would be broadcast or copied under the new licences for the handicapped, indications are that the cost to the institutions of their new licences is likely to be minimal. In these circumstances it seems appropriate to continue the existing basic structure for the new statutory licences. Many of the onerous aspects of statutory licensing could be overcome if the beneficiaries did not have the possibility of dealing with every single copyright owner whose material is subject to the statutory licence. In practice, at the moment, a claim for equitable remuneration from Copyright Agency Limited (CAL)- which was established as a collecting society by some copyright owners for the purpose of the sections 53B and 53D statutory licences-is very likely to be the only claim made. Nevertheless, the institution cannot assume this. CAL has no statutory authority to represent all copyright owners who have the right to seek remuneration under the licence. As CAL has now commenced inspections and claims for remuneration it would not be appropriate to alter the statutory licensing structure at this stage. In the event of a continuing failure by the relevant parties to agree on less onerous arrangements, it may be necessary to consider providing statutory recognition for only one collecting society to make claims based on copying and to which all records of copying would be sent. INCREASED ACCESS FOR LIBRARIES, ARCHIVES AND THEIR CLIENTS, AND FOR THE PURPOSES OF CRITICISM AND REVIEW AND FOR REPORTING NEWS The Act currently provides certain limitations on copyright control of works, for the benefit of libraries, archives and their users, and for the purposes of criticism or review and for reporting news. The Bill will extend these limitations to include audiovisual items: clauses 10, 11 and 12. It is intended to allow libraries and archives to copy unpublished records and films for the purposes of research or study or with a view to publication, and to copy records and films for preservation, provided certain conditions are met. The new provisions are not, of course, intended to limit the copying rights which a library or archives may negotiate with particular copyright owners. The provisions are intended only to set the minimum which libraries and archives may do, without seeking the permission of copyright owners or paying any fees. The fair dealing provisions proposed in the Bill for the limited purposes of criticism or review and of reporting news, are in the Government's view appropriate limitations on copyright control. As is the case with the existing provisions in relation to literary, dramatic, musical and artistic works in sections 41 and 42, no attempt is made in the proposed amendments to define what would constitute a `fair dealing' in an audiovisual item. The purpose of the provisions is to ensure that people who, in the community's interests, disseminate news and provide legitimate criticism and review for the benefit of consumers and audiences, may use copyright material without risking infringement action. Satellite Broadcasting Clause 5 of the Bill is intended to ensure that broadcasts via satellite are broadcasts under the Copyright Act. Under section 91 of the Act, copyright subsists only in broadcasts made from a place in Australia. A point-to-point transmission, under the present provisions, whether originating from a terrestrial transmitter and received by a satellite (an `uplink') or made from satellite to satellite, is arguably not a `broadcast'. Whilst the `downlink' from a `direct broadcasting satellite' is a broadcast, it is not apparently from a place in Australia within the meaning of the Act. The result is that a broadcast which would otherwise be subject to the Copyright Act, but which goes via satellite, does not enjoy copyright protection. In addition, owners of copyright in a work or audiovisual material may not be able to enforce their exclusive right to broadcast against a person who makes an unauthorised broadcast via satellite because presently only acts done or authorised to be done in Australia may constitute infringements. Consistent with international opinion in relation to this issue, which was set out most recently in the report of the WIPO/UNESCO Group of Experts on the Copyright Aspects of Direct Broadcasting by Satellite, broadcasting via satellite ought to be dealt with under the Copyright Act in the same way as other broadcasts. Costs in the Copyright Tribunal Proceedings in the Copyright Tribunal have significant commercial impact on the parties, and are often lengthy and involve considerable cost. At present, the Act provides, in most cases, that the Tribunal may make an order for costs. The Bill will amend the Act by making it clear that, in taxing those costs, a taxing officer shall have regard to the Federal Court Rules (including its scale of costs). Other Matters The impetus for the review by the Attorney-General's Department was home taping, but during the course of the review it became clear that commercial piracy was also a problem. Home taping remains an important issue. The remedy most favoured by copyright owners-namely a levy on blank recording media in return for a right to copy audiovisual material-would seem appropriate from a copyright policy point of view, because it would be a payment for use of copyright owners' exclusive right to copy. Whether a levy would be the most appropriate solution to the problem in the Australian context remains to be seen. Several countries do have such a levy: West Germany, France, Austria, Portugal, Hungary, Finland, Norway, Iceland and Sweden. In some of those countries the levy is collected as a tax, with only part of the proceeds going directly to the copyright owners, the remainder going either into general revenue, or to the general welfare of copyright artists. In its April 1986 White Paper, the United Kingdom Government announced its intention to introduce a levy on blank audio tape in return for unrestricted home taping. It was also stated in the White Paper that a levy on blank video tape was not justified at this stage. Both the House of Representatives and the Senate in the United States are considering Bills which propose a levy on blank audio tape. The Attorney-General's consideration of this issue to date has been on the basis that a blank tape levy would be a tax. If this proves to be the case, there are problems for Government taxation policy including the costs and structure of such a scheme. One other matter deserves close consideration in this context. It may be that the losses suffered by copyright owners through home taping could in some way be offset by a rental right. Both the U.S.A. and Japan have such a right for records and cassettes. A rental right could become increasingly important with the advent of compact discs, which may be a highly viable rental proposition because of their durability and high quality sound. The Attorney-General's Department is continuing to examine all these issues, in the light of international developments. Another reason for the commencement of the Department's review was the call by educational institutions for increased access to audiovisual items, in particular to non-commercially available material broadcast on television. Last year the Department developed a proposal for a statutory licensing system, in return for equitable remuneration, which would have provided that access, on terms arguably more favourable than those of the existing photocopying licence. The proposal was supported by tertiary institutions and copyright owners, but opposed by schools' representatives largely on the basis that there would be an increase in costs which, they considered, was not justified. In these circumstances, the Government decided not to proceed at this stage with any reforms in the area of educational use until further consultations and work can be undertaken. Educational institutions need to negotiate copying rights privately-either on a one-off basis, or by blanket licensing arrangements. Given that copyright owners are often not in a position to voluntarily grant such rights, even when they want to do so, it would be desirable for the difficulties with a statutory scheme to be overcome. It seems from recent discussions with schools representatives that common ground is being found. I am pleased to say that schools have acknowledged that the use of that material does require payment. This follows on the important concession from most copyright owners that, because of the social importance of education, they are prepared for their right to withhold their material to be removed and not to have the benefits of payment under a statutory scheme without joining an approved collecting society. In the course of the review, submissions were made to the effect that the term `performance in public' ought to be defined in the Act to take account of the fact that new technologies enable performances before small groups of the public. These `performances', which are usually film or video showings in motels, are to the commercial advantage of the person holding the performance. The decision of the Supreme Court of New South Wales in the Rank case in 1983 clarifies the issue. As the dissemination and use of copyright material becomes easier because of innovations in communications technology, both owners and users may have to accept a greater degree of orderly collective administration, perhaps via statutory schemes, subject to Copyright Tribunal review. Such trends appear to be evident overseas and increasingly appear relevant also in Australia. Financial and Regulatory Impact Statement The Copyright Amendment Bill will have no direct impact on Commonwealth revenue of expenditure. Any indirect impact on expenditure which may occur will be minimal, and will depend on applications being made to the Attorney-General or to the Copyright Tribunal to exercise powers under sections 10a and 149a respectively, which this Bill will slightly extend. A favourable indirect impact on Commonwealth tax revenue may be expected, as the strengthened anti-piracy provisions reduce untaxed illegal dealings in copyright materials, and encourage sales in legitimate product on which sales tax is payable. The position of the copyright industry can, therefore, be expected to improve as a result of the anti-piracy provisions, though the extent of this is difficult to quantify. I commend the Bill to the Senate. Debate (on motion by Senator Messner) adjourned. Senator ROBERTSON(Northern Territory) —On behalf of Senator Childs, 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. Senator COONEY(Victoria) —I present the 247th report of the Joint Parliamentary Committee of Public Accounts, entitled `Expenditure from the Advance to the Minister for Finance-Appropriation Act 1984-85'. Ordered that the report be printed. Senator COONEY —by leave-Report 247 examines the use of the Advance to the Minister for Finance in 1984-85. Honourable senators will be aware that each year the Committee examines expenditure from the Advance to the Minister for Finance to ascertain whether or not expenditure from the Advance has been confined to urgent and unforseeable requirements for which provision could not have been made in the original or Additional Estimates. The Committee also seeks to ascertain whether or not the departments concerned have maintained efficient administration in the expenditure of funds under the items examined. Under current arrangements, the Committee receives copies of all approved applications for funds from the Advance where they would remain a final charge to the Advance at the close of the financial year. All these applications for funds must be accompanied by adequate supporting detail. The Committee received statements relating to 103 items of expenditure remaining a final charge to the Advance in 1984-85. Supplementary material was obtained concerning 22 items. Despite clear instruction some departments did not offer sufficient explanation with their applications. The Committee would have expected the Department of Finance to have insisted upon sufficient documentary material for it to be satisfied that an urgent and unforeseeable requirement for funds from the Advance was warranted, prior to approval being finalised. While the Committee is satisfied that, in all cases of expenditure remaining a final charge to the Advance in 1984-85, the requirements were urgent, it is not convinced that all were unforeseeable. In several cases, the requirement for additional funds should have been foreseen before the cut-off date for changes to Additional Estimates on 25 March. In particular the Committee is not satisfied that the criteria for the use of the Advance to reimburse a revenue shortfall in the Williamstown Dockyard trust account were satisfied. The fact that the central office of the Department of Defence was unaware of the likelihood of a very large shortfall until May 1985, although the dockyard had been implementing measures aimed at eliminating the shortfall since late in 1984, indicated a disturbing lack of liaison between the dockyard, the Office of Defence Production and the central office of the Department. The Committee will be inquiring further into the operation of the Williamstown Dockyard trust account when it reviews the Auditor-General's report of March 1986. The Committee will particularly be looking to examine the proposed 1985-86 financial statements of the dockyard, which the Department has advised will conform to the `Guidelines for the Form and Standard of Financial Statements of Commonwealth Undertakings'. I commend the report to honourable senators. Debate resumed. Senator SIDDONS(Victoria)(3.15) —Before the suspension of the sitting for lunch I was commenting on the taxation legislation before the Senate which introduces self-assessment as a new principle in our taxation system. While the Australian Democrats generally are in favour of this, as it is a more efficient system, we are nevertheless concerned that it does place a very heavy responsibility on ordinary taxpayers, in particular ordinary taxpayers who may not have available tax consultants to assist them in the filling in of their returns. Because of that we are of the opinion that at least some of the responsibility for informing the public should rest with the Commissioner of Taxation and his Department. Precisely how that should be achieved is a question about which we have a fairly open mind, but we do believe that the Government has been remiss in not addressing this very important problem of informing the ordinary taxpayer and that an amendment, which I have already foreshadowed, should be passed in the Committee stage to put some responsibility on the Commissioner at least to reply in principle, and in principle only, to taxpayers' queries. We do not believe this would be an onerous responsibility on the Australian Taxation Office. Of course, we are anxious not to alter the law in a way which might lead to tax avoidance or evasion or which would defer the completion of taxation returns. All these matters have been raised by the Commissioner, and we have had a look at them. We believe that the amendment we will move in the Committee stage will be reasonable, having regard to all the matters that have been discussed. I know that because of time constraints the Senate is under a lot of pressure at the moment and I do not wish to extend my remarks unnecessarily. We do support this legislation; we do believe that it is important to clamp down on negative gearing for developers. We believe the Government, having done that, has a very urgent responsibility to clamp down on the negative gearing of corporate raiders so that productive investment can flow into the business sector, the manufacturing sector, rather than be sloshed around the stock markets. We believe self-assessment is a better way to go and for that reason, in principle, we support that part of the legislation as well. In the Committee stage I will be talking to our foreshadowed amendment, which states: . . . where a taxpayer furnishing a return raises, in writing signed by him or her . . . That implies, of course, that it does not apply to companies, partnerships or co-operatives. Presumably they can get advice, but the individual taxpayer may not be in a position to get advice. The amendment continues: . . . and furnished with that return, a question of fact or law affecting the taxpayer's liability to tax, the Commissioner shall give attention to that question. It does not stipulate a time limit; it just says that the Commissioner shall give attention to the question. I look forward to elaborating on that amendment in the Committee stage. Senator COLLARD(Queensland-Leader of the National Party of Australia)(3.20) —My remarks will be reasonably brief. As Senator Messner indicated, I will be discussing clause 10 in my role as representing the shadow Minister for Sport, Recreation and Tourism in this chamber. First of all, I pick up one remark that Senator Maguire made when he used figures to compare Queensland with South Australia. I guess in this day and age if an honourable senator thinks that his State has arrived as a State, the thing is to prove it by using some figures, albeit selectively on many occasions, to prove that that State is better than Queensland. Mr Acting Deputy President, I have you at a disadvantage. Because you are sitting in the Chair you are struck dumb as far as the debate is concerned. Even you have given Queenslanders a backhanded compliment by indicating on many occasions that if some other State wants to prove it is better, it has to beat the State that you and I belong to. In this instance Senator Maguire used figures to say that South Australia spent more money than Queensland on public housing. That is very easy to say and, indeed, he was probably right on the money that is spent. But if one takes those figures further, there have been less applications for public housing in Queensland than in South Australia. Indeed, from 31 December 1982 to 31 December 1985 the number of applications for public rental housing has dropped by 564 in Queensland. In Queensland it has actually dropped but in South Australia, the State that Senator Maguire represents and from which base he seeks to criticise Queensland all the time, public rental housing applications have increased by 12,106. I suggest that Senator Crowley wait a minute longer before she leaves the chamber. Obviously there are different bases from which they operate. We are operating on a time basis and the bases on which South Australia has operated have not changed over that period. So we see this selective quotation of figures from South Australia, which has had an increase-I say it again-of applications for public rental housing of 12,106. Really, are there any more people in South Australia than that? Queensland has had a decrease of 564. Quite obviously more money would be spent on public rental housing in South Australia because more people are in the market for it there than in Queensland. Having said that, and feeling a lot better for having said it, I will go on to the brief section I said I would talk about, which is clause 10, which states: Section 78 of the Principal Act is amended by inserting after sub-paragraph (1) (a) (1xxxiii) the following sub-paragraph: ``; (1xxxiv) the Australian Sports Aid Foundation,''. This means that the Australian Sports Aid Foundation is added to the list of charities which are recognised under the Income Tax Assessment Act 1936 for deduction purposes. The Sports Aid Foundation will be able to act as a mechanism for channelling donations to the various sports bodies. The Opposition does not oppose this. Indeed, it welcomes this addition to that list of accepted charities. But I must say that there seems to be an abundance of bodies being introduced into the sports scene in Australia. As I understand it, there will be legislation later on concerning the Australian Institute of Sport. We already have the Australian Sports Commission and now we have the Australian Sports Aid Foundation. In reality one-certainly two at the most-could do the job that is necessary. Be that as it may, the Government, I suppose on the patronage system on which it operates, by setting up these commissions, institutes and foundations is able to pat some of its good friends on the shoulder and say: `We would like you to come along and do this job for us'. Having said that, the people who have been appointed to the Board of the Australian Sports Aid Foundation are eminently suitable for that job. I think the job of the Sports Commission and the Sports Aid Foundation could all be handled by the one group of people; however, those people are eminently suitable, they are quite notable Australians and I am quite sure that in that capacity they will make a great contribution to sport within Australia. The Sports Aid Foundation, I can say from my personal knowledge, is set up a bit like the Elizabethan Theatre Trust Fund. In Queensland, Mr Acting Deputy President, as you would know, we have the Warana festival. If one wants to channel donations to the Warana festival and receive tax deductibility, one channels it through the Elizabethan Theatre Fund and indicates it is to go to the Warana festival. As I understand it, that is how the Sports Aid Foundation will operate. Mr Peter White, my colleague in the other place, asked for four guarantees from the Minister for Sport, Recreation and Tourism (Mr John Brown) in respect of the Sports Aid Foundation. The first guarantee was that donations to the Foundation would go to those sporting clubs or organisations that were nominated by the donor, providing they were bona fide organisations. The second guarantee was that there would be no deductions from the Foundation for handling charges as the money passed through the Foundation. The third guarantee was that there would be no interference in the existing system of direct sponsorship-in other words, there would be no interference where large firms use section 51 of the Income Tax Assessment Act to claim tax deductibility for advertising, and in that way firms would still be able to help our various sports. The fourth guarantee was that money donated to the Foundation which has no specified recipient at the time it is given would be used to benefit sports which at present receive little or no help. Even though there is nothing in the legislation to indicate any of those things, I think it is worthy to have in Hansard, in addition to clause 10, which amends section 78, the Minister's reply to those four guarantees. I will briefly read that response into Hansard. I will not go through the whole lot. At page 3297 of the Hansard of the House of Representatives of 7 May 1986, in response to the first guarantee, the Hon. J. J. Brown said: One of the other constraints that applies is the necessity for the Australian Sports Commission to ensure that any money channelled through the Foundation to any particular body, specified or otherwise, is audited in exactly the same way as are grants given by the Sports Commission through the sports development fund. This ensures that the money is spent for the purposes for which it is given. The second guarantee was that there be no deduction for handling charges. At page 3298 of Hansard the Hon. J. J. Brown was once again addressing Mr Peter White. He said: The honourable member for McPherson may rest assured of that. The specified regulations say that there will be no deduction at all for handling charges. The third guarantee was that there be no interference in the system of direct sponsorship. The Minister said: I simply point out that there has been a very different method by which firms, corporations and individuals sponsor sporting bodies, often using section 51 of the tax Act and claiming tax relief under advertisements. No money will attract tax deductibility as a gift to sport unless it is directed through the Sports Aid Foundation, except in the existing situation where corporations or individuals claim tax relief under section 51. The fourth guarantee was that the money would not necessarily go to sports which were well off. The Hon. J. J. Brown said in respect of that guarantee: The fourth guarantee that the honourable member seeks is that money donated to the Foundation for an unspecified purpose would not be used to prop up what are already very rich sports. The honourable member has not only my personal assurance on that but also the assurance of the Chairman of the Sports Aid Foundation, Mr Harris, to whom I think the honourable member issued this request in the first place. Having said all that, the Opposition welcomes the creation of Australian Sports Aid Foundation. We do take issue with the fact that there are now three bodies when in actual fact one, or at the most two, could do this job. We accept that the people who have been appointed to it are honourable and well known citizens of this nation and will do a good job. We support this legislation. Senator PUPLICK(New South Wales)(3.30) —The purpose of the Taxation Laws Amendment Bill is to make a number of changes in the taxation regime, the most significant of which is the change to arrangements on negative gearing which, according to the Minister's second reading speech, will eventually yield $195m a year in additional revenue. I pause to note that that money will be gained to revenue without the necessity to issue anybody with an Australia Card, or pursue all the ghastly paraphernalia which the Government seems intent on doing in that regard. I see my friend Second Commissioner McDermott in the gallery smiling wryly at the mention of the Australia Card. I think we can be assured that debates about the Australian Taxation Office and the Australia Card will come to occupy a certain amount of time in this chamber in due course, but I regret to say that today is not the day. I do, however, propose to take up a number of matters to which Senator Collard has referred in relation to the Australian Sports Aid Foundation, and in particular to be a little less generous than he was about what is being done to sport in this regard. I congratulate the Minister for Sport, Recreation and Tourism (Mr John Brown) on the appointments to the Sports Aid Foundation. The seven gentlemen whom he has appointed to the Board of the Foundation bring to 100 exactly the number of patronage appointments that the Minister has made under his portfolio since he became Minister. They represent the last batch to bring the number to 100, and I shall have something to say about that in due course. Clause 10 of the Bill seeks to give effect to the proposal which was originally announced on 10 December 1985 to admit the Australian Sports Aid Foundation to those provisions of the income tax law which authorised deductions for gifts of the value of $2 or more made to certain specified organisations. Gifts made to the Foundation on or after its date of incorporation-that is 18 February 1986-will qualify for deduction. Therefore, the Australian Sports Aid Foundation becomes No. 84 on the list of organisations approved for that deductibility status under section 78 of the Income Tax Act and now fits in neatly behind the Royal Australian and New Zealand College of Psychiatrists. It is also indicative, as I shall recall in a moment, of the selective nature of the way in which organisations are admitted to tax deductible status and the reason that that occurs. I want to deal more generally with the purpose of the legislation in seeking to raise and channel funds for sporting activities through the Sports Aid Foundation. It has by and large been assumed in the wider community that this Government has somehow developed a reputation for outstanding generosity towards the funding of a sport. That does not coincide with the facts. For instance, on 27 March this year I received a letter from Mr Leslie J. Martyn, President of the Confederation of Australian Sport, in which, among other things, he said: Given the optimism generated by the Hawke Labor Government when it came into power and the increase in sports development funding it initally provided, national sporting associations approached their developmental tasks with considerable enthusiasm. The reductions in the 1985-86 grants have tended to dampen this enthusiasm. If one looks at the hype that has gone on, for instance, over fund-raising activities for the Commonwealth Games participation-the Games are to take place in Edinburgh in July-one sees that the Secretary-General of the Commonwealth Games Association, Mr Arthur Tunstall, has been quoted as saying that the Association is still $700,000 short in its fund raising. The Australian on 23 May this year reported that the money crisis may force a cut in the teams for the games. Despite all the hype and denials by the Minister for Sport, Mr John Brown, it is quite apparent that in this area at least that hype has not been matched by the appropriate provision of revenue. The Government has, both subtly and more directly, put the squeeze on organisations over such matters as the broadcasting of sporting activities. Part of the problem of the shortfall in Commonwealth Games fund-raising activities has been that the Australian Broadcasting Corporation has rights to broadcast the Games. I do not object to that in the least, but it means that the capacity of the sponsors to raise additional money for Australian sporting activities, because of the sponsorship opportunities that would have been available had the telecaster of the games been a commercial station, has meant that by putting the squeeze on sporting organisations to favour the national broadcaster the downside of that has been that sporting organisations have less capacity to generate funds to support the sporting activity because of the prohibition on any form of corporate sponsorship of the ABC. That itself is a live issue in terms of the future of the ABC, one which this Parliament has not had the opportunity to debate at any great length. One of the things one is concerned about is the extent to which under the power of ministerial persuasion or direction we shall see the Minister playing favourites in this regard. I take, for example, the particularly difficult position of cycling in Australia. Australian cyclists in recent years at international competitive level have made their mark. At the last Olympics the Australian team's four did extraordinarily well and came away with a gold medal. We were all aware of the prowess of cyclists like Phil Andersen. It was therefore discouraging to see that on 12 March this year the Daily Telegraph in a statement under the heading `Minister back- pedalling says coach' reported: National cycling coach Charlie Walsh has hit out at Federal Sports Minister John Brown's failure to include cycling in the Australian Institute of Sport. It goes on to indicate the promises made by Mr Brown in that regard which have since been dishonoured. The Sports Aid Foundation per se is a very admirable concept. It was initially announced and developed by Mr Ellicott when he was the Minister for Home Affairs in the Fraser Administration. Had Mr Ellicott and had a Liberal-National Party Government been in the process of establishing the Foundation, it would have been established on very different lines from those currently put forward by the Government. Nevertheless, we have to deal with the legislation as it is and with the Foundation as it has been set up. I do not in the least criticise what the Government has said or has acted to do in terms of sporting relationships with South Africa. In fact, I support what the Minister has said on this issue, and there has been a bipartisan degree of support. But one wants to be aware of the extent to which this particular Minister has been prepared to intervene in a financial sense in this regard. For instance, the Minister issued a Press release on 25 September 1985 headed `Government grant withdrawn from Australian squash player'. Mr Ross Thorne, who was ranked in the top 10 squash players in the world, had been allocated support under the Government's national athlete award scheme. The grant was withdrawn because Mr Thorne had competed in the South African Open competition. In the current dispute in regard to the invitation issues to the Wallabies for a potential tour of South Africa, one saw a report in the Weekend Australian of 17-18 May 1986 as follows: Mr Brown said the Government would `withdraw all support for rugby union' if the tour went ahead. That is not just support for individual players or for a team potentially going to South Africa, but involves the withdrawal of all support for a particular code of football on the basis that the action is contrary to government policy. One wonders the extent to which the Sports Aid Foundation will have the degree of independence which it ought to have to make decisions sufficiently at arm's length for a ministerial direction in this regard. Despite the assurances given by the Minister to my colleague Mr White in the other place, which have been repeated today by Senator Collard, I am not persuaded that the effect of making donations to the Foundation tax deductible will not lead to the drying up of independent corporate sponsorship of sport in Australia. One thing that will happen is that direct relationships between the corporate sponsor and the receiving sporting organisation will be put in peril because there will not be the same degree of tax attractiveness, financial attractiveness, as giving the money through the Sports Aid Foundation. Although the assurance is given that the money will be directed to a particular sport, there are also contradictory assurances; the assurance, for instance, that the money would not be passed on to an already wealthy and favoured sporting code organisation. How are we going to balance the two? How will we be able to direct the money to a particular organisation or a particular code of sport and, on the other hand, not allow the continued subsidisation of sports which are already wealthy if, in fact, the money is directed towards a sporting code or organisation regarded as falling within that category? I believe that the direct breakdown in relationships is something which the sporting organisations take very much at their peril. I regret to say that I think that in the long run many of the codes and sporting organisations throughout Australia will suffer a reduction in the level of direct corporate sponsorship. The other point to be made as far as that is concerned is that the Minister, of course, has a directive power over the Foundation. I would be very suspicious of attempts to build up sports because they happen to be seen by the Minister as relevant to a particular area of the State. We know the amount of expenditure which has taken place out of total funds purely within the Minister's own electorate in Sydney. I would be very suspicious of large sums of money being under ministerial sway as far as the Foundation is concerned. It seems to me that, if the Minister were really serious about doing something significant in the taxation area for Australian sport, the most important thing that he could do would be to persuade his colleagues to provide some form of tax averaging for professional sportsmen. I would have thought that if there was anything of real financial benefit which the Minister ought to be concentrating on, the idea of tax averaging for professional sportsmen is one that he should be looking at. The final two points I want to make relate to the questions I raised about patronage. The Minister for Sport, Recreation and Tourism-I am glad a friend and colleague, Senator Michael Baume, is here as the watch dog of the Coalition Waste Watch Committee-has it within his power to make appointments to the Australian Institute of Sport, the National Committee on Sport and Recreation for the Disabled, the Australian Tourist Commission, the Tourist Advisory Council, the Australian Sports Commission, the National Australia Day Council, the Working Group on Women in Sport, and now the Board of the Sports Aid Foundation. Of those positions of patronage there are 15 on the Australia Day Council, 31 in the tourist area and 47 in sport. When we add the seven that are now appointed, it brings the Minister up to a nice round 100. The Minister is to be congratulated on now having had the capacity to make his 100th appointment of patronage. At some later stage when we come to the legislation on the Australian Institute of Sport one hopes to be able to develop a little more fully the extent to which political favouritism-the ducks and drakes syndrome-has taken place. Senator Michael Baume —That task is a heavy load to carry. Senator PUPLICK —Indeed. For instance, as I consider the seven persons appointed to the Board of the Australian Institute of Sport, worthy gentlemen as they all are, I am intrigued as to the particular contribution that Sir Peter Abeles is going to make to the whole thing, the particular contribution that Mr Nicholas Whitlam is going to make to the whole thing, and the particular contribution that Mr Kerry Packer is going to make to the whole thing. I was talking the other day about regional television and who is whose mate, big or little, particularly in the media. I am intrigued at the extent to which the relationship between the Government and the owners of, in particular, major broadcasting and publishing institutions in this country is reinforced, essentially at the public's cost, by these patronage appointments to which, when we come to the Australian Institute of Sport, we will have a little more time to devote our attention. The final point I make is this: Without in any sense seeking to derogate from the value of making contributions to the Sports Aid Foundation tax deductible, it is extraordinary when one considers the representations that I expect every member of the Parliament receives from people seeking tax deductibility for their organisation, and the extent to which they are knocked back regularly by the Government for inclusion as a prescribed body under section 78 of the principal Act. For instance, without naming names or without naming specific organisations, I know that in the course of the last year or so I sought to make representations to the Government on behalf of a number of organisations which are, for instance, involved in raising and spending money in an attempt to assist victims of the disease acquired immune deficiency syndrome-organisations which have sought to raise money for medical purposes, for research purposes, for rehabilitation purposes, for care purposes and for counselling purposes, which have been regularly and systematically knocked back in terms of their capacity to have a tax deductible status. I expect that every member of this chamber has a list of people and organisations on whose behalf he or she has made representation. Many of those are extremely worthy and extremely significant community-based groups, but they are knocked back. Because there happens to be real politics and there happens to be real votes in doing something or in being seen to be doing something about sport it gets preferential treatment. As I said, I do not object to sport having the Sports Aid Foundation. We, in government, promised that we would establish such an organisation. But it is not without significance that the politics of sport has become one of the most intriguing areas of politics developed to a fine art by the Minister for Sport, Recreation and Tourism, whose concern to use sport and to use sports men and women in Australia as promoters, supporters and, indeed, campaigners for the Australian Labor Party leaves a very great deal to be desired. Senator MICHAEL BAUME(New South Wales)(3.49) —I wish to raise in this debate the matter of negative gearing as it relates to the property industry, the home building industry. I state at the beginning that the Opposition, naturally, is opposing these negative gearing provisions which, in effect, mean that any interest burden that is in excess of the revenue that emerges from the ownership and leasing of a home, of a dwelling, should not be deductible for tax to the extent that it exceeds the revenue. The simple consequence of that is, of course, that it is an enormous disincentive for people to invest in rental properties. This may not interest or excite the Government. In fact, it has not in the debate so far in the House of Representatives and here. The Government speakers have expressed no concern whatsoever for the consequences that will inevitably flow from this disastrous change in the tax law, disastrous insofar as it is diminishing already the flow of accommodation available, particularly to people in lower income groups. This may not have been so bad-it would have been bad anyway-had it not been in the context of an overwhelming governmental assault on the home building industry. We are all aware of the fact that the Government decided, as a matter of economic policy, not to cut its own spending, not to follow the sort of economic policy which had been advised for a long time by the Opposition and most expert commentators and not to show restraint or responsibility. Instead, the Government determined that it would regulate the economy almost solely by means of interest rate policy. It is that reason and basically that reason alone that determined Government policy. We have seen record real interest rates and the disastrous impact which that has had on investment overall let alone on housing and, of course, there has been the general inflationary consequence of this kind of economic policy. However, let us concentrate on the impact of this deliberate governmental policy which the Government had to impose in order to try to preserve some value in the Australian dollar and to establish some kind of interest rate differential between interest rates existing overseas and interest rates locally so that overseas people would still invest in the Australian dollar even though it was clearly weak. The maintenance of this deliberate and determined high interest rate policy by the Government has resulted in a disastrous impact on home building. We have seen the figures over recent times. Senator Watson —Investment is going down. Senator MICHAEL BAUME —As my friend Senator Watson says, investment has been continually going down. However, that is only part of the story. The Government, through this high interest rate regimen, has been knocking the home building industry which, when it came to office, it set out to improve significantly. It boasted of its record of success. There was something like a 15 to 16 per cent average interest rate cost if one wanted to buy a home. Of course interests rates have now been increased as a result of the Government's belated recognition that market forces required it to increase the limit on savings bank housing loans. On top of this incredible squeeze on the housing industry, as a result of interest rate problems, we have now had two further deliberate, determined policy attacks on home building and the opportunity for people to own their own home in Australia. They have been deliberate acts of Government policy. The first was the announcement on 17 July last year-almost a year ago-of negative gearing proposals with which we are dealing in this legislation and the second was the capital gains tax which was announced on 19 September last year and which we will be dealing with later. Let us forget that the Prime Minister (Mr Hawke) had promised not to introduce a capital gains tax. Generally with this Government one would expect that the more vehement the protest that something will not happen the more likely it is that it will eventuate. However, let us forget that. We have to look very seriously indeed at the consequence of the negative gearing proposal not simply on the industry as a whole, not simply on home seekers as a whole but particularly on the poorest families who rely on the housing industry to provide them with accommodation either through the purchase of a home, hopefully at the lower end of the range, or through rental accommodation. The consequence of the negative gearing legislation is that it basically hits those people who are least able to get accommodation by purchasing a home. They do not have the capital or the capacity to borrow and therefore they are obliged to rent. Where will the rental properties come from if it is no longer financially rewarding for people to invest in property or to build new rental accommodation if the negative gearing proposals which the Government has introduced apply? In other words the Government, because of its own incompetence in cutting government spending which is absolutely essential, has decided to solve the problem in its usual way. It is belting the victims, it is belting the Australian people because it does not have the intestinal fortitude to cut its own spending. I will give an example. In the rental housing area the direct and inevitable consequence of this mean and offensive tax will not be to disadvantage the investors. They will find other ways to get a return. They can buy Commonwealth bonds and get a far higher rate of return because of the excessive interest rate policies that this Government has introduced. They can have other sources of investment. The people who have benefited from the capacity to deduct interest costs from income other than rental income are not the investors so much as those people who have been able to rent at less than the economic cost for this very reason. In other words, the owner of the property would not depend simply on rents for a return; he would also hope for capital appreciation which, in many instances, may never be realised because he may hold on to it until his death. But the fact is that his asset is appreciating; so he would not seek deliberately to make a capital gain. If he had other income he could naturally increase the benefit to him by claiming a tax deduction against his other income. These matters together-the capital gains tax and the ability to negatively gear-meant that the rent that would provide an economic return to an owner was far below the sort of return that that owner would seek if he had bought Commonwealth bonds or had made any other investment. In Sydney the average rental return has been something like 5 to 6 per cent. That is outstanding, as my friend Senator Watson says. This recognises that the people doing well, in general, were the poorer people who could not afford to buy their own home and who were obliged to rent. For a return of something like 6 per cent to the owner renters could have accommodation; but under this tax law, allied with the capital gains tax law, the poorer end of the housing market would simply be forced to do two things. They would be forced either to pay an economic return-in other words, pay whatever the owner had to charge to get a reasonable return on his income which would be something like 14 per cent and that would mean rents would go up enormously-or to seek public housing simply because owners would not build accommodation, whether it be flats or houses, for rental purposes if they could not get an adequate return. This legislation ensures that they will not get an adequate return. So in this legislation we are not only pushing up the rents of those people who basically are at the lower end of the income scale but also depriving them of the opportunity to get even a place to rent because we are destroying the market. Today we heard, I think, Senator Maguire, or some other leading intellect on the Government side, say that we were talking scare talk, that this was all scaremongering and that it was not really happening. Well, I have news for Senator Maguire or whoever it was, because today the national income figures for the March quarter came out; that is, the quarterly estimates of national income and expenditure from the Australian Bureau of Statistics. Of course, they are disastrous and they show that for the second consecutive quarter we have had negative growth. National income has in fact fallen by 0.3 per cent for the March quarter and, after revisions, by the same amount for the December quarter. Senator Watson —Oh! Senator MICHAEL BAUME —Senator Watson is right to say: `Oh'. This is one of the most serious developments among the many serious developments we have struck in the last month. This is one of the most serious developments affecting every Australian to have happened under this Government. We have warned and forecast that this would be the consequence of the Government's irresponsible attitudes, ratbag economics and extraordinary reliance on high interest rates as its only instrument of economic policy. Now it is all happening. Investment is collapsing. The Treasurer, Mr Keating, is running around the place saying: `You have to cut government spending because otherwise investment will collapse even further'. We have record balance of payments deficits and, quite frankly, if the present wage case is not resolved in a way that limits any rise in labour costs to a minimum and unless suggestions of productivity gains are scotched, these figures demonstrate that the economy is well into a recession which started six months ago. Let us look specifically at the figures as they relate to housing. We have been told that what we have been saying and the warnings that we have been giving are all bunkum and nonsense. But let us look at the percentage changes for dwellings in real money terms, that is, after taking into account inflation and seasonal adjustment, over the last few quarters. The figures show that in the December quarter there was a 2.6 per cent fall, after adjusting for inflation, in fixed capital expenditure on dwellings. I am not quite certain why it is called fixed capital expenditure because in effect it is a consumption expenditure, but it is classified as capital. Expenditure on dwellings by the private sector was down 2.6 per cent and in the March quarter down another 2.4 per cent. So, so far in the last 12 months there has been an overall decline of something like 1.4 per cent. No doubt this will continue further in the next quarter. So the forecast in the Budget figures of a slight decline in dwelling expenditure is certain to be massively exceeded. Of course, that is disastrous enough. But then we find, when we look at the inflation factor in the dwelling industry, that not only is there the increased interest rate cost, the increased rental cost, the increased costs that will emerge from negative gearing and from the capital gains tax but also already an increase in the actual inflation rate as it relates to dwellings. These statistics reveal that over the last 12 months there has been something like a 9.2 per cent inflation rate in respect of dwellings. That is another element to discourage investors from putting their money into this area. The cost of doing so is increasing and the returns naturally will also have to increase simply to keep pace with inflation. Apart from dwellings, we see in the statistics that came out yesterday for new fixed capital expenditure for selected industries by type of asset, seasonally adjusted and in constant dollar terms, that spending on new buildings and structures in the March quarter was stagnant at $755m in 1979-80 prices. In fact, in current dollar terms it was about $1.39 billion. That stagnation is a matter of major concern because it is in the investment area. So not only do we have a disaster in dwellings; we now have stagnation in new buildings and structures in terms of industry investment in commercial operations. Senator Watson —The industry predicted it. Senator MICHAEL BAUME —As Senator Watson said, the industry predicted it. But it is interesting because in fact the only bright point in the national income figures in the whole area of gross fixed capital expenditure was in non-dwelling construction. In the latest quarter there was supposed to have been a 14 per cent increase, seasonally adjusted. So it seems to me that, if the latest figures for selected industries are an indication of what is to come, and I believe they are, even in the one area that looked moderately bright in the national income figures, we are about to see a collapse. The only reason we saw some increase in non-dwelling construction was as a result of the expenditure on quite a few casinos and other tourist accommodation which developed as a result of the collapse of the Australian dollar, making Australia a much more attractive place for tourists but at the same time making it far less attractive for Australians, particularly those seeking a home. I want to stress that one of the reasons that we are strongly opposed to this legislation is the impact it will have on Australians, particularly those seeking a home and who are in the lower income bracket. However, there are a couple of other matters I want to raise in relation to this legislation which have emerged from the Standing Committee for the Scrutiny of Bills of which I am a member. This Committee has some concerns about clause 25 and retrospectivity that I would like to draw to the attention of the Senate. As the Scrutiny of Bills Committee reports: By virtue of sub-clauses 25 (4) and (5) the amendments made by clause 11 limiting deductions for interest on money borrowed to finance rental property investments and the amendments made by clauses 12, 13, 14 and 15 deeming consideration received for the transfer of rights to receive income from property to be assessable income (rather than a capital receipt) will have effect from 17 July 1985 and 9 October 1985 respectively. The Explanatory Memorandum indicates that these were the dates on which the changes were first announced. In neither case was this announcement made to the Parliament. The Committee is critical of the practice, which is becoming increasingly prevalent in the field of taxation law, whereby changes to the law are made retrospective to the date of a Ministerial announcement. The Committee recognises the special conventions associated with changes to the taxation laws announced in the Budget or in similar statements to the Parliament and the practical necessity that changes to taxation laws be made retrospective to the date of the introduction of the amending Bill into the Parliament. However, these conventions aside-- I want to stress this- the Committee deplores-- it does not just criticise- the practice of making changes to the law retrospective to the date of a Ministerial announcement, for example to a press conference, which carries with it the assumption that people should arrange their affairs in accordance with announcements made by the Executive rather than in accordance with the laws made by Parliament. The practice treats the passage of the necessary retrospective legislation `ratifying' the Minister's announcement, in the present case 9 months and 6 months respectively after the event, as a pure formality. That holds the Senate in contempt. This Government has done this consistently. It is not acceptable; not only that, it is misleading and disgraceful when, many months after the announcement, we find deals going on with the Australian Democrats behind closed doors which in fact change that announcement. So for nine months people have proceeded on the basis that the law will change when in fact it simply will not change in the manner announced back in September, or in one case July, of last year. Senator Sheil —Government by fear. Senator MICHAEL BAUME —This is absolutely government by fear and fiat and government by Press conference but not government by parliamentary democracy. It is about time that this Government woke up to the fact that if it continues to treat the Parliament with contempt the people of this nation will not tolerate it. This contempt of the Senate and of the whole Parliament is a far more serious matter than the people have so far recognised. I hope that we will continue to draw it to their attention. I must say in all fairness that there were examples under the previous Government when announcements were made relating to tax matters which were followed by legislation many months later in some instances. I remind the Senate that in those instances the announcements simply were to close off loopholes in existing law. They were not creating totally new directions, new laws, new attempts to do totally new things. For this Government to try to use that specific measure, that we were forced to adopt when in government, as a precedent for this disgraceful behaviour now is equally intolerable. It involves a kind of intellectual agility which is inappropriate for a serious chamber and certainly inappropriate for a democratic government. I am unaware-perhaps the Government could point it out-of any instance other than the closing of a loophole in an existing Bill or tax law in which our Government in tax matters acted in the way that this Government is doing. I do not think that anyone on the Government side would criticise us for coming out with announcements to close loopholes-in fact they were critical that we did not do that more often-and then finding out how to write the legislation to effectively block the loophole without doing damage to existing and proper commercial activity. That is not what this Government is doing. It is setting out a new set of taxation changes. The Government calls them reforms. Reform is the phoney word that is supposed to represent change-often change for the worse. That is the situation in this case. To regard this ragbag of Bills as reform is to abuse the English language. This legislation was part of the bribe that the Government offered to the trade union movement to allow the Treasurer to introduce some genuine improvement in the tax arrangements involving a switch from an over-reliance on direct income tax to a greater dependence on indirect tax, which had general community support. That, however, did not have the support of the Australian Council of Trade Unions and some elements of the big business cabal which surrounds the Prime Minister and to which he appears to limit his detailed conversations on such matters. As a result, Mr Keating's proposals were rolled. We do not have any genuine reform of the tax system. All we have now is the bribe that was offered-this ragbag of legislation-which, as the Scrutiny of Bills Committee says, has been introduced in a manner which it deplores. We have to put up with the bribe without getting the benefit of genuine tax reform. I strongly oppose this. I look forward to being able to test the attitude of the Australian Democrats in the Committee stage when some amendments will be moved. I encourage the Senate strongly to resist this legislation. I hope that those people who find that they cannot afford accommodation, that rents are out of their reach, that they have no prospect of getting a deposit or of being able to pay the interest bill if they want to buy a house, will recognise-there are many thousands of such people judging from the latest falls in housing approval figures-that it is not just bad luck or not simply bad fortune that has deprived them of the opportunity to have accommodation either rental or owned but is the direct result of deliberate government policy. The Government has chosen in endeavouring to solve its economic problems not to cut its own self-indulgences but to hit the home seeker. Senator WATSON(Tasmania)(4.16) —The Taxation Laws Amendment Bill contains two major elements: The removal of negative gearing on rental property investment, and the self- assessment of taxation. Both of these provisions are inept attempts by the Government to tidy up Australia's increasingly cumbersome income tax system. Unfortunately, the Government has neglected to acknowledge the detrimental effects that its social taxation reform package will have on the economy. The Bill proposes that negative gearing be abolished. It is incredibly short-sighted legislation. The Government objects to negative gearing operations when money is borrowed on rental investment property which is subsequently sold for a capital profit. There is some substance and justification in that argument but what it actually has done is hit all negative gearing proposals, even those that are not subsequently sold. The Government attacks such schemes from two sides; namely, by abolishing the negative gearing aspects and by introducing a capital gains tax. In equity, in philosophy, one may be able to justify one proposal but not the double-edged sword approach that this Government is using. In an effort to track down a minority of individuals-even the minority use the mechanisms provided by the law to reduce their tax burden-the Government has placed in jeopardy the welfare of the very people whom it claims to represent. In 1983 the Government gave assurances that housing would be given a high priority. When there is already a housing rental crisis the Government proposes to exacerbate the situation by squeezing the rental market even further. The private sector plays a vital role in providing accommodation. It is clear that the abrogation of negative gearing will result in a reduction of property investment for rental purposes. The ability to off-set excess interest costs on a rental property against other income has to a certain extent afforded the community with rental accommodation at a lower price than the market would normally provide. These negative gearing provisions in the Bill will have a very adverse effect on the housing situation. They will remove incentives for individuals to buy properties for rental purposes. They will receive less income in the short term in rent than the cost of the interest on their borrowings. I emphasise that that is in the short term. As the availability of rental accommodation decreases basic economics tell us that according to the law of supply and demand rents will be forced upwards until the market reaches a new and higher equilibrium. Also, present rent levels will not provide sufficient after tax returns to the investor. This is a second factor which will tend to inflate prices. Clearly, rents must increase for this type of investment to remain viable. I believe that the timing of the legislation is terrible, as my colleague Senator Michael Baume has already described to the Senate. With private sector approvals continuing to fall, the Government cannot afford to place more pressure on an already critical housing situation. It is the low income earners who find it most difficult nowadays to qualify for a loan. Consequently, this legislation is further evidence that the Government is placing home ownership beyond the reach of ordinary people, particularly the poor. If rents are forced to rise, poor people, the category of people most in need, will be the real losers. This legislation has even more far-reaching consequences. When the rental market dries up, the demand for housing commission homes will also be intensified and people will turn to government, clamouring for more funds for Commonwealth housing. The abolition of negative gearing will merely tamper with an already distorted market, gaining the Government little and destroying a system which has worked reasonably well in the past. The new depreciation allowance of 4 per cent per annum on residential, income-producing buildings included in this package has been offered as an illusory olive branch to the property investor. In effect, it will do very little to overcome the damage that the negative gearing provisions will cause to the housing situation today. The Government claims that the building depreciation provisions will somehow offset the effect of the removal of negative gearing. However, the compensation is not significant. The provision applies only to new buildings, not to all buildings. This means that a substantial number of property investors will not benefit as most of the houses which are rented out are old, rather than new. The legislation before us today is another example of the tardiness of the Government in putting into legislative form its earlier undertakings. A Bill which is intended to operate from July 1985 is not introduced until late May 1986 and in the dying stages of the parliamentary session. It is then rushed through the House of Representatives. The self-assessment provisions, likewise, give the Taxation Commissioner an inordinate amount of authority. Therefore, the provisions have the capacity to be particularly inequitable. Under the new proposals, a taxpayer's return goes to the Australian Taxation Office but will not be routinely assessed and given the full scrutiny it currently receives. The object of self-assessment is to reallocate work within the Taxation Office so that more staff will work on selected post-assessment assignments. This concept is quite sound in theory but in practice it has many problems. The scheme will impose great costs on the taxpayer as he is presumed to have a very intricate knowledge of the taxation Act in order to claim fairly and correctly. So that he can have some degree of assurance that he can claim properly he would need to have the services of a super-reliable tax agent. The system of self-assessment is unfair because it singles out and places costs on certain categories of taxpayers, together with the responsibility of knowing an increasingly complex taxation system. I believe that the Government Whip, Senator Robertson, will be aware of the sorts of problems that will be placed on people in these circumstances. The most blatantly unfair aspect of this tax relates to the Commissioner's powers. At present if a full and true disclosure has been made, no amendment to increase the tax liability can be made to reflect a changed interpretation of the law. Only if there has been a mistake in calculation or an error in fact can liability be changed. However, under this new legislation the Commissioner has the power to increase or reduce liability if the law is reinterpreted or changed in some way. This will apply to tax assessments made in the previous three years. Although returns may be accepted by the Commissioner, he can decide that assessments made earlier are not satisfactory and require them to be audited. Past commitments can then be called up and a backtracking process undertaken. One of the most unjust aspects of the proposed legislation is that, whilst the Commissioner has the power to reopen a case to increase liability, the request of the taxpayer to reopen a case to decrease liability is at the Commissioner's discretion. I believe that this leaves the taxpayer powerless while the Taxation Office calls all the shots. The fact that any assessment can be audited and liability increased has very serious implications for small business. Even if a full and true disclosure has been made and is accepted by the Taxation Office, there is no way of knowing whether the taxpayer's liability is finalised. This will create dreadful uncertainty within the private sector. Taxation laws are not black and white. They are always under debate as to what is the correct way of interpreting them. Not even experts in the field agree fully as to the real meaning of the many different and complex laws. Therefore, when assessments are made, they may be made on the basis of one meaning, yet be audited at some stage in the future when the law has been reinterpreted. If this happens it leaves taxpayers in dire straits. There is nothing binding in the tax laws that will give individuals some degree of confidence in the liability they have to pay. It will be up to the Commissioner as to how he interprets the legislation before the Senate. He has a disturbingly wide range of discretionary powers. Furthermore, if the taxpayer is uncertain about his assessment, he does not have the option to get the Taxation Office to scrutinise his assessment rather than do it himself. Therefore, even if he wishes to do so, the taxpayer cannot make certain of his standing in relation to his tax liability. Instead he must wait, perhaps up to three years, to see whether he will be audited and the matter subsequently disputed. He has no protection whatsoever. Given this length of time, problems must be created for the Taxation Office in relation to changes in the situation of each taxpayer. That is what will occur, for example, in the case of bankruptcy, insolvency, company liquidation and changes in the formal construction of a business. There are other anomalies which I particularly would like to comment on. The first relates to what I can see only as being the double standards which could occur due to this Bill. If a person receives interest paid by the Commissioner because the Commissioner owes to him a disputed claim or decreased liability, the individual must pay tax on that interest as assessable income. However, if the person has to pay the Commissioner tax, he cannot claim it to be tax deductible. In my mind this seems to be somewhat questionable. I am also particularly concerned about another anomaly which relates to tax audits under these new provisions. Under this legislation the expense of complying with a tax audit is not classified as a business expense and, therefore, is not deductible in the normal sense of running a company. Therefore, the very high costs that will be imposed on companies and individuals by tax audits are not tax deductible. Even worse, the costs of mounting a successful appeal against the Taxation Office are also not tax deductible. I believe that this is grossly unjust and a typical example of the unfair way the Government is now treating the private sector. Let me give honourable senators an example. In regard to the heavy construction industry, the road construction industry or forest harvesting, if an engine blows up on a major plant item and the engine is replaced, but on replacement it is found that the replacement engine is of a slightly greater horsepower, technically this means that it is a capital improvement, even though it involves the replacement of a subsidiary part of a whole asset. Most contractors would write this off as a repair item, it being deductible under section 51: It blew up in the normal course of conducting the business and a new engine was put in. However, down the track the Commissioner of Taxation, on one of his post audits, comes along, and three years later the contractor is up for about 40-odd per cent interest, back payment, and on $50,000 that could be sufficient to bankrupt a harvesting contractor. By removing the element of certainty by changing the provisions of section 170, these provisions will result in the bankruptcy of many small businesses. They just will not be able to carry these interest costs for three or four years down the track. The self-assessment provisions of the Bill must be condemned. They will do little to foster growth in the economy and will result in massive uncertainty in the private sector. Overall, the Taxation Laws Amendment Bill can have only a negative effect. The Australian tax system is far too complex. Grafting bits and pieces on here and there in an effort to reduce tax avoidance will simply make it more and more complicated and more and more inequitable to the individual. Ultimately, the benefits will be nullified by the costs. The level of taxation avoidance will continue to increase, with individuals trying to shelter from their existing very high levels of taxation. The higher the rate of tax, the more that taxpayers are likely to exploit the mechanisms that can be found to provide ways and means of minimising tax liabilities. The present measures will not guarantee a reduction in tax avoidance. More and more leaks will keep appearing in the system, and they will have to be blocked off. I conclude by expressing my extreme concern at the extension of the powers of the Commissioner of Taxation and by pointing out the grave implications that the Bills will have on the continuation of investment opportunities in the community and the problems that they will pose for small business. Debate (on motion by Senator Grimes) adjourned. Debate resumed from 27 May, on motion by Senator Grimes: That the Bills be now read a second time. Senator MESSNER(South Australia)(4.32) —This is the commencement of the debate on the fringe benefits tax, the second part of the Government's so-called tax reform package. It has come before us some eight months after the initial announcement by the Treasurer (Mr Keating) last year. The Fringe Benefits Tax Assessment Bill 1986 represents a giant step forward in tax law to prove that there is absolutely no logic in taxation; it is merely the figment of the imagination of an avaricious government which finds itself enmeshed in an impenetrable net, locking itself in with the Australian Council of Trade Unions through that so-called sacred document, the accord. It is, appropriately, a purple document that has been produced to be circulated amongst employers-the colour of mourning. And mourn we might for Australia as a result of this stupid tax measure. Mourn we might for the jobs of Australians as a result of it. But one thing we will not mourn is the passing of the Australian Labor Party out of government as a result of the introduction of this measure. The Opposition's formal position in relation to this legislation is that we shall be opposing it at all stages. Furthermore, upon election to government, we will repeal the legislation. I seek leave, Madam Acting Deputy President, to have incorporated in Hansard a copy of the news release issued today by the Leader of the Opposition, Mr John Howard, stating his intention to repeal this legislation. Leave granted. The document read as follows- LEADER OF THE OPPOSITION News Release by John Howard, MP Coalition will Repeal Fringe Benefits Tax The Opposition has considered in detail the Keating Fringe Benefits Tax. This legislation is anti-business, enormously bureaucratic and will do great harm to the productive sector of the Australian economy. On election to government the Coalition will repeal the Keating Fringe Benefits Tax. It is economic insanity for the Hawke Government to be introducing wide-ranging anti-business taxes at a time when Australia has a balance of payments crisis. The Government should be doing everything in its power to encourage investment and export earnings. Instead Mr Keating has decided to mug Australian businesses and farmers with an enormously complex fringe benefits tax. This is a costly, unfair and punitive way of tackling areas of undoubted abuse that do exist in relation to certain fringe benefits. In the name of tackling these abuses there is not justification for the method adopted by Mr Keating that will: cripple many small businesses and farming enterprises; and put thousands out of work in the motor vehicle industry and in rural areas. There are alternative ways of tackling those fringe benefits abuses which are an obvious form of tax avoidance. This will be addressed in detail when the Coalition's taxation policy is released prior to the next election. The Coalition's approach will address the abuses which do exist without the unfair and costly burdens involved in the Keating Fringe Benefits Tax. CANBERRA 29 May 1985 Senator MESSNER —I thank the Senate. This tax represents an insult to all Australians. It breaches the National Taxation Summit principles which were outlined by the Prime Minister (Mr Hawke) some time ago. There are at least three principles which it obviously breaches. Let us look at the fourth great Hawke tax principle: Any reform must lead to a simpler system, which, therefore, all Australians can understand easily. Certainly this legislation will lead not to any simpler system but only to a more complicated one. The eighth principle was that any reform must provide the best possible climate for investment, growth and employment. Obviously, this tax will destroy jobs and destroy incentive for investment and growth, all coming on top of the most disastrous national account figures that we have seen for three years announced today. The ninth principle also was stated by Prime Minister Hawke to be that any reform package must have widespread community support. I have never seen a tax measure more roundly condemned by the community than the fringe benefits tax, so it has no support in the community whatsoever. As a result, it fails on that ground as well. Not only does this tax breach those principles; it taxes the employer for the benefits obtained by others. It is a capricious piece of legislation in its impact on the various categories of employment. For instance, it singles out farmers, motor cars, and meals for employees; but it allows people to eat in in-house canteens and in other in-house facilities, which are given exemption from this tax. The tax imposes a double penalty. For example, even where a tax deduction to an employer is denied or limited, the fringe benefits tax on the employee's benefit is imposed. Let us just take the classic case of the so-called executive who receives, as part of his remuneration package, the use of a motor car which might be worth more than $26,660. The Australian Taxation Office will not allow a depreciation deduction on values in excess of that figure. To that extent, no tax allowance is made to the employer for the use of that motor vehicle; and yet notwithstanding that there is no tax benefit to the company, a second tax is imposed through the fringe benefits tax on the company as a result. It is absolutely ludicrous and is an insult to the intelligence of all Australians. There are other insults. The Treasurer expects us to believe that his famous tax cuts which are coming up this year and next are dependent upon this measure. Yet for every $6 of tax cuts that will be implemented by the Government's proposals, only $1 will come from the fringe benefits tax. We all know that the balance-some $3 billion in the overhang over a two-year period-will be paid for by inflation and by the taxpayer moving into higher and higher tax brackets. That is where the payment will come from. It will not come from the fringe benefits tax by any means. The Treasurer also expects us to believe that rorts are rampant and that the rich are getting the benefits. Let us look at what benefits they are getting. I mentioned earlier the case of the executive car. Suppose there is a $80,000 Mercedes owned by an executive; but the company that is employing that person gets a deduction for the depreciation on it only up to $26,660. There is no deduction against taxable income beyond that level. Yet we impose a second tax on the company in the form of a fringe benefit tax as a double penalty in that situation. It is interesting to note that 65 per cent of the work force receive fringe benefits, and among the kinds of benefits that they get, under the definition of this law, is, say, where they take home the car provided by the employer for garaging, because, frequently, the company, the employer or the charity, or whatever it is, has no room for garaging. It is therefore to the benefit of the employer that the employee takes the car home. Let us just consider that there are, say, a number of benefits to employees in that category, who might be in the lower level of income. Let us say that a company provides cars to 500 employees. We might find that, say, 10 people at the executive level of income have a somewhat grander vehicle than the other employees who take cars home, so only a minimal number, perhaps two per cent, of a company's employees may be caught under that category. While we are on that point we should note the statement in the Senate the other night by Senator Walsh who acknowledged that it was the Government's firm intention to force employers to cash up benefits-that is, instead of paying fringe benefits in the form of kind, pay them in cash. Logically, that means that it will be not the employer but the employee who will be paying the tax because in the future the employer will of course get a tax deduction for the cashed-up value of those benefits. The benefit will be received in the hands of the employee and he or she will be paying the tax as part of the pay as you earn system. Just to demonstrate this point I would like to incorporate in Hansard a table which sets out the situation as the tax applies to varying levels of income. The table quite clearly shows that in relation to benefits being cashed-up, as Senator Walsh wants employers to cash them up, there will be an incentive for employers to do that in the case of lower income earners and not, as he would have us believe, in the case of upper income earners. Therefore it is the lower income earners who, in the long run, will find that their benefits will be subject to tax in their hands. They will be paying the tax, not the upper income earners. As a result, the Government's measure fails on that very important ground. I seek leave to have the table incorporated in Hansard. Leave granted. The table read as follows- THE EMPLOYER'S INCENTIVE TO `CASH-OUT' FRINGE BENEFITS Employer paying F.B.T. on $1,000 benefit $ Value of fringe... 1,000 cost of F.B.T. ... 490 Gross Cost ... 1,490 less tax saving on F.B. at coy. rate ... 490 Net Cost ... 1,000 Employer `Cashing-Out' Benefit of $1,000 Employee's Rate of Tax ... 29% 43% 55% Net Fringe Benefit ... 1,000 1,000 1,000 Gross Cost to Employer ... 1,408 1,754 2,222 +25% On Costs ... 352 438 555 Cost to Employer ... 1,760 2,192 2,777 -Tax Saving at coy. rate (49%) ... 862 1,074 1,361 Net Cost to Employer... 898 1,118 1,416 Net Fringe Benefit... 1,000 1,000 1,000 Benefit of `Cashing-Out' ... +102 -118 -416 Senator MESSNER —The other point that the Treasurer would have us believe is that the tax is being imposed on 700,000 employers across the country because of efficiency of collection; that it is cheaper and better to impose it on the employers rather than on the employees. That is absolute nonsense. As we have now seen, Senator Walsh wants employees to pay the tax. But even if that were so, obviously that is not the reason why employers are having this tax pushed on them. Obviously it is politically easier for the Government to do that and, of course, the trade union movement would not allow it to happen any other way. Absolutely no thought has been given to the cost to business of the regulation associated with the fringe benefits tax, which is fantastically complex and difficult and which is generating amazing concern amongst employer groups. The Government seems to have ignored entirely the fact that it is adding to the regulation of business at a time when it is claiming that it is trying to deregulate industry and provide a more competitive industrial base. In summary, this tax represents nothing more than a new form of payroll tax, as it is being levied in exactly the same way as the States levy their taxes. Of course it is different from those taxes levied by the States because there is no exemption for small business in the same way as there is in the State arena. It is therefore destructive of jobs, of enterprise and of incentive. Small business has already reacted to payroll taxes. It knows what they are all about, and it knows how they destroy jobs. The only positions we can see being created in the job department as a result of this new fringe benefits tax are for accountants and public servants. We know that in my State, for instance, the car industry could well suffer a loss of 4,500 jobs. We have also the new uranium, gold and copper development at Olympic Dam. The Western Mining Corporation proposal to establish 650 houses there is in jeopardy because of the imposition of the tax. Instead of establishing a town of 650 houses, Western Mining Corporation is now actively looking at flying people on a regular cycle basis between Andamooka and Adelaide, rotating jobs so that its employees can keep their houses in Adelaide. Perhaps the most callous part of this whole fringe benefits tax is the impact it will have on charities and voluntary groups, and in some cases on religious organisations as well. People who are providing a genuine community service-people involved in groups such as the Red Cross Society, the Salvation Army, the Australian Cancer Society and so on-and who drive charity vehicles, or non-profit organisation vehicles, as part of the 24-hour service that they give the community, or who take them home in order the save the charity or body involved the cost of garaging, will now find that those organisations will be forced to pay a fringe benefits tax, so reducing the amount of money available to the disadvantaged. One other area of great concern came to my attention only yesterday. The new consulting industry, which is developing rapidly overseas, consulting with governments in other countries, and which is competing on a very large market that is now worth some $160m a year, will have problems with the tax. Consultants overseas are provided with houses, and in those parts of the world where there are no English-speaking schools and children have to go to special schools, the extra cost of fees associated with that have to be paid for and they will all be taxed at these new rates under the fringe benefits tax. Consequently that industry will be thrown into jeopardy because it is competing against the rest of the world on a very tightly-priced market. Let us look at some of the detailed provisions of the legislation. The fundamental problem with it is the broad potential application of its provisions. The crux of the legislation is the provision of a fringe benefit in respect of the employment of an employee. An employee is defined as a person being a former, a current or a future employee. So a company, an employer, can never avoid being caught for the fringe benefits tax. Basically, to be considered an employee a person must have received salary or wages as defined in section 221a (1) of the Income Tax Assessment Act. Of course, that definition includes directors fees. As the definition of an employee includes a future or former employee, it is only necessary to have received or to receive such a payment at any time in the past or in the future, with no linkage of the benefit to any current employment. In fact, section 137 states that if a benefit is provided not in respect of employment but is paid in cash, it is salaries or wages. It will be deemed to be salaries or wages to ensure that an employee's relationship is preserved, or created. Thus the concept of an employee is very broad indeed. Once the extended concept of an employee is established, a benefit must be provided in respect of employment. Section 148 extends the meaning of what constitutes `in respect of the employment of an employee', which is the crux of the whole Bill, and states that it is also included whether or not the benefit is also provided in respect of any other matter or thing, whether or not employment will occur, is occurring or has occurred, whether or not the benefit is offset by any disadvantage or inconvenience, whether or not the benefit is provided in connection with that employment and whether or not the benefit is provided as a reward for services rendered or to be rendered. So the extraordinary breadth of this legislation catches virtually any kind of condition. To make my point I take the common example of a teenage lad of 16 working in his parents' greengrocer shop after school and who receives a salary. When he gets married at the age of 23 or 24 and gets a wedding present, that wedding present will be a fringe benefit. I will take this a step further. The father might give his son and future daughter-in-law a loan for a house on an interest free basis or on perhaps a concessional interest basis. That is a fringe benefit and will be taxed in the hands of the father. So on it will go right through the life of that child until he dies. This is absolutely incredible. Senator Crichton-Browne —That will encourage them to work for dad! Senator MESSNER —That is obviously going to kill that business. There are a number of other examples that perhaps we ought to run through at this point. Let us look at the farming industry. The value of a dead tree chopped up by a farm worker and used for heating a farm cottage for his family is going to be subject to the tax. The mere use of a farm vehicle by a worker living on the farm to drive his children to the school bus stop will be subject to the tax. As private use is defined to mean `use not exclusively for producing assessable income', if a farmer drives into town to pick up a spare part for a tractor and takes his wife to do some shopping, the use of that car is a private use and will be subject to the fringe benefits tax. Senator Grimes laughs, but he should read the law. I bet that he has not addressed his mind to it. A four-wheel drive vehicle used exclusively on the farm each day will be required to substantiate business use in order to obtain exemption from the fringe benefits tax. The example of the farmer's son, which we have just covered in another instance in relation to small business, is a similar problem. The provisions are so broad that if a farmer had a son who worked on a farm property, who lived with the farmer and his wife in their house and received a salary while he worked, of course, the rental value of that house is taxable as a fringe benefit to the employer. Senator Boswell —You're not fair dinkum. Senator MESSNER —Yes, I am fair dinkum. We return to the situation of the small business where a child employee is working and he is given a bicycle by his parents as a birthday present. This will constitute a fringe benefit under these situations. Senator Boswell —That is disgusting. Senator MESSNER —That is the way this Government operates. One can see the breadth of this legislation. The Minister laughs, but I ask him to tell us where this legislation does not cover these circumstances. Senator Grimes —You know it doesn't. Senator MESSNER —Will the Minister tell us or point to the Act? Senator Grimes —It is just the same as you said about charities. You were lying then, and you are lying now. The ACTING DEPUTY PRESIDENT(Senator Coleman) —Order! Senator MESSNER —I do not take exception to what Senator Grimes has said. We all understand him. But the point about it is that it is exactly the misleading situation we had in the House of Representatives yesterday or the day before when Mr Keating, the Treasurer, said that people in farm houses would not be subject to this tax. That is absurd. If a person under this law is an employee of a company which owns a house that is on a farm property, the value of that house will be subject to a fringe benefits tax. That is the situation that will apply in those circumstances. Let us pass to other problems in industry. Safety awards will be made subject to the fringe benefits tax. Road safety awards given to people for good road safety habits will be subject to the fringe benefits tax. The gold watch given to the retiring employee will be subject to the fringe benefits tax. Relocation expenses paid for the transfer of an employee and the family will be subject to the full to the fringe benefits tax. This will be so, as the taxable fringe benefit is generally reduced by the amount that would have been deductible to the employee had the employee incurred the expenditure. But, as the Minister would know, that expenditure is of a private nature and is not deductible for the employee, therefore it will be caught up. The air fares paid by the company for a job applicant travelling from one city to another for an interview will be subject to the fringe benefits tax if that person becomes an employee of that company. It goes on and on, but let us just turn to religious bodies and charities. The private use of a car by a minister of religion will be subject to fringe benefits tax when he takes his car to visit his mother or to do some shopping. A proportion of the value of the house attached to the church will be subject to the fringe benefits tax. The value of a live-in school teacher or housekeeper will also be subject to a fringe benefits tax. As we have seen quoted so often in the media, a field worker for a charity who takes a car home because there is nowhere to garage it on the charity's property, will find that it is subject to the fringe benefits tax. These cases just roll on and on and we keep hearing more and more of these circumstances. Senator Grimes —All out of your mind. Senator MESSNER —If Senator Grimes can ask his offsiders to give him advice as to where we are wrong on these points, we would be only too pleased to hear about it, but these are clearly interpretations based on the law and have been scrutinised by people who understand that law and who apply it every day. Senator Grimes —The Treasurer has denied that repeatedly. Senator Walters is lying now like you lied about the assets test and she will get her staff to do the same again. Senator MESSNER —I really do object to the fact that the Minister calls lies those issues that were raised at the time under the assets test because quite clearly when they were raised they were proven to be right and the Government was forced to back off and adjust its legislation and its thinking. Senator Grimes —The gold teeth? Senator MESSNER —I never mentioned gold teeth, and the Minister knows that. Senator Grimes —You mentioned that on the program in Hobart. I will get the date for you and I will get the transcript. See if you can deny that. Senator MESSNER —The Minister is only trying to take my time. The point is that we should look at some of the other stupidities in this legislation. Governments are going to be forced to pay fringe benefits tax on that part of its employees' benefits. We talk there of State and local governments. Some 16 per cent-about $100m-of this new tax is going to be raised from local and State governments. Who is going to reimburse them? Is the Federal Government going to have to rob Peter to pay Paul? That is one solution. Another solution is that local governments will be forced to put up rates or State governments will be forced to put up the cost of water supply, water rates and so on. How else are they going to do it? Is it any wonder now that the Premiers of the States, such as Mr John Bannon in South Australia and Sir Joh Bjelke-Petersen in Queensland, have said that they will have to consider very carefully whether they can pay this or not? The attack on charities, as I say, is probably the most outrageous attack of all. Now we come to a matter even more serious-the letter sent to business houses in the last few weeks by the Commissioner of Taxation which incorporated the purple booklet and which included a questionnaire asking for information from employers. This letter is unprecedented in its political nature. I cannot believe that the Commissioner of Taxation did this off his own bat without some kind of duress from the Government because incorporated in this letter is the following statement: The Fringe Benefits Tax is an integral part of the Government's tax reform package, the overall aim of which is to cut personal marginal income tax rates and finance other benefits for the Australian community. If that is not a political statement, I do not know what is. I can only assume that it was the duress from the Treasurer on the Commissioner of Taxation which produced that kind of statement. Apart from being wrong, it is outrageously political as uttered by a civil servant in this situation. One can only say that that would be unprecedented in its breadth. When I started my comments on this Bill I made the point that the Opposition will be opposing it at all stages right down the line and that it is our commitment to repeal it upon election to government. I believe that we are thoroughly justified in that position. This Bill is dangerous. It is wrong in its principle in so many ways. It is certainly very onerous, it is burdensome, and it will add considerably to the cost of doing business in the community. It comes at a time when we are struggling to get the economy moving to bring about increased output in future to provide job opportunities for Australians. Clearly, this tax is destructive of jobs in the community, it is destructive of incentive for investment, and it will lead to the disemployment of many people in a wide sector of industry. It will force people who are unequipped to handle these things to keep records in such detail that they will find themselves in error, and no doubt subject to prosecution by the Australian Taxation Office as a result. In order to avoid those errors people will be forced to take advice from lawyers and accountants. One wonders what is in the Government's mind. We know that the accounting profession is under pressure in meeting its own obligations to the Taxation Office in the way of lodgment of returns by the end of October each year and the profession will be forced to answer queries and prepare returns on behalf of employers at about the same time in this financial year. One wonders how the industry will cope with this difficulty. The Opposition opposes this legislation. It is thoroughly bad and should be withdrawn now. That is a positive step that could be taken by this Government to retrieve this country's economic position. The legislation should be withdrawn now before the Government is embarrassed any further. Senator MAGUIRE(South Australia)(5.02) —This afternoon we are debating the Government's legislation to impose a tax on specified fringe benefits. The fringe benefits tax Bills introduce provisions which continue the Government's attack on tax avoidance and tax evasion practices. These Bills will ensure that a whole range of fringe benefits previously received tax free by a privileged minority of the work force will now be subject to taxation. Importantly, the extra revenue raised by these tax reform measures will be used to finance personal taxation reductions for other Australians. I make the point that this is part of a tax package which is designed to create tax cuts for many Australians. It is not a package which will result in overall taxation increases across the board but will result in tax reductions for many Australians. The revenue raised by this tax on fringe benefits will be used to reduce personal income tax scales and marginal tax rates. I instance the reduction in the top marginal tax rate from 60c to 49c in the dollar under this Government and the reduction in the current rate of 46c to 40c in the dollar. It is important to bear in mind that those reductions will enable many Australians to buy new motor vehicles and new products. One of the dishonest aspects of the campaign waged by the Opposition and by certain groups in the community against this legislation is that they will not acknowledge the effect of the tax cuts which will be financed by these measures and which will enable a number of Australians to make major consumer purchases and in many cases to buy new motor vehicles for the first time. That is a very important point that should be put on the record. The Government's crackdown on fringe benefits will make the tax system more equitable by distributing the taxation burden more in accordance with each individual's capacity to pay. As a result of the measures contained in the Bills and the Government's overall taxation package, there will be no increase in the total level of taxation in the community. That was spelt out in the Prime Minister's nine principles of tax reform-namely, that there should be no increase in taxation collections in relation to gross domestic product. There will be no overall increase in taxation as a result of the tax package. The provision of fringe benefits as a form of non-taxable remuneration to employees has escalated rapidly in recent years. Often it has constituted nothing less than outright tax avoidance. It has led to a serious deterioration in the direct tax base as upper income earners in particular have been receiving large slices of their remuneration in the form of non-taxable fringe benefits. Of course, fringe benefits have always existed as additional incentives provided by employers to attract employees. However, in recent years the use of fringe benefits has been abused. When one looks at the official surveys covering employees who have received fringe benefits one sees that there has been a very explosive growth indeed in the spread of fringe benefits in recent years. In fact, they can no longer be labelled as fringe benefits if one is to describe them correctly. In many cases such non-taxable benefits account for up to 40 per cent of an employee's remuneration package. So strictly speaking the term `fringe benefit' is a misnomer. In such cases 40 per cent of some remuneration is being received tax free. This practice had to be stopped if Australia is to have a fair and equitable tax system. The measures introduced in this Bill will ensure that the value of all major fringe benefits, whether received in cash or otherwise, are made subject to taxation. The fringe benefits tax will apply to all employers, including Commonwealth State and local governments and their agencies. Types of benefits to be taxed include employer provided motor vehicles, free or low interest loans, residential accommodation, board and excessive living away from home allowances, goods and services provided free or sold at or below cost, and expenses paid on behalf of employees. The tax will not apply to benefits associated with contributions to superannuation funds and employee share acquisition plans. Also exempt is free or discounted use of commuter transport systems by employees. No tax will be applied on goods consumed at work, nor on the first $200 in value in a year of free or discounted goods or services provided to an employee, including discounted air fares to airline and travel agency employees. It was previously announced that the taxable value of free or subsidised rental accommodation would be discounted by one-third. The Government has decided to increase that discount to 40 per cent. This concession is in recognition of the cost disadvantages of constructing accommodation in remote areas. That means that only 60 per cent of the value of subsidised rental accommodation will be taxed; initially at the 46c in the dollar rate, then at 27.6 per cent of the value. The Bill makes further allowance for the position of remotely located employees. One of these is to discount by half the value of holiday travel subsidised or paid for by employers. The system will be one of self-assessment. Responsibility will be placed on employers to lodge an annual return and to calculate the amount of fringe benefits tax payable. For the transitional year of the new arrangements tax will be imposed at the rate of 46c in the dollar on the taxable value of those fringe benefits subject to the tax. Thereafter, the rate will rise to 49c in the dollar, which equates with the maximum rate of income tax to apply from 1 July next year and the company tax rate to apply to corporate incomes derived in the financial year 1987-88. Revenue gains from the fringe benefits tax originally were estimated at $320m in 1986-87 and $515m in 1987-88. They are very large sums of money indeed-large amounts of revenue to be obtained by the Commonwealth. They indicate very tangibly the extent of tax avoidance through these avenues in the past. The fact that we are able to raise hundreds of millions of dollars by taxing fringe benefits indicates what has been going on in Australian society and those revenue figures underline the extent of tax avoidance through the use of fringe benefits in recent years. The revenue collected from the fringe benefits tax will be a major means of financing income tax cuts for many pay as you earn taxpayers in the next 18 months. That is a very important factor that has to be borne in mind in this debate. Since the announcement of the Government's fringe benefits tax measures in September last year, the Australian public has been bombarded with misleading and even false information about their likely effects. Much of this misinformation has originated from members of the Federal Opposition, and at other times, I regret to say, it has been the result of concerted scare campaigns by disaffected industry groups. For example, in South Australia Mr Olsen, the continuing State Liberal Opposition Leader, and a small section of the car industry late last year based the whole of the State election campaign on the so-called car tax. It is very important to note that this so-called car tax has already been tested once at the ballot box. Mr Olsen and a small section of disaffected industry groups made the fringe benefits tax on cars a major issue at the South Australian elections on 7 December last year. They invested thousands of dollars in full page newspaper advertisement telling us that the car industry was about to collapse. They told South Australian voters to send a message to Canberra. That is what they did. Rallies were held to give Mr Olsen a public platform. The organisers tried to confuse and mislead the South Australian electorate. They made it a big issue in the election and look where it got them-complete rejection by the South Australian electorate. Senator Walters —Out of 20 speakers only two of you were willing to speak on this. Senator MAGUIRE —It is the quality that counts. Today I will present some concrete facts about fringe benefits and about the likely effects of the new taxation measures. I intend to spend some time discussing the fringe benefits tax as it applies to employer-provided motor vehicles, since it is in this area that most of the scare tactics have been directed. First, it has to be made clear that the Government has not introduced a new tax on cars. The Government is not levying a new tax on the car industry as claimed in the full page, highly unsuccessful election advertisements at the time of the South Australian elections. The fact is that the Government simply is removing a tax lurk, a tax avoidance mechanism that has been available to a privileged few in the community for too long. It is very encouraging to note that the Government's proposals in regard to fringe benefits taxation is very heavily supported by the electorate. Opinion polls are showing overwhelmingly that these measures are very heavily supported by the electorate. As I pointed out in the debate on business lunches we had last November and December, it underlines the good common sense of the Australian electorate. The attitudes, which are coming through in opinion polls, show that an overwhelming majority are in favour of this legislation proposed by the Government. In fact, the fringe benefits tax element of the tax package is seen as the best feature of the overall tax package. It is overwhelmingly supported by the community. The Government is not placing a new tax on cars. It is simply subjecting to taxation the assessed value of the private benefit received by that minority of Australians who are given the use of employer- provided motor vehicles. The Government is simply making sure that remuneration, whether received in cash or otherwise, is made subject to taxation. We are trying to stamp out tax avoidance in this country, the scourge of tax avoidance which continued for years and years when Mr Howard was Treasurer. This Government is trying to stamp it out and this proposal to tax fringe benefits is an important aspect of that strategy. The fact that the benefits of using an employer-provided car for private purposes has been flowing to a privileged few can be seen clearly from an analysis of relevant Australian Bureau of Statistics information. The latest Bureau of Statistics survey of employment benefits conducted in August last year details the incidence of a whole range of fringe benefits in the community. For example, that official survey shows that some 7.7 per cent of all employees received some form of transport fringe benefits. They are the people the Opposition supports-the mere 7.7 per cent who receive some form of transport fringe benefits. Over 92 per cent of employees do not receive any form of employer concession or benefit related to transport costs. Clearly, once again, the Opposition has jumped into bed with the privileged minority in the community. What is even more revealing in the Bureau of Statistics figures are those which show the number of employees in each income bracket who receive particular fringe benefits. For example, of those earning less than $200 a week, which is the lowest income bracket in the survey, only 3.3 per cent received some form of transport fringe benefit. The 3.3 per cent in the lowest bracket compares with an average figure for all employees of 7.7 per cent. Yet of those employees earning greater than $560 a week, the highest income bracket, 18.8 per cent received a transport fringe benefit. That is more than double the average of 7.7 per cent for the entire community. In other words, fringe benefits are heavily skewed in favour of upper-income earners. Those figures clearly demonstrate that. No doubt, that is why the Liberal Party and the National Party have made such a fuss about this legislation. These are lurks and perks which are available to the most privileged income earners in our community. Often the intention of employer provided motor cars is outright private use. One only has to walk through a few corporate garages in the capital cities-I invite honourable senators to do so-to see the company cars with towbars. It is a very illuminating experience to see all these so-called company cars which are clearly fitted out as private vehicles. If anything, the figures provided by the Bureau of Statistics on fringe benefits fail to reveal the full extent of the inequitable distribution of those benefits. Some quite revealing figures on executive salary packages are contained in a report by the accounting firm Price Waterhouse entitled `Top 5 Plus-Executives Compensation Report'. A table from that report is included on page 88 of the Government's tax White Paper. It shows that an employer provided motor vehicle to a chief executive officer is worth over 15 per cent of that officer's salary. The relevant figure for a sales executive is over 14 per cent. So privileged employees are not only receiving the free use of a motor vehicle, worth up to 15 per cent of their actual salary, but also receiving it tax free. By contrast, average pay as you earn Australians receive almost all of their income in the form of taxed wages and salaries. They do not get company cars or lurks. They receive all of their income, or most of it, in the form of wages and salaries and every dollar of that income is taxed, except those dollars below the threshold. For those persons buying a motor vehicle is a major purchase, probably the second largest purchase they ever make after their home. These average Australians pay tax on all of their income and purchase their motor vehicle from their after tax income. It is relevant to ask: Why should a small privileged group of Australians receive a motor vehicle free as untaxed income while other Australians pay the full price out of their own wages and salaries after tax? Where is the fairness in that situation? The lurk of avoiding tax through the payment of income in kind rather than in cash had to be stopped. These Bills are designed to do just that; to bring some fairness and equity back into the Australian tax system. We have heard a lot recently of the claimed effects of these tax measures on the Australian motor vehicle industry. Naturally, as a South Australian member of parliament, as a South Australian senator, I am concerned that the effect of this legislation on the car industry is minimised. We have two major producers, General Motors-Holden's Ltd and Mitsubishi Motors Australia Ltd, in Adelaide, and I am concerned that the effect of this legislation on those companies and on their employees is minimised. I have been monitoring the position, as have my colleagues from South Australia, and we have raised the matter repeatedly within the Government party. Certainly, there may be some effects on the motor vehicle industry from a fringe benefits tax, but it will be nowhere near as drastic as some people would have us believe. Also, the effects of the fringe benefits tax on locally produced motor vehicles will be far less, I believe, than the impact on expensive imported motor vehicles, and that is a very relevant consideration in this debate. At present the Australian car industry is going through a period of change, a period of rationalisation. After all, the industry is made up of a number of firms producing a large number of models. There are probably more producers in Australia than there are in the United States of America where the market is 17 times as large as the Australian market. We certainly have five producers and I think that is a larger number than there are in the United States of America. There may well be a reduction in motor vehicles sales this year. I will go as far as to say that there will almost certainly be a reduction in sales in 1986, but this reduction will be partly one of the industry's own making. We only need to consider some recent facts about the performance of the Australian motor vehicle industry. As the Leader of the Government in the Senate, Senator Button, has indicated in this place, 1985 was a record year for car sales in this country. I have an article from the Adelaide News, a newspaper which has been making a lot of noise about the effect of the car fringe benefits tax. In a major article on 20 September last year, the Adelaide News had a headline `New cars in bonanza sales rush'. This is the newspaper that is stirring up all the fuss about the car fringe benefits tax. It reported that the threat of a tax on company vehicles has had little effect on the market. This is the newspaper which is now stirring up confusion in the community about this tax. However, as recently as last September it carried an article which stated that the threat of a tax on company vehicles had had little effect on the market. The article went on to state that many people were buying motor vehicles in September in anticipation of the end of the year introduction of models fitted with catalytic converters. In other words, people were buying early to try to obtain cheaper motor vehicles. That is one of the reasons why, in 1985, records were broken in the car industry. Some 695,000 new motor vehicles were registered. Partly a reason for that was the drawing forward of car purchases which would normally have been made this year-in 1986. The industry actually encouraged that. As a result of the fear of car price rises, due to the depreciation of the dollar and to the introduction of unleaded petrol, some consumers were encouraged to bring their purchases forward to 1985. The car dealers, through their own advertising, encouraged this drawing forward. One only needs to look at the many articles that appeared in newspapers last year under the heading `Buy now and beat the price rises'. There were many articles of that ilk and they were designed to stampede people into buying motor vehicles in 1985. There is no doubt that the Australian car industry is facing some real pressures in 1986 which could reduce sales but the Government's fringe benefits tax by no means is the major one. There are two major sources of pressures working to lift car prices and to hold down sales. The first is the need for catalytic converters for pollution reasons and the second-I have referred to it already-is the effect of the devaluation of the Australian dollar and the cost pressures resulting from that. However, there are some offsetting benefits. Local car makers should become more competitive as a result of the depreciation of the Australian dollar since the prices of fully imported cars have risen quite dramatically. Those are some of the facts about the Australian car industry. There will be changes ahead and a rationalisation of existing models, but there is certainly no cause for predictions of doom and gloom. Of course some members of the Opposition would have us believe that the measures contained in these Bills will sound the death knell of the Australian car industry. They are telling us that car sales will plummet as a result of the measures. I suppose one could argue the proposition that, to the extent that new motor vehicle sales fall as a result of this tax package and the fringe benefits tax, it simply demonstrates that the vehicles were not essential for business purposes. One could argue that proposition. If there is a fall in sales as a result of the fringe benefits tax, one could validly argue that the motor vehicles were not at all essential for business purposes. It is a very difficult argument for the Opposition to sustain because it has to admit that the vehicles were used for private purposes. The intention of this legislation is to tax that aspect of vehicle use which is of a private nature. I would also like to point out that even after this legislation is introduced it is highly likely that more new motor vehicles will be registered in Australia this year than were sold in the last year when Mr Howard was Treasurer. I think that is a very likely outcome. On 3 March the Melbourne Age cited industry sources predicting that car sales would fall by 80,000 units in 1986. The very same day the Adelaide News-I have referred to the campaign waged by the Adelaide News-also cited industry sources claiming that car sales would fall by not 80,000 units, but 120,000 units. So there is a 50 per cent variation in the claims being made by those opposed to the fringe benefits tax. Who are we to believe? Mysterious industry sources are putting about figures which are not so much rubbery as decidedly elastic. The claims about the industry impact of this measure are rather like having a hole in the muffler of one's car; the hole tends to get larger and larger and noisier and noisier and that is what has been happening with the claims being made by Opposition spokespersons about this legislation. Some more alleged facts emanating from the motor industry have come from the South Australian Automobile Chamber of Commerce. In one of its newsletters it claimed that over 50 per cent of all cars sold are fleet cars or corporate cars. Yet according to the data provided to the Government by the Federal Chamber of Automotive Industries-it represents essentially the same industry-the proportion of fleet registrations is not 50 per cent but 38 per cent. However, these inaccuracies are overshadowed by the Opposition parties' deceit and manifest hypocrisy on this legislation. I instance as an example of that hypocrisy a recent Press release issued by Senator Chaney in which he called on South Australian Labor Party senators to vote against the fringe benefits tax on company cars. It was a classic example of kiddie car politics by Senator Chaney. I refer him to Mr Howard's first Budget in 1978 which contained savage tax rises and were disastrous for the South Australian brandy industry. At that time my State, South Australia, contributed some 92 per cent of Australia's total brandy production. In one Budget Mr Howard, who is now the Opposition Leader of this country, wanted to virtually double the excise on brandy from $10.21 per litre of alcohol to $18.75 per litre of alcohol. The punishing effects of that impost on an important South Australian industry can be seen in the Treasury's revenue collections. The impact of that measure on the South Australian economy will be far greater than the effect of this car fringe benefits tax and that is a very important point to bear in mind. There was clear evidence that the South Australian brandy industry suffered major dislocation as a result of Mr Howard's 1978 Budget; but did Senator Chaney, who was a Minister in the Fraser Government, call on South Australian Liberal Party senators to put the interests of their State first? Of course he certainly did not. Did the South Australian Liberal Party senators vote against the brandy excise? No, they did not. South Australian Senators Messner, Jessop and Teague were all members of the Parliament at the time, as was Senator Chaney, and they all voted for the brandy excise which created absolutely disastrous problems for the South Australian brandy industry. Did South Australian Liberal Party senators voice any concern over the politically disastrous effects of Mr Howard's tax on the brandy industry? Not once in their speeches on the 1978 Budget did Senators Messner and Jessop refer to the brandy excise. We now find Senator Chaney issuing statements calling on Labor Party senators to vote against their Party and to vote against the Government's proposal to tax fringe benefits. Yet, he did not have the guts to vote against the brandy excise when the 1978 Budget was debated. This excise has wrecked the South Australian brandy industry. It has had far worse effects on the South Australian economy than the fringe benefits tax on motor vehicles could ever have. They are some of the facts and a real demonstration of the hypocrisy of the Opposition with regard to the tax on motor vehicle fringe benefits. Let us look at the details of the fringe benefits tax when applied to employer provided motor vehicles. First, the fringe benefits tax applies only to cars used privately by employees. If the vehicle is used solely for business and not for private purposes the employer will not be liable for any tax. The fringe benefits tax will be levied only on the assessed private benefit that the employee gains from using a vehicle. Secondly, the fringe benefits tax will not apply to self-employed people. Thirdly, existing tax deductions claimed for vehicle costs will continue to be deductible in full. It is quite incorrect to label the fringe benefits tax as a tax on cars. It is simply a tax on the value of the private benefit derived by an employee from the use of a company provided car. For too long the provision of motor vehicles and other items as part of an employee's remuneration package have been a major source of tax avoidance in this country. It has led to a serious deterioration in the direct tax base and has meant that a privileged few have received a large part of their income free of tax. The Government could no longer tolerate this rip-off. This inequity had to be cleaned up and that is what the fringe benefits tax is designed to do. Contrary to the Opposition's claims, the Government's tax package does not lift overall tax levels in Australia. The ACTING DEPUTY PRESIDENT(Senator Haines) —Order! The honourable senator's time has expired. Senator SIDDONS(Victoria)(5.32) —At last we have come to the debate on the fringe benefits tax. This government initiative has been the subject of intense speculation in the community for over six months. In the last week or so it has intensified to a crescendo which hopefully will be resolved once and for all once this legislation passes the Senate. I cannot help but draw a distinction between the attitude of the Australian Democrats on this matter and the attitude of the Opposition. The Opposition still says that it opposes this tax, that there is no need for such a tax and that, if it becomes the government in the future, it will repeal such a tax. I believe that any reasonable thinking Australian has to accept that there is a need to crack down on fringe benefit lurks. Without doubt it has become a very serious method of tax avoidance in the community. Worst of all, it has been a method of tax avoidance available to the upper levels of our society and certainly not applicable to those on a weekly wage. The Fringe Benefits Tax Assessment Bill 1986, the Fringe Benefits Tax Bill 1986, the Fringe Benefits Tax (Application to the Commonwealth) Bill 1986 and the Fringe Benefits Tax (Miscellaneous Provisions) Bill 1986 are designed to clamp down on the use of private motor cars, free or low interest loans, the release of debts, the payment of private expenses, free or subsidised residential accommodation and free or discounted goods and services. All of these fringe benefits undoubtedly have been offered to employees and undoubtedly it has become a rort. There was no doubt that something had to be done. The Democrats recognised that and adopted an attitude that we would negotiate with the Government, slug it out with the Government and try to get the worst features, the unfair features, of the tax modified. Essentially the need for a clamp-down on a fringe benefit rort was there and something had to be done. It would have been very easy for us to have joined with the Opposition and said: `Right. We will just flatly oppose this tax'. Then the inequities of fringe benefits would have persisted in the community. But we did not adopt that attitude. We negotiated with the Government, and I believe the Australian Democrats can be very proud of the very considerable concessions made by the Government as a result of our negotiations with it. For instance, our negotiations with the Government on fringe benefits on motor cars, concluded only last night, will result in that tax being reduced by about one-third. About $200m is involved in a very simple reduction of the percentages. The Government argued that it wanted to raise $370m through the car fringe benefits tax. If one looked at the way the tax was to apply, realistically it would not have raised $370m but something more like $500m. It was very difficult to convince the Government that its figures were wrong; in fact it has not yet conceded that its figures were wrong. What did we do? We got together all the motor car manufacturers and the trade unions, discussed the matter with various State Labor governments and came up with a formula with which all of those bodies agreed. We put it to the Government and the Government has finally been prepared to concede our point of view. As a result of that the scale will be reduced. The rate on motor cars travelling between 0 and 15,000 kilometres a year will be maintained at 24 per cent. For cars travelling between 15,000 and 25,000 kilometres a year, the tax will be reduced to 18 per cent of the value of the motor car. For cars travelling between 25,000 and 40,000 kilometres a year, the tax will be 10 per cent; and for cars travelling over 40,000 kilometres a year, the tax will be 6 per cent. That is pretty much in line with the agreement reached with the motor car industry as a whole, that is, what it thought was reasonable. It asked for three categories of tax-one at 16 per cent, one at 12 per cent and one at 8 per cent. If one looks at the proposal in detail, one finds that what has finally been agreed to by the Government is pretty much in line with what the industry said was reasonable under all the circumstances. The industry was prepared to concede that a rort was going on with company cars being supplied to employees who were not using those motor cars for business purposes but purely to drive to and from work. That was a very considerable concession by the Government and a considerable victory for the Democrats. It was achieved by getting in there, getting the various parties together and negotiating. The Government can reasonably be criticised on the ground that the fringe benefits legislation is extremely complex; it is. We would have liked it to have been less so, and I believe that could have been done. For instance, on the motor car tax it was not impossible to have applied a flat rate of tax on one or two categories of motor car and to have raised quite easily the same amount of revenue of $370m. On 500,000 motor cars it represents a tax of about $730 per car per year. The Government could have adopted an approach of applying a flat tax on one or two categories. However, the Government was anxious not to change its approach. It believes that delineating all the different uses for company cars will be a fairer way of doing it. It will certainly be a more expensive way of doing it. But when it was all considered we felt that we could push the matter so far and no further. It was probably not in our province to change substantially the philosophy that the Government used to levy these various taxes. There were other inequities which were very obvious to us and which have been addressed by the Government. For instance, when we first discussed this matter with the Government late last year, in September or October, we said that it was very unfair that the Government should impose additional fringe benefit taxes on charitable institutions, non-profit institutions. The Government agreed and said that it would look into the matter. When the legislation came through we found that the Government had not honoured its commitment in this area. Discussions over the last two days have resulted in the Government's agreeing to an amendment so that existing genuine charitable organisations will not be disadvantaged. That amendment will be moved during the Committee stage, as will the amendment relating to the percentage taxes on the value of new cars to which I have already alluded. That amendment has already been circulated. The Opposition has said that it would have been fairer if this fringe benefits tax had been levied on the employee rather than the employer. The argument goes that it is a benefit to the employee and that therefore he or she should be subject to the tax. I pointed that out in the Senate six or eight months ago as being a fairer way to apply the tax. It undoubtedly is. However, it suffers from the practical problem that it is very difficult to police such a tax. In fact, the existing tax law says that fringe benefits in the hands of employees should be taxed. That is clearly spelled out in section 26c of the Act. The problem is that the present system simply has not worked. People have ignored the value of fringe benefits. The Commissioner of Taxation has been unwilling or unable to catch up with people ignoring the tax. In most cases there has been no formal valuation and no one checking the system. It has been left to people's better natures to comply with the law. I was interested to learn only today when talking to various ministers of religion who were concerned about the way this tax will impinge on them that they are one of the few sections of the community who make clear what their fringe benefits are. Unfortunately, the bulk of the community has not been doing that and the system of taxing the employee has not worked. In practical politics, to clamp down on the rorts in the fringe benefit area the Government has resorted to taxing the employer and leaving it to the employer to recoup the value of that tax from the employee to the extent that the employer feels that that should be done. In the short term probably it will not involve the employee in any great additional tax. The employer probably will not bother to take the value of the tax from the salary or wages of the employee. However, in the long term this tax undoubtedly will have the effect of making it very unlikely that employers will indiscriminately hand out fringe benefits which are taxable. There is a long list of speakers on this matter. I do not wish to take up any more time than is necessary to go through the details of the taxes. Lots of points still need clarification. They can be debated in the Committee stage. For instance, how does the tax apply to free accommodation for farm labourers, to cases of people living on the premises of a business, and so forth? All these areas are of concern to various sectors of the community. We have discussed them with the Government. A letter from the Commissioner of Taxation clarifies many of these matters. The facts are that in opposition one can only amend legislation and try to reduce the worst effects of it where they are seen to apply. Fundamentally, one cannot change the philosophy of the legislation. We believe that the fringe benefit tax, particularly with the modifications on taxes on motor cars, is fairly reasonable. It is complicated, but at least it addresses the unfairness and various inequities that were applying in this area. Senator Walters —Could you table the letter from the Commissioner? That would be very helpful. Senator SIDDONS —The letter has already been circulated. It is available. Senator Walters —We have not seen it. Senator SIDDONS —I am afraid that I do not have the letter with me but it can be made available. It is for publication. In opposition we cannot force the Government to change its policies. Particularly, we cannot force the Government to change policies in critical areas of the balance of payments problem and our investment policy. The Democrats are very concerned about the direction the economy is taking and the present Government policies in these areas. The Government's reaction to the problems with the balance of payments and the huge foreign debt has been to cut expenditure, slow growth, and increase interest rates. We are very critical of these policies as being absolutely the wrong approach to the problem. We would have preferred to see the Government directing resources into developing industries rather than simply cutting expenses, which will have the inevitable effect of placing the burden of the problems of the economy on the backs of working Australians rather than where it should be-in the area of development-and stopping the enormous profits that are being made on the stock exchange at the moment. These are fundamental matters of Government policy-- Senator Knowles —Is profit a dirty word? Senator SIDDONS —It is not a dirty word but it is very unfair that one person, namely, Mr Holmes a Court, can make $400m on share speculations over a few months, mainly tax free. If the Government is to place additional burdens on the community as a whole, as it is threatening to do with its cutbacks in expenditure and in slowing down growth generally, it has to at least stop the enormous tax free profits that are being made right now through speculation on the stock exchange, which benefits nobody and creates not one additional job. These are important and fundamental matters. I mention them only because there is no doubt that this is an additional tax on employers and as such will have its effect on the economy as a whole. As I said, we agree with and support the tax that had to be applied. With the changes that we have been able to wring from the Government-I think that that is the right expression as this has been an extremely difficult period for us in negotiating with the Government, which has not given in easily but has been at least prepared to talk-we now support the legislation with the amendments to be moved at the Committee stage. Senator KNOWLES(Western Australia)(5.50) —At the outset of the debate on the Fringe Benefits Tax Assessment Bill, the Fringe Benefits Tax Bill, the Fringe Benefits Tax (Application to the Commonwealth) Bill and the Fringe Benefits Tax (Miscellaneous Provisions) Bill the Senate should recall that it is now about eight months since the Government announced this tax package. It is only in the last three weeks that some of the crucial legislation has been introduced into the Parliament by the Australian Labor Party tax junkies. While we could quite well accept that there are some delays between policy announcements and the introduction of legislation a delay of eight months amounts to contempt not only of the Parliament but also of the business community. The business community is trying very hard to make crucial decisions in the light of not knowing the basic details of what this Government is all about. It is bad enough to inflict this essentially anti-business legislation on the private sector without at the same time subjecting it to uncertainty. It is becoming fair to say that the delay of these taxation Bills until the closing weeks of this parliamentary session is a deliberate ploy by the Government to ensure that they receive minimum exposure and public scrutiny and that is absolutely disgraceful. The public of Australia deserves to be able to assess every bit of legislation at length. It should not be rammed through the House of Representatives, as the Government has done, and then rammed through this place. This is particularly true of the Fringe Benefits Tax Bill 1986 and its companion Bills, which effectively visit the employers of this country with a Federal version of a payroll tax that is far more complex and damaging than any other form of tax. It will take employers more than a couple of weeks to assess the likely costs they will incur under this tax. It is very hard for us to evaluate in the debate now the damaging aspects of this tax. The fringe benefits tax would have to be one of the most dishonest and cowardly taxation measures introduced into the Parliament. This is because the tax is not levied on the recipients. It is levied on their employers, the providers of the benefits. That, too, is disgraceful. The Government may talk about administrative convenience, but the fact remains that it is levying the tax in this way for the crudest of political reasons. Let us not forget what this Government is doing to the employers of this country and what it has done to the farmers and other people who are less likely to vote for it. It is simply homing in on the people who are less likely to vote for it. The Hawke Government has made a judgment that the direct taxing of the benefits in the hands of employees would cause a massive voter backlash and infuriate the Australian Council of Trade Unions. Let us not forget the ACTU which, hand in hand with the Government, runs this country. The last time a government attempted to tax fringe benefits in respect of both housing and the private use of company vehicles was in the disastrous 1974 Budget of the Whitlam Government. That Government soon experienced the political backlash of the imposition of that tax and withdrew the tax on company cars the very next year. The Hawke Government is now treading the same path, but with more guile and far less honesty. It was estimated by K. M. G. Hungerfords in April that the most likely cost of the fringe benefits tax to the corporate sector would be an extra 12 per cent in costs at a time when company profitability is faltering. We have just heard Senator Siddons say in effect that profit is a dirty word. He picked on the more affluent in our country, giving them as examples. We are not talking purely about the affluent. We are talking about everyone who is to be affected by this iniquitous tax-many of the small business people, farmers, charities and all those who are not at the higher end of the scale. Too often it is forgotten that this tax will fall on some unprofitable companies. There has also been a lack of consideration of the employment effects that will flow from the tax. In Western Australia, initial estimates of the fringe benefits tax by the Confederation of Western Australian Industry put the annual full year cost to employers at $80m. In anyone's language that is a large amount to take from a local economy. It is equally important to remember that the direct cost of the tax is only one aspect of the additional costs that will be imposed on the private sector. A tax that is assessed and payable quarterly-and within six weeks of the end of each quarter-will provide an absolute administrative nightmare. To substantiate the nightmare, the Government has had to send out 700,000 to 800,000 fifty-six page booklets to explain the tax. Senator Boswell —No one can understand it. Senator KNOWLES —Exactly. That is the feedback coming back to all of us. People cannot understand it. Let us consider the costs that have been incurred just by sending out these booklets. We cannot find out the exact costs, but let us just take postage. The cost of postage to send out between 700,000 and 800,000 booklets is nearly half a million dollars. What is the administrative cost on top of that? Senator Messner —Walsh said $3m the other night. Senator KNOWLES —I thank the honourable senator. It has cost $3m to send out a booklet that people cannot understand and that will be an absolute rock around their necks anyway. The comedy is that last year the Prime Minister was proclaiming that simplicity in taxation was the objective of his Government. That is an absolute laugh when we realise that the Bills before us today, together with certain parts of the tax package passed at the end of last year, have simply created another 350 pages of tax legislation to add to the 1,100 pages of the Income Tax Assessment Act as it stood last September. Tax legislation has become more simple, if we are to believe the Prime Minister. Yet we have an additional 350 pages of legislation. With legislation of this kind, no wonder it is estimated that some 54,000 people employed in the private sector are devoting their time solely to compliance with government regulation, and that was prior to the imposition of this tax. This Government should consider that the administrative burdens placed on the private sector contribute nothing to revenue, but diminish the capacity of businesses to pay their taxes. The whole concept of the fringe benefits tax takes no account of the capacity of employers to pay and the serious effect the tax will have on profit and employment levels. Such insensitivity falls very heavily on the motor vehicle industry. The Government has chosen repeatedly to ignore the problems that are being experienced by the motor vehicle industry. Even Senator Button, at Question Time this week, repeatedly said that the motor vehicle industry is overstating the facts. That is quite wrong, because independent people have said that the motor vehicle industry has already been affected by the impending imposition of this tax. I was, at least, pleased to hear Senator Maguire say in his speech that the industry had been affected by the depreciation of the dollar, forcing up the price of imports. It has also been affected by the high interest rates and the costs associated with the introduction of unleaded petrol. Does the industry really need an additional tax that will cost it more? Even without the fringe benefits tax, the motor vehicle industry is confronted with the fact that the average motorist will now retain his existing car longer in the face of increasing replacement costs. Clearly, the announcement of the fringe benefits tax has already had an adverse effect on car purchases by employers. The industry has had the worst March quarter for eight years, with a 22 per cent decline in total sales, a 33 per cent decline in registrations and a 40 per cent decline in the sale of commercial vehicles. Yet the Minister for Industry, Technology and Commerce (Senator Button) has said that the decline in figures has been caused by an extra good sales year last year. If that is not absurd, what is? Given the dramatic slump in sales in recent months it appears more than likely that 35,000 sales will be lost to the car industry in the course of this year, a proposition which, quite frankly, this Government is treating flippantly. On a conservative estimate, 10,000 jobs stand to be lost in the car industry. We should also remember the forecast of 25,000 job losses in the car industry, a forecast made not by employers but by the Vehicle Builders Employees Federation of Australia. This Government continually says that our estimates regarding the effect on employment of the entertainment tax last year are incorrect, yet the Minister lumps together all employment figures regarding the hospitality industry, including hotel staffs and everything else. The Government is still saying that our figures are wrong. They have been proven to be absolutely accurate. Do we really have to prove these figures relating to the decrease in jobs as well? When a car costing $15,000 is assessed at a value of $1,500, providing that it has travelled 30,000 kilometres, the incentive for employers to buy smaller and cheaper cars is quite obvious. This, in turn, makes a mockery of the local content policy of the Government as it is the larger models which achieve 85 per cent local content and which will be avoided in fleet purchases where a long term decline of between 12 and 15 per cent is anticipated. It is interesting that the Government, of course, is also very generously offering two methods of assessment for the calculation of the fringe benefits tax on company-owned vehicles-the need to keep a daily log-book, or the option of assessment by operating costs. Of course, this is an absolutely dubious and very costly proposition. But such an assessment system as keeping a daily log-book requires careful paper work from employees, who, quite frankly, in some cases, are too jolly busy to do that, and, in other cases, might not even have the capacity to do it in terms of knowledge of how to go about it. This Government seems to forget that company cars are not merely made available to the higher echelons and executives as part of salary packages but are often supplied to low paid employees for simple reasons of convenience. But once again, like trying to define legitimate entertainment expenses and trying to define this tax, this Government does not care to draw any distinction whatsoever: Lump them all in together and hope for the best. But the larger the fleet the more likely it will be that employers will adopt the statutory formula of between 10 per cent and 24 per cent of cost according to mileage. It defies logic to deny that the imposition of this tax will damage the car industry, and it is worth considering that with the consequent loss of sales tax, company tax and income tax paid by employers and employees alike in this industry, together with the increased social security payments to those who lose their jobs, instead of the $350m that the Government expects to recoup from the car industry it may, in fact, net about $49m if it is lucky. This tax junkie Government has sought to imply that the fringe benefits tax applies mainly to executives avoiding high marginal rates of tax through generous allowances and the use or concessional purchases of expensive vehicles. In truth, the fringe benefits as defined in this legislation cover a far wider spectrum of the work force. It was estimated last year that as many as 175,000 employees in Western Australia could be affected, according to the Australian Bureau of Statistics. Altogether, 44,000 employees receive assistance for private travel; 49,000 receive a payment for their private phone; 34,000 receive accommodation; 26,000 enjoy an employer contribution for medical expenses or health insurance; 25,000 get subsidised or paid electricity; 23,000 obtain free or discounted holiday travel; 21,000 receive entertainment allowances; and 14,000 have low interest loans, usually for housing, and 3,000 of them are, of course, bank employees. It is inevitable that thousands of these people will ultimately have to pay more tax when employers can no longer afford some of these benefits, and a smaller number may well lose their jobs as a direct consequence of this tax. It has been said on a number of occasions but, unfortunately, never publicly by Government members that what they are hoping is that, in the final analysis, perhaps, many of the private companies will simply not be able to afford to continue paying the fringe benefits tax, so, therefore, it will be put on to the employees. Is that their final aim and ambition through this tax-to put it on to the employees so that they are paying more tax? The mining industry is a major employer within Western Australia and will be a major payer of the new tax. This is worth considering, especially at a time when declining export returns are already threatening profitability, and of course, let us not forget about the threat of a gold tax as well. The Australia-wide cost of fringe benefits tax to the mining industry is likely to be $30m, half of which will be levied on mining operations within my State of Western Australia. The isolation and climatic extremes of major mining centres have required companies to offer subsidised accommodation and other benefits, such as holiday travel, or return travel to capital cities. They are essential inducements to getting employees to go into these far away places; they are not part of any scheme for tax minimisation. Once again, the offer of alternative methods of assessment for subsidised housing, in practical terms, gives little choice to employers. The second method of a statutory formula, applying a proportion of adult full-time earnings in the mining industry to each unit of accommodation, fails to take into account the great range of quality in the accommodation provided. The individual method of 60 per cent of the market value of the right to occupy accommodation creates the difficulty of assessing this market value. But it should not, however, be assumed that the cost of employee housing is a problem for only the mining industry and remote regions of Western Australia. It is, of course, equally of concern for a major employer in the south-west of the State, the Bunnings timber company. A firm of this size supplies 200 of its employees with vehicles, on the basis of administrative convenience rather than employment packages, and it has over 400 housing units for employees engaged in timber milling. At a very rough estimate, a company in this position could find itself paying $200,000 on the value of the vehicles and $300,000 on that of the housing. Even a well-managed and profitable company would find it very difficult to absorb a sudden increase without a major decline in profits or price rises. The Government has failed to consider important questions of equity in the calculation of the value of this kind of company housing. For example, housing provided in an isolated mill settlement such as Deanmill would have absolutely no practical market value if the company mill did not exist in the same area. Equally, there is a major question mark as to the value of housing in a centre such as Walpole on the south coast, where the rental value of a fairly basic home is of considerable value in the summer months and of little value in the winter months. There is no guarantee under this legislation, however, that these factors will receive proper consideration in the assessment of the value of employee housing. Why? It is because, like so many other pieces of legislation that this Government is putting forward, it is all too difficult. Should the timber industry suffer a general downturn, the effects of the tax will, of course, continue to apply to the detriment of the whole economy in the south-west of Western Australia. Of course, let us not forget the 200,000 Australians who are employed in the finance industry. Perhaps half of these receive some sort of subsidised loan. People might well and truly say: `That's fine. Why should they receive a subsidised loan when I don't?' But in the case of bank employees, a fringe benefit of this kind merely compensates for the fact that even after 13 years of service a bank officer will still receive 6 per cent below average weekly earnings. This again illustrates the point that the tax will have a major effect on the employment conditions of ordinary Australians. The impact of this tax on a bank the size of the Australia and New Zealand Banking Group Ltd will be at least $10m to $15m-exclusive of administration costs, which will be very heavy indeed. The magnitude of administrative costs will result from the number of employees and the variety of benefits, with varying allowances for non-metropolitan areas. The quarterly calculation of this iniquitous tax will absorb an enormous amount of computer time, as the experience of a similar tax in New Zealand has already shown. In New Zealand, when this type of tax was introduced, it meant that a team of five to 10 data processors worked flat out for three weeks changing all the computer systems. Of course, to do that also required extra staff to back them up. But this quarterly payment, within six weeks of the end of the quarter, has once again not been given any consideration, in view of what we already know about similar taxes. Even again, in New Zealand, consideration is being given to making it an annual payment and not a quarterly payment. Indeed, banks may, in effect, choose to pay extra tax rather than claim possible deductions and allowances, because of that administrative cost. We should also be considering this point: If the banking industry, with its sophisticated computers and accounting expertise, foresees this kind of problem, the impact of the fringe benefits tax on less expert and less profitable firms will surely be more damaging, with calculations to be made within six weeks. The Government has overlooked the fact that the tax will be levied on bank employees living overseas in the first year of such a transfer, when they will be counted as Australian residents for tax purposes, and this tax will, therefore, be levied on expense allowances for locations such as New York and Japan, where they are necessarily high because of local living costs. Double taxation agreements provide no protection here, since they cover income tax rather than indirect taxes. Whilst the banks may attempt to maintain existing benefits, it is surely inevitable that their employees will suffer in the long term, when such benefits will not be available. Only in recent days have many of the small business enterprises begun to realise the true impact of this tax and the bureaucratic nightmare that it will involve. Any small business enterprise-farms are included-organised as a company faces a fringe benefits tax bill on the private use of cars by family members held in the name of the company. Small businessmen and farmers are often employers on a casual basis only, and what this Government is offering is purely and simply the removal of a benefit which applied in cases where employers could not afford to pay higher wages. They are sufficiently hampered already by government paperwork, at Federal and State levels, and this new quarterly imposition will really be another millstone around their necks when, as we are already well aware, they are paying enough to their accountants and tax consultants. In short, they will find that they can afford neither the cashing up of employees in lieu of benefits nor the direct or indirect cost of the tax. Their solution will be to cease employing other than family members. It is important for us to remember that this Hawke socialist Government has been very courageous this time. It has broken new ground with this legislation by extending the fringe benefits tax to charities and non-profit organisations, which of course hitherto have been exempt from other forms of taxation. It is hardly a major concession to exempt from the tax the accommodation benefits supposedly enjoyed by staff living in to care for the aged and handicapped, but it has, as I say, reached new depths by now deciding that it will also levy a tax on the presbyteries, rectories and manses of Australia. A large number of welfare organisations and charitable institutions with modest administrative budgets will find themselves paying the tax, but of course their donors will be very comforted to know that the Federal Government will be receiving a little portion of each gift that they make. It was stated on Australian Broadcasting Corporation television on Friday 23 May that the Salvation Army in each State could be paying $50,000 in tax. Senator Boswell —That is disgusting. Senator KNOWLES —It is disgusting, Senator Boswell, when it affects groups such as the Salvation Army and also organisations such as the Jesus People in Perth who provide accommodation and outreach for homeless youth. When we think that these groups will also be hit by this tax, it is nothing short of a disgrace. Employees in such organisations need vehicles at home to answer calls at all hours of the day and night, and they so often need to garage them simply because it is unsafe to leave them on the premises. Yet the tax will be payable on these vehicles and on the value of accommodation provided to resident hostel managers. We might also ask why the Minister for Arts, Heritage and Environment (Mr Cohen) assented to the levying of the tax on National Trust accommodation provided to wardens of the historic properties that it maintains and opens to the public. As a voluntary organisation the Trust cannot afford, for example, to pay full salaries to the 14 wardens at its Western Australian properties. Senator Boswell —They are going to close down four in Queensland. Senator KNOWLES —Heaven knows how many the Trust will have to close down in Western Australia, too, because it simply cannot afford to pay the tax. It will be impossible for it to continue with 14 properties if this tax is allowed to go through. This Government may not know or care that the charter of the Trust excludes it from deriving income from its properties and thereby gaining rental income. If the National Trust in Western Australia alone has to pay a fringe benefits tax bill of $18,000 each year, it will be forced to reduce the advisory services it provides to government, including local government. It would be a tragedy if the stupidity of this Government put our heritage at risk of vandalism or forced the National Trust to cease restoring historic buildings and maintaining them for public enjoyment. Sometimes we are led to conclude that, at bottom, this Government has limited respect for voluntary organisations anyway. It will be of very little value to the Government to try to repair the damage to the voluntary sector by increasing its direct grants. This would be a classic illustration of bureaucratic fatuity-giving with one hand and taking with the other-to the ultimate administrative expense of the taxpayer. It would make no more sense than the supposed taxing of government departments who provide fringe benefits-an exercise, of course, that we could call fancy bookkeeping. The only solution to these injustices is to scrap the fringe benefits tax. It gives me great comfort to know that even if this tax is passed, with the aid of the Australian Democrats who have been doing a soft shoe shuffle on this issue for weeks, at least a future Liberal Government will repeal it. It is absolutely iniquitous and it should be rejected at all costs. Senator COONEY(Victoria)(6.15) —The Senate has heard some arguments put-very forcefully, may I say-by those who are opposed to the fringe benefits tax, but many speeches have been directed not so much against the fringe benefits tax as against taxation at all. Of course nobody likes paying tax, and why should we? There are some great free spirits around. I see Senator Boswell over there; he is a free spirit; as is Senator Robertson over here. They are men from the north, pioneers who do not like to be restrained by government; who would like, as it were, to live in the style of Crocodile Dundee. They may consider they need no government, no services, and therefore need pay no tax. The difficulty is that many of us live in what I might say are less pristine-some people would say more civilised-- Senator Robertson —Less desirable. Senator COONEY —That is right, Senator Robertson; we live in less desirable parts of the world. As a result of that we have to have government, and we have to have roads, electric light and all those sorts of things because we live in society. As a result, we have to have taxes to pay for those services. We even have to have taxes to pay for the eminent people in this chamber. Senator Collard —We have to pay for your light and your roads. Senator COONEY —The Leader of the National Party in the Senate is a very eminent figure and it is proper that the people of Australia pay to have him in this chamber. So there is really no question that taxes are needed, and the real question is who will pay the taxes. That is what the debate on this legislation centres on. It is clear that no more tax will be raised as a result of this measure. To use an expression I heard used recently, rather clumsily, though perhaps it indicates what it is all about, this measure is revenue neutral. In other words, it is not a question of raising more taxes; really it is a question of redistributing the burden amongst those people who have to pay them. Of course those who will have to pay more, who do not get what they used to get, will complain. I think we have to put up with that; why should not a person complain if he is going to lose a benefit? Was it not the Great Wobblies who said: `What's we got we hold'. That is really what this is about. Members of the Opposition quite eloquently and robustly have put an argument for those who presently have benefits as far as taxpaying goes which they want to hold on to. Should they be allowed to hold onto those benefits, having enjoyed them for many years while other people have not enjoyed similar benefits? Is it not time for a redistribution of the tax burden towards those who have had a good go in the past and away from those who have had a poor go, in particular the pay as you earn people who now, under this general tax package, of which this fringe benefits measure is a part, will get a considerable reduction in the rate of tax they pay upon their income? We have heard Senator Messner and Senator Knowles quite properly put forward arguments on behalf of charitable groups, but do those arguments hold water? The Director of the Australian Catholic Family Welfare Bureau in South Australia, the State from which Senator Messner comes, does not think so. I read from a Press clipping from the Australian Associated Press service of 28 May 1986. The headline is `Church group in favour of fringe tax', and it states: Adelaide, May 28 AAP-The Federal Government should take an even tougher stand than the proposed fringe benefits tax if it was really serious about confronting social injustice, the South Australian Catholic Family Welfare Bureau said today. Bureau Director Joseph O'Neill, who supports the proposed benefits tax, said it was generally the rich who enjoyed fringe benefits while the perks for the poor and low income earners were few and far between. He said fringe benefits were just a way for high income earners to avoid paying tax, and that was manifestly unjust. Mr O'Neill said the Government should get tougher and be prepared to tax the person who received the fringe benefit in every case and not the employer. Let me make it quite clear that he says that the fringe benefits tax is more than justifiable. He says that in his capacity as the Director of the Australian Catholic Family Welfare Bureau. He does not think that this is an iniquitous tax. He does not think that charities are suffering as a result of all this. He puts his view forward, and puts it forward strongly. Let us be clear about this question of charities while we are on it. Everybody seems to have assumed that the charities are going to be taxed on the vehicles they use in the course of carrying out their charitable work, but, if the use of any vehicle is to be taxed, it is only the private use component that is to be so taxed. If people are making donations to charities for the cars and other things that are available as fringe benefits, should that not be revealed? Is it right that charities should get donations from the public and then use those donations to buy articles which are then used for private purposes? It is a matter of real concern and, from the sort of debate we have had so far about this it seems that there is an extensive use by charities of cars, and perhaps of other things, for private purposes. Senator Grimes —Only some. Senator COONEY —Senator Grimes, in his usual charitable fashion, has raced to the aid of the poor and the charities of this country and said that only some charities do that. Let us hope that he is correct. If funds given to charities by donors are used extensively for the purchase of cars, which in turn are used for private purposes, something certainly ought to be done about it. The Income Tax Assessment Act is now a massive volume. It has come out in many editions over the years. It has perhaps been reprinted more often than the works of Shakespeare. Be that as it may, section 25 says, if I can paraphrase it, that people who earn income have to pay tax on it. Section 51 says that, in considering the income that people have earned, the losses and outgoings ought to be taken into account. It might be worthwhile reading section 51 (1). It states: All losses and outgoings to the extent to which they are incurred in gaining or producing the assessable income or are necessarily incurred in carrying on a business for the purpose of gaining or producing such income, shall be allowable deductions except to the extent to which they are losses or outgoings of capital, or of a capital, private or domestic nature, or are incurred in relation to the gaining of production or exempt income. We are soon to hear from Senator Boswell in this debate. He will make his usual quite brilliant contribution. Senator Boswell —Glad you recognise it. Senator COONEY —I certainly recognise that. Senator Boswell will no doubt deal with this point, but throughout this debate it should be remembered that anything that is expended on earning income is deductible. The whole argument is about whether or not elements which are not used in production ought to gain the same status as those elements which are used in gaining that income. In other words, the argument from those who oppose the fringe benefits Bills must be that expenditure on things not used in earning income should bear the same status as expenditure to earn income. Is that fair? A person can get sweat upon his brow, corns upon his hands and callouses upon his knees out there expending himself and expending all sorts of other things on earning income, yet the person who does not bear those marks of work and trade can gather the same benefits. In other words, there is no reward at all for the person who earns his bread by the sweat of his brow because he gets no more in deductions than the person who sits back and enjoys the benefits of a luxury car-- Senator Boswell —What a stupid statement. Senator COONEY —Let us go through that. Senator Boswell says it is a stupid statement. It is very good that Senator Boswell is following me in this debate because he can explain why that is a stupid statement. Senator Boswell says it is a stupid statement but that is the situation. This shows that even amongst the great intellectuals of this world-I put Senator Boswell amongst them-there is a misconception of what this is all about because to say that that is stupid means that he cannot see that the items and goods being taxed here are items and goods which are not expended in the earning of income and which do not fall within section 51 of the Act. If they do fall within section 51 of the Act they are tax deductible and do not even have to be dealt with under the fringe benefits tax Bills. Unlike the fringe benefits tax Bills, no records are required to be kept. The person simply states that he had to buy a vehicle and that it is being used by his employees to carry coal to Newcastle or whatever else he wants to do. I was almost going to say to carry bananas to Queensland but I certainly will not do that. Nevertheless, if it is expended in doing that, it is deductible. One of the problems that have arisen in this debate is that people think that what this legislation does is to tax items that are used in producing income, but quite clearly it does not. What we are talking about here are the fringe benefits as such-the person who gets the low rent, the free use of a car for his own purposes, low interest rates on his loan and those sorts of things which are not part of the employer's expenditure in earning income. Up until now the employer has used those to gain tax deductions. Honourable senators opposite have talked about the tax being unfair on the employer, but employers across the board have created this situation over the years. They are the ones who have come up with this scheme and have said to the employee: `I will not pay you $300 or $500 a week. I will pay you half of that and I will throw in the use of a car or give you a low rent home or a loan at low interest rates. That is what I will toss in'. Senator Grimes —Or pay for your kids' schooling. Senator COONEY —Pay for the kids' schooling. I will get off that subject. In any event, that is what the employer says. He then claims that as a tax deductible item because he has expended it, he says, in earning income, but nobody pays tax on that, whereas if the person was paid his proper wage, he would have to pay tax. It is the employers who have created this whole scheme for avoiding taxes which would otherwise have to be paid on remuneration, so why should they not have to unravel that scheme? It is within their power to do that. That has been brought up in debate already. People have said that what is going to happen here is that there will be renegotiation of remuneration packages. What is wrong with that if that is the result that is going to come about? If one looks at the history of this matter, it was not the employees who said: `Give us $150 plus the use of a car and this and that'. The whole scheme was created by those employers who practise these sorts of things. All these Bills do is to say to these employers: `If you want to do it that way, if you want to create that scheme, good luck to you; but you will have to pay tax on it'. If they want to go back to the way that most people in this community are remunerated-that is, in terms of cash payments-the employees would pay tax. That is a matter for them. People have said that that is going to be hard on the employers, and so it is. Sitting suspended from 6.30 to 8 p.m. Senator COONEY —Before dinner I was talking about fringe benefits tax and seeking to demonstrate that the concept behind the tax was that of fairness. Senator Boswell —Use a bit of honesty. You're not in the legal profession now. Senator COONEY —I hear an interjection to the effect that the tax is not fair. Having heard the comments of Opposition members, led by the redoubtable Senator Boswell, who will be followed by other eminent speakers, it will be interesting to hear them justify why it is not fair for remuneration which includes fringe benefits to bear the same tax as remuneration which does not. What is wrong with a remuneration that consists of $400 a week, plus $100 in fringe benefits, bearing the same tax as would an unsupplemented sum of $500 a week? Senator Messner —Under this system that will not happen because you're applying a flat rate to it. Senator COONEY —That is not quite right. The whole purpose of the tax is to this effect: If an employer wants to pay remuneration in such a way that up to now has obtained a tax benefit, from now on if that system is followed the employer has to see that the proper tax is paid on that remuneration. Until now the employer has paid out the remuneration by way of cash and by way of fringe benefits. He has discounted all that off his earnings because under section 51 of the Income Tax Assessment Act he has attributed all of it as being expended in the earning of income. That position will still remain except insofar as the payments include fringe benefits which have not been expended for the purposes of earning income but expended to give somebody an advantage over other people who have their remuneration paid simply in cash. What is unfair about that? Why should people who until now have had an advantage because they have their remuneration paid by way of a car, or a low rent home, or by obtaining a loan at a low rate of interest, be advantaged by way of remuneration over those who receive their remuneration in cash? Senator Parer —You don't have your heart in it, do you? Senator COONEY —Of course I have my heart in it because it is a matter of justice and morality. Senator Messner —How much is your fee for this one? Senator COONEY —The fee for this one is the satisfaction of knowing that I am talking on a matter which will introduce a great deal of fairness and will bring a great deal of equity into the taxation system. It will mean that people who up until now have missed out will be advantaged. Those who have had the free kick in front of goal will have to take their place in the ruck and earn their kicks from now on. Senator Boswell —Are you referring to the farmers who are finding themselves in a difficult situation? Senator COONEY —If we are talking about small business, it is interesting to see that the average income of proprietors of unincorporated non-farm businesses increased by two per cent in real terms between 1982-83 to 1984-85, and in the same period wages have fallen by two per cent in real terms. When one talks about the impact on small businesses other than farms, one must bear in mind that their income has increased by two per cent in real terms over that period and that their overheads have fallen in that wages in the same period have fallen by two per cent in real terms. If one looks at the whole economy-this is almost a cultural rather than an economic question when one thinks about it-it is a matter of whether we as a nation, as a group of people pulling together as a country, are willing to say that everybody should be given a fair go. Let us deal with the concept of a fair go. People are saying that the car industry will be affected by what we do in this legislation. For the purposes of the argument, if we want to give an advantage to the car industry why not give the industry a bounty and pass that provision through the Parliament? That would be a matter of expenditure. Senator Boswell —Who pays the tax on that? Senator COONEY —Senator Boswell would allow the car industry to take advantage of an unfair tax system. If he wants to give the industry an advantage, which obviously he wants to do when one considers his argument, why not do it out in the open by giving the industry a bounty? Why not do that, rather than going about it by an elaborate and labyrinthine mechanism by saying that we will give the car industry an advantage by allowing people to gain an unfair advantage in the payment of their income tax? In other words, the matter should be put out on the table. If the industry is so fragile and so unable to stand a system in which people pay according to what is earned, let us make some accommodation for the industry, if that is what the Parliament thinks, but let that be done through the Parliament rather than through a backdoor method of allowing fringe benefits to be tax deductible. If one follows that through, one could apply it to people who obtain benefits by way of low housing rents or low interest loans. If people are to be subsidised and dealt with in that way let Parliament debate it on that basis rather than on the basis that the taxation system is unfair because allegedly some people are being disadvantaged in some way. Of course, they will be disadvantaged by those provisions because they will be less well-off than they were before. But the people who were less well-off before will find themselves a lot better off because they will enjoy tax reductions. Furthermore, an advantage will flow to the very people Opposition members are now trying to protect by the backdoor method of giving them an advantage they do not deserve. By the way, they are the very people who will have a lower rate of tax imposed upon them. The Opposition is saying that not only should people get advantages by being able to drive cars, obtain free travel above everybody else and obtain advantages in the sort of house in which they live by free loans or other means, but they should in addition have tax reductions. The Opposition wishes those people to be advantaged to the disadvantage of the very poor and the less well-off in the community. The difficulty about the Opposition's proposition is that it wants the system to go one way. The Opposition should listen to the man who was mentioned before-- Senator Parer —From Snowy River? Senator COONEY —No, the man from the Australian Catholic Family Welfare Bureau-somebody who should be dear to the heart of Senator Parer, who professes a strong and firm belief in social justice. He should listen to that man who takes the Government to task for not imposing a greater fringe benefits tax than at present. He takes the view that the poor and lower income earners are very disadvantaged under the present system. The Opposition, through Senator Parer, Senator Boswell and Senator Brownhill, shows that it is misguided. It wants to give double advantage to those people who elected Opposition members to this chamber. They are proposing a double advantage again and again through the position they are taking on fringe benefits. When those opposite rise to speak in this debate I want to hear from them the answer to this question: Why should people who get an advantage-which does not come from the fact that they are working and producing income, but rather from the fact that employers want to give them a benefit which other people do not have-not have those advantages taxed and paid for by those who are on a lower rate of interest? This is part of a package which this Government has most successfully put forward. It includes the accord, which has kept wages at a low rate-perhaps lower than they should be. This is something which the previous government was unable to do. If one looks at the evidence and at the record of how this legislation came before the Parliament one can see that a great advantage has been given to business by the fact that wages have fallen where profits have been at record heights since this Government has been in office. When some sacrifice is asked for from that sector, which that sector is prepared to make, or at least the better part of it, honourable senators opposite unfortunately expend time and effort on a brief which I do not think they can-if they look in their heart of hearts-put forward and agree is a reasonable proposition. How do we overcome-we will hear this from honourable senators opposite when they get up-the annual growth rate of over 5 per cent in the three years since this Government came to office? This is not the first time this has been put. It has been put ad nauseam in this place since I have been here, but has never been answered. Perhaps this is the night when we will hear the question answered. How do those opposite explain that for three years Australia has had a real economic growth of around 5 per cent per annum? How do they explain the fact that unemployment has fallen and that employment has risen? How do we overcome the fact that industry has boomed? How do we overcome the fact that the car plan and the steel industry plan are accepted by industry? How do those opposite answer all those questions? They really cannot answer. In return for what this Government has done they have offered what could only be described as a scheme which would have been put to Alice in Wonderland at the Mad Hatter's tea party, and with about as much chance of success. The fringe benefits tax is a tax which is part not only of an overall taxation plan but also of an overall plan to re-establish Australia, its industry, and its people, people who are confident that a tax system is working very fairly in their favour, and to ensure that industry will continue to expand. The low level of industrial disputes is an indication that people now feel that they have some sort of stake in this community and that they can go forward under the leadership of this Government, confident that they will all be looked after by both business and unions, to ensure that the poor and the rich, those who are advantaged and those who are disadvantaged, can go forward as a nation instead of under the opposite prescription which is down on a particular section, down on the unions, down on the people at work, and down particularly on those who have borne the burden of taxation until now. The proposition put forward by those opposite indicates that there will be no relief in taxation for those who have suffered for so long under the present system. A rejection of this fringe benefits tax is an affirmation that the two nations of which Disraeli used to speak will be established well and truly in this country. Senator BOSWELL(Queensland)(8.15) —We have just listened to an incredible contribution by Senator Cooney who has tried to defend the fringe benefits tax. He has certainly convinced no one in Parliament-certainly not on this side, and there was no one on the other side to listen to his contribution. Not one honourable senator from the other side had the interest in the fringe benefits tax legislation to come in and listen to his speech. The fringe benefits tax will affect the farmers, the graziers, the car industry, local governments and State governments, mining companies, and charities. They have all been frantically worried about this fringe benefits tax since it was proposed eight or nine months ago. They are more worried since the little purple booklet went out to 750,000 frantically worried business people who keep ringing my office. I am sure that other senators have had the same sort of telephone calls. No one has been able to make head or tail out of it. To my way of thinking this shows that this is a government in disarray. This is a country which, in the Government's own words, is becoming a banana republic. That is correct; the overseas debt hit $80 billion. We are overspending by $1.5 billion a month. Of course, the socialist answer to this is to tax heavily the productive sector-the small business person, the farmer, the miner, the exporter. The Australian Labor Party has really scraped the bottom of the barrel this time. It will tax the blind, the cripple, the mentally retarded, and every charity which is trying to raise money to provide facilities for its own people. Fringe benefits tax is nothing short of a tax on an employer who has already paid tax. Even Senator Cooney must be able to see that. A business produces wealth; to produce more wealth it has to have a car, or it has to provide a house, in the case of a miner. So the business or the mining company is doubly taxed, once when it pays income tax and the second time when it provides a tool or item of equipment to produce wealth. Even Senator Cooney must realise that. I do not have his way with words; he is an eminent barrister, but one only has to be a man of the people to understand that one is paying tax twice. At a time when Australia is crying out for leadership, the Prime Minister (Mr Hawke) once again showed how he caved in to the Australian Council of Trade Union pressure last year at the National Taxation Summit when the unions told the Government that they wanted a fringe benefits tax but that they did not want their workers to pay for it. I suppose that that is a reasonable response from the unions but it is certainly not a reasonable response from the Government which is not here to give the unions everything they want. It is here to govern in the best interests of Australia. It is failing miserably to do that. The fringe benefits tax is short sighted. It will result in a massive loss of jobs. Already, the car industry is in dire straits with massive sackings taking place. In Queensland car registrations are down 28 per cent; in most other States they are down 30 per cent. That is resulting in the loss of many thousands of jobs. While the registrations are down 30 per cent, interest rates are going through the roof, Many honourable senators would have had representations from car dealers who say that they are in dire straits, in financial trouble. A lot of them are saying that there is no future for them in the long term. We must bring the Australian Democrats into this because they are doing the usual thing and making the usual grandstand play about the car industry. They have told the Government that unless it agrees to some minor amendments they will not pass the fringe benefits tax legislation. But in the next breath they say that if the Government really does not get enough revenue they will guarantee that they will put extra revenue legislation through. They are having two bob each way, the way they usually do. They are offering absolutely nothing. We are becoming used to the Democrats doing this sort of thing. The amendments they put through are not worth the paper they are written on. I say to Senator Macklin, who is sitting next to me, that we saw a classic example of the Democrats' concern regarding the capital gains tax when they said that they would reduce a capital gains tax on the goodwill component of farms. That is useless because there is no goodwill component of a farm. I asked the Minister for Finance, Senator Walsh, whether he had ever heard of goodwill relating to a farm and he had not. I asked the National Farmers Federation and it had never heard of it either. The Queensland Country Life newspaper exposed the Democrats' offer on the capital gains tax and the goodwill component of a farm, saying that it was not worth the paper it was written on. It advised its readers that the only way they could defeat a fringe benefits tax and a capital gains tax was to vote for the National and Liberal parties and that is the best bit of advice it has ever offered its readers. I commend Queensland Country Life for giving that advice, and that advice cost only 50c. Everyone should subscribe to that paper if that is the sort of good, sound economic advice it offers its readers. The Australian Federal Chamber of Automotive Industries estimates that 90,000 fewer cars will be sold in 1986 than were sold in 1985 and a further 25,000 fewer will be sold in each subsequent year. At this stage I believe that we should look at what revenue the Government will lose if the fringe benefits tax on cars is applied. I point out that I am referring to motor vehicle registrations only, not to houses or any other item to which the fringe benefits tax applies. Let us just look at cars. At the rate of car registrations, sales tax will be down $82m, import duty will be down $15m, the loss of company tax will be $49m and the loss of income tax due to the retrenchment of workers will be $70m. The total Commonwealth revenue loss will be $276m. Then, of course, there is the loss to State revenue. The loss in payroll tax will be $8m, stamp duty $11m, registration $3m, making a total loss of $298m. Even if that claim is an ambit one and even if we halve it, it is still a considerable amount of money. However, that is what the Australian Federal Chamber of Automobile Industries estimates the Government will lose in revenue. I point out that the Minister for Community Services (Senator Grimes) said in his second reading speech that the revenue raised in the first year would be $330m. I ask members of the Australian Labor Party-Senator Cooney is in the chamber, as is Senator Maguire from South Australia, the scourge of Queensland; he is a good man on figures-to tell me whether it is worth the pain to raise $30m, $60m or whatever if the result puts workers on the dole, destroys factories that manufacture motor vehicles components and causes misery and family breakdowns due to the pressure of people going out of work. The fringe benefits tax will affect many areas. State governments will be forced to pay tax on every policeman's house, every school teacher's house and every hospital employee's home. Senator Crichton-Browne —It is an uncaring Party. Senator BOSWELL —The Government does not care about the worker. I think that Senator Jones is of the Australian Workers Union faction. I know Senator Black is. I would like to know what they are doing to represent their union members. Senator Crichton-Browne —Wrong one. Senator BOSWELL —I can never keep up with the factions; I would need to be given a sheet of paper every day telling me of the changes. I would like to know what the AWU is going to do about all the benefits and jobs that will be lost to its members. Honourable senators opposite are now springing to action to defend the cause. Senator Jones —Madam Acting Deputy President, I raise a point of order. I would like to correct Senator Boswell. I do not belong to the AWU faction. I think that he ought to get his facts correct. The ACTING DEPUTY PRESIDENT(Senator Haines) —That is not a point of order. Senator BOSWELL —I apologise to Senator Jones if I have offended him by associating him with the AWU. Senator Cooney —Don't spoil a good speech by worrying about facts. Senator BOSWELL —Let me get back to my speech because I know that Senator Cooney is terribly interested in this matter. He is hearing from a man who has been in business rather than one who has an academic background like most ALP senators. I have actually been there and done that, which is more than Senator Cooney has done. He has been locked away in the courtrooms of this country. If he listens to me he may even learn something. It will cost the Queensland Government alone $80m to $100m to continue to provide services in the rural areas of Queensland where most of the houses for the public servants-the teachers, the policemen, the hospital workers; one could continue ad infinitum-are based. No government creates money; it only collects it. It would be necessary for it either to collect more taxes-that should be obvious-or to reduce the benefits that a State government is expected to provide by closing schools and police stations and shutting down hospitals. If that is what the ALP and the Democrats want, I suggest that they vote for this legislation because that is definitely what will happen. Every State government, irrespective of its political persuasion, runs on a tight budget. Every department works within the constraints of a budget and there will be no alternative but to reduce services. As I have said, most fringe benefits that are provided by governments are provided in the western areas of Queensland, the northern areas of Victoria or the western areas of New South Wales; they are provided in the primary industry areas. Those areas will bear the brunt of the tax due to the loss of services. They will also bear the brunt in a more direct way. Once again primary industry has been singled out by this ALP Government. After four years rural people have come to expect it. There has been one continued assault after the other on the primary industries of Australia. A fringe benefits tax will be charged on the fuel, food, telephones, vehicles and accommodation provided by the farmer and the grazier. A farmer will even have to pay fringe benefits tax on his son's or daughter's residence on the farm. Senator Teague —What about wedding presents? Senator BOSWELL —I do not know about wedding presents but if my colleague says that they will be affected, I should recognise his expertise in this area. The Government expects primary producers to employ people. Does it expect a farm worker to live up a hollow log? Is that what the AWU wants for its members? Does the Government expect a farm worker to live in a home in a town 20, 30 or 40 kilometres from where he works and trek 50, 60 or 70 kilometres to and from home? There is no alternative for a farmer but to provide a cottage or accommodation for farm workers. Telephones are also essential in country areas, particularly if a farmer has a worker on another block or who is living away from the main homestead. He must communicate with his farm workers or manager. It has got to the ridiculous stage that even if one offered a farm worker a cup of tea on the verandah and a piece of cake one would have to pay $2 in fringe benefits tax. Is that the egalitarian society that the ALP wants? Is that the one class society that it is aiming for? That shows honourable senators how ridiculous the ALP is. Let us take, for example, the benefits an average stationhand would receive. Let us put down $40 for the use of a cottage, which is a fairly low figure, and $14 for electricity and gas and let us say that we give him $10 worth of meat, which is not unreasonable. A dog would probably eat more than that. I will not throw in any phone bills or petrol. I come up with a figure of $64 a week. He will have to pay income tax at the company tax rate of 49c in the dollar on that $64 a week. That is at the absolute minimum but that works out at $31 a week added on to the costs to every farmer for every employee. Senator Grimes shakes his head. I do not know whether he does so in disgust or in shame. He is probably absolutely disgusted because I do not believe that Senator Grimes-I consider him a reasonable person-would ever fall for this type of legislation. The Government is asking every farmer who employs a worker to pay 49c in the dollar and then an additional $31 a week in tax per employee. I say to Senator Cooney that that is most unreasonable because the average farm income is around $7,000 a year. Senator Crichton-Browne —Wheat farmers have minus incomes. Senator BOSWELL —Senator Crichton-Browne speaks up for the Western Australian wheat farmers, as he should. There are many wheat farmers and farmers in Australia on a minus income. The Government is asking those people with an income of $7,000 a year-let us talk about an average income-to take $1,500 off that $7,000. How can Senator Cooney defend that? He cannot defend it because it is indefensible. There is no alternative for farmers but to provide accommodation for people who work on their farms. The workers cannot physically own their own houses on the farms. Farmers cannot expect workers to travel from a town that is 50 or 100 kilometres away. Therefore, the Government is expecting farmers to pay $31 per employee. It is predicted by rural organisations that up to one-third of rural workers will lose their jobs. Between 10,000 and 20,000 Australian Workers Union members will have their working conditions eroded. Senator Black is not prepared even to come into the chamber. I do not know to which faction the AWU belongs but I would like the AWU to defend the position of its members who pay $80 or $90 a year for the benefit of union membership. It is a complete sell-out. I will put out a Press release calling for all rural workers to resign from the AWU and to seek some other union that will defend their rights. Senator Reynolds —What about the National Party? Senator BOSWELL —The National Party of Australia would certainly never sell anyone down the drain like that. But at the end of the day let us look at what will happen to rural Australia. Up to 20,000 people will lose employment on farms. Families on those farms are already overstretched. Husbands are trying to make ends meet now and will have to do extra work. They already work 80 or 90 hours a week. But I suppose that the Australian Labor Party would not mind if they did another 10 to make it an even 100 hours a week. The wives of the tractor drivers, the mothers and the accountants will not let their properties go. They are great survivors. They will work a little harder and put a little more pressure on their families. Government members do not like the farmers. They have never liked them. The farmers do not vote for the ALP so the ALP has never given them a fair go. But it is not only the farmers who oppose this. The National Farmers Federation has passed a unanimous resolution requesting farmers to ignore both paying and filling out the forms for the fringe benefits tax. Senator Macklin —You support the breaking of the law. Senator BOSWELL —If I support it, so do Premier Bannon, Premier Burke and Premier Bjelke-Petersen. Senator Macklin —Are you urging people to break the law? Senator BOSWELL —Madam Acting Deputy President, I seek some protection from your colleague. I am continually being interjected upon. Senator McKiernan —I take a point of order, Madam Acting Deputy President. My point of order is that Senator Boswell has reflected on a member of another parliament. He named the Premier of Western Australia, Brian Burke, as being in support of not paying fringe benefits tax. Premier Burke has never made any threats to that degree and I ask the honourable senator to withdraw. The ACTING DEPUTY PRESIDENT(Senator Haines) —There is no point of order. Senator BOSWELL —Premiers Burke, Bannon and Bjelke-Petersen are all on record as saying that they will not pay the tax. Rural producer associations have not been invited to the mini-conference that the Treasurer, Mr Keating, is putting on. He has disregarded the NFF and has refused to send it an invitation. Once again he has completely ignored its members. When speaking about the fringe benefits tax we should not let pass the plight of the mining industries. They make a great contribution to overseas trade. The fringe benefits tax will cost the mining industries in Australia $61m per year-$46m for housing, $5m for travel and $10m for electricity allowances. In Queensland the tax will cost $13m. The housing, travel and power benefits are essential to the mining industry because of its remoteness. They are not tax evasion measures; they are recognised in tax legislation. The contribution of the mining industry to Australia's development, decentralisation and export earnings cannot ever be overestimated. Since 1967 the mining industry in Australia has build 24 new towns, 12 new ports, 20 airfields and 1,900 kilometres of heavy duty railway lines. In Queensland alone $362m has been spent on employee housing. The fringe benefits tax is a retrospective tax because it has changed the rules after projects have been established. Because 78 per cent of our coal is exported, prices are determined by the market. The industry is not able to pass on new domestic taxes. This tax can only cost jobs, stop mining industries from expanding and stop the growth of new towns. There is only one Labor senator still to speak on this legislation. Only three Government senators are making some effort by speaking on this fringe benefits tax. I must admit that the two previous Government speakers did an exceedingly shocking job. They have not convinced anyone. The fringe benefits tax will reduce all business in Australia. The Government is trying to recreate the wheel but it will pull down the whole system of business. In the last 10 years we have seen 360,000 jobs lost in manufacturing industry. This fringe benefits tax legislation will not create one real job. On the contrary, it will send many thousands more to the dole queues, particularly in the car industry. It will help the Government with its numbers of people employed under the community employment program. Many thousands more people will line up for the CEP jobs. As the dollar falls, because our mining and rural exports will become increasingly uncompetitive due to the fringe benefits tax, we will go further into debt internationally, with reduced income to service overseas borrowings, the J-curve will race off into the sunset and we will all remember the words of the best Treasurer in the world-that Australia will become a banana republic. I say to the Australian Democrats and to members of the Labor Party: If this fringe benefits tax comes through, you will all have made your contribution to ensuring that the best Treasurer's prophecy comes true. Senator BROWNHILL(New South Wales)(8.38) —Before I start to debate the Fringe Benefits Tax Assessment Bill 1986, the Fringe Benefits Tax Bill 1986, the Fringe Benefits Tax (Application to the Commonwealth) Bill 1986 and the Fringe Benefits Tax (Miscellaneous Provisions) Bill 1986, I want to record my absolute abhorrence for the manner in which this Government has gone about this legislation. Even before the legislation had reached the Senate and barely after it was passed in the House of Representatives, as an employer I was sent three things-a copy of a booklet, which I believe cost some $3m to produce, a form and accompanying letter. The booklet told me clause by clause what was in the legislation. The letter told me that the fringe benefits tax would become effective on 1 July and that from that date I would be liable to pay fringe benefits tax on a range of benefits. Basically, the form asked me to dob myself in and to admit liability under legislation that does not yet exist in law. The form further required me to sign and swear the information to be true and correct. How on earth is anyone supposed to sign that without knowing for what he is liable? What sort of Government are we running in this country that forces people to sign blank pieces of paper? The whole thing is atrocious. The history of this taxation legislation is a fascinating study of how governments can operate at the most inefficient level. The Treasurer (Mr Keating), in his statement on 19 September, observed: Today's measures will achieve a return to fairness in the Australian tax system not seen for decades. Australian society will be much the stronger for it. In November 1985 the Treasurer said: The Government has today concluded its discussions with the Australian Democrats concerning the tax reform package. It would appear that the Federal Treasurer has of late got nothing right, because neither of those statements has turned out to be correct. It all means that the tax summit or, perhaps more accurately, the Treasurer's tax rort and all the consultations, deals and pay-backs that went with it have amounted to an absolute waste of time. For three years we have had to suffer the Government's claims that it was working on the greatest reform of the taxation system ever attempted. We have been told time and time again that everyone in the community would contribute-unions, businessmen and employers. That is so much rot. The Democrats have taken their role of keeping us all honest to new heights. If I did not know better, I would have thought that the discussions over the past few days between the Democrats and the Government were scenes from a Cecil B. De Mille epic, with everyone taking turns at playing God. I do not need to outline what the various fringe benefits tax Bills will cover. Other speakers have documented their entire scope. I will concentrate on what I consider to be appalling inconsistencies and discriminations in the Bills. Before someone on the other side claims I am protecting some people, I had better say that I am not talking about those very few businessmen who live in cities such as Sydney or Melbourne, who have large incomes and very good accountants and who have for years been able to manipulate the income tax laws no matter how they are amended. I do not condone the actions of those people, nor do I wish to protect them. We all know the sorts of rorts to which I am referring-the absurdly concessional loans to people well able to afford full interest rates, and fringe benefits packages of $50,000 to $100,000 on top of their salaries. What I am concerned about and what the National Party and the Liberal Party are concerned about are the hundreds of thousands of other Australians who will be so much worse off after these tax changes are brought in. I want especially to talk about what is happening to the employers in small business in rural areas. Perhaps the most basic absurdity in this legislation is that of a tax imposed on employers on the total taxable value of non-cash fringe benefits provided. As the President of the Livestock and Grain Producers Association of New South Wales, Mr Michael Tooth, said only last week: The principle that tax should be paid by the recipient of wages and other benefits is well established in the western world. This new tax completely overturns that principle and in fact it becomes a tax on incentive and employment. It also contravenes the principles of tax reform of the Prime Minister (Mr Hawke). His fifth commandment claims that Australians should pay tax only at the rate commensurate with their ability to pay. This legislation will apply to employers even if they have a negative or nil assessable income, as Senator Boswell said earlier. In the rural sector, a rural employer who provides residential accommodation and charges rent at a rate less than what the Commissioner of Taxation considers fair market rent will be up for additional costs. Any additional costs of employment will simply reduce the number of people employed in the rural sector. Alternatively, the employee will be asked to pay the full market rent. Currently 110,000 wage and salary earners are employed in agriculture and related services. It has been estimated that this tax will cost the rural industry about $150m. This will be avoided if the employee is sacked. Either way, agriculture is to be slugged. The Government and the people of Australia must be made aware of this. This legislation deals not in cents but in dollars-hundreds of millions of them. It will hurt not just the rich tax dodgers whom Senator Walsh is so fond of talking about but the people who simply cannot afford to pay. Companies in my area are facing costs of $12,000 per employee. The alternatives for these or other people will be to pay it, pass it on, sack the employee or put the price of goods and services up to cover the extra costs. For those dealing in export commodities, that is just not possible. Either way, the economy suffers. If the employee is forced to pay, he will push for higher wages to bring him back to where he was before FBT. If the employer pays, his profitability slumps. If he passes on the costs, the prices of goods go up and so does the consumer price index. The merry-go-round starts spinning. Where does that leave the pensioner and others with little income? Another absurdity created by this tax is the timing of the year over which it applies. It will run from 1 April to 31 March with the tax payable in quarterly instalments. I know that the argument for this is that the timing will not interfere with other tax requirements. What it means in effect is that the businessman or farmer will not work on his tax just once each year or visit his accountant once a year; he will just about be living with his accountant. Already taxation accountants have been inundated with inquiries. Meetings of accountants have been held across the country. They have been trying to unravel this appalling accountancy nightmare. The accountancy profession is concerned about legal liability. The penalties for incorrect assessments are high, yet with the tax applicable in just a few weeks' time we still do not know the answers. We must all await the pleasure of the Democrats. Several accountants and businessmen near my home town have rung me and told me that they have rung the Taxation Office. They have spoken to people in the Treasurer's office. Some have even been desperate enough to phone the Democrats. All of them have called back-- Senator Boswell —The last card in the pack. Senator BROWNHILL —That is definitely the last card in the pack. None of these people can answer the questions. For example, a staffer in Senator Siddons's office assured one of my constituents that most farm workers lived off the farm and would travel to work, so the question of fringe benefits tax on accommodation for farm workers would not apply. I doubt whether that tax expert has been on a farm which is more than five kilometres from the centre of Melbourne. I also hope that Senator Siddons, as the Democrats' economic spokesman, receives better advice than that provided by that officer. Treasurer Keating's office fared no better. Someone in that office told my constituent that all he would need to do was put a nominal charge on the farm cottage and then `just increase his wages by the same amount'. If the Treasurer wants to find tax loopholes, perhaps he should talk to his own staff. The Taxation Office was far more honest, if unenlightening. People there just said that they did not know. Senator Boswell —This is like the Mad Hatter's tea party. Senator BROWNHILL —That is right. They have supposedly supervised the compilation of this legislation, and they do not know how it works. Accountants have already started up a fighting fund to protect their members against law suits likely to arise from late or incorrect returns. Businessmen will now spend many more hours and dollars sorting out the mountain of paperwork generated by these Bills. One part of this legislation has confused me and angered me even more than does the whole concept of fringe benefits taxes. In the White Paper published last year it was proposed that fringe benefits provided by an employer to an employee under a trade union award would not be taxable. If it still applied that benefits provided or won under an industrial award did not attract fringe benefits tax, that would have been one of the most blatant forms of discrimination perpetrated on the Australian community. It would have meant that trade unions could negotiate a most extraordinary range of fringe benefits using as a lever the fact that the employer would not have had to pay the fringe benefits tax on it. The private businessman, on the other hand, who similarly chose to provide a car, dining facilities or some other form of benefit or bonus would have been penalised, and at the full company rate of taxation. If that still applies under this legislation it will be the most extraordinary deal ever cooked up by the real pawnbrokers of this country-the trade unions. The unions still have some employers over the proverbial barrel. In New South Wales, for example, some farmhands are employed under the New South Wales Rural Workers Accommodation Act which requires that where residential accommodation is provided for a rural employee it shall be free of charge to the worker. In other words, there is no way the farm owner can avoid paying the fringe benefits tax irrespective-I emphasise this-of his ability to pay. It gets worse. If the children of a family live on a farm under a company arrangement or under the terms of an estate of the parents or live on a property owned by the parents, they are deemed to be employees, and the owners of the company-the owners of the property-will have to pay the fringe benefits tax on their own family. Yet Treasurer Keating had the nerve to tell the Parliament today that this tax would not unduly hurt farmers. What a lot of rubbish! Where has he been for the last 12 months? Senator Boswell —That is being deceitful. Senator BROWNHILL —`Deceitful' is quite correct. Is he not aware that there is a rural depression on and that farmers just cannot take any more costs? Senator Boswell —Why does the Government hate the farmers? Senator BROWNHILL —I am trying to find out why it hates the farmers. It is not giving much help to the farmers anywhere along the line. What was the point of the 15 April rural package which gave a measly $103m to farmers when this legislation is estimated to take back $150m? How much will it cost to do that? I have heard estimates that 450 additional staff will be employed to administer the legislation. I bet that, as large as that figure is, it is a mere drop in the bucket. The legislative formula is so appallingly complex that I believe it will take more than 450 people just to unravel it. I agree with Senator Chipp's comment that the legislation looks as if it was written by the same person who wrote the telephone book, but if Senator Chipp believes that it is so appalling why does he not join the Opposition and kick the legislation out? He knows as well as everyone else that the existing legislation has more than enough provisions to tighten up any lurks that should be wiped out. How, for example, does one value the rent on a house which has been on a property for 80 years or more and which has never been commercially rented out? Will the Government apply the same unfair dictatorial standards to this situation as it did to the assets tests valuations in which absurdly high values were placed on rural dwellings? The anomalies and the blatant discrimination are not restricted to the rural sector. Let me give some examples. Let us take a garage proprietor who employs his son as an apprentice. The son lives at home with his parents and currently pays no board because his parents choose not to charge him. Under this legislation the apprentice is not his father's son-which makes him something that I could not mention in this chamber-but rather he is his employee and is receiving fringe benefits. The father will have to pay for his son living under the family roof and sharing the family car. Does the garage employer father throw out or sack his apprentice employee son? Is that what this Government is all about? Is it trying to break up the family? An even more astounding example is that of a motel manager who has a wife and family. Like all motel managers they live on the job. They eat and sleep at the motel. Under this legislation their employer will be liable for tax on 60 per cent of the assessed value of rent, food and furniture. Food, for example, would cost some $4000 a year in fringe benefits tax. Rent would cost another $4000, and that is even before electricity is calculated. What about the beds and bed clothes? Where does it stop and who is to calculate it? Who is going to come and look between the sheets? Who is going to knock on the door late at night to see what sort of sheets the family is sleeping between? Where do retired employees go if, until now, they have been allowed to remain on a property rent free in exchange for the odd caretaker role? What happens if those retired employees are one's parents? The Government has been working on the tax reform package for three years. Frankly, it has been a phantom pregnancy because it has achieved absolutely nothing worthwhile and beneficial for this country. It has singled out the employer to pay for benefits he does not receive. In fact, he provides them and he is now to be charged tax for the gesture. The legislation will create bitterness between employer and employee. If employees are not sacked or charged for the benefit they will be quizzed at length as to how they use the company car. The employee will be challenged about the use of his telephone or electricity. Not just one industry has been hit. This tax will hit the big industries such as mining, which I am sure Senator Parer will mention later in this debate. It will hit the motor vehicle industry which Senator Messner has mentioned already. It will affect little people equally as hard. There has been no attempt to determine the ability of those affected to pay. The Government appears to have forgotten that the recovery of the economy depends on private enterprise, especially our export industries. If, on top of all the other economic ills, business has to cope with a further tax impost, we will be sending many businesses to the wall. In some cases both employer and employee will lose their jobs. The Government should take heed of the saying: `The levying of taxes and the shearing of sheep are very alike; they should both stop at the skin'. This tax is already well into the hide. Senator PARER(Queensland)(8.56) —We are debating the Fringe Benefits Tax Assessment Bill 1986, the Fringe Benefits Tax Bill 1986, the Fringe Benefits Tax (Application to the Commonwealth) Bill 1986 and the Fringe Benefits Tax (Miscellaneous Provisions) Bill 1986. Senator Messner pointed out the Government parameters for tax reform. I will mention a few of them again. Before the Government began the tax reform process last year, it said: The Government will simplify the system so that all Australians will understand it. It will be based on capacity to pay. Any changes will be acceptable to community groups and it will provide the best climate for investment and employment. I repeat: The Government will simplify the system so that all Australians will understand it. We have a Bill of 139 pages, an explanatory memorandum of 176 pages, and every person who is liable for the fringe benefits tax has received a 56-page guidebook from the Australian Taxation Office. That is what the Government means when it says that it will simplify the system so that every Australian will understand it. The fringe benefits tax has prompted an unprecedented revolt across Australia and the more the effect of the legislation is felt by every Australian, the more antipathy it will generate. There is no doubt that unacceptably high taxation brought about by grotesquely excessive government expenditure spawned a grocery list approach to salary packages. No one would disagree that in a minority of cases the system was abused. No one would disagree that these people should pay tax on blatant evasion. The existing provisions of the taxation legislation are such that these evasions could have been attacked. The fringe benefits tax, however, is part of an obscene package conceived late at night in a motel room between the Australian Council of Trade Unions and the Prime Minister (Mr Hawke). Is it any wonder that the progeny is a gross monstrosity? The National Taxation Summit, agreed to by the Prime Minister on a pre-election talkback program, was supposed to simplify and make more equitable the taxation system. Following the sell-out by the Prime Minister of his Treasurer (Mr Keating), the Government has produced a horrible piece of socialist, ideological nonsense which purports to aim at the few who have abused the system but which will succeed only in shooting the innocent bystander. When this legislation bites, it will adversely affect every taxpayer in Australia. This is not an income tax. It is a new payroll tax which applies to charities, ratepayers, farmers, tourist operators, small business, schools, religious institutions and miners. It is a tax on labour costs and not on tall poppy fringe benefits which, to be kind, was the original intent. The effect on the car industry is horrendous and is already being felt. While the rest of Australia was engaged in stop work meetings or strikes on 28 May to force the phoney 3 per cent productivity/union superannuation case, the Vehicle Builders Employees Federation of Australia was also on strike to protest about the effect of the fringe benefits tax on their industry. The language used by the secretary of the Vehicle Builders Federation to describe the tax was unparliamentary and therefore cannot be quoted. Even though the tax on vehicles may be watered down the Federation and Senator Button know that the jobs of these people are at stake. This aspect has already been covered to some extent by Senator Messner, and no doubt it will be covered by other senators in more detail. The tourist industry, one of the few growth industries in Australia today, will be particularly affected. Senator Jones should know this, coming from Queensland. This growth has occurred despite outdated and idiotic penalty rates. The industry is now confronted with a new and totally unwarranted and inequitable tax which will of course be paid for by the consumer. Because of the 24-hour nature of the industry, managers and staff live in many cases at their place of work. Staff must be accommodated on island resorts; there is no other form of accommodation. As the new tax is non-deductible and the measure is counter to section 51 of the Income Tax Assessment Act, the industry will need to derive an additional $150m a year in order to meet the tax. Tariffs and charges will need to increase by 9.5 per cent across the board to cover the cost. This, with the increase in labour and other costs of operations, will result in a massive inflationary increase in accommodation and hospitality costs of some 20 per cent over the next 12 months. I turn to regional and remote areas. My State of Queensland is the most decentralised State in Australia-an end which at one time was a priority for government. To attract shire clerks, engineers, nurses, teachers and others to remote areas special provisions such as housing, return air fares once a year and perhaps boarding school allowances have been and have to be provided. We recently had the Leader of the Labor Party in Queensland telling the people of Mount Isa, Cloncurry and other regional towns and cities in Queensland that he had negotiated special tax concessions with the Treasurer for people in those areas. This claim is nothing more than a flagrant abuse of the truth by an embarrassed Labor leader looking at an election. How on earth could these people be receiving a concession when before the legislation they were not paying the tax and after 1 July they will be? Those councils and shires will still have to provide the package to retain the services of these people, and who will pay? The ratepayers will pay, of course. They cannot afford to cash out, as Senator Walsh has suggested, as the cost to ratepayers would be even higher. Senator Jones —It is the highest charged State. It has the highest charges of any State in Australia. Senator PARER —Senator Jones should be supporting me. This is yet another discriminatory impost by a Labor Government against a large number of Australians who live outside the capital cities. This plus other factors, including the direction taken for the Minister for Communications (Mr Duffy) on regional television, will absolutely guarantee that at the next election there will not be a Labor member outside the Brisbane metropolitan area. Another major affected group will be charities, religious institutions and schools. The fringe benefits tax will, to name a few, apply to the housekeeper at parish churches; to church-run nursing homes; Salvation Army and St Vincent de Paul Society hostels and of course caretakers and live-in teachers at schools and school sporting facilities. Senator Maguire —What about the Catholic Family Welfare Bureau, which is calling on us to strengthen the tax? Senator PARER —I am glad Senator Maguire interjects. Senator Cooney drew attention to the Catholic Family Welfare Bureau earlier. Senator Cooney did not do a bad job. He is a good advocate, but he would have had the worst brief of his life. I am sure that, had he been in private practice, he would have knocked it back. The point about the Bureau is that so far that gentleman has not read his mauve book, because he is going to get caught. This will simply mean that church and charity groups will have less money available for the welfare, education, health and other social welfare programs they provide. These people do not fit the image of tall poppy tax evaders. I am sure that everyone would agree that these people are not tall poppy tax evaders, yet they are the ones who will be hit by this fringe benefits tax. Senator Jones —Who? Senator PARER —The honourable senator should go to the St Vincent de Paul Society. Senator Jones —It is excluded. Senator PARER —No, it is not excluded. This hastily conceived tax will give the Australian Labor Party a lot of time to repent at its leisure after the next election. Finally, I would like to address the effect of fringe benefits on the mining industry. This is an industry which has contributed much to the economy of Australia but which has suffered at the hands of governments both State and Federal. The industry has suffered in recent times at the hands of a depressed world market, some irresponsible union actions and destructive government controls. It is unable to claim legitimate business entertaining expenses for overseas customers to whom it would like to sell our products. Conditions of service in remote mining areas such as housing and transportation are an absolute requirement to get people to work in those areas. The provision of these facilities has never been aimed at avoiding taxation. It might be hard for people from the smaller States to understand that. I know Senator Jones will, because he has been up there. In the last 20 years, as explained by Senator Boswell, the mining companies have built many towns, railways, ports and so on at no expense whatsoever to the taxpayers of Australia. They have also made contributions to the economy by way of exports, payroll taxes, royalties, direct taxation, the iniquitous export duty and extortionary rail freight charges, which have been enormous and out of proportion to the demands on any other industry. Yet without the mining industry our standard of living would be close to the bottom of the list of Third World countries. For some of the mining companies the fringe benefits tax is the last straw. I know that sometimes people talk wildly and become prophets of doom, but this is not wild language, it is fact. It will remove whatever profit they were making. Some of the socialist ideologues on the other side will have a little gloat about that. What they do not realise is that their little gloat will contribute to the economic demise of our country. A company or an industry without profits cannot survive and when it goes a few hundred or a few thousand more breadwinners go, unwillingly, forced by this Government on to the unemployment benefit. Our mining resources have been described as non-renewable resources. The level of our exports depends on productivity and the costs of production. Every artificial cost, whether it be the plethora of extortionist government charges or extravagant labour conditions, reduces our competitiveness and more importantly reduces the level of our economically recoverable reserves, thus shortening the life of mines and employment life. Australia cannot afford this blatant attack on its natural resources and the next generation will have to pay very dearly for the cost of this big government with its attendant legalised plunder of our country. An enemy of Australia could not do more damage than is being done by this Labor Government. The fringe benefits tax is the final straw. Does the Government care? Does the Australian Council of Trade Unions, the author of the fringe benefits tax and the unelected government of this country, care? Of course not, otherwise it would not be hellbent on destroying the economy and putting at risk the jobs of every worker in the productive sector. Without these people there cannot be a public sector. I am on the board of a small underground coal mine at Blackwater in Queensland. I have no financial interest in the mine. I am on the board for two reasons: Firstly, it enables me to have a continuing understanding of the difficulties of mining. Secondly, and more importantly, because in co-operation with the miners' union, the mine, which was being closed, was put back on its feet. The miners readily agreed to more productive work practices and, as a result, there are now about 250 families in Blackwater which would not be there today but for that co-operative effort. This tax places this underground mine and other mines throughout Australia in a totally unprofitable position. To a mine in such a condition this tax is a new export duty which varies between $1 and $3 a tonne, depending on whether the mine is an open cut mine or an underground mine. If this is not discrimination against a major export industry, if it is not discrimination against a labour intensive underground mine, I do not know what is. Senator Walsh, surprisingly to me because he is usually very balanced on these matters, said a few days ago that companies should cash out their fringe benefits. For tax evasion type fringe benefits, nobody would disagree with that. I would not disagree with that. For the mining areas, this is simply not possible. As mentioned earlier, the provision of cheap housing is essential to obtain and retain employees. It is interesting to note that when there were layoffs in New South Wales coal areas, men were recruited into the Bowen basin. Even with the so-called fringe benefits, they returned to the Hunter Valley when jobs picked up. So much for the massive fringe benefits that are paid to mining people! I received a telex which was also sent to the Prime Minister (Mr Hawke), Senator Button, Senator Walsh and others. It was sent by the South Blackwater mine, a mine with which I have no involvement whatsoever, and part of that telex reads: Should the tax be applied, we shall have to consider either passing it on to the employees or closing the underground operations, fully recognising the potentially disastrous industrial ramifications of either course. Only two years ago your Government through Minister Walsh sensibly initiated exemption legislation to the coal export duty that helped the continuance of underground operations at South Blackwater and offered the mine prospects of ongoing but still very marginal viability. Now we are faced with the dichotomy of the proposed housing tax wiping out most of that benefit. I repeat: As far as the mining industry is concerned, this is no more or less than a new export duty which is not even tax deductible. The old export duty was tax deductible. In conclusion, this is the most divisive, unpopular, unwanted, inequitable tax package ever foisted on the Australian public. Administratively it is going to be an unworkable nightmare, as attested to by employees of the Australian Taxation Office who contacted my office after attending an in-house seminar and said: `We hope this thing does not go through because we are not going to be able to administer it'. This came from Tax Office employees. Senator Walters —The accountants are up in arms. They say they cannot administer it. Senator PARER —The accountants, of course, will gain if the industry can afford to pay them the extra money. We have middle Australia, the National Farmers Federation, the Australian Small Business Association, Mr Bob Ansett and others saying that they will not pay it. Since the issuing by the Tax Office of the massive mauve booklet, my office has been inundated with calls from people saying they have thrown their books in the rubbish tin. We have heard honourable senators opposite expressing shock and horror that Mr Ansett should publicly express his feelings, yet we have not heard a peep about the day of protest yesterday when 500,000 people were forced to down tools by militant trade unions. We have not heard a peep about the 30,000 members of the coal miners union who are going out on strike tonight for 24 hours to force a productivity case. Bob Ansett's protest is nothing compared to the effect of that industrial action on this staggering economy. The Government has on its hands a tax revolt of a magnitude never before seen in this country. It is self-inflicted, all because of a failed tax summit and a deal made in the middle of the night by the ACTU and the emeritus President of the ACTU who is now the Prime Minister of Australia. Senator MacGIBBON(Queensland)(9.15) —After seven months it has finally arrived-a package of four fringe benefits tax Bills freshly guillotined through the House of Representatives with the traditional respect for other people's feelings and views that the Australian Labor Party is known for. What did the Government promise? It promised a fairer and simpler tax system which would encourage investment. What did we get? We got four Bills, 151 pages of legislation, and 170 pages of explanatory memorandum. This legislation is extraordinarily complex. It is legislation which actually perverts the basis on which tax is levied at present. It introduces new taxes. It is a set of Bills which positively incite and encourage people to break the law, which should be the direct converse of any legislation we introduce. It is absolutely devastating on the business and commercial world in Australia. Would a Labor Government lie to us? Damned right it has on this when it talks about it being simpler and fairer and encouraging investment. I have no sympathy and no one on this side of the House has absolutely any sympathy at all for people who cheat on their proper, legal tax liabilities. It is common knowledge that taxes have been evaded by people having their income understated, by taking a lower salary or a lower set of wages than the market in fairness would pay them for a position, and taking the balance, the reduction in the income, in the form of other benefits, whether in the form of a car, a house, paid holidays, paid trips, school fees, loans at cut rates or things like that. None of us support the artificial reduction of income and thereby the artificial reduction of the liability to pay tax that is implied there. It is morally wrong for that to be done. But the point that the Labor Party cannot understand is that it is also legally wrong under the legislation that is on the books at present. All it needs is the courage and the backbone to apply the law as it stands at present. This damned Government has had three years to do that. It cannot evade that responsibility. It has had three years to see that the laws were applied, but it has not done so. It has now come in with this blunderbuss legislation which is going to have a devastating effect across the whole of the commercial world. I concede that there are some grey areas that cannot be covered by such a simple approach as I have put forward, but those areas can be covered by relatively simple amendments to the legislation we have at present covering income tax. My first criticism of this legislation is that it is just cowardice and incompetence that the Labor Party does not apply the law as it is on the statute book at present. In turn, it has taken counsel of its fears, prejudices and phobias and had a lash at the whole of the business community of Australia. Incidentally, it has unleashed the dogs in the Australian Taxation Office-people who want to be locked up the whole time because their whole function in life is to tax and tax until there is nothing left in the community. It takes a strong, intelligent and informed government to keep the Australian Taxation Office in check, but the Australian Labor Party has never had the ability to sit on the Taxation Office and to get some fairness and justice into its rapacious claims. The second point I have against this legislation is that the fundamental basis upon which income tax is levied in Australia is and always has been that the person who receives the benefit pays the tax. This legislation turns that principle entirely on its head. Under the proposed legislation, the person who receives the benefit will not have a tax liability; the person who provides the benefit is the one who will specifically pay. There is no reason at all for that, because the present law-I am sorry that, as a non-lawyer, I have to lecture members of the Labor Party all the time on points of law, but they are incredibly thick in this area-specifically forbids barter deals. One cannot avoid one's business obligations with respect to income tax or company tax liabilities by entering into barter deals. That is another buttress against people who are evading their true tax liability. I do not agree with this shifting of the onus on to the provider instead of the person who gets the benefit. It is fundamentally wrong and fundamentally unworkable in the longer term in the commercial world. The third criticism of this legislation is that the cost of imposing it is out of all reason for the benefit it might bring to the Taxation Office. I do not have any doubt that at the end of the day the tax collection figures will be less than they are at present, because the people who are cheating will have more avenues by which to cheat under this complex legislation than they have under existing legislation. While I am talking about cheats, I would like to talk about the Labor Party. I believe that members of the Labor Party have been blatantly dishonest in the way they have marketed this legislation. They have brought forward 151 pages of legislation and 170 pages of explanatory memorandum and their Treasurer (Mr Keating)-the world's best Treasurer, the undertaker-has reduced the whole thing to one simplistic sentence. To justify 151 pages of legislation he has said to people: `If I pay income tax, you should not get a tax-free car'. He has reduced 151 pages of legislation to a trite half truth like that. Possibly that is all the Treasurer can understand about the legislation. I would not be surprised about that. A very large number of people in the Liberal Party and the National Party want to speak about this iniquitous legislation. I pay full tribute to my colleagues who preceded me in this debate and who have dealt with the many anomalies in the legislation, particularly those who have dealt with the anomalous situation of charities and beneficial welfare organisations. I include in that group bodies such as the National Trust, which work for the corporate good of the community without in any sense at all getting any personal reward or benefit from it, and which will be penalised under this new legislation. Under this legislation, when people are moved to support the charities in society, instead of the benefit of their generosity going to the people they intend to receive it, it will go into the rapacious hands of this Labor Government and the Taxation Office-which is not the reason why people make gifts in the first place-but I do not think the general public realises that at present. I wish to take a couple of minutes talking about two areas in which this legislation will impact. The first is rural Australia, and the second is transport costs for the whole of the Australian community. Senator Boswell spoke at length on rural Australia, and I would like to add something to his remarks. I make a declaration here that I have a personal financial interest in this area, being involved in primary production. People who live in rural Australia, remote from the towns, enjoy a lifestyle which is quite distinct and quite different from that of the overwhelming number of Australians who live in suburbia. By and large, the houses that they live in are built to a very much lower standard of comfort and convenience than the average house in suburban Australia. There are good reasons for that. It costs a lot to haul materials two or three hundred miles or more from a railhead. It is very hard to get skilled tradesmen. Bush carpenters literally are that. They are people who seldom have had any trade training. Bush painters and plumbers are very rare; generally work in this area comes under the umbrella of odd jobs. The amenities in those houses are far fewer than those in suburbia. There is no television in most of rural Queensland; there is no telephone. The electricity supplies are very indifferent and variable. Electricity is usually generated on the property. It is certainly not part of the main grid. Mail services do not exist and people might have to drive to the nearest town to pick up their mail. The availability of milk and food supplies at short notice are facilities that residents on properties and farms in distant areas just do not have. All this adds up to a major inconvenience and to very real factors in those residents' costs of living. The employees, by and large, share the same conditions as the owners or managers of the properties. Just as standards vary for owners, they vary greatly for the conditions under which employees are employed. They vary from the one extreme, where the employees live in parity with and almost as members of the family, to the other, where the employees are quite separate from and have a demonstrably lower standard of living than the owner of the property. But certainly an employee on a farm or cattle station is living in a house, a hut or a set of quarters of a standard that is very much below what the average Australian urban dweller lives in. I venture the opinion that a large number of people in towns and cities in Australia would not consider, let alone live in, the conditions in which many employees and owners of properties live. These people live in sub-standard accommodation in comparison with that in urban areas. They may get some food from the property. If a beast is killed on the property, everyone shares in that because that is the custom of the area. They may get the use of a vehicle to go into town at the weekends, when someone is sick, to pick up supplies or to do some personal business; they may get some fuel. But the characteristic of their lifestyle is that it is not regulated, it does not conform to a set award such as those which unions impose on employees in industry. Employees live under conditions which are mutually acceptable to the manager and to them, which vary from property to property. This legislation sets out to tax every possible `benefit' that these people might receive. It will tax that benefit in the hands of the provider, not the recipient. Let us spend a moment looking at the practicalities of this. Firstly, let us deal with the place of residence. How are we to set a fair market value for a hut on a cattle property in the middle of Queensland or the middle of Western Australia? Where is the market that we are to judge it against? There is no way it can be done. That value is a notional figure. To give people a concession because they live in a remote area really is tokenism at an insulting level. Let us take electricity. I think most properties generate their own electricity. How are we to separate out the fraction that goes to supply a 60-watt bulb in a single room in a men's quarters or something like that? Even if it is on the grid and is part of the supply from the generating authority, there is only one meter on a property, only one input, and the whole property is served off that point. How are we to set a fair figure for the benefit an employee receives? One has only to state this to see how stupid and impractical the whole proposition is. How are we to assign a value to food when a beast is killed? If it is not given to the employee, is it to go bad because there is not enough storage space? This is so impractical that there is really not much point talking about it. The net effect of this legislation will be a great increase in hassle for the property administration. There will be real costs involved here, at a time when rural Australia is on its knees fighting for its markets. The sad part is that we are not dealing with cheats in this environment. Neither the property owners nor the employees are tax cheats. They are not the people who are ripping off hundreds of millions out of smart share trading operations on the Australian market that the Labor Party supports and encourages, because those people are the big donors to the Labor Party campaign funds; no, these are average little Australians struggling to make a living doing an essential service for this country. Let us look at another point-the provisions in this legislation for the use of vehicles. This is one of the most farcical things that could ever have been foisted on the property operators. I refer to the requirements that a log book should be kept for a four-wheel-drive vehicle that a person is to run on the property. One has to keep a log book and every day one uses that vehicle one must enter the date of the journey. One must enter the odometer reading at the beginning and the end of the journey. One has to enter the number of kilometres travelled and the purpose of the journey. If one has to take some bales of hay to feed some weaners in a distant paddock one will have to enter the name of the driver and the date on which the entry was made. One has also to enter the name of the person making the entry. It all has to be in English and signed by the person making the entry. People like Senator McKiernan would have difficulty in doing that, but I can imagine some sleek bureaucrat in Canberra thinking that would be a simple exercise. I guess that no one in the Labor Party today has ever worked on a property. I certainly have. I have been up before dawn and out mustering cattle all day long. It is absolutely impossible to put those impositions on someone who is working in the country. One does not carry log books and ball point pens in the glove boxes of four- wheel-drive working vehicles on properties. One does not have odometers that work in most cases. Farm vehicles are rough vehicles. The concept that one can neatly say how many kilometres one has travelled each day is frankly for the birds. One does not have time to keep those sorts of records. One works from sun-up to sunset doing tasks that often arise spontaneously. I go back to the late 1960s when I remember a friend of mine on a neighbouring property, one of the family ones, who, in a great drought, was driving about 18 hours a day. That was all he did for months and months, and he put up a huge mileage. He just filled up his water tank on the truck and kept the petrol tank full and drove from before dawn until about 11 o'clock every night for months. To ask a person like that, who is coping with a drought, to keep a log book with all this stuff in it on a daily basis is so impracticable. One cannot believe that any sane adult would propose it. It is all a nonsense; it is meaningless. The vehicle is there on the property because it is a working vehicle. It is not there to take guests from town out duck shooting. It is not there to take employees or the owners 500 or 600 miles into town. It is a simple working vehicle. Why should we load people up with over-legislation and over-regulation? But that is the obsession of the Labor Party. It wishes to reduce us all to grey uniformity by regulating and grinding everything down. The second thing I want to talk about is the effect that this legislation will have on the Australian transport industry. This legislation will result in great increases in transport costs. It was said some years ago that at least 25 per cent of the gross domestic product of Australia goes in transport costs. If that is true, and I believe it is, we have a major interest in getting our transport costs down as low as possible to be competitive. But what does the Labor Party do? It has a crack at the time-honoured practice of travel by airline employees and former airline employees by taxing that benefit. I happen to believe that if someone works in an industry and has contributed a lifetime to that industry and it has been the practice to give free travel when a person retires or while working for that industry, that is it. I think the airlines take it a little far because I do not see that that benefit should apply to girlfriends, fiancees, parents, brothers and sisters. I believe that the benefit should be restricted to the person concerned and spouse. I do not think that it should be open ended, but it is not my business to say that. Fundamentally, it is the business of the management of the airline to decide what practices it wishes to follow for the benefit of its employees. If the airline says, `If you work for us for 20 years you will be entitled to five trips a year within Australia or one trip overseas', that is the airline's business. It is not the business of Government to sit on that airline. The airline can make the decisions as to how it wishes to carve up its cake. Now the Government is saying to the airlines that all the travel undertaken by its employees will be taxable because the Government believes that it is a benefit. The airlines have said; `Very well, we will pay the benefit'. The figures I have seen in the Press-and they have not been rejected-are to the extent that this will cost the Australian airlines, Trans-Australia Airlines, Ansett Airlines of Australia and Qantas Airways Ltd, between $11m and $13m annually. That is their estimate at present. That does not come out of thin air. The person who will pay that sum will be the poor Australian traveller who wants to fly between Sydney and Perth, and the rest of it. I hope the people in Perth, who have the highest air fares in Australia, get stuck into this socialist Labor Government and say: `What the hell are you doing to our fares by billing them up like this?' This is an absolutely unreasonable thing to do. The House has before it a set of four Bills. I believe that it is some of the most tragically misguided legislation we have ever seen before this Parliament. It shows no understanding of the practicalities of the Australian commercial world. I do not believe one can reduce the commercial world to simple logical precepts in which everyone does exactly the same thing. I believe a government must strive for fairness and equality between all sections of the community. But where we have practices that have been enshrined for generations-the way people live in the country areas in Australia, the way people work for airlines and the rest of it-there is no point in upsetting them for no benefit to the public purse. The Government is introducing some very new principles which turn the basis of a taxation liability from the hands of the recipients to the hands of the providers. We are creating a new tax because the taxation rate on this is at the company tax level which is higher than the personal income tax level, or it can be in some cases. Many things that formerly were not liable for tax are now to be taxed, so the Government is creating a new tax base. Knowing governments, I believe the certainty is that that tax base will be expanded in future. What we are doing at the end of the day is increasing costs to Australian industry and commerce at a time when we cannot afford that imposition. Senator VANSTONE(South Australia)(9.38) —The Fringe Benefits Tax Assessment Bill and allied Bills that we are now debating make an absolute lie of the claim of the Treasurer (Mr Keating) that he was going to introduce a taxation system into this country that would be a simple and fair one that could be understood by all. As Senator MacGibbon pointed out, this package of Bills comes to us freshly guillotined from the other place. It is meant to be simple legislation but contains pages and pages of clause after clause of provisions and explanations. Before I deal specifically with this legislation, I wish to refer to some comments made earlier in the debate by Senator Maguire, a Labor senator from South Australia, my own State. If I understood the good senator correctly, he said that the Opposition position on this package of Bills shows how ready, willing and able we are to get into bed with any particular interest group. Senator Brownhill in my view clearly outlined the manner in which Labor looks after its own vested interests, namely its base support, the unions. One can ask any average Australian how concerned he or she is with the unions and the benefits they get. I suggest that, if Senator Maguire wants to concern himself with those who care for vested interests, let him first look to his Party's relationship with the unions. The second point which I would like to make with respect to Senator Maguire's comments is that, as I understood him, this legislation was going to get those who are cheating the system. What has not been explained, by Senator Maguire or others, is why the Government cannot get at those who are cheating the system by using the current tax legislation. As Senator MacGibbon said, we on this side of the chamber have no sympathy with tax cheats, but that does not mean that we believe that this legislation is the answer in that respect. Nor, as Senator MacGibbon pointed out, will this legislation specifically affect tax cheats. It will affect thousands of average Australians whom one could not in one's wildest dreams classify as tax cheats. It will affect thousands of rural Australians whom one could not classify as tax cheats. The simplicity of this package of Bills has been referred to by most of the speakers on this side of the chamber. It is an absolute joke. It will mean more complications for business, for the user of the benefit, and for the poor old pay as you earn taxpayer who happens to have the use of a car as part of his salary package, and as Senator MacGibbon capably outlined it will mean an enormous administrative burden compared to that which the taxpayer may have now. I agree with Senator MacGibbon that this package of Bills just reflects the cowardice and incompetence of this Government in not sorting out the Australian Taxation Office with the laws which are already in place, and that this Government wants, through this legislation, to get at the business community and to get what it can through it. If this legislation is so easy to understand-this is one of the criteria set by the Treasurer -and endorsed by the majority of Australians, which is another criterion set by the Treasurer, why is it that my electorate office, and the electorate offices of many other senators and members, are being flooded with telephone calls and letters from concerned Australians who are frightened and unsure about what will happen? Let us remember that we are late in May and a new tax year begins very soon. I seek leave to incorporate in Hansard just four of the letters which I have received. The Minister who was previously at the table has seen these letters and has agreed that that can be done. Leave granted. The letters read as follows- 187 Broughman Place North Adelaide 5006 South Australia Telephone (08) 267 1478 St Ann's College Inc. University of Adelaide 28 April, 1986 Senator A. Vanstone, 150 Hindley St., Adelaide, S.A. 5000 Dear Senator Vanstone, The Council of St Ann's College requests that consideration be given to the possibility of exempting the College from the proposed Fringe Benefits Tax. This tax will greatly affect the operation of St Ann's College, which is already struggling to maintain its services to students in light of the withdrawal of Commonwealth Government assistance at the end of 1986. Since the College, as an educational institution, is allowed exemption from taxation in all other areas, it seems anomalous that it should be taxed on fringe benefits for staff who are constrained to live at the College as part of their terms of employment. St Ann's provides accommodation for 140 male and female students, 96% of whom come from rural areas of SA, other States, or other countries. These students would have great difficulty in obtaining access to tertiary education were it not for the accommodation, in an environment conducive to academic study, that the College provides. Since St Ann's is not affiliated with any religious organisation it would be disadvantaged relative to other Colleges which are so affiliated, if, as we understand, they are to be exempted from this tax. The Finance Committee of the College has determined that the costs of meeting the proposed tax relating to the Principal, the Senior Tutor, and seven other tutors would amount to approximately $15,000. This would result in an increase of $3.57 per student per week in fees, which would cause considerable hardship. Thirty-five per cent of students here receive TEAS and thus are from necessitous circumstances. Most others live in College only through considerable sacrifice on the part of their families, who recognise the value of an investment in their children's education in a country much in need of trained people. The increase in costs just outlined would be in addition to the costs which must be recouped to cover the withdrawal of the Commonwealth grant. Together these two charges may well force access to College out of the reach of many students of low to moderate means, with the regrettable result that the access to tertiary education which it provides will return to being the prerogative of a socio-economic elite. The disadvantage would be greatest for those from rural areas, who already suffer from diminished educational opportunities relative to city-dwellers. I ask that this matter be given your urgent and serious consideration. Yours sincerely, (Dr) O. Mayo Chairman, Finance Committee Telephone (08) 218 7215 Lord Mayor's Room Town Hall Adelaide South Australia 5000 23rd May, 1986 Senator A. E. Vanstone, 100 King William Street, Adelaide. 5000 Dear Amanda, FRINGE BENEFITS TAX While Local Government has made submissions on various aspects of the proposed legislation, I would like to particularly draw to your attention the implications for Local Government on the use of vehicles. A range of Local Government employees are required by the nature of their employment to be on call and need a vehicle to attend to emergencies and maintenance tasks. In the City of Adelaide for example, eleven officers have the discretionary private use of a vehicle as part of their remuneration and it is recognised the proposed tax is aimed at this situation. However, 45 other employees have the use of a vehicle for the journey to and from work only because they are on call at home. It is estimated that the cost to the City of Adelaide will be $35,000 for those officers who are required to be on call and therefore must take a vehicle to and from work. This represents a direct extra cost on servicing those municipal functions which require attention out of hours. Taxation of this kind is inconsistent with the general principal of the different spheres of government exempting each other from taxes, e.g. Commonwealth properties are generally exempt from rates and similarly Local Government is generally exempt from Sales Tax. I would therefore urge you to seek appropriate amendments in the Senate to the proposed legislation so the Local Government is not penalised for the essential use of vehicles attending to maintenance and emergency tasks. Yours sincerely, James Jarvis THE NATIONAL TRUST OF SOUTH AUSTRALIA AYERS HOUSE 288 NORTH TERRACE ADELAIDE SOUTH AUSTRALIA 5000. PHONE (08) 223 1655 Box 61 Rundle Street Post Office Adelaide, S.A. 5000 Ref 5.18 BTH: CQ 22 May 1986 Senator A E Vanstone The Senate Parliament House Canberra ACT 2600 Dear Senator, PROPOSED FRINGE BENEFITS TAXATION I am writing on behalf of The National Trust of South Australia to express our deep concern at the proposed measure affecting the provision of accommodation to the wardens of our properties. This is contained in the Fringe Benefits Taxation Assessment Bill 1986, as introduced into the House of Representatives on 2 May 1986. As you know the Bill is designed to tax benefits as specified, provided by an employer to an employee in relation to their employment activities. We are dismayed that these provisions will have an unintended and seriously detrimental effect on the heritage conservation activities of The National Trust of South Australia. As you may be aware The National Trust of South Australia has in its care some 102 built, and 34 natural heritage properties. Whilst some of these properties could be extremely valuable from a commercial aspect, more importantly they are invaluable from a national heritage point of view. To prevent vandalism and monitor the condition of the buildings the Trust maintains a level of surveillance where possible at the sensitive properties by the installation of live-in wardens. In return for these simple but essential duties and for supervising visitors the Trust provides the wardens with free accommodation in the property. From our understanding of its provisions it appears that this rent-free accommodation will be caught within the ambit of the Bill under Clause 137 defining salaries or wages and Clause 148 defining benefits. Trust earnings from the properties for which it cares are severely restricted by their nature and the 18 properties in which we have had to install wardens merely give an acceptable living standard for the incumbents to provide these essential services. There is only one paid executive member of staff in the Trust. Together with two specialists, through some 80 branches and committees, they service the thousands of volunteers who are engaged in operating and administering the Trust throughout the State. It is hard to believe that the proposed legislation is intended to place further financial burdens on a non-profit volunteer organisation which already has the greatest difficulty in finding the large funds necessary to undertake a major portion of the State's heritage conservation work. We raise these implications with you as we feel sure you will agree that this is not the intention of the legislation, and we ask you to support our position by moving an appropriate Amendment. Yours faithfully B. T. Hodson FRINGE BENEFITS TAX TO SLAM HOTEL/MOTEL WORKFORCE The fringe benefits tax on employee accommodation and meals will increase the nation's hotel and motel tariffs and charges by an average of 9.6 per cent. ``This imposition will force hotels and motels around Australia to generate this additional revenue in order just to pay the so-called in-house fringe benefits'', said Graham Couch, executive director of Flag Inns Limited. ``The average accommodation business demands 24-hour, 7-day a week onsite management. Essentially, this means personnel must reside on the premises in order to effectively provide the full services offered by the business and demanded by the consumer. Yet the Government wishes to put a further tax on this service. ``As the tax is non-deductible, a measure which in itself runs counter to section 51 of the Income Tax Assessment Act, the industry will need to derive an additional $150 million in order to meet the tax. ``Tariffs and charges will need to increase by 9.6% across the board to cover the cost. This, together with the increase of labour and all other costs of operations, will result in a massive inflationary increase in accommodation and hospitality costs of some 20% in the next twelve months. This will have horrendous consequences for the economy and for our competitiveness in the international marketplace. ``The tax is on labour costs and not on `tall poppy' fringe benefits, as was the initial proposition. ``Following a 30% reduction to restaurant turnover as a result of the non-deductibility of entertainment costs, this legislation, if passed, will further reduce the labour workforce and send many businesses, which are only just surviving with the record highest real interest rates, to the wall. ``Revised treasury estimates that this tax will raise $570 million are grossly understated. In one instance, the tax on a 44-unit motel property in Western Australia is calculated to be $104,482, necessitating an intolerable increase of 62% in tariffs and charges. This estimate excludes costs of borrowing funds to pay the tax. ``In the interests of stability of the economy, reduced inflation, and growth in the workforce, we urge you to oppose the legislation.'' Flag Inns Limited represents 402 properties and 20.5% of all hotel and motel rooms in Australia. It is the largest accommodation group in the Southern Hemisphere. Graham C. Couch Executive Director Flag Inns Limited Senator VANSTONE —I will not deal with these letters in detail because they have been incorporated so there is no need, but I will just refer quickly to them individually. The first is from St Ann's College Inc., a university college in Adelaide. That letter outlines and reflects the concerns of the university collegiate housing groups around Australia. They are very concerned about what will happen to them, with the extra costs which this tax will put on them, and with what effect it will have on the fees that may have to be charged to students using that college. The second letter I wish to refer to is one I have received from the Lord Mayor of Adelaide. This letter draws a distinction between those officers working for the City of Adelaide and who have the discretionary private use of a vehicle as part of their remuneration. He points out that there are 11 such officers. He also points out that there are 45 other employees who have the use of a vehicle after hours, not as a part of their salary package but because they are expected after hours to be able to attend to council business when problems arise. It seems ludicrous that these people will be affected in this way. The third letter I wish to refer to is one which I have received from the National Trust of South Australia. It is concerned-this letter reflects the concern of presumably National Trust and equivalent bodies around Australia-with the consequences of their need to have live-in wardens in the residences which they are protecting. The fourth letter is in fact a telex from Flag Inns Ltd. That telex reflects the very real concerns of the motel industry in Australia. One could go on and seek leave to incorporate in Hansard letters from each individual group which is concerned and has a fear of the way in which this tax will operate and how it will effect the whole industry as well as the individual people writing the letters. If this tax is so easy to understand and is endorsed by the majority of Australians, why is it that the rural sector is so up in arms about the introduction of it, as Senator MacGibbon and Senator Brownhill so capably canvassed in their speeches earlier. I have had many calls and letters of concern from people in the rural sector. They are concerned at the effect this tax will have on so-called fringe benefits which people working for them receive, not because it is a fringe benefit in perhaps the traditional sense of the word, a discretionary part of their income but it is a fringe benefit which they receive as an absolute necessity because of the geographical location, for example, of where they live. There may not be alternative housing for people in those places so housing has to be provided. There is no choice. It is not a discretionary fringe benefit which is paid to rural people as a non-cash benefit to supplement their salaries to evade tax; it is a fringe benefit which they get as a consequence of the nature of the industry in which they work. Another industry which will greatly be affected by this particular tax is the airline industry. Again, there is no point in my outlining for honourable senators present the effect that this tax will have on that industry. It has been amply outlined before. I would like to make a brief reference to the effect on the car industry. A variety of figures have been quoted about how many people will lose their jobs. I do not want to attempt to put my finger to the wind and give a numerical guess on how many people I think will lose their jobs in my State because of this tax. Suffice it to say that it is not a concern expressed only by members of the Opposition. This is a concern expressed by the Labor Premier in my State, Mr Bannon. While on the topic of Labor people who may have some concern with this tax, I recall a media clipping several weeks ago saying that Senator Georges, after his suspension from the Australian Labor Party, made a comment, the import of which was, as I understood it, that the Labor Party needed to do a bit of growing up, and that that growing up would take place when the Labor Party could see its way to giving some freedom to its members of parliament in votes. As I understood the Press release the point which was being made was that the time had come for people elected for the Labor Party not to simply be seat warmers and go along with the Caucus line but to have some individuality. In this respect, I would be interested to see what South Australian senators will do. I note that Senator Maguire has spoken in this debate, and I note that Senator Foreman, Senator Elstob, Senator Bolkus and Senator Crowley have not spoken in this debate. It is disgraceful that they have chosen not to do so. Since the question of whether this tax will affect their State has been raised in such a public manner by people on both sides of the political spectrum, I would have thought that it would be the proper thing to do for a senator for South Australia, Liberal or Labor, to address this question at least, particularly because there seems to be indecision within various groups in the Labor Party about this. I mean by that that the Labor Premier in South Australia does not want this tax to proceed in the manner in which it apparently will. The next point which I would like to address is the burden which this tax places on the business community, a community we are looking to, or should be looking to at the moment, to thrive, to assist us to get out of the mess which we are in with our balance of payments. We should be doing everything that we can to encourage a thriving business community in this country. Instead of that, as Senator MacGibbon pointed out, a tax which one normally thinks is paid for by the person receiving the benefit is now to be paid by the person who is giving the benefit. I think we should ask ourselves why the Government is asking the business community to do what the Australian Tax Commissioner should have been doing for donkeys years. If honourable senators speak to a variety of accountants-I have spoken to them in Adelaide and I do not assume that they are a different breed to those in other States-they will tell them that the pursuit of the taxable element of the non-cash portion of salary packages has been negligible. In other words, they say that the Commissioner has been absolutely slack. They believe that a significant amount of tax that should have and could have been collected under the existing tax laws has simply been ignored. I do not know whether that was by direction. The inference is that we have a slack Taxation Office and this Government should be bringing it into line and pursuing these benefits through existing laws. That does not seen to be too much to ask. The Commissioner seems to be a keen sort of gentleman. He sent out his much publicised inquisitorial letter before the legislation was passed and before the last horse trading had been done with the Australian Democrats. We still do not know exactly what will happen. The Commissioner wrote off with great zeal inquiring into matters relating to legislation which had not yet passed this chamber. As he seemed to have such zeal in that area, I cannot adequately explain why he-euphemistically speaking his Office-seems to have lacked in the past the zeal to use all the powers that he has under the existing legislation. Tonight I would also like to refer briefly to the position of the taxpayer whose non-cash portion of his salary will now be subject to this tax. As has been amply outlined, if that person uses a car, he or she may well have an enormous burden of paperwork and log books. In an administrative sense this measure seems to be a most inefficient way to proceed. I understand that some employers will-in fact I understand that some already have-outline plans to give their employees a choice. Quite simply they will say: `The situation is this: The cost to us is going to go up by so much. That means that either some of you go or some of your benefits go'. Employers will give their employees the choice. What a dreadful position for those people to be put in. If the Government had been doing its job in the first place and if the Taxation Office had been doing its job in the first place, we would not be in this position and the Government would not be suggesting this ludicrous package referred to as the fringe benefits tax. In approaching my conclusion I return to the question of simplicity. As I have said-I simply want to reinforce it-the implementation of this package will be a nightmare for business, a nightmare for accountants and a nightmare for a number of PAYE taxpayers who will be involved in the administrative mechanisms for the collection of this tax. It makes the claim of the Treasurer that he wants to reform the taxation system so that it is a simpler and fairer system an absolute joke. The last point I wish to make relates to the Australian Democrats and their role in this matter. As we all know, their slogan is that they want to keep the bastards honest. To me and lots of other Australians that means that they will keep people to a particular standard. If that is what the Democrats are on about and if I were not a committed Liberal, I might be induced to vote for them, but the trouble is that their standard keeps changing. So day by day one does not really know what they will keep the particular government of the day to. Their standards change according to what bargain they can strike with those who are in government at the time. I will not go so far as to call them the prostitutes of politics; they are simply horse traders. In my mind there is no policy or principle that guides the Democrats. Their claim of keeping the bastards honest is a lot of rubbish; they are simply horse traders. In my view Senator Chipp should read the open letter addressed to him in the media-I believe it was in the Australian-and devote a considerable period to reflecting on those remarks. There are many Australians who are sick to death of a few people who have been elected to the senate wavering around, not on principle, but simply on the best bargain that they can strike. On that note, I will conclude. There is nothing else I want to say that has not been said before. Senator WALTERS(Tasmania)(9.55) —This is the first opportunity that the whole of the Senate has had to debate the very real problems facing the Government and the country as a whole. I say that because it is the first time the Government has admitted many things. Over the last 18 months to two years, the Opposition has been a lone voice in warning the community of the impending catastrophe facing our nation. It has now been joined, belatedly, by the Labor Government. In a flash of genuine concern-I believe that it was genuine-the Treasurer (Mr Keating) told us that his plans just have not worked. He said that our economic situation was a disaster, that Australia has fallen into a hole and that our economy now equals that of a banana republic. He told us that we cannot go on living the way we are when we are not earning enough to supplement that lifestyle. At last the Treasurer has told Australians that. In the past we were told by the Government: `She'll be right, mate. There's a J-curve just around the corner and as long as we all continue to abide by the wages accord we will continue to receive full wage increases in line with the inflation rate'. Even though the productivity situation was pretty dicey, we could do that. After all, the J-curve was just around the corner. We were told that because productivity had risen in some industries we could all ask for a 3 per cent productivity rise in the form of superannuation. Indeed, the Government attempted to intimidate the Australian Conciliation and Arbitration Commission in that way. Every time the Opposition warned that these policies would be a disaster, the Government ridiculed it and the media said that it was just being political. So the man in the street was lulled into a false sense of security and he spent up big on expensive imports. The first warning came when the value of the Australian dollar dropped and interest rates went up. However, this was all ignored by the Government, which kept telling the Australian people that those high interest rates would not last long. It said: `Do not forget that the J-curve is just around the corner'. Meanwhile, the dollar continued to fall and interest rates continued to climb. Then housing money started to dry up. Who would lend money at 13 1/2 per cent when he could get 20 per cent? Not many. The J-curve was still around the corner but it had not arrived so the Prime Minister (Mr Hawke) put up the interest rates on housing loans to 15 per cent. The Opposition continued to issue warnings. It was still a lone voice saying: `Things have got to change. The Government cannot continue to hide its head and live in a fool's paradise'. We could not afford the Government's generosity in its agreement with the trade unions about the 3 per cent productivity claim when there was no productivity rise across the board. The crunch finally came when the latest balance of payments figures were released. We found that what the Opposition had been saying over the past two years was all too true. Mr Keating's screech of anguish was heard all over Australia and then there was the refusal by the world's best Treasurer to say anything for 24 hours. It did not matter who tried to interview him, he was saying nothing. The world's best Treasurer declined to be interviewed. Finally, there was the admission that the J-curve would not arrive and that Australians must do something about it. Indeed, it was stated that we were a banana republic. Of course, that did not do much for our Australian dollar. But the Prime Minister, all the way from China, tried to drag the Treasurer to his feet. The best that the Treasurer could dream up was to say that it certainly was not his fault. He said that the reasons were, firstly, that the nasty Opposition had left him with a big deficit three years ago; and, secondly, that the prices of all our normally reliable trading goods had gone down. He said that that was what was wrong; it was not his fault, but the prices of all our major trading goods had dropped and there was nothing he could do about that. He said that, after all, his policies were still all right, although the 3 per cent productivity gain might have to be delayed-at least temporarily. Then he said that, even though he was correct, the tax cuts that he had promised for 1 September might have to be delayed-but of course only temporarily. But of course, he said that the fringe benefits tax, that we are discussing tonight, just had to go ahead because the Government has already spent that money. After all, it needs that money to pay the interest on its enormous debt; that is why this tax has to go ahead. First of all, let us just briefly examine the two claims by Mr Keating. The first was that what happened was really not his fault but the fault of the nasty Opposition that left him the debt. I will use the deficit figures for the years 1975-76 to 1985-86. All of these figures are in 1984-85 dollar terms so they account for inflation. In 1975-76, when Gough Whitlam left us the mess that he did, Australia was $7.9 billion in debt in 1984-85 figures. The next year, the figure was $6.4 billion because the Fraser Government had come into power. The figure then went down to $5.4 billion, then $5.9 billion, then $3.2 billion, then $1.6 billion in 1980-81. In 1981-82 we were only $0.7 billion in debt. In 1982-83 it blew out to $5.1 billion because we were facing the worst drought in the nation's history. What has happened since then, when we left that debt to the Treasurer? In 1983-84 the figure was $8.5 billion. Even though it had rained and the drought had broken, it went from $5.1 billion to $8.5 billion. In 1984-85 it was $6.7 billion. So, having got rid of the fallacy that we left the Labor Government with a large debt, let us look at the second reason given by the Treasurer-that the prices of all the things that we export have fallen and that there is really nothing that he can do about it. Of course, there is a heck of a lot that we can do about that. Our main exports come from our rural areas. Our competitors are New Zealand, the United States of America and the European Economic Community. One would hardly call them Third World countries that rely on slave labour. Our rural industries are acknowledged to be the most efficient in the world. They certainly can compete, if only the Government would keep off their backs and let them get on with the job instead of stifling them at every turn. I will just give an example of what I mean by that. I gave the figures to the Minister yesterday. Let us look at the problem of the cost of meat inspectors in the meat industry. In Victoria for the 12 months ended March 1985 it cost the Federal Department of Primary Industry $13.7m to inspect 8.6 million units slaughtered. But the State Department of Agriculture processed 16.4 million units at a cost of $8.4m. In other words, the State could do it for 50c a head while the cost for Federal meat inspectors was $1.60 a head. That is the sort of cost that that rural industry is paying. We have a balance of payments figure that the Treasurer assures us has turned us into a banana republic with little chance of repaying our debt. What does this Government-those banana people opposite-do? In all its wisdom it decided to impose an additional fringe benefits tax. We have been told by the Livestock and Grain Producers Association that this will cost rural industry $150m. That burden of $150m will be put on that struggling industry and will ensure that, if it had been able to compete overseas through its expertise, its chances are put paid to. At a time when figures released by the Bureau of Agricultural Economics show a dramatic drop in net income per farm from $19,500 in 1984-85 to an estimate of just over $6,500 for this year-just one-third of the previous year's income-the Government has decided to add an additional cost of $150m. Last week I asked the Treasurer's office to tell me how the tax would affect the farming community. The answer I got from his staff was that they did not intend to divulge that figure. I asked whether they knew what the figure was and they said: `No comment. We have no intention of telling you what it is'. What are they trying to hide? I have done a few sums. If the Government believes that they are wrong, let it correct me and tell me where I am wrong. With regard to on-farm employee accommodation, my figure, which is a very conservative one, is over $33m, using the Treasurer's figure of $40 per week for rent and allowing the 40 per cent isolation rebate on each of the 54,000 units. There are 54,000 units of such accommodation in Australia. We all know that many of those rentals will be higher than $40, but I have used the Treasurer's figures. Not all farms are in what the Treasurer, designates isolated areas. Indeed, I suppose only half of those units are in areas over 40 kilometres from a country town with a population of over 14,000. On top of those basic on-farm units, of course there are the principal farmhouses for non-family partnerships and private companies that will also incur the fringe benefits tax, as will many other types of trusts, et cetera. But, if we take just those first two, the non-family partnerships and the family companies, which clearly are covered by the fringe benefits legislation, we are told that there are 6,118 non-family partnerships and 8,601 private companies. My figure for that is $9,103,166. Apart from on-farm accommodation, other fringe benefits have to be taken into account such as meat and other produce allowed to the farm hands. The figure for meat alone is $40.5m. But perhaps the worst part of all is the ability of the Government to tax parents for the cost of board for their children who are employed on the property. So many children follow onto the family farm. Now the father who owns the farm will be forced to pay tax on his child's accommodation and the meals supplied by the mother when that child is working on the farm. According to the little purple book, accommodation and meals will be valued at $42-which is really quite unbelievable. Then we come to consider the car on the farm. I will quote from the letter that the Commissioner of Taxation supplied to the Australian Democrats. It says: A car owned by a company (e.g., a family company) which operates a primary production business would thus be treated as being available for private use by an employee of the company if garaged or kept at or close to the farmhouse where the employee lives. In such a case, however, fringe benefits tax will not be payable if the car is used only for business purposes and the employer elects the cost basis of valuation rather than the statutory formula. Log book records of business and any private mileage would need to be kept. If all trips during a day are business trips only 1 log book entry would be required for the day. The Commissioner does not say that if that farmer or employee goes to town to pick up a bit of machinery and takes his wife along to do the shopping, that is classed as private use. According to the little purple book, it is classed as private use, and therefore, the farmer has to consider that part of the usage as private use. The letter from the Commissioner of Taxation is most interesting. It underlines the Opposition's concerns. It will be interesting reading for some back bench members. I ask leave, Mr Acting Deputy President, to have it incorporated in Hansard. Leave granted. The letter read as follows- COMMISSIONER OF TAXATION Mr Greg Smith,...28 May 1986 Treasurer's Office, Parliament House, CANBERRA ACT 2600 FRINGE BENEFITS TAX ISSUES The following notes are provided as requested on various fringe benefits tax issues that you spoke to me about as having been raised in the course of discussions with the Australian Democrats and others. Clergymen It has been suggested that the exemption from FBT of benefits provided by a religious institution to a minister of religion will not apply if the minister calls in socially on parishioners. That is not so. The test for exemption is whether the benefit (the use of a car) is provided principally in respect of pastoral duties or other duties or activities directly related to the practice, study, teaching or propagation of religious beliefs. If that test is satisfied, as it would be in the ordinary case of a clergyman working in a parish, the occasional use of the car for other than ``pastoral'' pursuits would be irrelevant. An associated matter raised by the Uniting Church is whether Lay Pastors would be treated in the same way as ordained clergy for FBT purposes. Lay Pastors may act in the place of an ordained Minister in the event of a ministerial vacancy and are otherwise appointed to assist a Minister. As a preliminary view, we think that while acting in the place of a Minister a Lay Pastor could be regarded as a Minister pro tem. On that basis fringe benefits provided to the Lay Pastor principally in respect of pastoral duties would be exempt while the Lay Pastor continued to act in the capacity of a Minister. Cars on rural properties The FBT legislation specifies that while a car is garaged or kept at or near the place of residence of an employee it will be taken as being available for the private use of that employee. A car owned by a company (e.g., a family company) which operates a primary production business would thus be treated as being available for private use by an employee of the company if garaged or kept at or close to the farmhouse where the employee lives. In such a case, however, fringe benefits tax will not be payable if the car is used only for business purposes and the employer elects the cost basis of valuation rather than the statutory formula. Log book records of business and any private mileage would need to be kept. If all trips during a day are business trips only 1 log book entry would be required for the day. Residential accommodation-caretakers, national trust buildings, etc. The FBT rules specify that tax is payable on the market value of residential accommodation provided to employees. This would include persons such as caretakers of national trust buildings, lighthouse-keepers, etc. It has been proposed that national trust accommodation be exempt, on the grounds that the tax will reduce the amount available for restoration and maintenance etc. of the buildings. It has also been suggested that accommodation provided to persons who are required to live on premises as a condition of their employment (caretakers, hotel managers, lighthouse-keepers) should not be subject to FBT. We see no merit in either proposition. The Government has resisted the comparable argument of charitable organisations that they should be exempted from the tax because it would eat into the funds available for charitable activities. (See Mr Evans' note to the Treasurer yesterday). FBT is effectively a tax on the remuneration of employees, and there is no reason in principle why the benefits of one class of employee should not bear the same tax as those of other employees. It would be difficult to give exemption to national trust bodies while holding the line on charities. As to hotel managers, general caretakers, etc., we do not see any reason why such benefits should be exempted from FBT when it is well recognised that accommodation that goes with the job is part of such an employee's remuneration. If they were to be exempted from FBT, a clear tax advantage would be established over accommodation benefits provided to other employees which will generally be taxed on a market value basis. That advantage could not be justified. There have been questions as to whether the market value rule will produce an unreasonably high FBT taxable value in some cases, e.g., where a manager is provided with accommodation in a luxury hotel or tourist resort. Here the yardstick for valuing the benefit is not what a casual paying guest would pay for accommodation in the hotel or resort. Our valuers would take the view that other parallels would be more appropriate to use in assessing the market value for FBT. For example the value of live-in accommodation of a manager of a city hotel may more appropriately be equated with rents for a reasonably comparable standard residential apartment in the vicinity charged to long term occupants. Any restrictive conditions imposed on the use of the premises occupied by a caretaker in say a national trust classified building would also be weighed in arriving at the market value appropriate to the benefit. Board and quarters under rural awards You also referred to the operation of the FBT legislation in relation to board and accommodation benefits provided to employees under the terms of an award. You mentioned that under a particular farm workers' award, board and accommodation provided by an employer to an employee is valued at $26 per week. We are aware that under a number of awards an employer is required to provide either free board and accommodation to an employee or to pay the employee an allowance in lieu of board and accommodation. Examples are the Federal Pastoral Industry Award and the Queensland Shearing Industry Award which set out the rates of pay for employees engaged in shearing. The Awards set the rate of pay for individual categories of employee on a ``Not Found'' basis, reducing the rate where meals and accommodation are provided by the employer. This reduction is the ``Not Found'' allowance, which represents the value of meals and accommodation and is treated as a living-away-from-home allowance. Where meals and accommodation are provided by the employer, the employment is said to be on a ``Found'' basis. The current rate of ``Not Found'' allowance applicable in all Australian States, except for shearers and woolpressers under the Queensland Award, is understood to be $47.35 per week. Under the Queensland Award shearers and woolpressers are from 15 April 1985 entitled to a ``Not Found'' allowance of $81.22 per week. The values specified in an award may be the result of many historical and other factors and do not necessarily represent the current value of the benefit. Values specified in different awards for similar kinds of benefits can also vary considerably. Under the FBT legislation, board provided to an employee will be valued at the rate of $42 per week (less any employee contribution). That valuation will generally be concessional. In the case of non-remote accommodation, the taxable value of the benefit will be equal to the market rental value of the accommodation (less any rent paid by the employee). The market value will vary according to such factors as the size and standard of the accommodation and its location. In many cases, the market value of accommodation provided to farm workers will be quite low. If the employee concerned is living away from home, the accommodation benefit will be exempt. B. M. NOLAN First Assistant Commissioner Senator WALTERS —I thank the Senate. I do not know how the Treasurer can come up with such a crippling tax on an industry on which we are relying to help Australia recover from our disastrous balance of payments. Basically, what is so unjust about this tax is that the Government has charged the employers for a tax on the income of the employees. Senator Siddons also pointed this out. The injustice of this is incredible. The Government knows only too well that if it taxed those who receive the benefit, the industrial relations shemozzle would put it out of business. It knows that the employers will pay up and that the unions, as usual, will not. But all Australians will pay eventually. The Hydro Electric Commission in Tasmania, with subsidised accommodation for its workers, will be charged fringe benefits tax which it has estimated to be about $1m. Where will that money end up? It will be on the electricity bill of every Tasmanian household. We have the idiotic situation where Tarraleah is considered urban but Poatina, with another hydro-electric power station, in considered to be isolated. The accommodation allowances in those two places will vary considerably. The whole thing is ridiculous. Every Australian taxpayer will pay. Charities will be covered-religious and others. We have had letters from the National Trust of Australia. That is a very fine example of an institution that will pay. Schools and colleges where teachers live in, housekeepers-- Senator Chipp —But they will not be now. Don't you know what the facts are? Senator WALTERS —If Senator Chipp does not understand that, he needs to have another look at the legislation. Teachers and housekeepers will still pay. Caretakers as a whole and a multitude of people will pay. The Labor back bench has been absolutely hoodwinked into believing that just the wealthy executives will be disadvantaged. But 65 per cent of people receive some sort of fringe benefit. It is Labor's voters who will be disadvantaged by this tax. We on this side of politics do not believe that high executives should be able to claim as much as they do. The Taxation Office is able to cover this abuse. On this matter we would agree with the Government if it were able to rectify the situation through the normal channels. We will not and cannot agree on-and we will repeal when we get into government-taxes that tax the employer rather than people who receive the benefit. The whole situation is unjust. The Labor back bench has been completely hoodwinked by its executive. I have not spoken about the way the tax affects the car industry. So many people have already spoken on that matter. The Democrats have assured us that they have done a deal with the Government. Senator Chipp is talking about it right now. They have said that they will cut the car tax by one-third. We will see what comes of that. In return they sought the written-I stress `written'-agreement of the Prime Minister. They do not trust his word, according to news reports; they have demanded it all in writing. It is obvious that the Democrats pay so little regard to the Prime Minister's word that they insist on having the agreement in writing that the tax cuts will be introduced by the end of the year. We will see what happens with the economy at the end of December. Finally, the debate underlines the half-hearted effort by the back bench opposite. There are only four Labor speakers out of 22 on this legislation. That underlines their half-hearted efforts more than anything else. They are scared stiff of this package of Bills. How many of their supporters will be affected is only now coming home to them. Those opposite are running scared but they are not allowed to back off. As I said, the Government needs the money to pay the interest on its enormous deficit. Senator HILL(South Australia)(10.18) —To the uneducated-by that I mean someone who does not know the ways of this Government-it might seem amazing that with the economy going into recession, with the balance of trade looking like being about $15 billion in deficit this year, with inflation twice that of our trading partners and rising when theirs is falling, with interest rates still around record high levels and the dollar struggling to stand up, we are tonight debating yet another new tax with the promise of more to come. I remind the Senate that at the end of last week the House of Representatives introduced a further six taxation Bills which we are yet to debate. I intend to argue tonight that this new and additional tax in the Fringe Benefits Tax Assessment Bill, the Fringe Benefits Tax Bill, the Fringe Benefits Tax (Application to the Commonwealth) Bill and the Fringe Benefits Tax (Miscellaneous Provisions) Bill is unwarranted and unnecessary; that the provisions of the Income Tax Assessment Act are sufficient to counter abuse if they are enforced by the Commissioner of Taxation and if the Commissioner had the encouragement of this Government to enforce them; and that this tax is inflationary at a time when, as I have indicated, Australia's inflation rate is not only high but continuing to rise. I shall argue that this is an enormously complex piece of legislation when anyone would agree that one of the basic principles of all taxation law should be to keep such laws as simple as possible; that it will be administratively expensive, to say the least, again at a time when we should be reducing the administrative costs of our businesses rather than increasing them; and that it is full of anomalies and technical shortcomings. What I do not want to argue is that a non-cash personal use benefit that arises out of employment should not be taxable. The employment package obviously should be taxed as a whole. One should not simply be able to avoid a taxation liability by receiving part of it in the form of a non-cash benefit; that has never been the attitude of this side of the chamber. So I invite the Government to forget about all the nonsense it has come out with about our wishing to support tax cheats. We say that a non-tax benefit that is part of an employment package obviously should be taxed. However, this is a new tax. It is a new tax upon employers. It is a tax on the total value of fringe benefits provided to employees or their associates-we have a broad definition-during the tax year. Employers providing fringe benefits will be required to lodge an annual return. The employer must calculate the tax payable. I stress that it will mean a further load upon the employer. He must make the calculation of tax payable. To determine that, he must first determine what fringe benefits come within the legislation. The assessment is deemed to have been made when the return is lodged and the return is deemed to be notice of the assessment. The legislation contains specific provisions for identifying and valuing the various kinds of fringe benefits. As I have indicated, that becomes the responsibility of the employer. Apart from New Zealand, where a somewhat similar tax was introduced last year, it is an unique form of taxation. I suppose the closest analogy could be drawn with a State payroll tax. It is a tax upon employment; a tax that is liable to be paid by the employer. The difference between this tax and the State payroll tax is that in this case it is not deductible and therefore will be more expensive to the employer. It will therefore clearly increase the costs of production which will either reduce profits, which I would have thought was undesirable now, or be passed on in the form of higher prices for goods or services, which, similarly and obviously, will contribute to domestic inflation, making our exports even more uncompetitive than they are now. I would have thought that would be undesirable even to this Government. It is a tax which is to apply to bodies exempt from income tax. It is to apply to charities, clubs and societies, schools and tertiary and research institutions, hospitals and medical benefits associations, State and local government and union and employer organisations. So we have the ridiculous situation where a charity that is raising money from the public but which may have to provide a benefit to an employee in a distant area, or for numerous other reasons, will be taxed in this way. So those who voluntarily raise moneys for such charities could well find their contributions being paid out in the form of a fringe benefits tax. Again, I would have thought that was ridiculous. Equally ridiculous is the fact that governments are going to be paying the tax. In other words it will be taken out of one pocket to be put into another, a fact that this Government does not seem to be able to see. It is a tax which, notwithstanding the fact that its incidence is so wide, contains clear loop- holes within the legislation. For example, it is argued that non-contributory superannuation will not be included. It is argued that interest free loans used by employees to purchase shares will not be included. It does not take much imagination to look at a whole series of dividends-based packages that will avoid the fringe benefits tax. Each of these three examples, I would have thought, was a good reason for a fringe benefits tax not to apply. Nevertheless, I have not heard from the Government that this has been done deliberately. I presume that it is just an oversight. An oversight like this will always occur in such complex legislation. Not only are there clear loopholes in the legislation but also it is clear that there still may be benefits to an employee in an employer paying the fringe benefits tax, particularly while the rate of individual income tax remains so much higher. Obviously, if that tax rate comes down the benefits will lessen. However, as we are aware, the date for these proposed income tax cuts seems to be getting further away. We are yet to see whether they will occur. Even if they do occur, in the figures that have been put down by the Government there are still circumstances in which there will be a benefit to the employee if the employer paid the tax. I argue that the tax is unnecessary because fringe benefits are adequately covered in the existing legislation. I spoke at some length about that in a speech I made on 1 May and, therefore, will not repeat the total argument. Section 26 (e) of the Income Tax Assessment Act is adequate to catch non-cash benefits of this kind in the same way that the Income Tax Assessment Act was adequate not to allow deductions for entertainment expenses that were not incurred in the course of raising taxable income. In the same way, the Act has been found to be adequate to counter various anti-avoidance measures. Yet this Government has insisted on adding piece after piece of unnecessary legislation. Those of us on this side of the chamber would have much preferred the Government to exhaust the existing provisions of the Act before bringing to us such massive and complex additional legislation. Not only do we argue that this legislation is unnecessary but also, as I said, in my opening remarks, it is legislation of enormous complexity. Speakers before me have gone through at some length the provisions that relate particularly to car benefits provided as fringe benefits for employees. The law that we are being asked to enact is enormously complex, and I am not going to go through it all. What I would prefer to look at rather than the legal aspect of the legislation is the administrative aspect of employers who must put into effect their obligations in relation to motor vehicle fringe benefits. I thought this was very well summarised in an article by Mr Bob Garbutt of Price Waterhouse which appeared in the Australian Financial Review on Monday 19 May of this year. The article is headed: `The Fringe Benefits Tax-Either way, it's piles of paperwork'. That is an apt heading for an analysis of the administrative ordeal under which employers will be put in implementing these provisions as they relate to car benefits. As you are aware, Mr President, a choice can be made between the statutory formula basis or the so-called operating cost basis or actual base. If the employer chooses the former, he no longer has a choice in moving to the other, so he has lost all flexibility. But if he chooses the former, the Bill does not set down specific record keeping requirements; nevertheless Price Waterhouse advises that a number of records are necessary reasonably to meet the administrative requirements. Price Waterhouse suggests that the employer should keep a vehicle register which should show for each vehicle the base value, which will not be easy to calculate. It will have to include the purchase cost, including sales tax paid, and special rules apply in relation to that. It should include the delivery costs where applicable, the cost of any private accessories subsequently fitted and, if the car is leased, its market value at the time the lease commenced. It should also include the date of purchase, the date of sale, the number of kilometres travelled in each year ending on 31 March. For the transitional year which ends in March next year, this information has to be kept on a quarterly basis for 30 September 1986, 31 December 1986 and 31 March 1987. The record should also include the number of days in each period that the vehicle was used or was available for private use. It should also include the amount, if any, paid by the employee for car expenses not reimbursed to him in each period to which I have referred. Debate interrupted. The PRESIDENT —Order! It being 10.30 p.m. I propose the question: That the Senate do now adjourn. Senator REID(Australian Capital Territory)(10.30) —In July 1984 the Joint Parliamentary Committee on the Australian Capital Territory reported to the Parliament on its inquiry into the Murrumbidgee River in the Australian Capital Territory region. One of the things that the Committee was looking into was the impact of future developments in the Territory region and Canberra's future urban development on the Murrumbidgee River. Of course that specifically refers to the development of the Tuggeranong area. That was quite specifically dealt with and I refer to paragraph 10 of chapter 5 in which we said: Urban run-off from Tuggeranong already has caused considerable pollution of the Murrumbidgee at stormwater discharge points. This pollution has been worst when heavy rains have washed fine earth material from construction sites, greatly increasing turbidity in the River. It is a fragile river, Mr President, as you will appreciate and of course it does not belong only to the Australian Capital Territory. It starts in New South Wales and it continues on for a considerable distance in that State. We therefore have a great responsibility to see that what we do in our portion of the river does not cause pollution in other parts. I have received correspondence from Mr John Rowland, the President of the Conservation Council of the South-East Region and Canberra, a voluntary group which represents about 25 organisations and takes an interest in conservation. It certainly took an interest, along with many other people, in the inquiry to which I have referred. He refers to the Council's dismay-that is my word-at the damage currently being done to the Murrumbidgee by run-off, in particular from the development works in Tuggeranong and specifically Calwell and Theodore, he says, rather than the town centre site itself. The Committee spent a lot of time looking at the impact of the town centre development. It was our view that the lake should go in first to protect the river from the development, but we accepted the National Capital Development Commission's assurance that it would be able to put in place procedures that would protect it, and it is hoped that that is happening. I will seek leave to incorporate that letter in Hansard as well as other correspondence which tells the story. I will not go into it in detail. There is a letter to the Minister for Territories (Mr Scholes) relating to the activities of the ACT Electricity Authority and its apparent failure to protect the area, and there is reference to what may perhaps be regarded as an offence under the Water Pollution Ordinance in relation to Tuggeranong Creek; there is a letter to the Chief Inspector of the Residential Leases Section of the Department of Territories concerning inspection processes; a letter to the Assistant Secretary of the Land Management Branch of the Department of Territories; and a letter to an Assistant Commissioner of the NCDC, all discussing the issues which are involved and the numbers of people concerned in the development in that area. I think the Minister needs to institute an urgent examination of the practices of development in the Tuggeranong area. We need to ensure that damage from run-off into the Murrumbidgee River-as I said, a fragile river-is avoided. With the heavy rains that we have had recently, that is difficult and of course if we have further rains the problem will continue. I now seek leave to have those letters incorporated in Hansard. Leave granted. The letters read as follows- CONSERVATION COUNCIL OF THE SOUTH-EAST REGION & CANBERRA (INC.) PO Box 1875, Canberra City, A.C.T. 2601 Australia 062-47 7808 21 May 1986 Senator Margaret Reid Parliament House Canberra 2601 Dear Senator Reid, I enclose copies of some recent correspondence to the NCDC, Mr Scholes, the Residential Leases section of the Department of Territories, and the Land Management Branch of the Department, regarding the damage currently being done by run-off to the Murrumbidgee from land development works in Tuggeranong. The key areas of concern, it is now apparent, are in Calwell and Theodore, rather thant the Town Centre itself. Both the NCDC and the Department of Territories Environmental Protection Section have been quite open about the magnitude of the problem. The question is now what remedies can be found-such as seeking the necessary NCDC contract variations, tightening up the Department's `handover' requirements and enforcing the provisions of the Water Pollution Ordinance on both private contractors and government authorities (notably ACTEA and Telecom). Time is short, with winter fast approaching. Official figures for soil run-off in one upstream tributary from a land development site after recent moderate rain were over 300 times higher than the accepted figure for a river of the Murrumbidgee's nature. We seek the assistance of your good offices in effecting the necessary protection measures. Our thanks for your attention. Yours sincerely, John Rowland President CONSERVATION COUNCIL OF THE SOUTH-EAST REGION & CANBERRA (INC.) PO Box 1875, Canberra City, A.C.T. 2601 Australia 062-47 7808 19 May 1986 Hon. G. Scholes Minister for Territories Parliament House Canberra 2601 Dear Mr Scholes, We are writing to you in your capacity as Minister responsible for the A.C.T. Electricity Authority. We are concerned at ACTEA practices on new residential blocks, following inspections this week in the Calwell development. We observed piles of earth from ACTEA cable-laying in gutters, above the Tuggeranong Creek; this is an offence under the Water Pollution Ordinance, with a specified fine of $10,000 (Tuggeranong Creek being a Class R Waterway). We also observed areas where ACTEA had finished, leaving bare tamped-down earth, rather than regrassed areas which are necessary to control erosion. Can you assure us that the observed offence was an aberration, and offer assurances that it will not be repeated? Can you advise us as to ACTEA's formal guidelines for management of such works, and site regeneration? You will appreciate the importance of a public authority setting good examples in such matters, especially in an area where private contractors are working, and expected to comply with the law. We look forward to your co-operation in this matter. Yours sincerely, John Rowland President CONSERVATION COUNCIL OF THE SOUTH-EAST REGION & CANBERRA (INC.) PO Box 1875, Canberra City, A.C.T. 2601 Australia 062-47 7808 19 May 1986 Chief Inspector Residential Leases Section Department of Territories GPO Box 158 Canberra 2601 Dear Chief Inspector, The Conservation Council is the peak voluntary environment organisation of the region, representing some 27 conservation bodies. Our concern is with the protection and enhancement of both rural and urban environments. We are writing to seek clarification of the inspection process preceding `handover' to the Department by a contractor following land preparation of new residential sites. Our concern arises from an inspection of new sites in Calwell, which we are informed have been accepted by the Department. On these sites we saw evidence of no grassing, but considerable surface erosion resulting in almost total loss of topsoil, and deep rilling on virtually every block. Considerable silt loads were in gutters. Our understanding of the Water Pollution Ordinance is that this constitutes a clear breach, given that the flow is directly into Tuggeranong Creek (a Class R Waterway under the Ordinance). Can you inform us as to inspection procedures and the criteria by which blocks are accepted or rejected? Did the blocks in Calwell meet this criterion? We look forward to your early advice in this matter. Yours sincerely, John Rowland President CONSERVATION COUNCIL OF THE SOUTH-EAST REGION & CANBERRA (INC.) PO Box 1875, Canberra City, A.C.T. 2601 Australia 062-477808 21 May 1986 Dr B. Pratt Assistant Secretary Land Management Branch Department of Territories GPO Box 158 Canberra 2601 Dear Dr Pratt, I am writing to seek clarification of one aspect of the Murrumbidgee protection issue, as it is affected by Tuggeranong land development practices. We understand that three sections of Land Management are involved in accepting `handover' from the private contractor-Residential Leases, Land Services and City Parks. As you will see from the enclosed letter, we are unhappy with the inspection procedures of at least one of these sections. We would appreciate your advice however on the nature of consultation between these sections, and the degree to which inspection criteria are co-ordinated. We ask because it appears from our own inspection that there is a discrepancy between the state of land handed over to Residential Leases, and to City Parks. The latter-notably footpaths-has been well hydro-mulched and grassed, suggesting a laudable insistence on high standards by City Parks inspectors. It does appear however that this good work is undermined if residential land behind it is not protected, as hydro-mulch will not withstand heavy run-off from an adjacent area. We know that you share our concern for protection of the Murrumbidgee corridor, and would appreciate your advice in this matter. Yours sincerely, John Rowland President CONSERVATION COUNCIL OF THE SOUTH-EAST REGION & CANBERRA (INC.) PO Box 1875, Canberra City, A.C.T. 2601 Australia 062-477808 21 May 1986 Ms J. Lang Assistant Commissioner NCDC GPO Box 373 Canberra 2601 Dear Jill, Our thanks for our recent briefing on the Tuggeranong situation, as it affects Tuggeranong Creek and the Murrumbidgee. That session, plus a subsequent field inspection, has been most helpful to us in understanding the position. We accept your assurances that in the main the Town Centre protection measures are working; we are also totally in accord with your assessment of the grossly unsatisfactory conditions upstream. This of course threatens to nullify the Town Centre controls, which are clearly not designed to withstand the combined impact of storm run-off from the upstream suburban catchment and the Centre itself. It is a complex issue, certainly, and there is quite a cast of interacting participants that we can identify. We enclose letters to some of the other parties as an indication that we do not see the NCDC as having sole responsibility. However there is at least one key area where we do urge you to take action within your power. It appears that the contracts with the Calwell and Theodore developers (in particular) are a major cause of problems. We understand that in part they contain requirements of less stringency than the Water Pollution Ordinance, (although we believe that reference to the WPO is also made). We accept that the contracts were drawn up over a decade ago, which helps explain their deficiencies. But the key date is surely when they were signed, which we understand to have been considerably more recently; in fact it seems unlikely that this date was much earlier than that for the White contract for the Town Centre. We would welcome clarification of this point. Can you further assure us that there are no further contracts pending, which are based on this model? Whichever is the case however, the problem remains. We urge the Commission as a matter of highest priority, to negotiate the necessary lease variations. We understand that there may be a cost involved, but consider that the problem warrants it. We understand further that the Department of Housing and Construction is acting as your agent in this matter. We believe that they must take some responsibility in this, as clear breaches of both the Water Pollution Ordinance and individual contracts appear to be taking place without DH & C's intervention. We request the Commission to re-instruct this Department in its role of agent, again as a matter of urgency. We would appreciate your early reply to these matters, as with winter's approach, it is fair to describe the situation as one of potential crisis. We would of course be pleased to discuss the matter with you further. Yours sincerely. Ian Fraser Director Senator MICHAEL BAUME(New South Wales)(10.34) —Mr President, I rise briefly to express my concern at a speech made in the other House last night in the adjournment debate by a Mr Gear from Canning, who sought to attack the Waste Watch Committee on several grounds. Basically, in effect, he was trying to hold us I suppose in terrorem; he tried to terrorise the Waste Watch Committee out of its proper task of seeking information by way of the methods available to us, despite the Government's attempts to block the flow of information to me and my Committee. The methods we have available to us include the reading of reports, which we do with some interest and enthusiasm; the telephoning of departmental officers to gain information that should properly be available to us; and when that source is blocked by instructions from the Government itself, as it has been in the matter of the community employment program through the Department of Employment and Industrial Relations, we have to use the other more expensive methods available. I regret that Mr Gear in making his complaints was obviously either unaware of or deliberately chose not to reveal the fact that members of the Waste Watch Committee had been blocked from getting information from the Department of Employment and Industrial Relations on what we understood to be the instruction of the Minister for Employment and Industrial Relations (Mr Willis) that no information be given to us over the telephone by officers of his Department, even when the information simply involved asking for the date a release was made, for the amount of that release, or the formal name of the recipients of the money involved in that release. We have been told that simple questions like that are to be referred to the Minister's office, on the instruction of the Minister. I have no reason to disbelieve the public servants involved. It is a clear and deliberate attempt to limit the flow of information-information that is in the public interest-to the Waste Watch Committee. As a result, we have had no option but to seek information through measures that are far more expensive and Mr Gear, in the other place, has complained about the costs of the search for such information. All I suggest to Mr Gear is that he advise his ministerial colleagues that if they are so desperate to save money in the search for information, they provide it much more readily than has been the case so far so that more expensive methods, particularly using the Freedom of Information Act, will not be necessary. We have been forced to use that Act after having been refused information by this Government on an increasing number of occasions. We have to use the provisions of the Act to try to force information out. I can assure the Government that at the weekend it will be seeing some of the results of the use of the Freedom of Information Act, which was the only way we could get information in a couple of matters which are naturally very embarrassing to the Government and, having received the information, we now understand why the Government was so keen to block the supply of that information. But for Mr Gear to pretend that it is somehow improper for the Waste Watch Committee to use the remedies available to it-expensive though they may be-because easier and less expensive remedies are being denied to us by this Government which is supposed to be committed to the concept of open govern- ment-- Senator Peter Baume —Ha! Senator MICHAEL BAUME —Exactly. As my cousin Senator Peter Baume says, `Ha!' This Government has made a mockery of the concept of open government. Its continual refusals to provide information which should properly be made available and which ultimately is, after appeal, forced to be released, is a disgrace. I need only remind the Senate of the fact that this Government, having already and continually misused what it was pleased to describe as a forward deficit estimate, from its first year on, has refused to release similar information which it was prepared to misuse in relation to the Fraser Government. The Government has refused to release such information because it says that forward estimates of the deficit are misleading and it is not in the public interest for them to be revealed. That simply demonstrates the double standards of this Government. I am more concerned about Mr Gear's attack on the Waste Watch Committee. He said that the Committee has cost more in Public Service revenue than it has saved in the waste it has exposed. I believe that Mr Gear was being the hatchet man for the Ministry, which is now becoming, naturally and properly, unnerved about the success of the Waste Watch Committee in exposing ridiculous and disgraceful examples of Government waste. This is a crude and, I suggest, offensive method of trying to force the Waste Watch Committee, by seeking to accuse it of being wasteful in its search for information, out of the arena so that it will cease its activities of exposing the incompetence and waste in so many areas of this Government. I can assure the Government that its efforts will be unsuccessful. I can assure the media that we will continue to provide information of public interest and of public concern about governmental waste, whether we get it despite Government objection and Government obfuscation or not. I am intrigued to see, by the way, that Mr Gear has called on Senator Walsh to require all questions on notice to be costed so that an accurate cost of any abuse of this research service can be identified. I am interested to see that he is now in favour of adding an additional cost-I am not quite certain whether Senator Walsh will be overjoyed by that thought-in order to try once again to hold us in terrorem to frighten us out of making quite proper requests. There is one other point I would like to make and that is that Mr Gear says that, because the Committee has not contacted any of the Ministers responsible for the spending it criticises to offer any advice on ways in which taxpayers' money can be saved, he believes that this shows that the Committee is not interested in playing a constructive role in saving money or lowering taxes. I remind Mr Gear and the Government that when the Grace Committee established its extraordinary effectiveness in the United States of America it was suggested to this Government that it might be very useful indeed if a similar committee were established in Australia. The private sector pressed for it and this Opposition pressed for it, but this Government refused to be a party to such an arrangement because it has so much to hide. It would not have an independent body like the Grace Committee in the United States, which was so successful in curbing government waste, examining this Government's waste and spending. The Waste Watch Committee of the Opposition was created because of the refusal of the Government to accept the proposition that an independent body like the Grace Committee should be appointed. If the Government wants someone to provide it and its Ministers with information let it accept the offer or the suggestion that was made to it by this Opposition and by the private sector and not come on with this sanctimonious rubbish about how the Opposition's Waste Watch Committee is not behaving properly if it first does not reveal to the Minister involved where there is such evidence of waste. I repeat: This kind of nonsense will not diminish our enthusiasm, nor will attempts to belittle our endeavours by referring, for example, to a former Prime Minister's car bill. I have dealt with that matter on other occasions. I do hope that the whole question of car costs will be resolved when Mr Neil Brown takes what I hope will be some strong action in this matter, particularly in the matter of the applying to him of bills for which he had and should have had absolutely no responsibility. I remind the Minister for Community Services (Senator Grimes) that when people raise, as Mr Gear did, clearly on ministerial instruction, the matters of Mr Fraser's car bill, there is clear evidence that the whole administration and costing arrangements of the Commonwealth car pool are ludicrous. The $250,000 car bill last year for the Prime Minister (Mr Hawke) is a clear nonsense. I use that example not to criticise the Prime Minister's car use but simply to say that of that $250,000 that the Prime Minister had marked against him for his car use last year his personal car use was listed as being $130,000, which would have required him to have been in his personal car 22 hours out of the 24 hours of every day of the year at the normal costing rate. In other words, the costings are absolute nonsense. I would hope that using the Prime Minister's car bill as an example demonstrates that. I can also assure the Government that any attempts to frighten us out of continuing our work will fail. Senator GRIMES(Tasmania-Minister for Community Services)(10.46) —I was not here for the whole of Senator Michael Baume's speech. As for his remarks on the distribution of costs for the use of Commonwealth cars, I could not agree with him more. In fact, many of us have questioned the manner in which this calculation has been made, not only by this Government but by previous governments and previous administrations. The only thing I would say about it is that the sort of pot shotting that has been going on at Mr Neil Brown and others about the costs of cars and travel is something that has been going on for as long as I have been here. In fact, one year I was the subject of that sort of behaviour. The leader of the pack baying at me at the time, publicly and privately I might add, was none other than the Hon. Neil Brown. I must say that it was with considerable pleasure that I saw the headlines that he received over his car use. I must say that I did not join in that sort of thing. I was just pleased that somebody who had been living by the sword was copping a bit of the sword himself. I think it is a bit much for Senator Michael Baume to think that someone like George Gear is egged on by Ministers in this Government to frighten the Opposition's Waste Watch Committee. I do not think anybody frightens the Opposition's Waste Watch Committee any more than the Waste Watch Committee frightens the Government. But I will say that what Mr Gear did was to point out, as he is entitled to do and as he will do again and as other people will do, to the people of this country that the Waste Watch Committee's activities cost taxpayers money. It is no good Senator Michael Baume saying to someone like me who was a shadow Minister from 1976 to 1983 that it is outrageous for this Government or any Minister in this Government to tell his public servants to be limited in the answers they give to Opposition senators. I well remember that in that whole six years no officers from the Department of Social Security were allowed to speak to me at all. In fact, in the case of the Greek conspiracy case I got up in this place and asked question after question, but I never got any answers from the Minister or from the public servants. In fact, this whole sordid tale leaked out bit by bit. I believe in the freedom of information legislation but I also believe that the costs of that freedom of information legislation should be exposed in this place. I point out to Senator Michael Baume that a Minister in the Government of which he was at one stage a supporter and an employee used the freedom of information legislation, at a cost of thousands of dollars, to find out personal details of the lives of members of the Government, to find out whether they were married to the people they were living with. When he got that information he distributed it around the electorate, not in his name but through members of his Party in the electorate, who then passed it on. In one case it was given to Senator Harradine, who refused to use it and refused to participate in that sort of nonsense. I happen to be very much in favour of the Freedom of Information Act. I am very much in favour of freedom of information. I think it is a great advance and I support it very much, but it can be abused. It can be overused, and it can be abused in the way that a Minister in the previous Government abused it to find out the personal details of people's lives. I think that, if that happens, George Gear or anyone else in this Parliament has every right to expose that sort of behaviour and expose the costs of the use of that legislation. I wish the Opposition's Waste Watch Committee well. I see that in the first few weeks it had a few problems and got a few things wrong. I dare say that it will get some things right and some things wrong. We may all benefit from it. As long as honourable senators opposite do not keep the President and me up, by bringing it up every night on the adjournment, I will be happy. Question resolved in the affirmative. Senate adjourned at 10.51 p.m. The following paper was tabled: Remuneration Tribunals Act-Remuneration Tribunal-Determination 1986 No. 4-Committee to Review Funding of Technical and Further Education, dated 18 April 1986. The following answers to questions were circulated: (Question No. 985) Senator Bolkus asked the Minister representing the Minister for Foreign Affairs, upon notice, on 20 March 1986: (1) Was there a report in the London Sunday Times on 15 December 1985 which refers to the forced detention, interrogation and subsequent rape and torture of an employee of the United States Embassy in San Salvador, Mrs Graciela Menendez de Inglesias. (2) Will the Minister for Foreign Affairs investigate the allegations in this report that members of the American Embassy security department illegally arrested and interrogated her then handed her over to the brutal Salvadoran Treasury Police who subjected her to at least 15 days of torture including repeated rape in order to procure a `confession' of her alleged guerrilla sympathies. Senator Gareth Evans —The Minister for Foreign Affairs has provided the following answer to the honourable senator's question: (1) I am aware of the report in the London Times of 15 December 1985. (2) It appears that Mrs Menendez was an employee of the United States Embassy in San Salvador and that she was detained and interrogated on suspicion of passing information about other staff members to insurgents. My Department has obtained certain information about her subsequent treatment but it is not sufficient to enable me to judge the validity of each of the allegations. I can say that the Salvadoran Treasury Police have a notoriously poor record of treatment of detained persons. The account given of Mrs Menendez's treatment by them is consistent with their reputation. While there are gaps in the information available, there are elements of this case which give me cause for concern. It is, however, beyond Australian resources to conduct a detailed investigation. Mrs Menendez has, of course, been able to leave El Salvador, following a court ruling that there was insufficient evidence to justify her continued detention. (Question No. 998) Senator Puplick asked the Minister representing the Minister for Foreign Affairs, upon notice, on 8 April 1986: (1) Did the Minister for Foreign Affairs say in answer to House of Representatives Question on Notice No. 1967, `Official development assistance (ODA) in 1985-86, is estimated at 0.45 per cent of Gross National Product (GNP). If the cost of education support for private overseas students (estimated at $88.414m in 1985-86) is excluded from the calculation, the ODA/GNP ratio is estimated at 0.41 per cent'. (2) Can the Minister indicate what the ODA/GNP ratio is for the developed or industrialised countries who are members of the United Nations on the latest available figures (see answer to House of Representatives Question on Notice No. 1967 Hansard, 29 November 1985, p. 4084). Senator Gareth Evans —The Minister for Foreign Affairs has provided the following answer to the honourable senator's question: (1) Yes. These figures are calculated using the encashment method of recording aid flows. (See below.) (2) The following table lists for 1984 (the latest year for which figures are available) the ODA/GNP ratio for member countries of the Development Assistance Committee (DAC) of the Organisation for Economic Co-operation and Development. These countries are, to all intents and purposes, the aid-giving developed industrial members of the United Nations. A calendar year base is used to measure donors' performance internationally. The ratios are calculated using the deposit method of recording aid flows, which varies from the encashment method by counting contributions to international financial institutions as aid flows at the time of the deposit of promissory notes in a bank rather than at the time of actual expenditure. DAC Member Countries: Official Development Assistance as a Percentage of GNP, 1984 Australia... 0.46 Austria... 0.28 Belgium... 0.56 Canada... 0.50 Denmark... 0.85 Finland... 0.36 France... 0.77 Germany... 0.45 Italy... 0.32 Japan... 0.35 Netherlands... 1.02 New Zealand... 0.27 Norway... 0.99 Sweden... 0.80 United Kingdom... 0.33 United States... 0.24 DAC Average... 0.36 (Question No. 1001) Senator Knowles asked the Minister representing the Minister for Transport, upon notice, on 20 March 1986: (1) (a) Is the area confined in the coverage of Lat. 31*.46''S/32*.04''S, and Long. 115*.34''E/115*.44''E, classified as Australian Territorial Sea; if not, what sections does the Australian Territorial Sea take of this area; and (b) are the South Passage Channel markers, shown on Chart AUS 114, position approximately 32*01''S 115*37.5''E, in Australian Territorial Seas. (2) Is the Australian Government considered a responsible Government which would be expected to abide by the requirements of its membership with the International Association of Lighthouse Authorities (IALA). (3) (a) Does the Minister for Transport agree that while the Seas and Submerged Lands Act 1973, and the United Nations Convention of Territorial Seas and Contiguous Zones, may not prevent co-operative arrangements between the States and the Commonwealth, the responsibility must still remain with the Commonwealth as laid down in the Coastal Waters (State Powers) Act 1980, and the Coastal Waters (State Titles) Act 1980; if not, what is the explanation; (b) would the Minister in reading the last sentence on the final page (Page 9) of the IALA Maritime Buoyage System Handbook, agree that the document contains the sentence ``confirmation that the buoyage changes in specific areas have been carried out will normally be announced in Radio Navigational Warnings and in Notice to Mariners''. (4) (a) Does the Minister state that the Coastal Waters (State Powers) Act 1980, and the Coastal Waters (State Titles) Act 1980, do not apply to certain areas of Australian Territorial Waters. (b) has the Minister, or other Ministers of this Government or of previous Governments, handed responsibility for such International Agreements and Acts of Parliament as are cited above, to the individual States; if so, by what form and method has he, or they, passed on these responsibilities. (5) (a) Is the Minister stating in answer to my previous Question on Notice, No. 735 (section 5) that vessels within Territorial waters but outside parts that the Commonwealth Department declare are not their responsibility, such as the Fremantle Port Authority Area, are not entitled to be warned by the Department of Transport, even when the Department knows that the vessel is entering that area where a known danger exists; (b) are they to be warned only by the local authority, even when it is known that the authority does not have radio facilities of sufficient range to pass on such warnings with reliability; and (c) is the Minister prepared to admit that it is not the responsibility of the Commonwealth Department to send out radio warnings to all those concerned in all Australian territorial waters, despite the fact that the Commonwealth Navigation Act 1912, and the Seas and Submerged Lands Act 1973, state that all concerned must be warned, and the fact that through the International Conventions relating to Safety of Life at Sea the Commonwealth Government agrees to give such warnings, and the fact that the Coastal Waters (State Titles) Act 1980 and the Coastal Waters (State Powers) Act 1980 clearly state that the Commonwealth retains the responsibility for these Conventions and Acts. (6) (a) Does the Minister state through his answer to my previous Question on Notice, No. 735 (section 6), that because these Coastal Waters (State Powers) Act 1980 and Coastal Waters (State Titles) Act 1980 do not assign specific ministerial responsibility, the Acts do not apply to the Department; (b) does the Minister now state, after claiming that section 6 of these Acts does not prevent co-operative arrangements between State and Commonwealth, that once such co-operative arrangements are agreed to, this absolves the Commonwealth Government of all responsibility under the Commonwealth Acts of Parliament and International Agreements to warn all those concerned of dangers, and that those others with whom they have decided to arrange to co-operate may or may not abide by these acts and conventions, as they see fit or as they are physically capable of abiding by them according to their limited facilities. (7) (a) Could the Minister elaborate on the reference to ``co-operative arrangements'' contained in the final sentence of his previous answer to my Question; and (b) is the Minister stating that co-operative arrangements are already in place with the Fremantle Port Authority (FPA), its Minister, the State Transport Department, or other relevant controlling authority. (8) If the Minister or his Department have entered a co-operative arrangement with the controlling body of the FPA, would not this situation then be covered by the fourth section of the Minister's answer to my previous Question, when he states that through his Departmental Federal Sea Safety and Surveillance Centre he authorises warnings of danger to navigation that relate to those areas for which the Federal Government accepts responsibility, as part of a shared responsibility with the States and Territories for the provision of marine navigational aids. (9) If the Minister does not agree with the proposition in Section 8 of this Question, then does he agree that the Federal Sea Safety and Surveillance Centre would be responsible for sending out warnings because they retain such responsibility under the Coastal Waters (State Powers) Act 1980 and the Coastal Waters (State Titles) Act 1980, as they have not entered into a co-operative arrangement with the FPA. (See answer to Question on Notice No. 735, Hansard, 11 February 1986, p. 140.) Senator Gietzelt —The Minister for Transport has provided the following answer to the honourable senator's question: (1) (a) No. The Australian Territorial Sea is that area three nautical miles seaward of the baselines proclaimed in accordance with the international law. In respect of the area in question the Territorial Sea baselines (published in Commonwealth of Australia Gazette No. S 29 dated 9 February 1983) are as follows, commencing from position 32* 07' 20''S, 115* 39' 23'' E; from 32* 07' 20''S, 115* 39' 23''E, to 32* 04' 03''S, 115* 38' 00''E; from 32* 04' 03''S, 115* 38' 00''E to 32* 01'47''S, 115* 31' 39''E, thence following low water mark of Rottnest Island. Clockwise, to position 31* 59' 27''S, 115* 32' 28''E; from 31* 59' 27''S, 115* 32' 28''E to 31* 56' 22''S, 115* 45' 10''E; then following low water mark of mainland, in a general NNW direction to 26* 08' 42''S, 113* 09' 26''E. (b) no, they are internal waters. (2) The International Association of Lighthouse Authorities (IALA) is a non-government body which brings together its members in order to exchange information and promulgate improvements based on the latest technology. Membership is open to agencies responsible for navigational aids, port authorities and commercial organisations. The Federal Department of Transport is a member of IALA and participates in the activities of the organisation. (3) (a) The Commonwealth and the States at the Premiers' Conference in June 1979 completed an agreement for the settlement of offshore constitutional issues (known as the Offshore Constitutional Settlement), which took full account of international, national and State interests and produced a solution agreed to by all States on what matters are appropriate for Commonwealth, State or joint administration and how the various agreed arrangements should be implemented. Pursuant thereto the Commonwealth enacted, inter alia, the Coastal Waters (State Powers) Act 1980 and the Coastal Waters (State Titles) Act 1980. The effect of the former Act is to give each State the same powers with respect to the adjacent territorial sea (including the seabed) as it would have if the waters were within the limits of the State. The effect of the latter Act is to vest in each State proprietary rights and title in respect of the adjacent territorial sea (subject to certain exemptions). At international law, although the Commonwealth accepts international obligations, and benefits from rights, under international treaties, the means by which any such obligations are to be given effect domestically is a matter for the Commonwealth. Consistent with international law, responsibility for implementation of such obligations domestically can rest with the Australian States for areas within the jurisdiction of the States. Although section 6 of each of the Acts mentioned above confirms the position at international law that nothing in those Acts affects the rights and duties of the Commonwealth under international law, any question regarding any adverse effect on an Australian citizen of an alleged failure by Australia to comply with international law is a matter to be determined solely in accordance with arrangements in Australian law, both Commonwealth and State. Section 6 of each of the Acts is of no assistance in this regard. (b) the publication referred to is a booklet produced by the British Hydrographic Office intended to assist mariners in the changeover of the IALA System of Buoyage. The sentence, when read in the context of the whole section entitled ``Implementation of the IALA Buoyage System'', refers to notification of the change to the IALA System. In Australia the changeover was completed by 31 December 1982 and at that time mariners had been advised through radio navigation warnings and notices to mariners. The IALA Maritime Buoyage System booklet issued by IALA does not include any reference to promulgating buoyage changes. (4) (a) The Coastal Waters (State Powers) Act 1980 and the Coastal Waters (State Titles) Act 1980 apply to the `coastal waters of the State'. Sub-section 3 (1) of each of those Acts contains the following definition: ` ``coastal waters of the State'' means, in relation to each State- (a) the part or parts of the territorial sea of Australia that is or are within the adjacent area in respect of the State, other than any part referred to in sub-section 4 (2); and (b) any sea that is on the landward side of any part of the territorial sea of Australia and is within the adjacent area in respect of the State but is not within the limits of the State or of a Territory.' Section 4 of the former Act further elaborates on the extent of the territorial sea and coastal waters, by way of the following provisions: `4. (1) For the purposes of this Act, the limits of the territorial sea of Australia shall be the limits existing from time to time, ascertained consistently with the Seas and Submerged Lands Act 1973 and instruments under that Act and with any agreement (whether made before or after the commencement of this Act) for the time being in force between Australia and another country with respect to the outer limit of a particular part of that territorial sea. (2) If at any time the breadth of the territorial sea of Australia is determined or declared to be greater than 3 nautical miles, references in this Act to the coastal waters of the State do not include, in relation to any State, any part of the territorial sea of Australia that would not be within the limits of that territorial sea if the breadth of that territorial sea had continued to be 3 nautical miles.' Sub-section 3 (1) of the former Act also contains the following definition: ` ``adjacent area in respect of the State'' means, in relation to each State, the area the boundary of which is described under the heading referring to that State in Schedule 3 to the Petroleum (Submerged Lands) Act 1967 as in force immediately before the commencement of this Act.' (4) (b)It is inapt to speak of Commonwealth Ministers having handed responsibility for Commonwealth Acts of Parliament to individual States. In relation to the provisions of the cited International Agreements concerning notification of dangers to shipping, co-operative arrangements between the Commonwealth and each of the States stem from an exchange of letters between the Prime Minister and the Premier of each State in 1934. (5) (a) With regard to Question on Notice No. 735 (section 5), neither the previous answer nor the question made any reference to ``vessels within Territorial waters but outside parts that the Commonwealth Department declares are not their responsibility''. Where responsibility is shared between the Commonwealth and the States, the sharing of responsibility and the determination of the parts of the shared responsibility for which the Commonwealth is responsible results from arrangements between the Commonwealth and the State, not from any declaration made by the Commonwealth Department. As stated in my previous answer the Department of Transport is only obliged to send out warnings of dangers to navigation in relation to those parts of the shared responsibility for which the Commonwealth is responsible. It will nevertheless issue warnings for other areas when requested to do so by the responsible authority. (b) No. The Commonwealth will issue warnings of occurrences within ports when requested to do so by the responsible authority. Where a local authority considers its radio facilities to have insufficient range to pass on warnings with reliability it may request the Commonwealth to issue an appropriate warning. The Department of Transport understands that the style and location of the radio facilities operated by the Fremantle Port Authority would have a nominal range of 18.6 nautical miles. (c) See answer to question (3) (a). The Federal Government is aware of the various responsibilities on parties having an involvement in navigational safety in the Australian territorial waters and meets its obligations in respect of those parts of the shared responsibility for which the Commonwealth is responsible. The Acts referred to in the question do not state what the question suggests they do. (6) (a) No. However, as indicated in the answer to question (3) (a), the Acts deal with the legislative powers and titles of the States in respect of coastal waters. Those Acts have an effect on the domestic exercise of jurisdiction by the Commonwealth in the context of the Offshore Constitutional Settlement. (b) See answer to question (3) (a). (7) (a) Co-operative arrangements are an integral part of the Offshore Constitutional Settlement. Such arrangements between the States and the Commonwealth concerning implementation of international maritime agreements take a number of forms, most commonly through administrative arrangements or complementary legislation. For instance, the terms of the agreement on certain aspects of shipping and navigation were confirmed as part of the Offshore Constitutional Settlement of 1979. (b) Yes. Co-operative arrangements with Western Australia in respect of shared responsibility for marine navigation aids and radio warnings stem from an exchange of letters between the Prime Minister and the Premier of Western Australia in 1934. These arrangements provide that the responsibility of the Commonwealth in regard to provision and maintenance of lights and other aids to navigation ends with the erection and maintenance of those aids necessary for ocean navigation. Provision of port, river and minor aids to navigation is a matter for the State Government or local authority. In this context radio warnings are regarded as `other aids to navigation'. (8) The Department of Transport has not entered into a co-operative arrangement with the controlling body of the Fremantle Port Authority. The co-operative arrangement with Western Australia in respect of shared responsibility for marine navigational aids stems from an exchange of correspondence between the Prime Minister and the Premier of Western Australia in 1934. Resulting from that exchange the Department of Transport is only required to send out warnings of danger to navigation in relation to those parts of the shared responsibility for which the Commonwealth is responsible. (9) See answer to (8) above.